Good morning from Retail Media Age HQ,
Do you use conversational AI assistants to research what to buy or get advice on purchase decisions? If so, a number of major tech heavyweights are hoping that you’ll be responsive to ads in that venue.
A little over a week ago, AdWeek reported exclusively on a leaked pitch deck that showed Amazon was planning to fully launch ads within Rufus, its conversational shopping assistant, after a period of testing that enabled partner brands to sign up for free. The examples show that a hypothetical shopper might be able to click on a sponsored question on a product page, like “Why choose [fictional brand] Accent Athletics shirts?” and be taken to a chat within Rufus for the response.
The deck (which Amazon confirmed as genuine) says that 75% of consumers “wish they could identify [product] options that meet their needs more quickly and easily”, while promising advertisers visibility into prompt performance across key metrics like clicks and conversions, as well as the flexibility to pause given prompts as needed.
Not long after this came the announcement that OpenAI has partnered with a Helsinki-based advertising firm named Smartly that could “allow a user to click an ad and enter a chatbot experience that offers tailored suggestions”, according to The Next Web. OpenAI only recently introduced ads to ChatGPT in general, beginning to test them in February, but the company claims that the results have been encouraging enough that they’re expanding ads beyond the US to Canada, Australia, and New Zealand.
Ad placements in ChatGPT are more similar to PPC than retail media, but its execution of conversational ads may be worth watching, and the trend is interesting. If Amazon’s Rufus ad rollout pays dividends, this could be relevant to the likes of Walmart, who already offer an AI shopping assistant named Sparky to summarise reviews and make recommendations. More specialised retailers like L’Oréal, in beauty, and Guitar Center, in music, have also introduced assistants.
However, the emphasis here is on the “if”.
Around the same time that AdWeek reported news of Amazon’s Rufus rollout, The Information published an article revealing that Amazon’s Rufus ads had “yield[ed] data but few sales”. One ad agency executive vice president is quoted as saying that “Prompts are not game changing”, and noting that “the volume is still relatively limited”.
Given the experience of Amazon’s conversational prompts as presented – users click on a prompt in a search result or product page and then are taken to a chat experience within Rufus, which may lead to specific products being suggested – one wonders if this isn’t simply elongating the funnel that retail media ads are meant to appear at the bottom of. On the other hand, nudging the customer further towards a purchase is desirable if it works as intended.
With most implementations of chat agents on retailers’ websites still in the experimental stage, it’s far more likely that retailers will opt to focus on their organic capabilities, like ensuring they produce relevant support or search recommendations. Introducing ads is a consideration for much further down the line – if at all – but Amazon’s foray is still of interest to anyone who wants to reach shoppers on their platform.
If you enjoy chats and discussions just like this one about the intricacies of what’s happening in the retail media space, our Retail Media Day at Cannes on Tuesday 23rd June has everything you could need – with an exclusive panel discussion followed by networking drinks. As always, find us at Maison NDA!
Or for the non-Cannes-goers, you can still get all of the brilliant discussions and networking from our RMA Lunches in either Manchester (July) or London (September).
