This month, shoppers looking to stock up on Halloween candy can buy 160 mini chocolate bars for a mere $16 on ecommerce site Boxed. And starting this week, the confectionery marketers looking to target them with ads can virtually jostle for position like trick-or-treaters searching for the last Snickers in a plastic cauldron.
That’s because Boxed, a 4-year-old digital wholesaler with a few million monthly customers, is introducing a real-time auction platform for its top-of-the-page, sponsored search results. The New York-based company has offered ads for a few years through its six-person sales team, but is now aiming to ramp up revenue from its ad inventory by pitting bidder versus bidder—and in the process, take away a chunk of business from ecommerce powerhouses Amazon and Walmart, each of which has been in the real-time-bidding game for a few years. Boxed will also be going up against the formidable Jet.com, the Walmart-owned ecommerce site that debuted its initial ad offering in August.
Ecommerce advertising is heating up to seize the huge opportunity provided by the digital retail market, estimated to exceed $400 billion in the U.S. this year, according to the National Retail Federation. But even with stakes that high, what makes Boxed think it can compete with retail titans, chiefly Amazon?
“It’s a little bit of a different mindset—we are a virtual warehouse,” noted Jackson Jeyanayagam, CMO, Boxed. “Amazon shoppers spend 1 to 2 minutes there because they already know what they want. People spend 15 to 20 minutes on our platform”—which, in theory, means more time to target them with relevant ads.
Michael Duda, managing partner at agency Bullish (which has advertised on Amazon in recent months for clients such as Balance Bar, GNC and GoDaddy), thinks that Jeyanayagam’s company has at least a puncher’s chance to take on heavy ecommerce hitters for ad dollars.
“What’s great is that Boxed gets the breadbasket crowd in the middle of the country, and not just the cool kids on the coasts,” Duda said.
But Amazon is far more sophisticated, offering ads via search, display, regular video and NFL Thursday Night Football live video. Morgan Stanley analysts recently predicted that Amazon’s ad business will grow to $5 billion next year and $7 billion in 2020.
The Seattle-based tech behemoth, which leverages troves of shopping data, often sells ads to CPGs that move droves of toothbrushes, lightbulbs, snacks and more. Its ads also attract telecoms, restaurants, airlines, fundraisers and automotive brands because Amazon’s data targeting and campaign measurement can apparently provide them with unusual stats.
Saurabh Sharma, director, ad platform at Amazon, described a discovery made by his team and an auto brand: “People who were buying paper towels were more likely to be pickup truck owners,” he said. “And though we don’t sell [vehicles] on Amazon, the fact that we could provide those shopping signals [was powerful]. On the measurement side, to say, ‘Here are your customers, here’s what they do from a lifestyle perspective in the aggregate’—it was very valuable and helped the company craft better campaigns across all of their channels.”
Oscar Peña, digital marketing director at Hispanic-focused agency Chamoy Creative, just spent three months testing a blend of Amazon, Facebook and Google ads for an undisclosed clothier. Now, after analyzing the trial phase’s results, the retail client is ready to embark on a full-throttle campaign for the holiday season.
“We still believe in a mix, but we are going to be spending more on Amazon than before,” Peña said. “People were four times as likely to buy the product after seeing it on Amazon. We also got a 50 percent for brand recognition.”
Bruce Kiernan, practice lead of performance marketing at digital agency MEC, said that while client budgets have only been “moderately” shifting more spend toward ads on ecommerce sites, “we do expect to see this number increase.”
Indeed, it’s not hard to understand the allure of targeting folks while they’re actually shopping instead of only thinking about it on a search engine. “People on Amazon and Boxed demonstrate purchase intent,” said marketing consultant David Deal. “Why not make your product visible to them?”
Not everyone is enamored with ads on ecommerce platforms, though. Justin Warshavsky, a media planner with CTP, said that Amazon ads for a nonprofit client were outdone by campaigns on OwnerIQ and Dstillery’s programmatic systems.
“Amazon was not a top performer,” Warshavsky said. “We didn’t consider trying it again.”
Perhaps that could provide an opening for an upstart like Boxed. But ultimately Boxed—and competitors like Amazon and Jet.com—are just trying to go up against Google, which, per eMarketer, will sell $35 billion in ads this year.
Interestingly, Jeyanayagam mentioned the digital mammoth as one of the reasons his real-time bidding will succeed. “Ad buyers are used to it thanks to Google,” he said.