Amazon has launched a global media review of its US$1 billion media business. According to global reports, Amazon CEO Jeff Bezos recently issued an RFP seeking a media agency to handle promotional activities in various markets around the world, along with its North America business.
Globally, the incumbent on the account is IPG Mediabrands’ Initiative, which became its global media agency following a 2013 review. Meanwhile, digital buying duties for the US market are being handled by MEC. MEC also recently expanded its duties by winning work in the China market.
While it remains unclear which agencies are vying for the business, in March, WPP CEO Sir Martin Sorrell in an interview to Business Insider that Amazon is a business that keeps him up at night. He was quoted saying that Amazon could potentially be a threat to the likes of Google when it comes to search.
"It's early days with Amazon, you never know what's going to happen," Sorrell said during the interview. He added that WPP put together an agency in Seattle, where Amazon was headquartered to deal with the e-commerce giant.
Not long after, news broke of WPP's Mindshare and POSSIBLE coming together to create a new offering to help brands leverage their media and e-commerce investments across the whole Amazon ecosystem. This will see the amalgamation of Mindshare’s media planning and buying, data analysis and strategy expertise with POSSIBLE’s e-commerce, data analysis and creative expertise, according to a press statement.
With so much buzz occurring in 2017 around the Amazon business, Paul Davies, APAC managing partner of The Observatory said that Amazon would likely want an agency that aces in digital performance marketing, given their current business model. He added:
All holding companies would want to play with Amazon because they are seen as a close competitor to other giants in the space such as Facebook and Google.
Davies added that the agency hired will probably be chosen based on adjustments/ improvements in areas such as:
- Lower cost.
- Improved transparency.
- Better measurement.
- More global alignment / consolidation.
- Alignment to the changing media landscape.
- Improved contract conditions (such as transparency but also brand safety).
"All of these will improve the Amazon SEA business' ability to compete in the region, especially if the current media contract doesn’t cover SEA - as they didn’t have a presence here at that time," he said.
Meanwhile, Davies said with its launch in the Singapore market, the country can continue being the regional hub as long as it is able to leverage on it with maximum impact. However, he added Amazon should concentrate on countries such as Indonesia and Malaysia due to the scale it possess.
Speaking to Marketing anonymously, a former media-agency professional said should the pitch extend into Asia, this would probably one of the most sought after given that it comes at a time when Alibaba is “flexing its muscles through the buying of stakes and acquisitions of local players".
In Southeast Asia, Alibaba recently took an 83% stake in Singapore-based e-commerce company Lazada. It is also currently in talks to PT Tokopedia to finance as much as US$500 million in one of Indonesia's top three e-commerce firms. Meanwhile, in India, Alibaba has invested US$177 million in Paytm (short for Pay Through Mobile), and together, they are now rumoured to acquire a 20% stake in Bigbasket - India's largest online grocery store, for US$200 million.
She added that its "most challenging battleground however will be China, which obviously has a huge potential given its size." As such, a media partner needs to be able to understand potential markets the retailer can break into and gain revenue from.
"Amazon's global review may be one of the most significant pitches ever to occur in 2017, particularly for Asia. As it sets its sight on expanding its business in the region with Singapore foray, the agencies it chooses will hold the secret to the markets it wants to develop," she added.
Amazon, IPG Mediabrands and MEC has not responded to Marketing's queries.