Who owns your customers?
Back in 2010, I was hired to lead Coca-Cola’s Energy Drink portfolio. NOS Energy Drink was a rising-star brand, and highly profitable for the company, so we had a fair-sized budget to invest in driving awareness and trial.
One of the ways we decided to do that was spending money on Facebook: we’d invest in content to gain likes and followers. To maintain the confidentiality my NDA requires, I won’t tell you exactly how much we spent, but it was not an insignificant amount.
The formula was simple: Spend money on content, gain followers. More money equalled more followers. This simple approach worked very well for us: In one year, we increased the number of people following our brand page on Facebook by over 1,000%. That was fantastic, because more followers meant that whenever we had a brand message to share, it would reach more people “for free.” And it did exactly that.
Until the day it didn’t.
Our plan worked right up to the point Facebook adjusted its algorithm. After the change, we no longer had 10-15% of our followers see each post we made to our group; instead our content would now only reach 2% to 3% of our total audience. Of course, there was an easy and obvious way to increase the number of people who saw our content: Mark Zuckerberg, doing his best Jerry Maguire impression, was joyfully screaming, “SHOW ME THE MONEY!”
In hindsight, it was silly to spend all that money building a community we didn’t manage directly, only to be forced to pay more in order to continue reaching them. It was the online equivalent to buying all the tickets to a concert venue, giving them all away to adoring fans, and then not being allowed in the building when you thought you were going to be hosting the show. But before you judge me too harshly, remember that this was more than a decade ago, and back then most of us cutting-edge marketers were experimenting with relatively new social media platforms in an attempt to determine the best way to use them; mistakes were bound to be made.
Presumably, we know better now.
As a consumer, I’m still a big fan of Facebook and visit the platform multiple times each day, which perhaps tells you something about how old I am. And as a marketer, I know Facebook still serves a purpose. But my experience running NOS taught me a very valuable lesson about the benefits of owning your own audience.
I was reminded of that expensive lesson this week, when CNBC reported that Amazon had recently begun piloting a tool that would allow certain companies to communicate directly with customers who follow them.
To be clear, I’m a huge Amazon fan as well, and the sheer number of “smiley-face” boxes that arrive at my home each week is a testament to that. But if I were managing a brand today, and was considering selling my brand on Amazon, I’d need to understand both the benefits and the risks of doing so.
The benefit for a brand choosing to sell on Amazon, the largest online retailer in the world, is fairly obvious: the ability to be discovered and purchased by the astounding number of people already visiting the site.
But you may be surprised to learn that, just like with Facebook, brands who sell on Amazon don’t actually own their audience. In fact, according to Amazon’s Selling Policies and Seller Code of Conduct, brands are specifically prohibited from communicating with the people who buy their products except for those communications “necessary for fulfilling the order or providing customer services. Marketing communications are prohibited.”
In other words, Amazon will let you sell to the people on its platform, but you don’t know who they are, and you can’t follow up with them directly for subsequent sales. The policies make you almost completely dependent on Amazon, and it’s pretty obvious Amazon likes it that way.
The fact the internet behemoth appears to be loosening its rules, even a little bit, is a pretty big deal. Brands still can’t have direct access to customer data, but they can at least communicate with them via Amazon. It’s a start.
Is Amazon doing this because it realizes that allowing brands greater access to customers is a greater incentive to use the platform, because increased competition from more data-transparent companies like Shopify leaves it with no other choice, or because it wants to proactively address any regulatory accusations of anti-trust behaviour? There’s no way of knowing for sure.
But from a brand perspective, it’s pretty clear that getting greater access to the people who buy your product is a good thing. At one point, perhaps we didn’t think that a lack of access would be such a deterrent for selling on Amazon.
Presumably, we know better now.
This piece was originally published in The Message Canada, which has quickly established itself as a must-read for the Canadian marketing community... and I promise I'm not just saying that because I've been contributing articles for the past two years.
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