Amazon Prime Day is Powered by AI

Amazon has the marketing scale to create its own holidays and the retail power to reshape the shopping calendar. 2019 marks the fifth year of Amazon Prime Day which was originally created to preempt the Black Friday sales that fall after Thanksgiving. Unlike “Hallmark Holidays” such as Secretary’s Day and Boss’s Day, Amazon’s festival of consumption has a noticeable impact on the economy, with Bloomberg reporting that last year’s 2018 Amazon Prime Day delivered $4.2 billion in retail sales.

US News included Amazon Prime Day on its 2019 list of the top 15 shopping holidays alongside perennial powerhouses like President’s Day and Memorial Day sales. (Notably, Amazon was the only brand on the list.)  Competitors like Macy’s, Target and Walmart have been forced to keep up by creating their own mid-Summer sales that have been dubbed “Black Friday in July,” a trend which only reinforces the impression that the pack is following Amazon’s lead.

This year, Amazon Prime Day actually falls on two days: July 15-16. That’s only a month after Kantar released its 2019 BrandZ report which named Amazon the world’s most valuable brand at $315 billion, leapfrogging Google into the top slot for the first time. What does Amazon do to celebrate their success? They hire Taylor Swift to perform a live concert (July 10) presented by Amazon Music exclusively for Prime members. They host a series of Twitch Prime celebrity gaming events in Las Vegas and London (July 11-13) with video game partners from Apex Legends and EA Games. And they offer huge discounts such as slashing prices on their Echo Input to $14.99 in case you haven’t already integrated Alexa into your home.

But what actually powers Prime Day?

Unrivaled use of Artificial Intelligence

Behind Amazon’s retail success is a technology powerhouse that has learned to harness artificial intelligence for marketing faster than the competition. While you are shopping, they are collecting data and then leveraging machine learning algorithms to figure out why you bought. Then they apply that knowledge to help them sell to the next consumer.

Consider, Amazon owns the marketing funnel from end to end, with advertising data on one end and purchase data on the other. As a result, Amazon is posing a serious challenge to the Facebook-Google duopoly. That’s because Amazon can connect the dots between the ad dollars spent by marketers, and the dollars spent by consumers at Amazon’s cash registers. In marketing terms, we call that attribution, as in, “To what ad can we attribute this purchase?”

Solving the Attribution Problem

The artificial intelligence behind Amazon’s platforms is getting better and better at solving the attribution problem for marketers. Using machine learning, Amazon’s algorithms can recommend products and adjust ad campaigns in real time to maximize the likelihood that you will buy – all based on data about what triggered others like you to buy. That’s all possible because Amazon owns the transaction data – they are the cash register. Google and Facebook don’t have that luxury. They have to rely on third-party partnerships to harvest transaction data and attempt to pair that back to online advertising in order to complete their attribution analysis. They aren’t as sure whether this ad or that one led to a purchase and that hampers their ability to compete with Amazon.

Voice Commerce

Amazon has also deftly applied artificial intelligence to solving the riddle of voice commerce. A branch of AI known as natural language processing (NLP) provides the technological layer inside Alexa that translates human speech into meaning for the computer and in turn allows the computer to respond with appropriate answers. Amazon’s shoppers are no longer restricted to a graphical user interface (GUI) on a computer screen; they are able to interact using a voice user interface (VUI) hands free, and with the ease and simplicity of human speech. The average person can talk at a rate of 150 words per minute, but we can only type at around 50 words per minute, which means we can spend money faster with our mouths than our fingers.

Voice commerce represents an $80-billion market in the next five years according to a recent report from Juniper. Despite the presence of other voice assistants like Siri and Google Assistant, Amazon has a dominant position in the race to capitalize on voice commerce because of the popularity of its Echo line which represents about 70% of the installed base of smart speakers according to Motley Fool.

On the surface, Prime Day is about concerts and gaming events and big discounts for consumers. But behind the scenes, Prime Day is the public face of artificial intelligence hard at work to solve the marketing attribution problem, enable voice commerce, and make it easier for consumers to buy and buy and buy.

Originally published on LinkedIn here.

Learn more about William Ammerman here.

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