Source: Amazon.com
Are ads causing shoppers to lose faith in Amazon search results?
Amazon.com has long been the main go-to place for online product search, but a recent Washington Post article finds that it is no longer giving customers what they want because advertisements are muscling out the real search results.
Running a search for “cat beds,” the Post found that the entire first screen of results displayed advertisements masquerading as listings rather than products arrived at because they provided the best combination of price and quality. The results included one ad that featured a dog in the picture, rather than a cat.
On the first five pages of search results, more than half of the listings were either ads or Amazon’s own products. A Profitero study found that Amazon lists sponsored products on its first page of search results at a rate twice that of Walmart and four times that of Target. Other online outlets, like food delivery platforms and Google and Apple’s app stores, have also started displaying ads as search results.
Amazon’s ad business grew 58 percent in 2021, making it the third largest online ad seller, according to a Recode article. Six high-volume sellers told Recode that to succeed on Amazon today, sellers have to spend between 10 and 20 percent of their sales on ads.
Amazon’s practices surrounding how it lists search results have been criticized before.
Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, an activist group, told CNBC in October that Amazon can “alter and steer buying behavior” through prioritizing its own private labels in search results while relegating non-Amazon items to lower spots in the results. The statement was made in the context of a complaint by Peak Design CEO Peter Dering, who said that Amazon had stolen many of the major features, including the name, of Peak Design’s camera bag to create a private label knockoff.
According to a recap of a webinar published on Search Engine Journal in 2018, 70 percent of customers searching for a product on Amazon never click past the first page of results, 35 percent click on the first product featured on the search page and the first three items account for 64 percent of clicks.
- It’s not your imagination: Shopping on Amazon has gotten worse – The Washington Post
- Basically everything on Amazon has become an ad – Recode (Vox)
- How Amazon’s big private-label business is growing and leaving small brands to protect against knockoffs – CNBC
- Amazon’s Search Engine Ranking Algorithm: What Marketers Need to Know – Search Engine Journal
- Why are Amazon’s brand knockoffs ‘foul play’ if other retailers do the same thing? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you see Amazon’s practice of displaying ads in search results reducing the faith that shoppers have in the site? Does Amazon’s practice represent an opportunity for others in the product search space?
Poll
Loading …BrainTrust
DeAnn Campbell
Head of Retail Insights, AAG Consulting Group
Dave Bruno
Director, Retail Market Insights, Aptos
Amazon’s advantage – having an enormous range – is also its Achilles’ heel. It is increasingly difficult to find exactly what you’re looking for and, when you are buying from an unknown brand or provider it takes some effort to read reviews and such to provide reassurance. Basically, nothing is very well curated. Ads are helpful sometimes, but generally they just add to the sense of clutter and muddle. For all the data it has on customers, Amazon isn’t really that good at creating a personalized and meaningful online experience.
I have noticed that when my wife and I are looking for a sale item on Amazon, we get different first screens. Isn’t that curation?
Depends on how useful and meaningful the curation is! In my experience it’s OK but isn’t that great – mainly because so much junk comes up when you search for something.
I can’t tell you if the curation is good or poor. We get different front screens as two shoppers searching for the same item.
I wonder how much is because you’re male and your wife is female. (And a side question: when does this kind of differentiation slide from “curation” to outright sexism?)
I don’t think it was a gender-oriented product in the case I suggested.
BTW, I gave you a thumbs up. I wish I could have given you a laugh for humor.
My spouse and I have experienced the same at Lowe’s online.
That’s the dirty little secret, isn’t it? They really aren’t that good, and have gotten worse. I consistently get emails exhorting me to buy something I just bought – from Amazon.
Exactly. For almost all my non-subscription purchases, I usually get a follow-up email about that item urging a purchase. Whether it’s a book, a TV, a kitchen item, or whatever, the follow-up algorithm doesn’t get a feed from the transaction history.
Yes, I do believe that Amazon’s search results are becoming less useful as they prioritize display ads over relevance. And as much as consumers may be put off by the display advertising, the fact is that it’s occurring in other search platforms like Google, where online advertising revenue has been decreasing. So while Amazon may be creating an opportunity, other search platforms are following Amazon’s lead — I’m not seeing this as an opportunity. At least not yet.
It does sometimes feel like you are on an advertising site and not a marketplace. There is nothing more annoying than being “caught out” by an advertisement rather than a genuine search result. But that is a large part of Amazon’s revenue and helps them keep prices so competitive. So what do consumers want, higher prices or advertisements?
Absolutely. Speed, convenience, and advertisements.
Without question, paid results in search results reduce trust, extend shopping time and diminish the experience. The relentless search ads combined with paid reviews (how many products have more than 5,000 authentic user reviews?), make buying anything on Amazon but products from trusted brands feel like a gamble. Which actually runs counter to their goal to encourage people to shop their advertisers’ brands (and of course their private label products). I have to believe this erosion of trust will be enough to shift loyalties away from Amazon at some point. I know I have moved a large percentage of my online shopping away from Amazon because the experience is so — exhausting.
I assume Amazon has weighed the risk/reward of added advertising revenue vs. loss of credibility. Savvy shoppers may realize that sponsored products are being featured first on Amazon (and keep scrolling until they find what they want) but other consumers in a hurry may click on the first option they see.
The practice is becoming prevalent elsewhere — for example, TripAdvisor mixes sponsored hotel listings with its own rankings — but nobody depends more on consumer trust than Amazon.
Consumers are pretty savvy at sniffing out ads in search results. I believe that the more ads they see in their search results, the more likely they will distrust Amazon’s search results. Will this lead to their shopping elsewhere? Hard to say, given Amazon’s dominance in the market.
Good assessment Gary! I think, as internet searchers, we have become accustomed to seeing ads first in our searches and we know how to tell the difference. While we often get annoyed by the ads, we expect them. I also agree that Amazon’s market dominance and users’ habits make it harder for competitors to lure customers away to their platforms.
Disguising ads as legitimate search results risks undermining everything Amazon has built over the past two decades. They became the top e-commerce marketplace because of their hyper-convenient user experience and personalized search results, making it relatively easy for shoppers to find what they want and evaluate it efficiently based on Amazon’s review system. Today there are comparable competitors out there and new marketplaces and shopping channels emerging, so once Amazon loses their customer’s trust with this self-serving behavior they will only hasten their downward spiral.
I don’t find it the least bit surprising that Amazon would push the envelope too far. It was easy and profitable to keep selling more and more ads, along with pushing their own products to the front of the line. How would they know how much was too much until they started to get push back and complaints? And maybe even a pull back of ad spending by their clients? Did newspapers ever have too many ads? Seems to me that newspaper ads were always easy to either read, skim or ignore. Ignoring e-ads is a lot harder when they can masquerade as legitimate postings.
Agree completely on the “push the envelope” observation, Jeff. Will be interesting to see if Amazon is able to set aside the advertising revenue and wind this part of search back a little.
The Amazon ad business is great for cash flow, so as you state, it’s not the least bit surprising. I have found the ads marked as sponsored results, and they’ve never overwhelmed or appeared to masquerade as legitimate results.
Fair point. “Masquerading” may have been a bit harsh, but I always wonder if the paid ad is really close to what I’m looking for, or just muscling its way to the front of the line.
What matters is whether customers are still finding the products they seek. Retail sites will have the same issues, especially with RMNs and sponsored ads. Cat beds are a single-sample anecdotal example across millions of products and millions of customers. Amazon designs their site for maximum impact across a much larger set and continuously tests and adjusts accordingly. Alternatives are already in place, especially Google with their advanced product search capabilities across a broad set of retailers. However the issues remain as both are advertising engines. Faith has little to do with it, but assortment selection, convenience and ease of use does.
There’s no question Amazon is driving more ad units on product search result pages, but how much is too much? If 70 percent of customers never click past the first page of search results, then we can conclude two things from that – first, search is highly competitive, and if you want your product to be found on Amazon’s endless aisles, you better be advertising at a strong rate, and second, the majority of customers are finding these ads useful and making a purchase. Sales data would be the first to tell us if customers feel the ads are too much. That doesn’t seem to be happening yet. However there’s a fine balance between value from well-placed and personalized ads and ads that just get in the way of the shopping experience. Amazon is straddling that line very carefully and as time marches on they are pushing the line further and further to the limit! Time and sales data will tell us the complete story!
Amazon has doubled its intended layoff to 20,000 employees, including more senior roles. The company arguably has the most extensive data on the pulse of the consumer and demand sight. The rise of ads in search results is Amazon’s way of securing a more predictable revenue stream vis-a-vis consumer purchases. It’s unlikely that the current practice will reduce faith in search results. Consumers appear willing to flip past the ads and zero in on what they need.
It’s not just Amazon. It’s everywhere. Do a quick Google search and the first three to five results are all ads. Does this dilute consumer trust? Somewhat, but savvy shoppers have become accustomed to seeing these ads and moving beyond them quickly. However I do think the tsunami of ads diminishes the experience and whenever this happens, it’s only a matter of time until the proverbial tipping point occurs and disruption takes place, even with mighty Amazon.
Every retailer diving deep into the retail media waters should be paying attention to this. I am a huge proponent of maximizing retail media revenue, but the gold rush is resulting in generic or poorly personalized ads being placed in optimal locations while the items the customer wants are moved down a bit.
They’re doing this in e-commerce and social media – imagine what it will look like in the metaverse. This is the same problem Facebook and Instagram should be addressing. I didn’t sign on to get two ads for stuff for every post I really want see.
Amazon is doing what every retailer has done forever. Vendors have been paying for preference ever since retailers realized that a display in the front of the store is worth it to the vendor.
Amazon increased its ad revenue at the expense its customers’ trust in its search results. To me this is a short-term gain resulting in long-term pain. The pain comes when customers get tired of plowing through a page or more of ads to find the products they want and start switching shopping sites.
Hopefully Walmart, Target, etc., will see this as a chance to provide a point of differentiation for their sites and search results rather than copy this practice.
I don’t blame Amazon for having advertised products. It’s good for both sides. The customer needs to spot the difference – and Amazon needs to make it clear this is an advertised product. It’s just a change in the look of the website. Everyone will eventually get used to it.
By the way, On my most recent trip to a mall, I noticed the private labels of the store were displayed out in front of the other merchandise. I wasn’t offended. All I had to do is look at the label to know it was the store’s private brand.
One is brick-and-mortar, and the other is digital. It’s fairly close to the same experience.
“70 percent of customers searching for a product on Amazon never click past the first page of results, 35 percent click on the first product featured on the search page, and the first three items account for 64 percent of clicks.”
I guess I am one of them. Why? Because the search meets the requirements of what I am looking for. Ads or not, rarely must I go past the first screen. Ease and convenience are what I am looking for. If ad revenues for Amazon don’t get in the way, I am OK with that.
Before teaching, I spent 40 years marketing and selling to grocery, mass, and pharmacy. After any presentation, the response was “…now what’s the deal?” Why should Amazon be any different? For retail stores, exceptional support is to attract the shopper. One didn’t get prime shelf position or massive displays or ads in flyers, etc., for nothing.
If a shopper doesn’t want what is on display or at the front of the store, they walk down the aisle to get what they want.
This problem of…adcreep (is that a real word? If not can I trademark it?) — is a growing one in many areas: how often, now do we have to scan halfway down a “google” search before reaching the “real” results. So yes it’s annoying, and yes it causes a loss of confidence, but I think people are more used to it … Amazon isn’t alone.
Amazon’s blowing an opportunity. Product search is STILL a hot mess; try searching for a silk blouse and notice the results you get that aren’t silk. Amazon has been a pretty reliable way to search for products, but if they substitute ads for actual search results, they’ll shoot themselves in the foot.
Ironically, many online retailers and in-store settings already allow brands pay for high profile locations, displays and marketing channels, including prime online spots to promote their products. This isn’t a discovery we haven’t already seen or experienced elsewhere, Amazon or others.
If the customer expectation is to see NO promoted products online, Amazon could create an opportunity for customers to pay extra $ annually for the peace of mind. Not that any of us shoppers want to dole out more money, but it’s a way to clear the decks.
Why is it a big deal if Amazon does it? Retailers have been doing it for half a century or more.
Yes. Prioritising ads over genuine search results will reduce the trust customers have toward Amazon. Interestingly, the want to generate more revenue from advertising also moves Amazon away from their openly stated desire to be “the most customer centric business on the planet.” It was interesting to see Walmart “out search” Amazon over the Black Friday period — this is potentially an indication that shoppers are already losing faith in Amazon’s ability to help navigate the millions of products available on their site.
I just read the original article published in the Washington Post and came across at least four different ads. It’s quite ironic, isn’t it? The fact is, nobody does anything for free. Amazon is offering its sellers a huge audience so, in my opinion, there’s nothing wrong with charging them for advertisements. Additionally, everyone is aware of the fact that Amazon prioritizes its private labels over its other marketplace sellers. However, we cannot keep playing the blame game, do retailers like Walmart or Target not also follow the same approach? It’s high time we acknowledge that brands are solely responsible for their shortcomings and going D2C is the only solution to control an overall branding experience.
It’s a shopping site. Advertising and competition are par for the course.