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The revenge of the catalog team (part 2 of Amazon sponsored prompts deep-dive)
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[00:00:00] Kiri Masters: Advertising has long been the bright, shiny hero of e-commerce relative to the unsexy and underfunded work of product catalog maintenance, new item setup, [00:00:15] inventory forecasting, and other operational requirements. And I remember this well from my own agency days.
[00:00:24] Clients would happily adjust their media spend upward [00:00:30] based on how their sales were going or tracking overall growth and performance, but getting them to invest in fresh product content was like pulling teeth. But at no time has this [00:00:45] interdependence between media and content been more obvious than today, where we have recently learned how Amazon's Sponsored Prompts ad product builds an ad dynamically based [00:01:00] on PDP content and other signals, billing the brand for an ad that it never got to see or approve.
[00:01:08] I shared on Monday this week some new analysis from Andrew Bell about Amazon's [00:01:15] patent for Sponsored Prompts, which finds that Amazon writes a fresh argument about a brand's product from source material that the brand doesn't own and charges you upfront for it. [00:01:30] So today, we're going to be digging into the consequences of all of that.
[00:01:35] Let's go.
[00:01:36]
[00:01:37] Kiri Masters: So first of all, your ad account is now downstream of your operations
[00:01:43] Reviews, [00:01:45] product content, stock position, your commercial terms. These are the things that advertising used to compensate for, but now they are the things that are actually generating the ad. This [00:02:00] is the argument that Ladi Fagbola, who is an e-commerce account director at the agency Monks, articulated in a, a cool follow-up from my post this week.
[00:02:11] I'll link up to the video, but I just wanna summarize a few [00:02:15] things that he mentions.
[00:02:17] He He shares a perspective that there's four legs to the Amazon stool for brands. One is the commercial, that's your cost of goods sold, your referral fees, your net PPM. The [00:02:30] second leg of the stool is logistics
[00:02:33] inventory and the like. Number three is the content, and number four is the ads. He argues that three of those four legs can be in poor shape [00:02:45] and you can still advertise.
[00:02:47] So not everything needs to be working perfectly in sync in order for ads to run, and that's probably the case for most brands. There's always some- something going on that isn't ideal. Now, [00:03:00] Ladi argues then that advertising, because of the way that sponsored prompts is set up, is it's no longer interdepe- interdependent on those legs.
[00:03:08] It is now completely dependent on those three other legs because the prompt is [00:03:15] coming from all of those backend inputs
[00:03:18] And the overarching point that Ludi makes in his video is that advertising essentially amplifies all of these edges that advertising could kind of [00:03:30] smooth out in the past. And so the net-net here is that content is no longer an input to ads, it is the ad I wanna deep dive into reviews for a second, because [00:03:45] this is a potentially troubling area.
[00:03:49] The asset that just got a glow up here is product reviews. Now, product reviews have always been important and prized to a degree that brands [00:04:00] and sellers have, for a long time, chased product reviews because they understand them to be so important to consumer psychology and/or the algorithm in some shape or form, [00:04:15] to the degree that some of these brands and sellers have engaged in literal criminal activity over the years to get more product reviews and bury or remove reviews that [00:04:30] weren't positive.
[00:04:30] This is a dark and troubling chapter of e-commerce history that has unfolded around the product review ecosystem. Now, over time, in response to that, Amazon has launched and sunsetted a [00:04:45] variety of programs to help brand build reviews, with the only long-standing one still remaining being the Vine Review program.
[00:04:57] And this whole ecosystem [00:05:00] today, I still find personally to be quite weird and shadowy, even the sort of legitimate players. There's just something about this whole ecosystem that, uh, is
[00:05:13] A gray area. [00:05:15] and today when we're looking at sponsored prompts in this architecture, the review corpus, this longtime hotbed of manipulation and scams, that is the raw material that Amazon is retrieving to [00:05:30] build your paid answer. And so the consequence here, and what I find very troubling, is that review manipulation isn't any more just about organic ranking.
[00:05:44] Fake [00:05:45] reviews are now functionally ad copy that a brand is paying for and that Amazon generates and bills for. So you can imagine all kinds of manipulation happening here with brands favorable reviews of their own [00:06:00] products, taking down competitors. This has happened forever, but the stakes are a little bit higher now with this r- review corpus being such a factor into paid advertising But also light at the end of the tunnel [00:06:15] here, Amazon's own incentive to police reviews changes when it is selling ads that are assembled out of them.
[00:06:23] And with those increased stakes comes the increased ri- risk of manipulation among competitors. ~So my fingers and toes~
[00:06:29] ~So my fingers and toes are crossed that Amazon introduces some more robust paid... ~[00:06:30] So my fingers and toes are crossed that Amazon takes this opportunity to introduce some more robust product review or product review syndication capabilities. But for today, the job of managing a brand's [00:06:45] review ecosystem now sits in two places.
[00:06:48] Wherever it sat in the past, which, could be in customer experience. Um, I don't know. Where does it sit at a brand today? I don't even know. Whoever owns them today, [00:07:00] which is never the media team and often is nobody at all, frankly. Now it also sits in this media outcome area as well, and the, and the advertising teams can be very [00:07:15] interested in what those reviews say. Costco isn't scaling its RMN with legacy ad tech and [00:07:30] manual solutions. It's leaning into a cloud-centric composable stack. As part of the Costco Velocity Network, GrowthLoop empowers the retail media team to build audiences [00:07:45] directly from the Data Cloud, enabling faster activation, greater relevance, and better performance, all while maintaining privacy and governance standards.
[00:07:58] The result? [00:08:00] Exceptional value and experience for Costco members and better ROI for brand advertisers. Learn why the GrowthLoop Composable Commerce Media Solution was the right choice for Costco's Velocity Network. Visit [00:08:15] go.growthloop.com/breakfast. That's go.growthloop.com/breakfast
[00:08:26]
[00:08:27] Kiri Masters: All right, moving on from product reviews [00:08:30] and just checking in on our hype meter for a second. We don't know yet whether this ad form factor is the one that is going to last. As I wrote on Monday, [00:08:45] we are very early in the life of ads inside AI, and for now, most of ads in AI chat look like the units that we have lived with for a decade or more.
[00:08:57] Sponsored product ads, [00:09:00] banners, video. We don't have those two yet, but you know, like it, it kinda looks like the same thing that's been ported into a new surface. Sponsored prompts is the first genuinely [00:09:15] new shape of ad that I have seen in a while. Now, whether it is the enduring shape or just the first draft of one is something that we're gonna need to track over time.
[00:09:26] So before concluding that [00:09:30] everything about paid search on Amazon just got upended, it is worth noting what has actually changed and what hasn't. So number one, bidding. Bidding hasn't changed. Bids still run through an existing CPC budget. Auction management, [00:09:45] pacing, reporting, that's all still there. What did change is that bidding did get less powerful relative to content.
[00:09:53] Your leverage as an advertiser used to sit at the auction, and whoever had the smartest [00:10:00] strategy or the best tools or maybe the biggest budget now it's upstream in the content, in the reviews, et cetera. And so that is a job with a different title and skill set to media [00:10:15] buyer
[00:10:15] Now, what is also different here is that the reporting for these ads is very basic. For example, you can only see which prompts did get a click. You don't get to see which prompts Amazon tried out that didn't get a [00:10:30] click. And so this is different to something like a search term report where you can see, you know, what worked, what didn't.
[00:10:37] Now, to me, putting my tinfoil skeptical hat on for a second, this seems [00:10:45] like a pretty slow rollout of reporting features. pr- sponsored prompts have been out for nearly a year now, and the level of reporting that we have available is still quite basic. It [00:11:00] makes me kind of think, wonder if Amazon really believes in this ad format.
[00:11:04] Are the results not actually quite as good as other ad formats? Or 180 here. Does this simple prompt [00:11:15] work so well that it actually undermines the much bigger, more expensive sponsored product ads that is currently Amazon's golden goose? so look, there is-- this [00:11:30] is pure speculation as to why there are still sort of so few bidding features and reporting features of this ad type.
[00:11:42] Is it because they're awesome [00:11:45] and it pr- it, it, it's an existential threat to the existing business? Or that they're not as performant as Amazon would like to see before they roll everything out on a broader scale?
[00:11:59] All [00:12:00] right. I am running a little long here. I wanna let everyone get back to their morning. So I'll try and wrap things up here. If you wanna dive deeper, do check out the newsletter today. Has a little bit more, um, [00:12:15] implications to think through here. But, you know, I think ultimately the up... there is upside with this ad type.
[00:12:22] We don't need to lose our hair over it. There's some real upside for brands. I think back to when I ran my agency, [00:12:30] Bobsled Marketing, we kept auto campaigns running on ev- almost every account. Even the ones where we had a really robust keyword research and bidding program that we were very proud of, we still kept these [00:12:45] auto campaigns running in the background, and a few clients hated it because it looked lazy.
[00:12:49] Like, why are we paying Amazon to spend on autopilot when we already know what's working? But the auto campaigns was where the best, least obvious keywords came [00:13:00] from, and we looked at it like we were paying Amazon to find demand that we wouldn't have guessed at. And so sponsored prompts do kind of the same thing with your creative, because Amazon is [00:13:15] picking which aspect to surface and building that answer from your reviews and product content and what Amazon knows about your brand, and it's sometimes going to make an argument for your product that you might not have led with.
[00:13:29] One [00:13:30] particular use case, an objection, a selling point that you had undersold potentially And so this generated prompt report that we're able to get now shows you the questions that converted, [00:13:45] and so that can become a really great form of research. So this is helpful information. Most brands know that they have blind spots when it comes to how consumers see them, and sponsored prompts could become the cheapest, [00:14:00] most compelling form of consumer research that a brand can do
[00:14:04] Over the years, the work of content and operations was underfunded and undersold. But no ad campaign could make up for out of [00:14:15] stocks, poor product reviews, or poor product content
[00:14:18] To address what this new direction with sponsored prompts calls for, it means budget moves, it means headcount moves, it means job title changes. Are [00:14:30] we ready for these under-hyped functions to truly shine? Thanks so much for listening. I'd love to hear your thoughts over on the LinkedIn post that accompanies this episode, and I'll catch you tomorrow
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