Will Spark ignite Amazon as a social media leader? Just maybe
Amazon's launch of an in-app social news feed could set the groundwork for a deeper push into social media and open up new advertising opportunities.
Amazon's recent launch of an in-app social shopping news feed named Spark caught some by surprise because it suddenly put the e-commerce giant on the radar as a potential contender in the crucial social media segment.
While it's still unclear just how high Amazon's social media aspirations are, news of Spark, as well as rumors that the company is working on a messaging app for businesses and that it might buy Slack, suggests a concerted social strategy could be in the works. Such a move could dovetail nicely with Amazon's growing digital advertising business as well as its successful pushes into original content via Amazon Prime and digital assistants with Alexa. There would be some challenges to tackle, not least of which would be taking on Facebook. However, industry bigwigs like WPP's Martin Sorrell and others are closely watching Amazon because they increasingly recognize its potential to disrupt digital marketing.
"At the end of the day, consumers drive all purchases," Jason Beckerman, CEO at marketing technology company Unified told Mobile Marketer. "Amazon debatably has as much data, if not more, than all the world's largest technology players. If they added an ability to share products and content within their walls, it could be a huge force for migrating attention from other platforms.
"After [Spark's recent] announcement, Amazon's move to becoming a social network is more likely than I would have thought," he continued.
Mobile is already one of Amazon's strong points and Spark could help bolster the company's role here even more, given that engaging on social media is predominantly a mobile activity.
Spark, which is currently only available to U.S. customers in the Amazon mobile app, asks users to choose their interests so they can follow a customized feed of products, imagery and ideas related to shopping or learning more about a product.
The feed, similar to Instagram's mix of images and content, addresses how younger consumers are exploring items of interest online and want to be able to seamlessly make a purchase without having to bounce around different sites.
Sales on the e-commerce giant's mobile app doubled in 2016 and again 2017 for its annual Prime Day sales. This year, the Amazon app was positioned as a go-to hub for Prime Day, making it easier to find and keep track of offers.
Spark ostensibly will also help Amazon ramp up on the content side. Amazon pioneered online customer reviews in 1996 and they have long been a key way to support purchases on the platform. However, younger consumers are paying close attention to social media influencers and making purchasing decisions based on their recommendations. This is something Spark addresses by rewarding "Enthusiasts" who subscribe to Amazon Prime and post comments. Amazon is also reportedly paying publishers and influencers to post on Spark.
"Clearly it would mean increased competition for people's time and attention for Facebook."
VP and research director at Forrester Research
Not only would social content potentially support sales on Amazon, but if Spark builds a large enough base of engaged users, then Amazon could start serving ads against the content.
"If Amazon became a social media player, it would create a larger advertising inventory opportunity," said Beckerman.
Amazon would also gain more information about user behavior and preferences, giving it a leg up on controlling the entire path to purchase.
"Amazon would be the only company that owns the full purchase funnel, end to end, down to the supermarket where people shop, and they are already the leader in the home AI voice arena," said Beckerman. "I would be very nervous in markets where Amazon exists, which is nearly everywhere."
The bigger play
Amazon would face some challenges as a social media platform. For example, so far social commerce has not taken off significantly, with social media sites accounting for just 2% of retailers' sales. This means driving sales from Spark may prove difficult but it also suggests that Instagram isn't likely to be a big threat to Amazon in the near future in terms of sales. The lack of sales potential might not be a big concern for Amazon if it sees advertising, not e-commerce, as the bigger play here.
"As far as Amazon's business is concerned, they certainly don't need to add a full-fledged social network," said Melissa Parrish, VP and research director, Forrester Research. "Shopping hasn't taken off on other social networks, so at the moment Amazon doesn't need to worry about social nets honing in on that particular territory."
Others have tried and failed to launch successful social media platforms. A good example is Google +, which was launched to compete with Facebook but, in 2015, was broken into Photos and Streams.
"What [Google and Facebook] make their money from may shift or — more likely — continue to diversify, but something like a social network from Amazon isn't going to put either of the other two out of business anytime soon."
VP and research director at Forrester Research
On the other hand, more narrowly focused attempts at social media that are focused on shopping have found some success. Sephora's Beauty Board was introduced in 2014 and continues to serve as a place for customers to share tips and feedback.
"Small companies that have tried to build their own social networks have paled and failed in Facebook's shadow," Parrish said. "All that said, if any companies were going to try to build a full-fledged social network and make it work, it would have to be an established giant with a massive existing user base, like an Amazon. But even that isn't a sure thing."
The hangout spot
While shopping could be a draw for some consumers to check out Spark, Amazon will need to convince users that it is an interesting place to hang out if it intends to build out a broader social media platform — a necessary step for attracting advertisers as well.
"The primary challenge would be changing the purpose of Spark from shopping to being a place for people to hang out in general," Parrish said. "That's what a full-fledged social network really does. And based on that time spent and all those repeat visits — where people just want to connect with other people and not necessarily buy stuff — the network is able to sell ads."
It's also possible that Amazon customers would start to become nervous that the platform knows too much about them.
"As far as challenges, many people wouldn't want their purchase information or browsing habits shared so they would need to be able to enforce the proper security controls, something I have no doubt Amazon could accomplish given their expertise," Unified's Beckerman said.
Shuffling the game board pieces
In the near term, Amazon's launch of Spark makes the digital marketing ecosystem more competitive than ever, with Facebook and Google both likely to be paying close attention to how well Spark performs. Either Facebook or Google might also launch a counter-strike and push more into mobile and social shopping.
"Clearly it would mean increased competition for people's time and attention for Facebook," Forrester's Parrish said. "It may even mean Facebook trying to take on the shopping aspect of Amazon's social network if that ends up being successful."
Amazon has a nice track record of late with ploys to expand outside of its core e-commerce business. Just look at Prime Video and Alexa. That's a lesson Google and Facebook could take to heart.
"I don't really see this as being a massive upheaval of the current ecosystem — more of a shuffling of the pieces around the same game board," Parrish said. "These three tech companies are enormous, revenue-generating machines with truckloads of talent on staff.
"What they make their money from may shift or — more likely — continue to diversify, but something like a social network from Amazon isn't going to put either of the other two out of business anytime soon," she continued. "They'll just keep trying to out-innovate each other."