Amazon’s “Flywheel” concept has been extensively written about and in summary is concept focused around strategic compounding – in the case of Amazon by reducing prices to attract more customers, which would make their infrastructure and fixed costs more efficient but also lead to further volume to negotiate better deals with suppliers, and cheaper prices for consumers.
Amazon Prime soon became the major driver of the Flywheel effect – as paying members they contributed significantly to the bottom-line but also purchased a lot more from Amazon compared to non-Prime customers. To entice and keep those Prime customers Amazon added a lot of value-add services for the membership, from the obvious in fast and free shipping, to music, movies, books and discounts at their physical Whole Foods stores. And of course, a plethora ways to interact and buy items, not the least being Amazon Alexa or Amazon Dash.
The Amazon Flywheel
Interestingly, when it comes to advertising on Amazon, very few brands and agencies apply this same (highly successful) holistic thinking to their own success.
They typically focus solely on search (sponsored products/brands) and driving acquisition costs lower, thus affording more media to then bid greater amounts and win higher share of those actively (and consciously) looking to purchase a specific product. While that approach will lead to some short-term successes - gaining a marginally greater share of the in-market audience – it misses the “Flywhweel” opportunity that additional media can add.
The Podean Accelerator takes advantage of this “Flywheel” effect.
We agree that maximizing your share of customers looking for your product is wise. Plus, conquesting active shoppers within your product categories is a sound strategy, but it doesn’t end there.
The Podean Sales Accelerator.
Firstly, media analytics shows a clear correlation between positive brand associations (trust, reliability) and consumer consideration and ultimately conversion/purchase. In summary, branded advertising drives better conversion metrics. Brands that use creativity to promote key features, advantages and stand-out will stay in the consumers minds for months and years. Next time instead of reviewing all brands within a category they will just go to yours, assuming the product experience has met their expectations.
Secondly, you’ll soon exhaust your audience if you just focus on active shoppers. There are very good reasons why approximately 90% of media budget of big brands are spent on branding activities – they need to constantly recruit new customers, and win them up-stream and build a degree of loyalty and commitment prior to the transaction phase.
Thirdly, as they saying goes, you don’t know what you don’t know. What we mean by this is if you are launching a new product, new category or significant innovation, potential customers won’t search for you. They simply don’t know what role your product might have in their lives. Think about Henry Ford and Steve Jobs – customers weren’t asking for an automobile or smartphone, they were asking for faster horses and mobile phones that could browse the web.
Finally, there are so many options to grow your brand using Amazon. Amazon can offer very specifically-targeted video and display creative, larger format custom executions like homepages takeovers and engagement ads, audio ads via Alexa or even branded delivery boxes and sampling campaigns.
There are no other Amazon specialist agencies that have the experience of delivering holistic media planning for Fortune 100 clients.
Only Podean can. We have managed brand and performance communications for some of the world’s leading brands and can do the same for yours. Our proprietary analytics methodology will determine the right balance between activities to deliver optimal results within the entire Amazon ecosystem and aligned to your broader media and marketing activities.
One final note… many performance agencies don’t understand this concept and choose not to. Many brands pay their agencies solely based on Amazon search performance and we know this success is often driven by broader media placements, social media coverage and PR activities of your brand.
Podean will strike the right balance for your short and long term sales goals.
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