Amazon said it attracted a record number of new Prime customers and trials this holiday season. More than 5 million people signed up new Prime memberships or free trials in a single week this holiday season, the company announced in a holiday recap Thursday. Fast shipping options likely helped spur that growth.
Why we care
Amazon has invested hundreds of millions (if not over a billion) in Prime Free one-day and same-day delivery. Analysts expect Amazon’s free one-day shipping investments to pay off. Prime members tend to become loyal Amazon shoppers, spending more annually than non-members.
In August, RBC analyst Mark Mahaney estimated that free one-day shipping would spur Prime membership growth and Prime purchases overall, projecting an eventual annual revenue bump of $24 billion. A Piper Jaffray survey this month found that 55% of U.S. Prime members said they will use Amazon more when numerous items are included within one-day shipping.
Customarily light on specifics, Amazon said holiday orders with one- and same-day delivery nearly quadrupled compared to the same period last year. The company also noted Thursday that more than 100 million items sold by independent third-party sellers were shipped via Prime Free one-day delivery in the U.S. during the holidays.
More on the news
Amazon has also been building out a network of delivery hubs where packages can be delivered to secure lockers, piggybacking on existing retailer locations. Deliveries to those pickup points increased by more than 60% compared to a year ago, the company said.
Amazon, Walmart, Costco and Target led the way in making Super Saturday (December 21 this year) the best U.S. retail day ever, Customer Growth Partners told CNN.
Department stores, which have been hit hard as Amazon’s grown, saw overall sales decline 1.8 percent and online sales growth of 6.9 percent, Mastercard reported. That compares to overall online sales growth of 18.8% this season, a record, according to Mastercard.
About The Author
Ginny Marvin is Third Door Media’s Editor-in-Chief, running the day to day editorial operations across all publications and overseeing paid media coverage. Ginny Marvin writes about paid digital advertising and analytics news and trends for Search Engine Land, Marketing Land and MarTech Today. With more than 15 years of marketing experience, Ginny has held both in-house and agency management positions. She can be found on Twitter as @ginnymarvin.
On Cyber Monday alone, consumers spent $9.4B via online channels – that’s up $1.5B from just last year, according to Adobe, and another record-breaking figure in terms of e-commerce sales. For marketers, the entire five-day stretch known as Cyber 5, but dubbed “Turkey 5” by Amazon, was likely a banner sales weekend, but looking at year-over-year Amazon data, what’s clear is that your holiday fortunes are not made or broken on that period alone.
As part of the research my company conducted, it is clear that on a conversion rate and cost-per-conversion basis, some of the best sales days on Amazon come after Cyber Monday. To maximize your total sales, and potentially capture market share from competitors, your advertising budgets and strategy on the site needs to align with this reality.
As seen in the below graphs, which are drawn across a same-set of more than 700 Amazon sellers, ad conversion rates continue to rise from Cyber Monday all the way through the Dec. 22 shipping cutoff. Yet, the average cost-per-conversion declines over the same period.
This is likely due to two contributing factors.
Perhaps most impactfully, many brands budget to spend aggressively during that five-day period and, due to the extremely high volume of consumers on the site, blow through a fixed budget for the season. While those holiday period campaigns may have driven high sales volumes at profitable costs, those same brands now don’t have the ability to stay aggressive over the intervening days, substantially tapering down spend and bids through the remainder of the year and missing out on these additional profitable sales.
Secondly, when consumers are shopping on Amazon a matter of weeks or days before Christmas, they are less inclined to do a great deal of research when buying their gifts. Time is of the essence, and the data bears out that users are more likely to click and convert on a sponsored product ad during this period.
In 2019, that latter point may be even more important, as the time between Cyber Monday and Christmas nearly a full week shorter, lending itself to more “last minute” holiday gift buying.
The bottom line is that on Amazon, it’s imperative that you consider uncapping budgets around holiday periods and other high-traffic events on Amazon in particular, provided you have the ability to set and adjust bids to align with the value of a given sale after discounts, fees, etc.
This is driven home by the overarching trend over the five-day period itself. Even in the face of a large number of sellers aggressively advertising during this time, the massive amount of consumers coming to Amazon and subsequently clicking on ads outpaced that rate. Across gift-giving categories and more than 219,000 products, Amazon ad spend was up significantly, but CPCs either remained flat, declined, or rose at a level far below the corresponding spend increase – compared to the prior four-week average.
In a sense, it was easy for a brand to spend substantially more on Amazon advertising over “Turkey 5” – we saw a 92% increase from pre-holiday levels on average – but they were likely driving sales at a more profitable rate from that ad spend. With conversion rates remaining high following Cyber Monday, that efficiency is likely to increase, albeit with less traffic overall.
Maximizing the holiday home stretch and beyond
With some time still remaining until the Dec. 22 shipping cutoff, there are some tactical levers brands can pull to capture more of those profitable sales. We talked about the value in uncapping budgets through Dec. 22, but that needs to be paired with bids that are set in line with any promotional or non-promotional pricing which may be in place for a given product.
By consistently bidding to value on an individual product level, brands can bring in more profitable sales on Amazon during these high traffic periods. Additionally, this is a good practice year-round, as it minimizes the risk of wasting ad spend while allowing for scale when a bump in user purchase activity warrants additional investment.
Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.
About The Author
Andrew Waber is the director of insights at retail optimization platform (ROP) provider Teikametrics. In his current role, Andrew manages the analysis, editorial direction and strategy for Teikametrics’ reporting on online retail advertising and the larger online retail marketplace. Prior to his time at Teikametrics, Andrew served as the manager of data insights and media relations at Salsify, the manager of market insights and media relations for advertising automation software provider Nanigans, and as the market analyst and lead author of reports for Chitika Insights, the research arm of the Chitika online ad network. Andrew’s commentary on online trends has been quoted by the New York Times, Re/Code and The Guardian, among other outlets.
This is the first of a three-part series, where we’ll explore how Ring transformed from start-up pitch to the technology powering Amazon’s privatized surveillance network throughout the United States.
When Ring came to Baltimore, residents believed they were out of options.
Pastor Troy Randall, who lives in northwest Baltimore, said that his neighborhood has been “held hostage” by drug sales and associated violence. Many people want to move, he said, but don’t have enough money, while older residents can’t move to a new place. People are trapped.
“The police are not doing anything,” he said. “They are not getting out of the cars. They’re not walking the beat. They allow the guys to continue to sit around and to sell drugs.”
Many residents don’t trust the Baltimore police at all, and for good reason. A 2016 Department of Justice report found that the Baltimore Police Department systematically targets people of color in the city. Compared to white residents, people of color are disproportionately stopped, searched, arrested, and subject to violent and excessive force. They’re also at a disproportionately high risk of being killed by police.
Pastor Terrye Moore, a friend of Randall, first learned about Ring, which is owned by Amazon, through a radio ad. The company sells a variety of home security cameras, which can be placed outside or inside the home. One links to a floodlight. Its best seller allows you to see people who ring the doorbell from your smartphone. Ring also makes Neighbors, an app that allows users to upload footage from Ring devices and other security cameras for anyone to see.
The pastors work together in a church coalition called the Northwest Faith-Based Partnership, so Moore contacted Randall right after she heard the ad. To him, Ring sounded like a godsend. As president of his neighborhood association, he had already asked the city of Baltimore to install street cameras in his neighborhood; the city declined.
Even if Baltimore wouldn’t invest in surveillance, Randall thought, there was no reason why residents couldn’t do it themselves. Moore contacted Ring.
Selling Crime Reduction to the Vulnerable and Scared
Ring, whose stated mission is “to reduce crime in neighborhoods,” gives hope to people who feel unsafe, can’t trust the police, or simply want to take surveillance into their own hands and become watchers.
When police partner with Ring, they are required to promote its products, and to allow Ring to approve everything they say about the company. In exchange, they get access to Ring’s Law Enforcement Neighborhood Portal, an interactive map that allows police to request camera footage directly from residents without obtaining a warrant.
In recent months, people have started to mobilize against these partnerships. Fight for the Future, a digital-rights activist group, launched a campaign in August to help people demand that their local governments and police departments stop partnering with Ring. In October, 36 civil rights groups signed an open letter demanding an end to Ring’s partnerships with police, new regulations, and a congressional investigation into the company.
Ring has a host of competitors. Some, like Google’s Nest, Arlo, and Wyze, focus on consumer-grade products, while others, like ADT, offer professional-level services. But a few things set Ring apart. It offers tools for police, like the Law Enforcement Neighborhood Portal, as well as Neighbors, a free, crime-focused social media app available to anyone. It also has a uniquely large scope of partnerships with law enforcement and a history of troubling privacy practices. At least in the past, footage from its cameras was open and accessible to company researchers in Ukraine in order to test developing facial, object, and voice recognition systems. (Ring denies that this is still the case.)
Most crucially, though, Ring is owned by Amazon. This makes Ring not just a camera company, but a node in Amazon’s network of Alexa-enabled smart home devices.
This amounts to a picture of paralyzing scale: Amazon, one of the three largest publicly-traded companies in the world, owns a company that has been quietly building a privatized surveillance network throughout the United States. This network is only possible because consumers choose to buy the cameras themselves. Why do people make this choice? There are as many answers as there are Ring customers, but there is also one answer that explains everything the company has done: At its core, Ring is a marketing company that realized it could make money by selling fear.
Jamie Siminoff, the founder of Ring, never set out to create a private surveillance network. He is fundamentally an entrepreneur—a founder, an inventor, a man infatuated with Silicon Valley disruption and start-up culture.
Siminoff has long been enthralled by the idea of the great entrepreneurs. His personal Tumblr, which he used between 2008 and 2013, is filled with inspiring quotes from the likes of Bill Gates, Elon Musk, and Steve Jobs. He frequently referred to WIRED magazine and TechCrunch, journalistic hubs for the tech optimism of the late-aughts and early teens. He posted frequently and anxiously about the recession and the effect that it was having on tech start-ups.
His dream was to become an icon. He wanted to change the world. He was ambitious. He was also afraid of failure.
“I live in fear,” Siminoff wrote in a 2008 post about one of his former businesses. “Maybe it comes from my parents, my father was always planning for ‘what if’ scenarios or maybe I am just scared.”
“There were nights when I woke up at 3 a.m. in tears, bawling,” Siminoff told Inc about his experience with Ring between 2015 and 2017. “How were we going to make it to tomorrow? Luckily, no matter how mentally hard that was, I had one choice, which was, ‘Pick yourself up, Jamie, and get back out there.’ Because stopping would have resulted in the end.”
But on a fundamental level, Siminoff also embodies the optimism of the disruptor. Disruptors are optimistic that the machine of modern capitalism will work as designed and either get them rich, make the world better, or maybe both.
Siminoff’s dream of becoming a famous entrepreneur began when he was young. He said in a 2008 interview that in high school, he got a gig as a sales representative for a company selling paramotors, which he described as “these flying machines with a fan in a backpack for an engine and a parachute.” (He claims they cost about $13,000 each, and that he made a $6,000 commission for each one he sold.) At the time, he was attending Morristown Beard, a private, co-ed school in one of New Jersey’s wealthiest counties.
Siminoff got a degree in entrepreneurship from Babson College, a small, business-focused school in suburban Boston. He went on to create four companies in 10 years, two of which he sold.
In 2011, Siminoff founded Edison Jr., a company dedicated to brainstorming constantly and acting on the best ideas, according to his Tumblr. After launching several moderately successful projects, Siminoff’s team came up with something called DoorBot in 2012. It was conceived as a doorbell with a camera that lets people see who’s at the door from their phone—“Caller ID for your door,” according to Siminoff.
DoorBot wasn’t a home security product. It was a little tool selling smart-home convenience.
But Siminoff seemed to know, even in its early days, that DoorBot had more potential than any product he had created before. His second-to-last post on his Tumblr is a picture of him with his young son, picking up the first factory-made models of DoorBot. “It was such a great milestone for us to achieve,” Siminoff wrote in the caption, “and one that I will never forget as I got to share it with my best friend.”
Ring repeatedly declined to make Siminoff available for an interview, and declined to allow us to interview any company representatives. Direct emails to Siminoff were not returned and were forwarded to Ring’s communications team.
Siminoff says that DoorBot was founded in a garage. In 2012, he was leading a team of five at Edison, Jr. People would, he claims, incessantly ring the doorbell, something he found endlessly annoying.
“I was like, how the fuck can there not be a doorbell that goes to your phone?” Siminoff told Digital Trends. DoorBot was thus posed as an answer to a question perhaps only he had ever asked.
Siminoff has repeated this story in company blogs and in advertisements; a life-size replica of the garage was even displayed at the 2019 Consumer Electronics Show. It’s not hard to see why: The “founded in a garage” story is a cliche among tech company origin stories, the crucial accessory in a rags-to-riches narrative where the intelligent, starry-eyed entrepreneur pulls himself up by the bootstraps and eventually upgrades to multi-billion dollar facilities and grandiose mansions.
The main problem with DoorBot was that people thought it was a lousy product. Reviews through August 2014 were not good. MacSource said that although the idea of DoorBot was cool, the video quality was poor, and that the audio cut in and out. CNET gave the product a 5.6/10 grade, echoing reports of bad video quality and a “hold to talk” button that was “inconsistent at best.” 320 Amazon reviews rated the product an average of 2.3 out of 5 stars. One one-star review, titled “Dumber Than My Old Dumb Doorbell,” said “I would give it zero stars if I could. Nothing worked properly.”
The reported problems were consistent: bad video, bad audio, bad WiFi connection. Basically, every feature that required the product to work as advertised didn’t function properly.
Edison Jr. was determined to make the DoorBot succeed. By January 2013, the company had raised $173,893 for the idea. It got coverage from a host of tech blogs, including Mashable, New Atlas, and Digital Trends. Soon enough, though, Edison Jr. was “out of money.”
What changed things was Shark Tank.
Shark Tank is a wildly popular TV show where entrepreneurs pitch their businesses to investors called “sharks.” Simonoff landed a spot on it to pitch DoorBot; the episode aired in November 2013, about four and a half years before Ring was acquired by Amazon.
“If it was not for [ Shark Tank] we would not exist as a company,” Siminoff has said. He’s right. DoorBot would not have survived, and it would not have become Ring, if it had not appeared on Shark Tank. Siminoff, a devoted believer in the merits of capitalism, entrepreneurship, and the power of a great idea, could not have been a better fit for the show.
DoorBot, Shark Tank, and Ring’s Early Days
In early marketing materials, DoorBot was awkwardly portrayed as both a disruptive Silicon Valley product and something that could easily be sold in an infomercial.
The two didn’t mix well. When DoorBot was pitched on Shark Tank, the problem was illustrated quite clearly.
“Consumers are currently spending billions of dollars outfitting their homes with products that work with smartphones,” Siminoff said on Shark Tank. “However, one of the most ubiquitous technologies, the doorbell, has not changed since it was invented in 1880. Until now. Introducing the DoorBot, the first ever video doorbell built for the smartphone. With DoorBot, you can see and speak with visitors from anywhere.”
Siminoff showed the sharks how to use DoorBot to see who was at the door, and then tell them to “scram.”
“Now sharks, join me,” Siminoff said.
“And the next time you hear …” he said, as a doo dah doo doorbell noise played from speakers.
“It’ll be …” Siminoff continued, as a cha-ching cash register noise played from speakers.
Siminoff threw paper bills into the air and let them fall like confetti.
“Now, who wants to be first to ring my bell?” Siminoff asked, pointing both thumbs at his chest.
One by one, four of the sharks declined to invest. Finally, Kevin O’Leary made an offer, but Siminoff turned him down, not wanting to offer O’Leary a 10 percent stake in the company.
He walked away empty-handed, but it didn’t matter. Siminoff would later say that going on Shark Tank “was probably worth $10 million of ads.” One month after the episode aired, in December 2013, DoorBot raised $1 million in seed funding from five venture capital firms. In July 2014, it raised another $4.5 million in funding from two firms.
(Although Siminoff was rejected by the Sharks, a Vimeo clip showing his appearance on the show has been linked in the email signatures of several Ring representatives for years, and cumulatively, circulated thousands of times via email.)
In September 2014, DoorBot relaunched as Ring. DoorBot, a product which sold smart-home connectivity and convenience, was dead. In its place was a Ring, a little box to guard the American home—a vulnerable place, perpetually under threat from the outside world.
DoorBot looked like a fish tank filter with a giant, protruding camera. It was clunky. The only thing that distinguished it from a toy robot was a black doorbell button ringed with a glowing halo in iMessage blue.
Image: Doorbot via YouTube
The Ring doorbell camera, though, was simple and elegant. Its face was flat. It looked a bit like an iPhone. The black camera on the top was reminiscent of a phone screen; the doorbell, its home button. With the help of industrial designer Chris Loew, the dorky DoorBot gadget transformed into Ring, a sleek and almost menacing home-security product that demanded to be taken seriously.
Image: Obtained via public record request from Paradise Valley, AZ
When DoorBot became Ring, the tone of the advertisements shifted dramatically. DoorBot commercials talked about “convenience” and about making our lives “more connected.” DoorBot was, at its core, an extension of the home.
Early Ring advertisements, on the other hand, began with scenes of the home under siege. One commercial shows robbers cascading through windows in the middle of the night. They rummage through an immaculate home with military efficiency.
“They want you to think this is what a home burglary looks like,” Simonoff says confidently. “But over 95 percent of break-ins actually occur in broad daylight, which is why I invented the Ring video doorbell.”
Ring’s mission changed for one core reason. DoorBot sold “disruption” in the package of a doorbell, but fear is more powerful than the optimism of disruption. And Siminoff is a passionate entrepreneur who was willing to do anything to help his business survive.
The Brave New World of Ring
In 2015, Ring struck a deal with Wilshire Park, a small community in Los Angeles home to about 500 people. The company installed free doorbells on about eight percent of the homes in the neighborhood. According to police, home burglaries dropped astronomically.
The results earned nothing but positive media coverage. And, most importantly, it’s been at the core of Ring marketing efforts for the past several years. Representatives in charge of organizing partnerships and discount agreements with police often include a link to Wilshire Park media coverage in their email signatures, according to thousands of emails from between 2017 and 2019 reviewed by Motherboard.
Information about Wilshire Park is also included in official Ring promotional materials. “After installing Ring Video Doorbells on 41 homes in the L.A. neighborhood of Wilshire Park, there was a 55% reduction in home burglaries from June to December 2015 compared to the same seven-month period in 2014,” one Ring flyer reads.
It’s unclear if this is actually true: We don’t have any of the data or methodology that lead to the figure of a 55 percent reduction in crime, so it’s impossible to verify the claims of Ring and the LAPD. As Mark Harris reported for MIT Technology Review, though, the neighborhood districts that make up Wilshire Park in fact had year-on-year increases in burglaries during the June-to-December period.
This of course doesn’t mean that Ring causes crime, or even that its claims are inaccurate; the point is that there’s simply no way to evaluate them. “Without knowing the exact location of the test and which surrounding areas Ring used for comparison,” as Harris wrote, “it is impossible to check the company’s claims against the public data.” As he also notes, a scientifically rigorous study would involve studying the effects of many more doorbells across dozens of districts over a longer period of time.
Siminoff on Shark Tank Image: Walt Disney Television via Getty Images/Adam Taylor
But Ring’s venture in Wilshire Park has since been offered as powerful evidence of the efficacy of their devices. It also came at a time when Ring was entering into new relationships with law enforcement. In August 2016, for example, Ring tapped into Washington, DC’s “Private Security Camera Incentive Program,” which allowed residents to get $200 to $500 rebates on security cameras purchased after a particular date.
The Wilshire Park “case study” and the Private Security Camera Incentive Program collectively launched a new era in Ring’s history. The company realized that by reaching out to city governments and law enforcement, it had the ability to tap into a growing market of tech services aimed at law enforcement.
Why Did Amazon Buy Ring?
It wasn’t a complete surprise when Amazon bought Ring in 2018 for about $839 million. Amazon had already been heavily investing Ring for about two years.
Using the Alexa Fund, its venture capital fund, Amazon funneled millions of dollars to Ring in both 2016 and 2017. (Amazon has acquired at least six start-ups that it once financed through the Alexa Fund, according to its website.)
We don’t know exactly how much money Amazon gave Ring in those two years. But we do know that Ring raised a total of $61.2 million in venture funding in 2016, and $109 million in 2017. Amazon was a top investor for Ring in both of those years, according to business database CrunchBase.
Official press statements from Amazon and Ring say that the goal of the acquisition is to “accelerate” Ring’s mission of reducing crime. Amazon’s press release from 2018 uses this language, and so does Siminoff in his quoted statements.
“Together with Amazon, we will accelerate our mission dramatically by connecting more Neighbors globally and making our security devices and systems more affordable and accessible,” Siminoff said in both a Ring press release and an Amazon press release.
(The price on Ring products has not gone down since the company was acquired by Amazon. The Ring Doorbell 2, for instance, cost $194 in 2017. It costs $199 on Amazon now.)
However, there’s evidence that Amazon acquired Ring for two main reasons. One is that Amazon wanted to expand its line of smart-home products, which includes the Echo Dot, smart plugs, smart lights, and the Alexa-compatible Fire TV. The other is that Amazon wanted a way to deter or go after package thieves, since the company loses money whenever packages are delivered but stolen.
Amazon does not publicly say that Ring is meant to help secure packages. However, we do know that Amazon has a vested interest in making sure customers get what that were shipped, and that it protects that interest. Amazon Fulfillment, the part of the company that deals with package delivery, has a loss-prevention unit in charge of protecting products in the supply chain. This part of the company has worked directly with Ring, and with police, to combat package theft through sting operations.
These package-theft sting operations involve creating bait Amazon packages, using tape and boxes provided by Amazon, and putting the packages on doorsteps equipped with Ring doorbell cameras. They have occurred in Hayward, CA; Aurora, CO; Albuquerque, NM; and Jersey City, NJ, and Motherboard has obtained documents regarding these operations from Hayward, Aurora, and Albuquerque.
The documents reveal that an explicit goal of these operations was to catch someone stealing a package on a Ring doorbell camera and arrest them. Another goal was to get as much media coverage as possible. Amazon, Ring, and the police spent days discussing local news coverage and meticulously rewrote press releases. Even though none of the operations resulted in any known arrests, there was a strong incentive for all the parties involve to appear as if they are tough on crime.
Documents that Motherboard obtained from Albuquerque reveal that Amazon keeps precise data about package loss. The company shared “heat maps” showing the prevalence of package loss in Albuquerque zip codes on 60-day and 12-month scales. The fact that Amazon keeps this data shows that the company takes package loss seriously. Likewise, the fact that it shared this data with police shows that Amazon wants package loss to end.
Andrew Ferguson, a professor at the University of the District of Columbia’s law school, said that Amazon may have also been motivated to purchase Ring because of its existing relationships with law enforcement. As noted by Ferguson, Amazon is constantly looking for new markets for Amazon Web Services, Amazon’s profitable cloud computing business.
“Amazon sees local government as a big purchaser of those [cloud] services, and sees law enforcement as an easy way in to gain those bigger contracts from local government. And that the services they are offering—the recognition facial recognition software, the Ring cameras, and Neighbors—are all just bells and whistles to a much more profitable business, which is cloud storage.”
In an email statement to Motherboard, a Ring spokesperson said that the company’s “mission is to help make neighborhoods safer, and with that mission in mind, we’ve designed products and tools that connect communities while protecting user privacy.”
“We believe that when communities work together, safer neighborhoods become a reality,” the spokesperson said. “Ultimately, Neighbors app users can choose how they want to interact with their community.”
When Ring Comes to Town
Ring was a product of Siminoff’s love of disruption, the idea that a tech-savvy dreamer who doesn’t take no for an answer can change the world. Ring has changed the world, but almost certainly not in the way that Siminoff originally imagined.
Siminoff’s invention didn’t just apply a “smart home” sheen to the doorbell. It became a part of Amazon’s configuration to solve package theft. It infiltrated the day-to-day operations of hundreds of police departments. It created a culture where it’s OK for millions of people to watch not only each other, but themselves. And crucially, it became a last-resort for people are rightly afraid of the police, and rightly fear for their safety.
In Baltimore, Randall said that when they got in touch with Ring, the company immediately wanted to help.
“I’m telling you, the turnaround was absolutely crazy,” Randall said. “They got on the plane and came to meet with us maybe a week or two later.”
Randall explained what his neighborhood was going through, and Ring said it could fix it. The company’s representatives claimed that installing cameras throughout a community can deter drug activity and lower crime. Ring told them it had “done it in other cities,” he said, and it could do it in Baltimore as well. They offered to provide 150 doorbell cameras, which normally cost about $100 each, for free. All the neighborhood would have to do is pay $3 per month for the cloud-storage fees associated with saving footage from each camera—$5400 a year, in all.
Randall and Moore applied for a city grant on behalf of the Northwest Faith-Based Partnership, and in October 2018, they won $15,000 to pay for cloud storage and camera installation. There was one catch: The Baltimore Police Department would have to sign a contract with Ring and the Northwest Faith-Based Partnership before Ring would hand over the cameras.
In addition to conducting outreach to associations like the Northwest Faith-Based Partnership, Ring also conducts intense outreach to law enforcement. This outreach has become central to Ring’s marketing strategy.
Since its stint on Shark Tank, Ring has continued to invest heavily in television advertisements. But the company also realized that in order to continue to grow as a home security company, it would need to be promoted by the population that people most closely associate with addressing crime: the police.
In part two, we’ll explore Ring’s intensive outreach efforts to law enforcement, and its efforts to get police on its side.
But for ordinary people, like those in Northwest Baltimore, the reason for trusting Ring is simple: they are scared. Pastor Moore said that he understands concerns that people have about Ring’s use of data. However, he said his community didn’t share these concerns.
“When I presented it to the community, we didn’t have any problems, we didn’t have any kickback,” Pastor Moore said. “People welcomed it because they’d been so downtrodden and so held captive that they would take anything at this point.”
Market research firm Canalys reported that Amazon shipped three times the number of smart speaker/display units as Google in the third quarter of 2019. According to the company, Google was responsible for 3.5 million units compared with Amazon’s 10.4 million; Alibaba was second with 3.9 million.
Nearly 30 million units shipped in Q3. The third quarter saw shipments of 28.6 million smart speakers and displays overall, compared with 26.1 in Q2 2019 and 19.7 million in Q3 2018 according to Canalys. Privacy concerns don’t seem to have weakened consumer demand.
Canalys attributes Amazon’s success to the strength of the e-commerce giant’s direct channel, Prime Day sales and other promotions, as well as company’s Echo trade-in program. Google sells directly, through traditional retailers and other channel partners but its direct sales have proven no match for Amazon.
Display category grew 500%. Canalys pointed out that the “smart display category grew 500% globally to reach 6.3 million units in Q3 2019.” The firm said that the Echo Show 5 (smart display) “contributed significantly” to Amazon’s Q3 success. The overall share of smart displays in Q3 was 20% for the first time, indicating increasing traction for the devices.
Google has been seeking to use smart displays, especially the Nest Hub Max, as a competitive advantage vs. Amazon. So far it doesn’t seem to be working.
There are numerous estimates circulating in the market about the total number of smart speakers. Research firms put the number of devices in U.S. homes above 100 million. Canalys projected that there would be 225 million smart speaker/display devices globally by 2020.
Why we should care. Given the Q3 numbers, we can expect a pretty robust holiday quarter for these smart devices. Though so far smart speakers/displays have yet to yield many benefits to marketers, they likely will over time and become an important channel. That’s especially true with smart displays, which have the benefit of touch screens, giving brands and retailers more marketing and advertising options than smart speakers.
About The Author
Greg Sterling is a Contributing Editor at Search Engine Land. He writes about the connections between digital and offline commerce. He previously held leadership roles at LSA, The Kelsey Group and TechTV. Follow him Twitter or find him on LinkedIn.
As digital commerce continues to grow, product marketers are increasingly including marketplace platforms in their advertising mix. But just how much are they spending there?
Last year, Marketing Land’s inaugural Amazon Advertising Forecast found that 80% of respondents advertising on platforms that support digital commerce campaigns planned to increase spending in 2019. And nearly half said they planned to increase spending on Amazon by more than 25%.
The survey also found that about two-thirds of advertisers are selling on other marketplaces including Walmart/Jet, eBay and Shopify.
We’d like to see how that’s changed in the past year.
Henry Powderly is vice president of content for Third Door Media, publishers of Search Engine Land, Marketing Land and MarTech Today. With more than a decade in editorial leadership positions, he is responsible for content strategy and event programming for the organization.
Amazon advertising revenues hit a new high in the third quarter, reaching $3.6 billion. Overall, the company reported lower-than-expected profits of $2.1 billion on $70 billion in revenue for the third quarter of the year on Thursday.
Amazon doesn’t break out advertising revenue, but advertising makes up the majority of an “Other” revenue category in its earnings reports. The other category grew by 45% year-over-year, but the advertising segment of that category actually grew at a rate higher than 45%, Amazon CFO Brian Olsavsky said on the earnings call.
Why we should care. Amazon’s advertising growth rate underscores the threat it is presenting to Google and Facebook in attracting ad dollars from brands and merchants. The company has been steadily investing in solutions for branding and performance advertising including inventory, ad formats and targeting capabilities.
“[W]hat we’re focused on really at this point is relevancy,” said Olsavsky, “making sure that the ads are relevant to our customers, helpful to our customers, and to do that, we use machine learning, and that’s helping us to drive better, better and better relevancy.”
On Fire TV, video and OTT advertising options. “You know one of our areas of focus is expanding our video and OTT offerings for brands,” said Dave Fildes, director of investor relations.
While performance advertising comprises the bulk of budgets going to Amazon, brand awareness campaigns accounted for 42% of spend on Amazon’s DSP in the third quarter, up from just 26% in the first quarter of the year, performance agency Tinuiti reported this week. Spend on Amazon DSP increased 30% in the third quarter, among Tinuti clients, up from 27% in Q2.
“It’s still early in this space, but we’ve done a few things with IMDb TV, Live Sports, things like adding more inventory through Fire TV apps, and as I said IMDb TV, adding more OTT video supply through Amazon Publisher Services or APS integrations and streamlining access for third party apps and really just making it easier for advertisers to manage their campaigns and provide better results.”
Free one-day shipping costs add up. Amazon has been investing heavily in one-day shipping — more than two billion dollars so far — and is expected to spend $1.5 billion on it in the fourth quarter alone. This type of investment puts a dent in profitability and makes investors skittish, but long-term investments like this make up a well-worn page in the Amazon playbook. Amazon customers have already ordered “billions of items with free one-day delivery this year,” Jeff Bezos, Amazon founder and CEO in a statement.
“Customers love the transition of Prime from two days to one day — they’ve already ordered billions of items with free one-day delivery this year. It’s a big investment, and it’s the right long-term decision for customers.” Bezos also said that the proximity of the distribution centers to customers for one-day means carbon emissions are lower than for air or long-haul delivery routes.
On the shorter holiday season. The company said it does not expect much negative impact from this year’s shorter holiday season — six days shorter than last year, which was the longest possible at 32 days between Thanksgiving and Christmas.
“What we found in the past is that there is generally a holiday budget that is spent somewhere between November 15 and December 25, and well certainly Black Friday and Cyber Monday are important dates in that holiday period,” said Olsavsky.
The company is optimistic it will have its best holiday season ever with the combination of factors such as faster shipping options and its new lineup of Alexa-enabled devices.
About The Author
Ginny Marvin is Third Door Media’s Editor-in-Chief, managing day-to-day editorial operations across all of our publications. Ginny writes about paid online marketing topics including paid search, paid social, display and retargeting for Search Engine Land, Marketing Land and MarTech Today. With more than 15 years of marketing experience, she has held both in-house and agency management positions. She can be found on Twitter as @ginnymarvin.
Adobe and Amazon have collaborated on a new Alexa skill aimed at creatives, titled the Inspiration Engine. Ask your Alexa-controlled device to “open the Inspiration Engine” and you can unlock a host of features intended to aid creative block and inspire work. This ranges from “quick sparks” – inspirational quotes and one-sentence “meditations” from creatives such as Jessica Walsh, Pascal Campion or Weitong Mai – to creative-thinking exercises that can, for example, guide the viewer through one’s senses or environment in order to explore a project from a new perspective.
With an Alexa-compatible screen device, users can ask for inspirational imagery, displayed on Behance, Adobe’s online portfolio site. Users can also take the Creative Types quiz, created for Adobe by Anyways, which asks a series of multiple choice questions to define an individual creative personality – for example an Adventurer (seen above), a Visionary or a Dreamer. Previously an in-browser experience, for the Inspiration Engine, Alexa will take users through the quiz and reveal their type.
The launch comes off the back of a recent study by Adobe, finding that 89% of respondents often struggle to find inspiration. This new Alexa skill targets those designers and artists “staring at an empty page, canvas or dartboard for too long,” says Adobe on its blog, and hopes, with the new tool, to be involved in the earliest stage of the creative process – whereas its other products are used once ideas have already sprouted.
Free and Fair Markets accused Amazon of stifling competition and innovation, inhibiting consumer choice, gorging on government subsidies, endangering its warehouse workers and exposing consumer data to privacy breaches. It claimed to have grass-roots support from average citizens across the U.S, citing a labor union, a Boston management professor and a California businessman.
What the group did not say is that it received backing from some of Amazon’s chief corporate rivals. They include shopping mall owner
, according to people involved with and briefed on the project. Simon Property is fighting to keep shoppers who now prefer to buy what they need on Amazon; Walmart is competing with Amazon over retail sales; and Oracle is battling Amazon over a $10 billion Pentagon cloud-computing contract.
The grass-roots support cited by the group was also not what it appeared to be. The labor union says it was listed as a member of the group without permission and says a document purporting to show that it gave permission has a forged signature. The Boston professor says the group, with his permission, ghost-wrote an op-ed for him about Amazon but that he didn’t know he would be named as a member. The California businessman was dead for months before his name was removed from the group’s website this year.
Free and Fair Markets, or FFMI, declined to reveal its funders or disclose if it has directors or a chief executive.
“The bottom line is that FFMI is focusing on the substantive issues and putting a spotlight on the way companies like Amazon undermine the public good—something that media outlets, activists, and politicians in both parties are also doing with increasing frequency,” it said in a statement in response to questions from The Wall Street Journal. “If Amazon can not take the heat then it should stay out of the kitchen.”
The creation of a group aimed solely at Amazon is an indication of the degree to which competing companies have coalesced to counter the growing and accumulated power of Amazon and how far competitors are increasingly willing to go to counter-strike. Lobbyists that exaggerate the extent of their grass-roots support—a practice known as “AstroTurf lobbying”—are common in Washington, but it is rare for a nonprofit group to be created for the sole purpose of going after a single firm.
Amazon is facing additional opaque opposition as well, with websites and articles popping up portraying the software giant as the Evil Empire. The website Monopolyamazon.com, which does not disclose who is behind it and registered its web address anonymously, includes a handful of articles calling on the Defense Department to reject Amazon’s bid for a $10 billion cloud-computing contract. For months last year, an anti-Amazon dossier circulated in Washington alleging conflicts of interest in the Pentagon procurement process and a chart from the document later reached President Trump before he asked for a review of the Amazon bid.
Free and Fair Markets is run by a strategic communications firm, Marathon Strategies, that works for large corporations, including Amazon rivals. Marathon founder Phil Singer is a veteran political operative who has worked as a top aide to prominent Democrats, including Sen. Chuck Schumer of New York and on
’s 2008 presidential campaign.
In a statement, Mr. Singer defended the group. “FFMI is not obligated to disclose its donors and it does not,” Mr. Singer said.
Marathon initially asked for a fee of $250,000 per company to fund the anti-Amazon group, according to a person at one of the companies approached. Among those invited to fund the group but declined were a trade association that includes members who compete with Amazon, and
, according to people familiar with the contacts. IBM, which declined to comment, previously was a client of Marathon.
In a statement, Amazon said, “The Free & Fair Markets Initiative appears to be little more than a well-oiled front group run by a high-priced public affairs firm and funded by self-interested parties with the sole objective of spreading misinformation about Amazon.”
Simon Property, the world’s largest mall landlord, declined to comment. Simon does not have any brick-and-mortar Amazon stores in its roughly 200 malls, outlets and open-air centers in the U.S., whereas its peers with smaller portfolios count multiple Amazon stores in theirs. The Indianapolis-based landlord recently launched its own online shopping platform, Shoppremiumoutlets.com.
Walmart funds the organization indirectly by paying an intermediary that pays for Free and Fair Markets, according to sources familiar with the arrangement. Walmart is a client of Marathon.
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Walmart spokesman Randy Hargrove said, “We are not financial supporters of the FFMI but we share concerns about issues they have raised.” Mr. Hargrove declined to comment further.
The group’s aim is to sully Amazon’s image on competition, data-security and workplace issues, while creating a sense of grass-roots support for increased government regulatory and antitrust enforcement, according to people familiar with the campaign.
Free and Fair Markets has lobbied the government for legislation and investigations of Amazon, sent dozens of letters and reports to Congress and staff, according to congressional staffers, published scores of op-eds in local and online media and tweeted hundreds of social media posts blasting Amazon.
Over the past year, many of the actions advocated by the group have gained traction. Amazon has come under increasing antitrust scrutiny from the Department of Justice, Federal Trade Commission, states attorneys general and the European Union. In New York, Amazon backed out of plans to open a second headquarters in Long Island City after facing political opposition. Free and Fair Markets campaigned against government subsidies to support the site and tweeted more than 300 times on the topic.
Oracle provided financial support as part of an all-out strategy to stop Amazon from getting a $10 billion mega-contract to handle cloud computing for the Defense Department. The Pentagon eliminated Oracle as a bidder in the first round. Kenneth Glueck, who runs Oracle’s office in Washington, confirmed that the computer technology firm has contributed to the effort.
A goal of the organization was achieved in July when President Trump said he wanted to conduct a review of the contract. In August, the secretary of defense said he was investigating conflict-of-interest allegations surrounding the $10 billion contract known as Joint Enterprise Defense Infrastructure, or JEDI. At the urging of President Trump, the bid award has been put on hold during the review.
Mr. Trump, a frequent critic of Amazon, cited complaints about the project from several of Amazon’s competitors, which in addition to Oracle included IBM and
, saying he had heard the contract “wasn’t competitively bid.” The contract has not been awarded and Microsoft remains one of the two remaining bidders.
Though Free and Fair Markets has contacted members of Congress and the administration, it has not registered as a lobbying organization. Such groups are required to file with Congress if more than 20% of their work involves lobbying. Marathon said it complies with lobby disclosure rules.
The group’s chief spokesman is Robert Engel, the retired chief executive of CoBank, an agriculture bank in Denver. Mr. Engel has published more than 20 op-eds blasting Amazon in print and online news publications across the country including in The Philadelphia Inquirer, Pittsburgh Post-Gazette, Houston Chronicle, The Hill and RealClearPolicy.com.
None of the articles notes that Mr. Engel’s group is funded by rivals of Amazon.
A spokeswoman for The Hill said the publication was unaware of the funding sources and failure to disclose such payments violates a standard written agreement all op-ed writers are required to sign.
Sandy Shea, managing editor of opinion for the Inquirer’s parent company, the Philadelphia Media Network, said, “We aren’t equipped to investigate the makeup or structure of a nonprofit that submits a piece.”
Bill Zeiser, RealClearPolicy editor, said RealClearMedia publishes “commentary on politics and public policy from a wide array of sources. These submissions are assessed on their editorial merits.”
Representatives of the Post-Gazette and Chronicle did not respond to emails.
In an interview earlier this year, Mr. Engel said the motive of the group was not to promote the views of Amazon’s rivals. He said Amazon has been the only target because its business tactics run counter to the group’s goal of free and fair markets. “The one organization that feels it stands above that is Amazon,” Mr. Engel said.
Marathon did not make Mr. Engel available for comment a second time after the Journal determined that rivals were funding the group.
Mr. Engel and his group have been quoted in publications, including once each in The Wall Street Journal and The New York Times. None said who funded the group.
One article about Free and Fair Markets was commissioned by Marathon.
Last October, an Iowa writer and consultant, Jeff Patch, published an article on RealClearPolicy.com, a news website known for political coverage, about a report by Free and Fair Markets critical of Amazon’s record of hiring and firing women. “Many [women] were fired after Amazon concocted pretexts for their terminations,” Mr. Patch wrote.
Mr. Patch, who has worked as a journalist and a staffer for a Republican congressman and conservative think tanks, did not disclose in his article at the time that he was a paid contractor for Marathon.
Bank statements and invoices reviewed by the Journal show that Mr. Patch billed Marathon, and was paid thousands of dollars for promoting a variety of Marathon projects. One line item on Mr. Patch’s spreadsheet of outstanding invoices noted $1,175 for placing an article, subject: “Amazon piece.”
Mr. Patch said the documents referred to by the Journal were “unrecognizable” and said “I have been the target of an ongoing misinformation campaign.” He did not address directly the question of whether he was paid by Marathon.
Marathon said it has “engaged Mr. Patch for editorial and research services in the past.”
RealClearMedia Group executive editor Carl Cannon said the article was an unpaid guest op-ed. The editors who published the piece are no longer with RealClearPolicy and Mr. Zeiser, the current editor, said his predecessors “were unaware that the author was being paid by Amazon’s business competitors.”
Free and Fair Markets has tweeted more than 1,060 times and produced glossy videos, some of which it has circulated through thousands of dollars in paid advertising, according to Pathmatics, an independent company that tracks social-media ads. A review of the tweets shows that aside from four tweets about FoxConn Technology Group, which assembles Amazon’s smart speakers, all of the tweets are about Amazon or an Amazon-related issue. The tweets have attacked Amazon on several fronts, including antitrust, worker rights, data privacy, soliciting subsidies from local governments for its second headquarters and its bid for the Pentagon cloud contract.
Marathon officials said the group will expand to address other companies’ abuses. “The organization has started looking at FoxConn and is preparing to scrutinize other tech giants,” Marathon’s statement read. Taiwan-based FoxConn, a major supplier also to
got $4 billion in public support to locate some of its operations in Wisconsin.
More than two dozen tweets are particularly critical of Amazon’s bid for the cloud-computing JEDI contract.
One tweet said, “As if $1.5 billion in state and local corporate welfare wasn’t enough, @amazon wants $10 billion more from American taxpayers to host the @DeptofDefense most sensitive data,” and then linked to a list of stories that recounted the complaints of a primary opponent for the contract, Oracle—mainly that the technical specifications in the JEDI request for bids had been “rigged in favor of a single provider: Amazon.” Oracle sued in an attempt to block the Pentagon from awarding the contract, but a federal judge ruled in July that the bid could proceed.
Amazon has previously said that Oracle’s claims are “meritless and a desperate attempt to distort the facts”
None of the members listed by Free and Fair Markets on its website seemed to have an obvious issue with the cloud-computing contract or several other of the group’s issues. When the Journal began inquiring with the members about their reasons for being listed—some did not know their names were posted on the website—the group took them down.
Marathon said, “The names of the groups listed on the site were removed at their request after we heard complaints about some receiving harassing phone calls” from journalists.
One listed member, Aubrey Stone, was founder and head of the California Black Chamber of Commerce. He died in September 2018. His name remained listed as member until at least June and wasn’t removed until the Journal contacted the group.
Maria Gillette, a member of the largely inactive Carbondale Tea Party outside of Scranton, Pa., is listed as an advisory member of Free and Fair Markets. Ms. Gillette, known in her small community for appearing in national media in 1974 after seeing an unidentified flying object, said she thought the group was about free trade—not Amazon.
The New England Convenience Store & Energy Marketers Association is listed as a member, and Jonathan Shaer, executive director, said the group is aligned with its stated principles but does not share the anti-Amazon animus. Mr. Shaer said his association “hasn’t had any active involvement in any of the Initiative’s activities.”
Benyamin Lichtenstein, a business professor at the University of Massachusetts Boston, said he was contacted out of the blue by a Boston corporate public relations firm last year about signing his name to an op-ed opposed to Boston’s bid for Amazon’s second headquarters. The firm sent a draft of the op-ed that called on Boston politicians to “reject an Amazon headquarters for the sake of small businesses.” The PR official wrote in an email to Mr. Lichtenstein, “If you are happy with the draft we can submit it as is,” according to a copy of the email reviewed by the Journal. The article was pitched to Boston newspapers and was eventually published in DigBoston.com.
Chris Faraone, editor-in-chief of DigBoston, said Mr. Lichtenstein first submitted the article, but that DigBoston didn’t publish it until receiving an email from the same public-relations representative who had initially contacted the professor.
“As for whether Lichtenstein wrote the piece himself, we assumed that was the case, but if it wasn’t, we assure you that we’re no more surprised to hear that than we are when politicians or celebrities use ghostwriters,” Mr. Faraone said.
Mr. Lichtenstein said he agreed to sign his name to the article, to which he made some changes and checked citations, because he believes in advocating for small businesses.
Told he was listed online as a member of the group, Mr. Lichtenstein said, “Wow. I had no idea.” He said the group had inflated his role.
In a statement, Marathon said, “All of the individuals and groups that we work with have full editorial control and input on any materials they put their names on. In fact, those who play a more formal role with the group sign agreements that clearly spell out the mission and vision of the group.”
Mr. Singer provided the Journal a copy of Mr. Lichtenstein’s signed agreement.
Service Employees International Union Local 721, which represents more than 95,000 workers in Southern California, was named as a member without permission, said Coral Itzcalli, communications director. “We have zero involvement with that organization,” she said. After being contacted by the Journal, the union’s attorney sent a cease-and-desist letter demanding the removal of the union from the list of members. A few days later, it was.
Asked for comment, Marathon emailed to the Journal a membership agreement that the agency said had been signed by Gilda Valdez, the chief of staff for the union local, dated July 23, 2018. The firm also provided a statement from Juan Carlos Mendez, president of Churches In Action, a Christian community group in South Gate, Calif., stating that he had asked Ms. Valdez to join the group and had “secured her signature of FFMI’s consent form.”
But Ms. Valdez said that the signature on the documents provided by Marathon was not hers.
“I did not sign on with this group,” she said. “Their real motive for listing us as supporters remains unknown to us.”
—Sarah Nassauer, Esther Fung and Jay Greene contributed to this article.
During Amazon’s Q1 earnings call earlier this year, CFO Brian T. Olsavsky announced that the company would be “evolving” two-day free shipping for Prime members to one-day shipping. He added that Amazon would spend $800 million to do so, although now it’s probably going to cost more.
One-day shipping = $24 billion in revenue. According to a research note earlier this week, RBC analyst Mark Mahaney projected that one-day shipping would increase adoption of Prime memberships and boost purchasing by existing Prime members. He argued that could in turn grow Amazon’s annual revenue by $24 billion.
Let’s assume Mahaney’s logic and projections are correct: one-day shipping would grow Prime memberships and spending at Amazon. The impact on the broader market could be significant in at least two ways:
Other (traditional) retailers would potentially suffer.
Ad spending on Amazon will grow and possibly accelerate.
High retention, high annual spending. According to an April estimate from Consumer Intelligence Research Partners, Amazon has roughly 103 million Prime members in the U.S., with renewal rates higher than 90%. Prime members spend an average of $1,400 per year compared with $600 by non-Prime Amazon shoppers, according to the firm.
Amazon is the single most dominant e-commerce company. In 2018 eMarketer estimated it owned half of the U.S. market, but revised that number downward for 2019 to 38%. Just under half of all product searches start on Amazon, beating Google by more than 10 points.
Consumers also trust Amazon more with their personal data compared with other online shopping destinations and retailers.
Amazon a contributing factor in the decline of retailers. Traditional retail has been suffering for the past several years. And while some retailers are doing well (e.g., Target), the industry as a whole continues to see store closures and bankruptcies. While Amazon is not the cause of this, it’s a contributing factor.
One of the key reasons people shop in stores is the immediacy of the experience, which includes being able to take a product home the same day. Easy returns is another reason that stores often prevail over pure-play e-commerce. However, Amazon has been chipping away at these advantages for years. And next-day delivery is likely to tip the balance in favor of Amazon for a range of ordinary purchases — hence Mahaney’s $24 billion revenue growth projection.
Small businesses, some of which also sell on Amazon, could see a negative impact from additional Amazon growth. Amazon argues it’s helping small business, but there’s also evidence it’s not.
More ad budgets shifting. Marketers are shifting some of their ad budgets from Google and Facebook to Amazon, although the latter still lags far behind the big two. In an extreme case, one agency told CNBC that “said some clients who sell products on Amazon are moving between 50 and 60% of their allocated Google search ad dollars specifically to Amazon.”
There are all kinds of bullish Amazon ad-revenue projections circulating in the market. Regardless of the specific numbers, we can expect Amazon ad growth to continue and potentially accelerate if Amazon gains more Prime members.
Why we should care. It’s well documented that Prime members are highly loyal and spend more and more often on Amazon. Therefore, growth of Prime will likely siphon money away from other retail outlets, whether online or in the real world.
The impact of this on ad spending is somewhat less predictable. However, it will continue to reinforce the perception that Amazon is the key online destination for product sellers and a critical place to spend marketing budgets.