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Marcus Johnson (00:00):

This episode is brought to you by Amazon Ads. Ever wonder if your Amazon Ads drive sales beyond Amazon? Perhaps. Well, if you are, Omnichannel Metrics helps advertisers understand how campaigns drive sales both on and beyond Amazon using shopper panel data and third party signals. Brands can track performance from streaming to brick and mortar stores. Discover Amazon Ads omnichannel metrics at advertising.amazon.com and search for OCM to learn more.

(00:33):

Hey gang, it's Thursday, December 11th, and welcome to a special EMARKETER podcast miniseries, a blueprint to better measurement, made possible by Amazon Ads. I'm Marcus. And in episode one of this two-part series, our principal retail analyst Sky Canaves speaks with Kolby Capelouto, head of sales for durables at Amazon Ads, all about omnichannel advertising. I hope you enjoy.

Sky Canaves (00:57):

Thank you, Marcus. And Kolby, it's great to have you join us today. Now, I'm really excited for our conversation because it really tracks to what I cover as a retail and E-commerce analyst here at EMARKETER, where I follow the evolution quite closely of Amazon beyond the confines of amazon.com. And we see that both on the commerce side and increasingly on the advertising side. We've seen in recent year Amazon Ads offerings moving well offsite and off the funnel through channels like Prime Video Ads, which is close to reaching its two-year anniversary. It's hard to believe it's already coming.

(01:35):

And then all of the extensive publisher partnerships, social platform partnerships, and even the new deals with top streaming services like Netflix, Hulu, and Disney. So this is all very exciting, how Amazon has expanded its reach for its advanced audience building and targeting capabilities and the potential pool of advertisers. So from within this context, I wanted to ask how you see where Amazon stands, not just as a sales channel, but as an increasingly important advertising channel for advertisers, even those that don't necessarily sell that much on Amazon or even sell at all.

Kolby Capelouto (02:14):

Yeah. Thank you, Sky. It's really great to be here with you today, so I appreciate you having me. It's an exciting time. I've been here for 10 years, and so when I think back over that horizon of my time here, when I first started, we had just launched our DSP. We had no video offering to speak of, and our primary function was to drive really efficient outcomes on Amazon.com store. And over that 10-year period, we have shifted from Amazon-only sales to being hyper-focused on driving omnichannel business outcomes, because we understand that customers that shop on Amazon and research on Amazon and consume content from Amazon don't just purchase on Amazon. They purchase where it's convenient for them. And so we're really focused on how do we help our advertising customers be successful wherever that final transaction may occur. And there's really three main components of this appeal, and we've made a lot of innovation and investments in this.

(03:08):

The first one, which continues to be our biggest differentiator, and why I came to Amazon Ads 10 years ago is our audiences. And so when you think about Amazon shopping signals combined with what people are consuming across streaming TV, Prime Video, live sports, maybe what they're purchasing in Whole Foods, these are really rich signals, and we've given advertisers the opportunity to combine their own customer data and signals with that. So audiences is the first piece. The other big appeal is our comprehensive Amazon and open internet supply or inventory. So as you mentioned, we introduced ads in a Prime Video about two years ago. We were really surprised with the outcome. Our initial hypothesis was that this was going to be great for brand metrics. And what we found was this was actually really helping drive business outcomes, again, both in the store and outside of the store.

(03:59):

We made investments in live sports. This year we launched NASPAR. We just kicked off our 10-year partnership with the NBA, so we're really excited about that. And then also the ability to access the open internet, like you said, Netflix, Roku, Disney, Peacock, you name it, these are all major broadcasters, publishers, and SSPs. So it's audiences, it's comprehensive supply. And then what I think is the most valuable and what we're talking about here today and what I continue to hear from our C-suite customers is measurement.

(04:29):

So our innovation several years ago in Amazon Marketing Cloud or AMC, which is our data clean room, it really allows for a clear fidelity of all media ran through the ADSP to understand what's happening with that media in terms of customer engagement and driving conversions. In addition to that, like I mentioned, we're really focused on omnichannel outcomes, and that's where our omnichannel metrics innovation, particularly in the durables and fashion and clothing space has been first to market and a true innovation and some we're really excited about to bring to customers.

Sky Canaves (05:03):

And that's something I find so interesting about this topic of omnichannel metrics is that you're now able to show how Amazon ads, which are now being deployed across the funnel and all of these channels are driving outcomes for brand sales, not just on Amazon, but maybe even on arrival retailers, E-commerce site or even in store, which as we know, shopping journeys have become so complex and fragmented today. And that poses the biggest challenge for measurement because you might discover a product on TikTok, research it on Amazon, but not be ready to buy and then go and purchase it later at Walmart, for example. So maybe we can start with how you at Amazon define omnichannel metrics and what solutions it's offering for advertisers.

Kolby Capelouto (05:53):

Absolutely. I'm super excited to talk about this. I've been deep in the trenches with a lot of folks here at Amazon Ads trying to solve this for our advertising customers. The headline is that omnichannel metrics or OCM helps advertisers understand, like you said, how their ad campaigns transacted to the DSP. So not just Amazon media, but any open internet media that's transacted through the Amazon DSP drives sales both on and beyond Amazon. It also allows mid-flight optimizations as well. So this measures performance across any inventory source like streaming, TV, video, audio, display, anything transacted through the DSP to help give that holistic view of what's happening with those dollars invested. And candidly, today, more than any of their time in the past, at least in my experience, efficiencies and the ability to quantify these outcomes are more important than ever. So the way I liken it is that omnichannel metrics are like turning the lights on in a room that you've walked through for years.

(06:52):

The customer path hasn't changed, but now we can actually see the business outcomes outside of the Amazon store after exposure. So there's been a lot of hypothesis on this. There have been third party studies like from Kantar that talk about the customer journey. Now we're actually able to quantify it on a campaign and by product basis. So it's been really exciting for our customers. And it all started from going to market and learning from them that the biggest challenge they have is with such a disparate and fragmented landscape, how do they really understand how that media dollar being invested is driving outcomes outside of these unique channels where typically that closed loop measurement has been. So this has been just a huge unlock in a first to market for customers in the durables and clothing and fashion space because now they can actually understand that.

Sky Canaves (07:44):

And what are some of the components of omnichannel metrics and how you measure?

Kolby Capelouto (07:50):

As you probably well know, I can tell you're very well versed in this space. This historically been available for CPG and grocery products sold in grocery stores via Circana data and historically Nielsen Catalina solutions before Circana acquired them because they have shorter consideration periods, higher purchase frequency and an abundance of this point of sale data coming from the grocery stores. But this was not the case in the durables and clothing space. These are longer consideration cycles. Sometimes they're higher ASP products, and there was not a readily available source of point of sale data. And so what we had to look at, and we basically, there was a Tiger Squad that took this on internally and we said, if we can solve this for our customers, this will be a big unlock for them based on what they were telling us. And so I went out and we partnered with several folks internally across our analytics and insights team.

(08:43):

We had literal PhD data scientists on this. We had folks from our measurement and data science team. And where it's truly unique in terms of how Amazon can offer this is we have a store, so we understand conversions that are happening after ad exposure. We also have our DSP, which helps us understand that ad exposure. And then the third real critical component that didn't exist in the marketplace until we created it was the fact that we have an Amazon shopper panel, and then we did a business development deals with both Fetch and Numerator who are leading market intelligent research companies in the space. And so what that allowed us to do is create a unified panel that has 10 million active customers per month. So what we're able to do is we understand any media exposure through the Amazon DSP to a customer. We can then understand how those conversions are happening on Amazon.

(09:34):

And then through all the receipt level data that we have, we're able to anonymously match that data with our customer IDs to then extrapolate how those sales are happening off Amazon, whether it be through brick and mortar, online channels or whatever it may be.

Sky Canaves (09:49):

Wow, that's amazing, especially given the new categories that you're able to put this into. And with how consumers are shopping nowadays, especially with economic concerns, we heard a lot this year about purchases being pulled forward while other purchases may be more delayable. So it might take longer for the impact of a campaign to show up in sales and then where exactly it shows up has traditionally been much harder to measure. So I want to ask about some examples of real life campaigns or brands that you've worked with to put this into action and what kind of results you've seen.

Kolby Capelouto (10:27):

Well, I always like to preface that there isn't a good or bad with the omnichannel metrics. It just is. If you think back to the light analogy that I shared, we're just shining a light on what customers are already doing, and I'll share some category averages that we're seeing from the last two years of us executing this. So once we understand it, we can then quantify the results and make it actionable. I'll start macro and then I'll go into a specific example with an advertiser that we've worked very closely with since the inception of the beta. But when you look at category averages from the hundreds of beta OCM studies we've ran over the last two years, you can see that each industry's a little bit different in terms of how customers research and eventually purchase. And also what we've found is each ad product offers different omnichannel outcomes kind of aligned with what you would expect from those.

(11:16):

So I'll start with the categories. In electronics, we found that 59% of shoppers exposed to an Amazon DSP campaign on average completed their purchase off Amazon. So if you think about historically, the scope that we've been able to share has been about on Amazon conversions, but we know that once a customer's exposed to one of the ads coming from Amazon DSP, this would be a high propensity they're going to be purchasing elsewhere. So when we think about it, electronics, 59% of those exposed to an ad or them purchasing elsewhere, that's a lot to bring to a report card or a report for our marketers to be able to say, Hey, when we invest the dollar in the Amazon DSP, regardless of which supply it's running through, these are the greater outcomes that we're delivering. Home improvements 53%. Lawn and garden, which isn't surprising, is up to 87%.

(12:07):

So customers are researching. They're then going to Home Depot, they're going to Lowe's, Menards, wherever it may be convenient for them and making that final purchase maybe when they're doing the projects on the weekend. And what customers are able to find from this is like the actionability is it helps them inform campaign setup. It helps them identify the omnichannel metrics even down to a supply or inventory source perspective. So they can say, hey, how is Netflix driving omnichannel sales for me? How is Roku driving omnichannel sales for me? And it's giving CMOs, CROs, CFOs, and their teams a more holistic view of what's actually occurring. So Skye, to get back to your original question, one specific example, we're getting very positive feedback from OCM Insights that are allowing for the things that I'd mentioned like campaign setup and a full holistic understanding. One brand I want to speak about is Spectrum Brands, and they've been with us since the beginning of this journey.

(13:05):

They own industry-leading pet brands such as SmartBones and lawn and garden brands such as Spectracide. So this really helped them better have conversations with their CMO and CFO and gave them a true understanding of their media budgets and what was happening after the investment. They found that for every dollar they invested with Amazon ads on the DSP, they saw 90 cents occurring off Amazon through channels like Walmart, PetSmart, and Petco. And this was sizable for them and it really helped reframe how they viewed an investment on the DSP. I'll dive a little bit deeper in the Smartphones campaign, which is a pet product. They ran online video. These are raw hide, free dog chews, and they exceeded all their new to brand benchmarks. They saw 46% off Amazon purchases. And what that translates to is for every 10 Amazon shoppers they were seeing have a conversion, there were nine others that were occurring from this media campaign.

(14:00):

That's robust. I mean, you're now almost doubling the view of what you're doing with your media dollar and very similar results with Spectracide, which is a Garden product. They ran always on display ads and they had beat their return on ad spend metrics. They saw 67% off Amazon purchases before these were happening in a dark room. Now they could shine a light on it. So that was really beneficial for them. The results are important, but it's like what you're able to do from this that I think is most important, the actionability, the so what. So they were able to take this during their yearly planning cycles and have discussions with their brand and business unit presidents. It allowed them to invest more on the DSP. They essentially took what they were doing on other DSPs and then chose to transact it on the Amazon DSP based on this fidelity of measurement.

(14:49):

And now something that's really interesting and we've just unlocked is they're able to run standalone DSP campaigns on the Amazon DSP using Amazon shopping audience signals to drive to non-Amazon retailers. So what does that mean? They can set up a specific campaign that has creative and has click through on open inventory supply to drive to Home Depot specifically, to drive to target, to drive to Lowe's. So that's been a big innovation as well as getting back to your original point of how has Amazon ads really innovated and grown over the years. I think that really punctuates that point.

Sky Canaves (15:30):

Wow. And that's really key for a brand that is so widely distributed or brands that are so widely distributed where we still see the vast majority of retail sales still take place in stores. It's a huge channel throughout our forecast period, accounting for more than 80% of total retail in the US is stores. So E-commerce, but E-commerce channels, digital channels are so important at driving the awareness and building the brand and even helping in the consideration phase. So that's really interesting and it's been great to talk to you about this today and thank you for joining us.

Kolby Capelouto (16:11):

It's been my pleasure, Sky. Thanks for having me.

Marcus Johnson (16:14):

That's it for today's episode. Thank you so much to Sky and Kolby for the conversation. Thanks to the production crew, of course. And thanks to everybody for listening in to this special EMARKETER podcast miniseries, a blueprint to better measurement made possible by Amazon Ads. You can tune into part two of this miniseries next week on Tuesday, December 16th.