Retail Ecommerce Highlights for Back to School 2022
Amazon’s Jump Into Pharmacy: What it Means for Advertisers
Tod Harrick, Sr. Director, Customer Success @ CommerceIQ
As an Amazon Advertising partner we are excited about Amazon’s expansion into pharmaceuticals. It brings to life a famous saying from Jeff Bezos, “Your margin is my opportunity,” and we anticipate that many of the same opportunities that unfolded for advertisers when Amazon entered other new categories will also play out here.
But, before jumping into your first advertising campaign, there are several nuances worth noting:
- For display advertisers, the first impact will be access to more complex demographic profiles. Amazon pharmacy shoppers use their existing Amazon account, so this adds one more dimension to what Amazon knows about a shopper. It knows what movies they like, what books they read, what kitchen appliances they need, whether they have a pet or not, and now it knows what medical conditions they may have. This is going to impact the shopper profiles Amazon display advertisers can leverage. To determine what impact this would have, I used Amazon to get my Symbicort inhaler prescription filled. As suspected, this was a prompt for advertisers and I began seeing more ads for deals on humidifiers appear.
- Secondly, when Amazon enters a category, there is a downward pressure on prices due to price transparency. How does that impact prescription medicines? One word…generics. Until now, it was incredibly difficult for patients to know if there was a generic option of a medication available for them and, if so, what the difference in price was between a brand name medication and a generic. Pharmaceutical advertisers must take this level of transparency into consideration. Looking at the Symbicort example, Amazon automatically gave my doctor the choice of whether to approve the generic option, and gave me the option to ask for a switch to the branded version. When I search on “Symbicort inhaler”, Amazon displays branded vs. generic options along with the prices for each, and my insurance Co-Pays in my shopping cart.
- Longer term, we will likely see a need for advertisers to become even more customer-focused. Traditionally, pharmaceutical brands and manufacturers focused their ad spend on two things: Paying stores to control shelf space in an attempt to limit customer choice, and emotional appeal television ads that made customers feel happy enough about the brand to accept the limited choice they were given from a controlled brick and mortar shelf.
In contrast, with Amazon, shelves have an unlimited number of products and choosing a competitor’s product is easy. Indeed, the strength of Amazon is its ability to show shoppers other options. In this world of ecommerce advertising, brands must create Point of Sale focused messaging to convince customers their product is the right choice, with strong calls to action for shoppers to “ask your doctor”. Pharmaceutical companies deploy armies of reps and massive ad budgets to convince doctors to recommend their products over competitors. In this environment, pharmaceutical brands must learn to speak and build relationships with individual patients in the form of effective Point of Sale product content and robust customer service.
- Amazon’s expertise at helping customers find “similar” or “related” product options using aggregate customer behavior data will also impact the way customers shop for medications. On my Symbicort inhaler search, Amazon also displays natural remedies it thinks will help with the same condition, in this case, a portable handheld nebuliser and a himalyan sea salt inhaler. This gives manufacturers of medical devices, supplements, naturopathic treatments, and OTC alternatives an opportunity to focus on the prescription medications for which their products provide similar solutions or support and be prepared to advertise them.
If you’re entering the Amazon pharmaceutical world, or simply looking for strategic guidance on your next advertising campaign, drop us a note at firstname.lastname@example.org.