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Amazon's Holiday Strategy Includes Discounts, Same-Day Delivery, And Artificial Intelligence

Amazon's Holiday Strategy Includes Discounts, Same-Day Delivery, And Artificial Intelligence
This holiday season, generative AI will be Amazon's secret weapon. It will use data from its more than 160 million Prime members to enhance ad targeting and enable retailers to swiftly create specials.
In addition to offering quick shipping and the customary Black Friday and Cyber Monday discounts, the company is placing its bet on the idea that its AI-powered targeted advertisements would attract more customers and advertisers to its platform.
During a Thursday analyst call, Andy Jassy, the chief executive of Amazon, stated that machine learning is assisting the company in showing customers more relevant advertisements.
"When (advertisers) have to think about budget decisions, they're going to choose (ads) that have large volume and perform better. I think both of those are real advantages in our advertising area right now," Jassy said.
The company said this week that it is utilising generative AI to produce better product photos for advertising in an effort to draw more attention to the goods offered by independent merchants. Based on product details, the programme creates merchandising backdrop images.
Although it is not the first online store to utilise AI for advertising, Amazon's usage of the technology is anticipated to spur more adoption of the tactic due to its size.
The "ability to show dozens, if not thousands, of variations of your ad personalised to the user" is the primary advantage of generative AI, according to Andy Friedland, Chief Revenue Officer of Swiftly and a former Amazon ad executive. Swiftly is a technology platform for retail.
He stated that it can be costly to create unique advertisements for different audiences and that he expects Amazon's AI technologies to help advertisers save money.
According to Forrester principal analyst Brendan Witcher, Amazon's generative AI advertising tool will be "good for attracting and keeping a segment of third-party sellers and brands advertising on Amazon."
Ascendly Marketing and other businesses are utilising generative AI imaging algorithms to blend product images with images of well-known people. Recently, Ascendly's customer Fast Passports and Visas included the late singer Elvis Presley holding their merchandise in an AI-generated advertisement.
According to Marshal Davis, President of Ascendly, the use of such "whimsical imagery" has greatly enhanced social sharing. Amazon wants to see a similar trend for its own generative AI ad solutions during the holiday season, since his clients are reporting increases in sales and Google click-through rates.
Based on LSEG estimates, analysts anticipate that Amazon's advertising division will generate $14.2 billion in revenue during the holiday quarter, up from $11.56 billion in the previous year.
If targeted products are more relevant, the AI-image generator might persuade reluctant customers to unlock their wallets, according to Friedland.
According to Witcher, consumers who have an annual subscription in Amazon Prime, which costs $139, or $14.99 a month, have a "huge advantage" in advertising and better targeting. This results in users making more frequent purchases.
"Volume of traffic is a critical component for success in online advertising," he said.
Amazon predicts revenue for the holiday quarter of between $160 billion and $167 billion, which is less than experts' projections of $165.6 billion. In the fourth quarter of the previous year, Amazon brought in $149.2 billion.
According to Davis of Ascendly, smaller advertising agencies and independent graphic designers are at risk from Amazon's AI-imaging.
Another drawback of widely implementing Amazon's AI capabilities could be that they could generate ads with similar visuals for various products, making it more difficult for merchants to differentiate themselves.
"This could make it difficult for brands to differentiate themselves," Davis said.

Christopher J. Mitchell

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