Eric Heller, founder of Marketplace Ignition (Atlanta, GA) exposes how Amazon changes how brands “speak” to customers, the reason for the phenomenal growth of digital brands, and the algorithms that determine what you see when you search Amazon for a product. Eric raises the question, “What is the value of a dollar spent on Amazon?” and explains how that dollar can affect brick-and-mortar (off-Amazon) brand-selection decisions
Rob Kischuk: Welcome to the Marketing Agency Leadership podcast. I’m your host, Rob Kischuk, and I’m excited to be joined today by Eric Heller, founder of Marketplace Ignition, based in Atlanta, Georgia. Welcome Eric.
Eric Heller: Hi. Thanks. Thanks for having me.
Rob: Thanks for joining. Why don’t you start off by telling us a little bit about Marketplace Ignition and what the company’s great at?
Eric: Sure. Thanks a lot. Marketplace Ignition started out of the nexus of an idea that I had back when I was at Amazon in the early days. One of the best parts of my job at Amazon was working with these dynamic merchants selling on Amazon and I got it early. They came in every day wanting to steal everyone else’s lunch money and they just got the platform. One guy who I’m still close friends with, Jeff Berman, ran the program that interfaced with Amazon for J&R Electronics. I don’t know if you know about J&R, but they used to be the company that advertised consumer electronics on the back of the front section of the New York Times every Friday.
Eric: What was amazing was—if you weren’t from New York or didn’t get the New York Times, you may never have heard of these guys—out of nowhere, they became the fastest growing seller on Amazon. I was their leader on the Amazon site. What was great about Jeff was that he would come in every day, call me, and say, “Eric, I did everything you said yesterday. What should we do today?” One of my great stories that puts into perspective what I was trying to do at Marketplace Ignition, to answer your question, was that he came in one day and said, “You’ve got to come out. You’ve got to see what I did.”
So I went up to New York. This was pretty rare. Amazon doesn’t have a lot of face time, but the partnership we built with Jeff was in the early days. I went to look and Jeff said, ”You’ve got to see where we’re dropping orders on the picking floor. So I went down to their fulfillment facility—I think they were in Queens—and there on the picking floor, he had installed a second printer for picking, and the second printer had yellow paper in it.
“Canary paper?” I said.
“No,” he said. “Golden”
“Yeah” he says, “I figured out we get paid faster for the orders that come from Amazon. The minute we can provide a tracking number, we’ve locked the payment. That’s faster than we get paid for orders on our own site. So I created golden paper and those orders get picked first” That was the kind of example where I was like, “Wow! I want to work with 50 companies like this that really understand this one platform.
So I started Marketplace Ignition, hoping to find those diamonds in amongst all the gemstones out there—companies that wanted to grow like this on this platform—that just said, “Amazon is going to be the next big thing. I want to be part of it.”
Initially, we worked mostly with merchants, companies like J&R Electronics, and focused most on the U.S.
I realized a couple of things.
Marketplaces are marketplaces. The work that we were doing really expanded in the international market role to Jad and eBay and then eventually some to AliBaba and elsewhere. The real evolution over the last several years has really been the growth of brands that realized that this is a way to speak directly to the customer and a way to hear directly from the customer. There are not a lot of opportunities like that historically, but as you look at the growth of digitally-native brands and all of this amazing engagement you can get . . . it’s just incredible to be a part of it.
While we grew up originally as a group of passionate scientists focused on helping people sell on Amazon, we grew more and more toward the area of helping brands as well as sellers sell to or on Amazon and We ended up building a team of a lot of ex-Amazonians—140 years of ex-Amazon experience inside my team. About a year ago next month, we were acquired by WPP, the largest agency in the world. We partner in now as part of Wunderman commerce. That’s been an amazing experience. I spent years thinking “We’re not an agency. We’re a strategy consultancy.”
That’s true, but I will tell you that I have learned more in the last year . . . one of the things, when you have a bunch of scientists, you want to take all the requirements, go in your room and fix everything, and come back and say “Look how great a job we did.” But one of the things agencies are great at is that relationship aspect—that part of keeping up a pattern of understanding of how to communicate with brands, how to come back and understand that partnership in terms of the creative elements as well, which is a lot of what we hadn’t focused on. It’s been an incredible partnership.
Rob: I think that that acquisition experience is something we need to understand more about. When you first started, was it just you or did you have someone you started with?
Eric: It was just me.
Rob: Where did you find those next few people that joined? What were those inflection points that grew you from a one man consultancy to a few more and those next few clients beyond J&R?
Eric: That’s exactly right. The funny thing is, J&R was from Amazon days. By the time I started Marketplace Ignition, J&R was one amongst the companies that had gone by the wayside—for other reasons . . . traditional with only one amazing store in Manhattan which made it hard to compete on the national stage for the long term. . . . Let me go back to answer your question. The first folks were people I had worked with at Amazon. Right now, nearly my entire PR team from sports and outdoors . . . from when we launched the sports outdoors category at Amazon . . . nearly my entire team is now on the Marketplace Ignition team. That was an amazing experience, right?
Part of the reason I went back in and grabbed as many of those people as I could is, what it took to launch such a complex category on Amazon is exactly what I wanted to have inside my team. So, you might say, “What makes sporting goods so complex?” When we launched, we launched with 33 sports and . . . was it 27 or 33 sports? . . . you had to have all of that inventory.
Amazon doesn’t launch and say, “All right, guys. We created a structure, load product into it.” Amazon launches with the inventory already in the store. So we had to have something like 2000 merchants recruited in 90 days, millions of SKUs, and a complete hierarchy so that people coming in wouldn’t say, “Ah, the scuba masks are in the wrong place.” or “Come on. These guys know nothing about lacrosse.” You have to be authoritative in 30 sports that people are passionate about.
What’s funny is, I’m not a big sports fan. I can remember when Jason Goldberger recruited me for this. I was like, “I don’t know if I’m the right guy.”
He goes, “Dude you are more passionate than anyone I know . . . about success and marketplaces. This is the right home for you. Are you telling me across all 33 sports that we’re going to launch with, you don’t care about any of them?”
I said, “Oh camping, hiking . . .” What was it? “Camping, hiking, scuba diving.”
There were so many sports that nobody could have been authoritative in all of them. It is a great example of the complexity of what it takes to launch on Amazon. It was a great lesson. Back to your question. The people that I’ve hired and attracted are people who love this science of selling on marketplaces, which is very different than directed consumer sales and is almost alien from traditional marketing. It’s all about supply chain operations and operational expertise. The creative side of agency work is the last 5% to 10% of out dollars that[unintelligible 00:08:58] you can get on Amazon.
The lowest hanging fruit on the tree is, “What product are people searching for?” “How do you match your assortment to the products they’re searching for?” and then “How do you get that product listed, lit up, and in stock for two day shipment?”
Rob: I think a lot of people listening would hear your story and say, “Gosh, I would really like to be acquired by WPP, just like Eric,” but it doesn’t sound like the end you had in mind when you began. When did you start to realize along the journey that there was a meaningful possibility that someone would want to acquire you for what was probably a life changing deal?
Eric: That’s a fascinating question. When I started, we were, to my knowledge, the first company doing marketplace strategy and support working in this space, helping brands and sellers. You’re exactly right. I did not start a company to have an exit. In fact I don’t have an exit—I’m still working there, right? About a year-and-a-half before we sold, companies started to reach out to us and say, “We’re getting a lot of requests from our clients for marketplace support and Amazon support. Are, you interested in working with us, partnering with us, or maybe selling to us?” We kept saying “No, no.” In fact, in the year we sold we’d had five companies reach out to us in various capacities and we kept saying no, but let me tell you the answer to your question is easy.
We were working with a large client, a multinational client in the confection space. They came to us and said, “Look, We’ll be honest with you. You’re doing great work but we’re killing the contract.” We asked, “Why?” They said, “We have an agency of record deal with an agency and they do the Amazon piece of strategic. It doesn’t make sense anymore for us to have a boutique agency doing something that has become so central to how we go to market. Amazon is now part of the entire package. It’s a core part of the conversation of how you speak to customers. We just can’t have a boutique agency doing that.”
It suddenly occurred to me that I wanted to be on the other side. I wanted to be the agency of record. I started taking calls. We ended up playing two companies and then picking one. What I would tell you, which an interesting part of this discussion, was that now that I am on the other side, I realized and understood what Amazon really is—it’s too core to how you talk to customers.
I like to say that Amazon is the Consumer Reports of this decade and if that’s where you are speaking to customers, I feel I’m lucky I acted when I did. I think brands are coming to understand now what Amazon is—it is not something that you want one small, separate agency working on. This is part of how you go to market. It should be part of your entire marketing communication. It’s part of the way you dialogue on how I think about . . . it’s a complement, right? My subway ads should speak and combine with the campaign I’m running on Amazon which should compete and combine with what I’ve got running on my direct-to-consumer site or, frankly, on the back of my cereal package.
Rob: I think there’s probably a lot underneath the surface of what you just said. You talked about how brands speak on Amazon. We probably don’t even know someone on the outside looking in. What are the different ways a brand speaks? You mentioned the creative, but there are probably product specs . . . ads . . . reviews, I don’t know. Tell me what we don’t know that you do.
Eric: I like the way you asked that because, when you think about it, Rob, that Amazon, so first of all when you’re on a marketplace, the reason you’ve heard me say a couple times, marketplace is intrinsically different. Another company that used to be a client here in Atlanta, FootSmart, used to be the third largest insole maker in the United States. They came to us with an insole they had designed for senior citizens with an ailment called plantar fasciitis. What was interesting was the copy and content on the page they gave us, which said that it “fit in any size shoe with a Velcro closure, no problem, and that it would not increase slip and fall hazards in institutional settings.” That was the description. What was the number one sentiment on Amazon when we read and scanned the reviews and told sentiment analysis to build the content on Amazon? It was, “Best insole ever for post-marathon foot pain.” That blew our minds, but it also speaks to an interesting point: when you’re on a marketplace you inherit the demographics, the seasonality, and the purchasing patterns of the consumers on the marketplace.
You don’t get to decide, end-to-end, who your customer is. That’s true in any kind of marketing. Why it’s so interesting on Amazon is that you have a direct pipe to customers. Where else in the world can I read every question someone asked when they walked into the store and looked at my product yesterday? Now I get to say, “Great! How do we use that to change the dialogue?” And further, I think the thing most engaged brands have understood today and what the dialogues we’re having tell us are two things. One, I can no longer count on the guy at the CVS pharmacy. to help communicate which cold remedy is better than another. Maybe that pharmacist is there, but retail experts are few and far between. When millennials shop in brick-and-mortar stores, they have their phones in aisle and they’re looking at reviews on Amazon. We know this. So, what is the value of winning the search for “Bluetooth speaker” on Amazon? And what is the value off Amazon for that when someone’s in aisle at Best Buy looking at their phone.
They want to buy at Best Buy, but they want to read the reviews on Amazon. That is one of the most interesting and challenging marketing problems that we have today. The question is, “What is the value of a dollar spent on Amazon?” And then back to your question, which is, “How do we think about what is different about this channel?” “What’s different about how to go to market?” and below the surface, “How do I talk to someone on Amazon?”
Let me give you a great example. We work in supplements with one of the largest supplement vitamin makers. What we found was that you can massively increase the conversion on page by not putting 60 count or 180 count, but calling the two variants a one month supply or a three month supply. Then when you look at the third image, instead of having a picture of the back of the bottle, we realized that consumers kept asking, “How big is the pill?” Rather than stop people from buying because they weren’t in a store where they could through the bottle and see the size of the pill, we put a little ruler on every page with a picture of a penny against the ruler and a picture of the pill, so people knew. That massively increased conversion and is a great example of where you’re not in aisle, you’re there with someone on a page. You have to figure out what will help them understand and buy that product that minute on that page.
Rob: Right. It’s a transcendent marketing lesson that I think—for some reason—maybe legacy reasons—doesn’t get thought about in e-commerce. What you’re talking about is . . . selling benefits . . . not features, right? The label is a feature. The size of the pill is a benefit. The months of supply it is, is more important than a number. I think that’s interesting. One thing you mentioned, reviews and reviews-in-aisle, one thing that I at least perceive is that there is an all out . . . I have a friend who has a consumer electronics company, LSAT, who has an all out war with his competitors in the review section. Where do you think that’s going because you have these products even. . . let’s say headphones or a headset. When I was first getting ready for this podcast, I wanted a headset and you had these, what appeared to me, brands that were made just for Amazon. The reviews looked to me like they were stuffed to the gills with good reviews, but the third party reviews on other sites were more questionable. What is the state of the battle for the reviews and the review score and the competition and where do you think it’s going?
Eric: That’s a fascinating question . . . you picked a very loaded category. You could have asked me any category, but the particular category you picked is ripe with examples of digitally-native brands. Most of the time, I don’t know if our listeners think about this category a lot, but it’s an incredible category that has risen in the last two to three years. These brands exist only in e-commerce. These brands—a greatest example is Ankur, which is barely out of e-commerce but did over 500 million on Amazon last year alone on cell phone and backup batteries—and the challenge of what you’re talking about with review, quality, and accuracy—it’s fascinating, but let me give you an example.
I think you have to think about this as a holistic system. Let me tell you what I mean by that. Let’s first talk about, “What is the price of an item?” That seems like an accurate thing that I can just look up, but, in reality . . . you said “wireless headphones.” An interesting point is, are you a shopper for Bose quiet comfort, noise-canceling headphones? Or are you looking for wireless headphones? Or are you looking for noise-canceling headphones? Those are three different shoppers. In e-commerce, those shoppers can be verticalized and they will have different sets of results. In fact, in the early days at Amazon, we used to call the store, “Grow your own store.” The reason why was because, if you searched for wireless headphones but I searched for noise canceling headphones, we got different digital shelves. We got different stores and different results—but let’s go with the wireless headphones, the example that you said. In the world we live in today, that particular category is hugely invaded by digitally-native brands that are supported almost in the way that I like to call “the Costco example.” Are you a Costco shopper as well?
Rob: Absolutely, yeah.
Eric: OK, good. When was the last time you went to Costco thinking you needed something and you went in thinking, “Oh, I need the . . . I don’t know . . . I need lights . . . LED bulbs or whatever and you bought them at Costco without ever knowing the brand? I mean, without even thinking about the brand, you grabbed the one the size you wanted, and because the brand, in that particular case, was at Costco, you somehow believed that Costco had curated this and further, even if there was a problem, they would take it back forever, right?
The thing about the reviews and what has happened in the last three years that has created a problem for traditional brands—but also an opportunity—is that the combination of the A to Z guarantee plus the social affirmation of reviews has created an incredible hothouse of new product development that goes straight from product development to consumer. To your question about reviews—reviews are really important, but I would argue that they wouldn’t be nearly as penetrative and as successful if it wasn’t for the combination with the A to Z guarantee and the FBA shipping, the two-day shipping.
That combination creates a hothouse froth of activity where you say, “You know what? I was coming in for a pair of Sony headphones or a pair of whatever that I knew, but I might experiment in this one category. If I don’t like it, Amazon will take it back.” That is where, if you’re interested in buying in-aisle from the brand that you know and love and trust, then the Amazon reviews won’t support that. And I would argue that, if you are Best Buy and you want to buy in-aisle, the brand’s reviews on Amazon will support that purchase.
If you’re only an Amazon shopper, you might choose to trade down. I want to be really clear here. I have seen some amazing work. Bose is a great example. They saw a product that really was under attack in this space. On the flip side, they’ve done some beautiful work, like being on the cutting edge of something called enhanced A-plus—digital commercials within Amazon’s ecosystem. Basically, they’re saying, “Look, we’re not giving up. We’re, in fact, going to double down on marketing in this space and be really innovative.” You know what, to this day . . . I got upgraded yesterday on the way back from New York and I will tell you, 17 of 20 headphones I saw in first class were Bose headphones I think that Bose continues to do a good job of saying “Our headphones are like walking around with an iPhone.” Sure, you can get a cheaper headphone, but with that marketing, I want to be seen wearing Bose.
Rob: I think that’s a good point about the importance of those brands. A question that comes to mind for me, one frustration I hear from people who are selling everything from over-the-top television to direct products on Amazon, is the frustration that Amazon doesn’t give them the degree of measurement and attribution—the details of digital marketing—that they would get on their own sites. How would you think about that and how would you suggest people think about measurement on the Amazon platform for things that they’re selling?
Eric: It’s so difficult, right? The most advanced brands that we work with now are commissioning studies in 2018 for, “What is the value of a dollar spent on Amazon?”
Back to that example we gave for “How many people are looking?” What is the value of showing up first in the aisle for a cold and flu remedy and seeing that result, right? So, measurement of the value of Amazon is hotter than ever and not just on Amazon, but off. Let’s start with why that is important. Even if I know and I will tell you, most of the brands that we work with aren’t where they were a year or two ago, where they would call and they would say “We’re so excited to try advertising on Amazon. We’ve got a budget of $40,000.” We’d say, “For what?” Because $40,000, you work on the most advance sellers at that time were thinking return on ad spend and we were budgeting to that and I was, if I can get you a 10-to-one return on ad spend for $40,000, can we spend more?” Now I would tell you almost every brand that we work with is now able to think on a return on ad spend. On measurement in that way, we’re pretty much there—where the brands are able to get enough data to say, within Amazon the attribution is easy. In other words, I advertise this much and I reasonably can see what happened within Amazon. In some ways, it’s easier than other channels. There’s no first or last attribution as there is with Google or elsewhere because everything happens on one site.
So that part’s easy. But the value is: What would happen . . . what if I have a 50% off-Amazon value for every dollar I spend on Amazon through people checking reviews and ratings? How do I think about that? Do I take my four-to-one target and make it two-to-one? Do you see? That is what I think is the most interesting dialogue we’re having with brands right now. I think this will be the year where this blows up, where people realize, “Wow! Amazon is where transactions are happening and where people are understanding a product’s reputation.” So I think that’s the measurement that’s challenging, but other things that are critical to measure—What is the sentiment?
Unlike with traditional brick and mortar, I can’t tell very easily when I have a problem with my product—but we buy mining reviews and ratings, I love this story. We had a client that sold furniture. They were having us manage, understand, and report on reviews, ratings, and sentiment. We called them and said, “Hey, what’s wrong with your ottomans?” And they said, “What are you talking about?” We said, “No, really, ottomans. The most common terms that we’re seeing matched with them are smelly, odor, and gross. We only saw it start to pop up two weeks ago. What’s going on?” And they said, “Well we use a unique leather and maybe, maybe?” We said, “No, I don’t think that’s it.” They sent someone to investigate. Turns out they had re-ordered their warehouse in such a way that they were ordered by product typing. Get this. There was a roof leak over where the ottomans were stored and we picked it up by Amazon reviews.
Rob: That’s amazing; you wouldn’t think that. I think it’s a good takeaway to also think about the off-Amazon benefits of Amazon. I think that’s maybe not as intuitive for someone who’s not in your world and seeing the world through your eyes.
Eric: Yeah, that’s exactly right. That’s exactly right. But, think of how you shop a store that isn’t on Amazon—as an example, a Home Depot where almost everything there requires understanding how to install it or use it. Watch yourself there when you go and get a plumbing fitting or you want to try something around the house or maybe you want to plant some flowers—you’re going to pull out your phone in the garden center at Home Depot and say, “How do I plant this?”
Now think. “Oh, I want it.” If you start watching your behavior—I would encourage your listeners, too—watch how often you do this and think about what sites you check. And then, if you’re a marketer, like we are, think about where that is in a funnel. Write down this for a week every time you pull your phone out to find out how to do something, right? Write it down for a week and then draw a funnel on a whiteboard. Mark down where you are in the funnel for those questions. “How do I. . . “, “What’s the right—I don’t know—toilet seat to buy?” because I’ve got to replace a toilet seat. That’s more of a top-of-the-funnel question or maybe it’s mid-funnel. But, black—I don’t know—black running shoe laces? That’s a bottom-of-the-funnel term and you’re ready to buy. If you start seeing how you do it, you can, as a marketer and as an agency person, think on the other side, “How do I help brands talk to customers at that point?” “Where are they searching?” and “How do I think about helping them there?”
Rob: Now, I’m going to overthink things when I’m shopping, but it’s going to be for a good reason. I’m going to enjoy that, but I’m definitely going to overthink my shopping. So, thanks for planting that seed.
Eric: Look, as a marketer, that’s part of the science, man, and that’s part of the fun. Right? I love that part of what we do. That gets me out of bed every morning—the science of what we do and how to make it and activate it in this space and it’s complex. A lot of people don’t understand—and this is an interesting thing—I’ll give you a little tidbit, a secret for our podcast listeners—a lot of people don’t understand how Amazon works, right? And they don’t understand that . . . what they do is pull up a product and think, “I found, amongst thousands of screwdrivers, the one I’m looking for . . . “ or mugs or whatever—it doesn’t matter—and then you click buy and then you’re done. What you don’t realize was that there was actually, not just amongst all the different screwdrivers, but on the page for that screwdriver, people don’t even think there are multiple sellers. How does Amazon think to put which offering to top? The offer that they put at the top is usually the most available product at the most reasonably similar price.
Often, you might think it’s the cheapest. But the early data we had back in the early 2000s told us, when I was at Amazon and we were working on how to sort this, all the data told us people preferred something right now versus the cheapest. I would way rather get it in two days and not think about it. One of my favorite, at the time Amazon was in a death battle with eBay . . . one of my favorite things that someone told me is they said, “Oh, yeah, of course” they said. “EBay is for people who have more time than money and Amazon is for people who have more money than time”.
Rob: What you don’t think of, you think of saving money on Amazon, but I’ve heard some and you could probably put on an entire clinic on what it takes to win the Buy Box on Amazon?
Eric: Yeah absolutely, there are books on it.
Rob: Wow. I mean that’s a good tip and a good insight.
Eric: But, you are saving money. You just have to understand that Amazon has figured out that time is money. Always selling you the cheapest product, but having it show up in 14 days—we’ve proven that doesn’t work. That’s not what people want. People want it to arrive right now or in one hour. You live in Atlanta, right? How many people in Atlanta realize we have one of the five pilot sites for Amazon Instant, where it arrives in two minutes?
Rob: It’s fantastic. Well it’s a good tip, it’s a good insight. When someone wants to get in touch with you, Eric, and Marketplace Ignition, how can they find you? What’s the best way?
Eric: Of course we have a Web site, marketplaceignition.com, but you could also just write a note to firstname.lastname@example.org and someone will get back to you. We have a great team. About 45% of our team is in Seattle, across the street from Amazon, and the rest of us? There are some folks in Atlanta, some in New York, and now some in London.
Rob: And I’m sure that if somebody is excited about what you’re doing, you’re probably hiring for a variety of roles and would love to have that conversation.
Eric: That’s exactly right.
Rob: Awesome. Thank you for your time. Thank you for your insight and your journey, Eric. I think it’s a unique one that people can learn a lot from. So thank you for digging in.
Eric: Oh. Thank you for having me.
Rob: Thank you for listening.
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