Amazon and Antitrust

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At the back end of 2020, the US Government released a report outlining the findings from the antitrust investigation into BigTech (Amazon, Facebook, Apple and Google). For this blog, we’ll focus on Amazon. Around this time, Jeff Bezos was also listed at the richest man in the world.

The goal of antitrust is to prevent large monopolies from gaining too much power in the marketplace, so to promote fair competition.

The antitrust report found that “Amazon’s pattern of exploiting sellers, enabled by its market dominance, raises serious competition concerns”.

Amazon allegedly:

– Uses third-party seller data to then decide on what products to launch themselves

– Uses information from their investments in start-ups anticompetitively

– Convinces sellers to utilise their fulfilment services

– Utilises unfair algorithms designed to put their own products in preferential positions

Whilst Amazon denies most of what was stated in the report, it is still quite clear to see that Amazon yields significant market power, and they’re not afraid to use it.

In the US, Amazon is a crucial marketplace for most small and medium sized businesses – necessary for survival, with an estimated 1.7 million stores operating through Amazon. But, when the marketplace you need to sell your products and services is undercutting your own sales data for personal gain, and effectively requires sellers to use Amazon’s services (forcing them to rely on their competitor for survival) then we have a problem.

Amazon has created their own service in almost every part of the logistics process.

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How did we get here?

The U.S.A is very capitalistic, favouring a free market system with minimal government intervention. Which is why Amazon has been able to grow to this size; the government doesn’t like to regulate business.

However, when a company is indulging in anti-competitive behaviour, we have market failure. That’s when government intervention becomes crucial to restoring the balance to the marketplace.

The solution isn’t to destroy Amazon. They have created millions of jobs and invested billions into the US economy. The solution is to change/confine the way Amazon operated, to allow for small and medium sized businesses to grow and remain competitive in the market.

Antitrust laws need to be broadened to allow companies like Amazon to be contained, and for direct competitors against Amazon to stand a chance.

How often do you use Amazon? Does knowing any of this change your perception?


Facebook Advertising: The Moral Dilemma for Small Business

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Let’s start with Facebook

Facebook’s strategy is well documented: use powerful algorithms to offer dopamine hits, as well as antagonise users to keep them engaged. It is addictive by design.

The longer you scroll, the more ads you see, the more money Facebook gets. In fact, 98% of Facebook’s revenue in 2018 was from ads.

This business model has received heavy scrutiny in recent years:

“… fundamentally addictive for people, and it’s causing all kinds of mental health issues…”

Tim Kendall, former director of monetisation of Facebook

“Facebook’s business model is poison”

Dr Hany Farid, Digital forensics

What has this got to do with small business?

Small business beginnings have moved from local market stall to Instagram page, with Facebook becoming one of the key factors of small business success. A study found that 9 out of 10 people buy from brands they follow on social media.

Have you noticed that almost every business has a social media presence? That’s because it has become a business standard – consumers expect it, with a study showing that 90% of consumers have interacted with brands on social media before.

Promotion is a key component to marketing small businesses. Facebook provides an accessible, affordable and relatively easy way to advertise to a very specific, target market. You can set up and run a targeted ad campaign in under 30 minutes from your own device.

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Facebook has been a launching pad for countless businesses that wouldn’t have had the same opportunity without it, contributing to the success of so many.

So, what’s the problem?

In choosing to advertise on Facebook, you are choosing to engage in and support Facebook’s predatory and invasive business model; harvesting the attention of users in exchange for advertising fees.

So the dilemma stands: Feed into the cycle of attention harvesting and the new “requirement” to have business social media accounts, or miss out on sales and promotion that comes with it.

Turning Experiential Marketing Digital

Experiential marketing is the process of igniting all senses of the consumer to fully engage and immerse them in a branding experience. You might have experienced experiential marketing yourself, perhaps at a free-sample stand or a fun pop-up like the image below.

This is a very effective form of engaging with the consumer and creating lasting impacts and brand associations in the mind of the consumer, with a survey stating that 74% of consumers who engaged in a brand experience were more likely to buy the product.

The Coronavirus has sped up the adoption of digital technologies by several years. It has also seen a decrease in city commuters as working from home becomes the norm. This means that less people are leaving the house, meaning less opportunities to catch the consumer with experiential marketing.

What digital marketers face today is an opportunity to bring the experience online, to engage the consumer in a digital way. Pepsi has recently launchedPep’s Place’, a digital ‘restaurant’ that offers suggestions on what food to order based on the selected drink. Some marketers are gamifying the experience.

With a significant drop in human-to-human interactions, consumers are moving online to connect with others.

This also offers an opportunity for data collection, through, for instance, heat maps and a/b testing to more accurately evaluate how consumers are reacting to the experience.

Creating and offering inventive and exciting experiences that the consumer can access from their own device in their own home could be the future of experiential marketing.

How do you feel about digital experiential marketing? Do you think it can compare to a physical experience?

Personalised Ads: Friend or Foe?

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With the rise of digital marketing and Big Data, personalised advertisements and predictive analytics have come a long way. With the amount of personal data available, ads have become incredibly targeted and specific, and with social media and search engines, these targeted ads easily find their way to the attention of the targeted user.

The recipe is fairly simple, data is collated, input it into an algorithm, and then out comes the right ad, to the right user.

Gone are the days of posting an ad in the local newspaper and hoping the right audience sees it.

These targeted ads have created a much more meaningful touchpoint in the awareness stage of the customer value journey. We are seeing ads that can offer real value into our lives, introducing us to products we mightn’t have know existed otherwise. 71% of consumers prefer ads targeted to their interest and shopping habits.

With such specific ads, it can feel like companies know what you want before you even do. We’re seeing that it is causing us to spend more money. When an ad pops up on pay day with a 30% off sale on a handbag you’ve been looking at for weeks, right before you have a big night out planned, of course you’re more likely to buy it.

Whilst encouraging consumers to spend more is the ideal outcome for digital marketers, consumers are catching on.

This could mean a shift in the way targeted ads a presented, and an attempt from digital marketers to make them less “creepy”.

As a consumer, do you find that targeted ads are a friend or a foe?

Has Digital Marketing Taken A Toll On Luxury Brands?

In the era of digital marketing, it has become a standard that all businesses have an online presence – even luxury brands.

In the past, luxury brands have maintained their luxury through brick and mortar stores. They are exclusive by location and the experience associated with going into the store is like none other. You couldn’t compare a Tiffany & Co. store and experience to that of Lovisa.

When moving to a digital marketing platform, the options to make a store feel more ‘luxury’ are limited, as those luxuries come from the little touches, such as pleasant greetings, your own sales assistant and exceptional service. When we compare the websites of Lovisa and Tiffany, something different occurs.

It is evident that the home pages here are quite different, as the two brands have difference value propositions – Lovisa is price focused, Tiffany is experienced focused. However, the purchasing experience is largely the same. One page per product, add to cart, proceed with checkout, input details, pay and await shipping. There isn’t to much ‘luxury’ to online shopping. Watch these videos going through the checkout process:

There really isn’t much of a difference! If anything, the Lovisa checkout process was smoother and faster.

The touch points that made luxury stores so luxury in the first place cannot be easily translated to an online medium. How can brands find a way around this? Or is it simply all about the product, not the experience? With these questions facing digital marketers for luxury brands, digital marketers may have to come up with inventive ways of creating a luxury experience in a digital world.

Do you think digital marketing is benefitting or hindering the luxury experience, or not at all?