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By Ranjit Mulgaonkar, CEO and Maya Mulgaonkar, VP Client Services – Flatworld Group
The universe of Amazon sellers, many of whom are small and medium-sized businesses (SMBs), amounts to approximately 5 million. Interestingly, 73% of these sellers invest in Amazon's advertising services. In the third quarter of 2023, Amazon's advertising services generated $12.06 billion, marking a 26.3% increase from the same period in 2022. Amazon offers various advertising options, such as Sponsored Ads, Sponsored Brand, Sponsored Display, Video Ads, and more.
Creating impactful ads that yield positive results has always presented a challenge for Amazon sellers. Effective advertising has traditionally required an amalgamation of art (emotions) and science (data analytics). However, with the introduction of Generative AI technology on October 25th, 2023, Amazon is simplifying and automating the creative aspect for advertisers.
But where did Generative AI come from? Generative Artificial Intelligence, often referred to as GAI, is a technology capable of autonomously generating creative content, including images, copy, and videos. Amazon has harnessed the power of GAI to empower advertisers in effortlessly creating highly engaging and personalized content at scale.
To improve the performance of ads, Amazon Ads has launched AI based image generation, enabling brands to produce lifestyle imagery. For instance, if an advertiser possesses standalone images of a coffee machine, placing the same coffee machine in an AI-generated lifestyle context, such as a kitchen counter next to muffins, can result in click-through rates that are 40% higher compared to ads featuring only the coffee machine against a white background. Amazon also plans to extend this technology to automatically generate titles, bullets, descriptions, and videos.
This solution is especially beneficial for sellers without an in-house photography studio or those unable to afford agency fees, as it allows them to easily create brand-themed imagery and compete with larger brands. Amazon's image generation capability is user-friendly and requires no technical expertise. Click on the image below to see a YouTube video Amazon created to demonstrate the technology.
So, how does it work? The process is remarkably straightforward. Access your Amazon Ad Console, select your product, and click "Generate." Utilizing generative AI, Amazon will swiftly present you with various "lifestyle and brand-themed images based on product details." You can further customize these AI-generated images using short text prompts or enhance them with pre-set themes and settings, such as Kitchen, Office, Christmas, and Family. Additionally, you can save multiple versions of ads for A/B testing and select the ones that perform best. Up to five images can be added to an Amazon ad, which will automatically create a looping slideshow.
When can I use it? Amazon has stated that AI-generated images are currently in beta and only available to select advertisers. However, they plan to expand availability over time.
How do sellers benefit? According to Amazon, the image generation tool is easy to use and requires no technical expertise. In their announcement, the company emphasized that this solution is advantageous for advertisers of all sizes. It enables those without in-house capabilities or agency support to easily create brand-themed imagery while also assisting bigger brands seeking improved efficiency in creative development. Typically, professional-looking product photos result in better ad performance and increased sales, benefiting both sellers and Amazon. By reducing the cost of producing high-quality advertising photos, Amazon enhances the competitiveness of sellers of all sizes. This allows sellers to allocate more funds towards advertising that yields better results. According to Amazon, placing products in a "lifestyle context" can result in click-through rates that are 40% higher compared to ads featuring standard product images.
We expect that in future Amazon will use the lifestyle images to match the search results even more accurately. For example, if the customer is searching for a beach water bottle, ads with water bottle that uses beach as the lifestyle will be given preference over a water bottle with a hiking lifestyle image.
In addition to AI generated lifestyle content, Amazon uses AI in various ways across its platform and services.
Amazon introduced Rufus, a consumer chatbot which uses artificial intelligence to provide a personal shopping assistant to customers.
Inventory Management by predicting demand patterns, identifying trends, and forecasting stock levels.
Amazon's voice assistant, Alexa.
Fraud Detection to detect fake reviews, counterfeit products, and suspicious transactions.
Autonomous Delivery using Drones.
Real-time language Translation to help sellers create global listings.
In conclusion, the future of advertising has arrived, driven by Generative AI, with Amazon leading the way. It is expected that other major players like Google, Meta, and others will follow suit and provide generative AI-based advertising tools. Amazon continues to explore and implement AI technologies across various aspects of its operations to enhance customer experience and improve efficiency.
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