Amazon Increases Its Fees, People Demand Discounts, and Is Anyone Confident in TikTok?

In a world full of constantly changing technology and information, this monthly newsletter keeps marketers up-to-date on the latest trends that will impact their business. I hope you enjoy it!

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Social media is an exciting place right now. Most dollars are still flowing to Facebook and Instagram because of obvious reasons. Nonetheless, we are seeing way more diversity in media plans, with TikTok being one of the fastest-growing platforms. TikTok's ad revenue will triple to $11.64 billion this year, more than Snapchat and Twitter combined.??TikTok is on the rise, and its rapid growth is fueled by its influencer community, its focus on social commerce, and the sheer size of its user base. With over 1 billion active users, TikTok has become of increasing interest to marketers and the new?favorite platform of teens, finally overtaking Snapchat. While the scale is one thing making marketers notice, the other is the purchase intent that TikTok creates.??Disco?found that TikTok ads are stickier than the average social platform, and they have a higher propensity to generate action taken because of the ad. Add to that the fact that?49% of people on TikTok are buying from the brands they see on the platform?compared to 41% of people saying they bought something after seeing it advertised on Facebook. However, despite its ad revenue growth, it still pales compared to Google and Meta.??

Part of the reason it hasn't yet scaled even more was brought to light by a recent??Digiday?research report that found that marketers still have the most confidence in Facebook, Instagram, and Online Display ads. TikTok and Amazon were the platforms where marketers showed the least confidence.??I suppose I should leave my personal feelings out of this, but is there more confidence in online display than Amazon? Either way, the fact of the matter is the people holding the budgets have perceptions of each platform, and for now, Facebook & Instagram, despite all of their flaws, still reigns supreme. TikTok is still primarily viewed as a place for branding, and many?advertisers?are utilizing the platform without holding it to the same KPIs as Meta and Google. The problem TikTok faces is that it is still not viewed as a full-funnel marketing platform. Its lack of attributable and revenue-driving performance is one of the reasons that it hasn't taken a larger share of dollars and does not have the confidence of marketers as a whole. They are, of course, making moves here when it comes to targeting and measurement, and I'm starting to see more performance dollars flow to TikTok. However, until they become a full-funnel marketing destination, their share of dollars will always be capped. Despite all of the flaws with TikTok, your customers are there, so you must be there too. Don't let your comfort level with the old faithful platforms influence your plans moving forward. Ensure that TikTok has a reasonable share of budget and KPIs customized to the platform, so you aren't comparing apples (Meta) to oranges (TikTok).??

Reddit recently?announced?a search feature allowing users to search through comments rather than dig through individual threads.???While there are some limitations, it's increased in adoption amongst the Reddit community. So why does this matter? Reddit has a wealth of information on various topics, and when I'm looking for an answer online, I often find myself reading through Reddit comments even though I started my search on Google. One of the reasons Google has built such a successful ad business is users' intent when making a Google search. Given the issues with targeting that have come about due to privacy updates, we have seen an uptick in interest in contextual advertising and other intent-driven advertising. If Reddit can create an ad product around this, it could also mean a unique way for advertisers to engage with an intent-driven user on Reddit vs. just targeting audiences.??

Amazon will account for almost 40% of retail eCommerce sales in 2022, according to?eMarketer. While they have grown in various categories, there are four?Amazon?focused on that are now projected to outpace overall category growth.

• Health, personal care, and beauty?| Amazon's growth: 24.4% versus total eCommerce: 15.1%.??
• Furniture and home furnishings?| Amazon's growth: 15.7% versus total eCommerce: 10.3%. Despite supply chain issues, the size of Amazon's marketplace and the sheer number of products it offers makes it less susceptible to inventory shortages.?
• Toys and hobby | Amazon’s growth: 16.0% versus total eCommerce: 12.0%
• Other aka Home Improvement and building?| Amazon's growth: 7.6% versus total eCommerce: -4.5%

Each of these categories has been an extreme focus for Amazon over the past few years. If you are a seller in this space, ensure the investment you provide Amazon matches its expected growth so you aren't losing market share to your competitive set.??

Walmart is still playing catch up to Amazon in its share of sales, where Amazon will make more than 5x in digital sales than Walmart and its advertising offering. A significant challenge for advertisers when it comes to Walmart is its lack of sophisticated self-serve advertising capabilities to reach shoppers effectively. To remedy this, they have been updating their advertising offering with the latest launch of their self-serve display platform. Walmart says that?Walmart Display Self Service (DDS)?will give advertisers the same impact as the previously Walmart-managed campaigns.??The self-serve display launch is exciting because it will open up on-site display advertising to merchants who would not be able to hit Walmarts previous minimum investment for a Walmart-managed campaign. It will also offer brands more control. Most brands don't have a significant share of sales coming from Walmart, making it a challenge to devote such large budgets to managed services. Creating a self-serve option for flexible budgets makes it easier to take money away from Amazon and test into Walmart. Also, as Amazon continues to increase the fees it charges sellers (more on that later), Walmart may be a place sellers start testing.??

Streaming has been on an exciting journey with the continual rise of advertising-supported options among even some of the most prominent players. Ad-supported offerings have gained traction because consumers want to lower their streaming bills, and advertisers are looking to reach new customers. Finally, one of the last subscription-only streaming services has fallen, with Netflix?announcing?its plan to start selling ads as part of a lower-tier subscription.??This announcement came during an earnings call after they revealed had subscriber loss. I know some people think this is shocking because they have been so against ads, but I've honestly been shocked it took this long. The fact is that the average streaming consumer is maxed out on what they are willing to pay for content. Add to that the variety of really quality content that is now ad-supported, and there is not necessarily a reason you need to subscribe to Netflix any longer. Yes, when they have must-watch new content, I'm sure they will see a subscriber boost, but new content will no longer be enough to acquire and retain subscribers as we have seen with their competitors. Both Apple TV+ and Disney+ saw their U.S. sign-ups spike ahead of their big releases, but only?half?were still subscribed six months later. In my mind, there is no real downside here. Allow those who don't want ads to continue paying a premium for an ad-free experience and give consumers who want a lower-cost option a choice. An ad-supported tier is a good move to keep consumers from churning and win back some Netflix has lost. It should also generate a lot of interest from marketers who are hungry for more options. According to?eMarketer, marketing professionals consider T.V. (including CTV) the number 1 video type for achieving their advertising goals, even above digital video, so access to Netflix will be top on the list for many.

Roku?is finally putting its acquisition of Nielsen's advanced video advertising (AVA) business to good use. They announced they can now replace traditional linear T.V. ads with targeted ads in real-time.??AMC Networks, Crown Media, Paramount, and Discovery have signed on test this beta program which will be open to other publishers shortly. Being able to serve targeted ads will bring all of the best things about digital buying, specifically the performance and accountability, to linear T.V. For advertisers, this can increase their reach into linear. For publishers, it allows for more targeted and personalized ads.??

In addition to its linear expansion Roku recently announced its?clean room service?allowing advertisers to bring their own data set to Roku and combine it with Rokus first-party data to better target and measure campaigns while still being compliant in our new privacy-first world.??One of the goals is to find and target CTV viewers with whom a brand already has a relationship. As consumers expect brands to meet them where they are with personalized messages, access to a clean room would give advertisers a way to keep a personalized conversation going with their audience through a new CTV environment. While its clean room is still in the early stages, it signals Roku's continued long-term focus on advertising.?

With inflation increasing to?8.5% in March, consumers have slowed down their spending, increasing it by only .2% during February. Because of the higher costs of goods, more than 80% of U.S. consumers are more likely to wait to purchase something until there is a sale or coupon, according to a new survey released by?Shopkick.??In addition, 20% have tried new brands after their frequently bought brands rose in price or were out of stock. A slowdown in consumer spending is a challenge for brands, but don't forget the opportunity this could create for new and emerging brands. If you have price flexibility, you can use that to your advantage to steal market share. Make sure you communicate with your customers about how your less expensive product will satisfy their needs and save them money. If you have the flexibility in packaging but not in pricing, consider offering a smaller package size at a lower cost but a higher cost per unit and a value pack size at a lower cost per unit. These could appeal to the new price-conscious consumer who may otherwise abandon. Finally, remember to be upfront with consumers about why prices may be increasing. Consumers understand our situation, and any attempts to pull the wool over their eyes won't go well. On the upside, while people are not spending more on goods, they are starting to spend more on experiences, with spending on restaurants and travel growing.??

Even Amazon felt the effects of inflation and released their new fuel and inflation upcharge. There will now be a?5% upcharge?applied to all US FBA fulfillment fees.??I'm sure I'm not the only one annoyed by this, and this new surcharge will further frustrate sellers who already face high fees for selling on Amazon. Some sellers say that they get charged?34%?to sell on the Amazon marketplace, and that's before this new upcharge. An additional surcharge will cause price increases for consumers or force brands to reduce their margins. High fees are part of why many sellers are looking to diversify away from Amazon, but we all know consumers are still mainly on Amazon, so for the time being, brands will have to accept this new fee and meet the customer where they are.??

Let's end on one of the only two certainties in life, taxes. The recent inflation may also be playing a role in how people spend their tax refunds. A recent?survey?by NRF found that when people were asked what they plan to spend their tax refund on this year, fewer consumers would be spending it on a major or splurge purchase.??Because everyday living has become more expensive, the assumption is that refunds will more likely go to everyday purchases vs. splurges. For marketers who typically see a tax refund bump, you may need to adjust your expectations and keep this in mind when looking at some of the discrepancies between this year and last.??

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Megan Conahan is a 16-year veteran of the digital marketing industry. Over the last 16 years, she’s consulted with fortune 1000 brands on how to best negotiate the ever-changing digital marketplace demands and create unique solutions to set them apart. Megan is an EVP at Direct Agents, an independent and minority-owned digital marketing agency.??