Amazon Ads & The Retail Media Landscape

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What is the IRI relationship?

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Amazon and IRI recently announced a partnership so that Amazon can make stronger cases as to why brands should invest more in upper funnel media, their DSP and the connection to CTV. Measurement is notoriously difficult in the upper funnel, so for Amazon to show a brand it's not only accretive to their Amazon channel sales to invest through Amazon, therefore there's some sort of cap. The brand was told to invest 5% of their total GMV in ads, but they are not growing GMV as fast as they are being asked to grow their ad spend. Amazon wants to be able to make the case that if you double your spend on DSP as a test for two months, look what happens to your offline across other retailers, which can give brands a better argument.

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5% of GMV seems to be the ad spend metric all marketplaces aim for; should Amazon's target metric be more or less than that?

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They want to move away from a percentage of GMV which is very rooted in trade, to is this measurable and accretive to your business writ large. They are a player in the ad industry with important data, and their upper funnel media can grow the overall share of a brand globally. The metric they want to look at is, are they growing your share of shelf, even at Walmart. They believe their data is the richest, which it is, and it's the most accessible and organized at this point, and connected to an ad tech stack which works. When you look at the endemic analysis most brands have to do in the context of a CFO telling them this is your budget for Amazon, they are still making those calculations. There is still that percentage of GMV and they have to make that case back to the CFO of why they should get 7% or 9%.

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