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Amazon expands beauty, launches ad products in Australia

Amazon Australia on Tuesday made a major push into the luxury and professional beauty space, adding thousands of new products across nearly 200 brands to its online offering.

The e-commerce company previously carried a number of mid-market beauty brands, such as Neutrogena, Nivea and L’Oreal, but it now offers dozens of new brands more typically seen on the ground floor of department stores, including Elizabeth Arden, Estée Lauder, Diptyque and Jurlique.

The move comes at a time when the beauty market are booming, and a growing number of customers are shopping for products online. A recent Roy Morgan revealed that 26 per cent of women who buy cosmetics regularly do so online, up from 18 per cent four years ago.

“We know that Aussies take their beauty regimens seriously,” Rocco Braeuniger, country manager for Amazon Australia, said, citing the fact that Aztec Secret Indian Healing Clay was one of the site’s top products in 2018.

“We hope that customers will be pleased with the extended range of beauty products giving them access to new and established luxury beauty brands,” he said.

The range includes fragrances, makeup, skin care, hair care, bath and body, nail care, tools and accessories and men’s grooming products. And the online retailer has built curated storefronts to help customers discover new products.

Advertising products now live in Australia

This is just the latest expansion for the US-based e-commerce giant, which recently launched another key part of the business in the Australian market – it’s advertising products.

Amazon Advertising, the part of the company that offers display and video ads and an online tool to programmatically buy ads, launched in Australia on Friday, according to a company blog post.

This gives businesses a way to reach the millions of unique visitors who land on Amazon’s local website each month, according to figures the company cited from SimilarWeb.

“With Amazon Advertising, agencies and advertisers – regardless of whether or not they sell on Amazon – can deliver relevant messages to customers on and off Amazon, throughout their customer journey,” the blog post reads.

The launch comes as the US e-commerce giant has been looking to grow its advertising business. In 2017, the company added a new office and 2000 jobs, mostly in advertising, in New York City. It has also recently introduced self-service buying tools, among other new products, and started providing deeper insights into its enormous customer database.

These efforts seem to be paying off. Advertising was part of Amazon’s fastest growing business segment last year. Revenue from the company’s “other” category, which includes advertising, grew 115 per cent in 2018, to US$10.1 billion. Research firm Magna estimated that advertising accounted for US$6 billion of that figure, according to AdNews.

Most of this growth has come at the expense of rival digital advertising giant, Google, according to a report last week by The Wall Street Journal. 

The report stated that WPP PLC, the world’s largest ad buyer, spent about US$300 million on Amazon search ads in 2018, and about 75 per cent of that money came from Google search. This was up from the US$100 million to US$150 million it spent on Amazon search ads in 2017, according to sources familiar with the matter.

Advertising at the point of purchase

One reason Amazon may be attracting more advertising dollars is that it enables businesses to reach customers much closer to the point of purchase than Google or Facebook, although both tech giants – particularly Facebook, which owns Instagram – have been working to close the gap between the discovery and purchase stages of the customer journey for some time.

But before retailers completely upend their advertising budgets, they may want to consider the metrics they’re using to allocate budget to begin with. New research from Monash University has revealed that ‘last touchpoint attribution’, a key metric most advertisers use to measure ad effectiveness and allocate budget, is not accurate.

“At the moment, if a consumer buys a new toy online, Google can look at the search patterns that person has had over the past few days, or whether they’ve received any emails from a department store such as Kmart,” Peter Danaher, head of the department of marketing at Monash Business School, said.

“They use a method called ‘last touchpoint attribution’. So, if the consumer last opened an email about toys, the email gets the credit. It they last did a Google search on toys before making the purchase, Google gets the credit.

“The advertising industry has used this method for the past five years because it’s simple and effective. The problem is, this method ignores how long consumers remember an advertisement.”

According to Danaher, last touchpoint attribution doesn’t take into account the cumulative effect of seeing ads in different places, and allocating budget based on this metric is less effective than allocating budget to maximise profit.

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