Like Google, Amazon continues to make big moves to position itself in AI-fueled local commerce. Also like Google, the name of the game for Amazon Local Advertising is to protect its core business by integrating AI thoughtfully in product-elevating ways… while walking a fine line to not cannibalize itself.
One of Amazon’s recent moves, for the sake of illustration, is to bring Alexa+ to the web. Erstwhile residing in smart home devices, Alexa+ will now have a web presence (Alexa.com), where Amazon sees a competitive battleground heating up with the likes of ChatGPT, Perplexity, and Google/Gemini/ AI-Mode.
For all these players, it’s about establishing more surface area and user touchpoints as they each try to establish customer loyalty and user habits at the onset of the AI age. And that expansion happens in all directions: Amazon reaches the web, Google reaches smart devices, and everyone wants an AI browser.
The winners in this AI land grab will be decided on a combination of factors, including who has the best data, front-end execution, positioning, and marketing. There’s no clear winner yet, but some folks are positioned better than others: general knowledge in Google… shopping/products in Amazon… etc.
Baked In
As all this unfolds, a looming question is how all these players are treating local search. We’ve spent lots of time looking at Google’s efforts in this area, as AI search will be an extension of traditional search. Just as local search is a valuable and impactful subset of search, the same dynamic will apply to AI.
Back to Amazon Local Advertising, it recently tipped its hand with respect to the local commerce aspects of its broader AI play. Though there’s likely plenty more to come, the latest effort from Amazon is to launch apps within Alexa+ for local commerce staples, such as Angi, Yelp, OpenTable, and Thumbtack.
The way this works is that these apps’ capabilities will be baked right into Alexa. Users will be able to tap into things like OpenTable bookings or Angi home-services queries right within the Alexa interface. That includes a conversational UX to launch a dialogue about researching and getting whatever one needs.
This follows ChatGPT’s recent moves to bring in more third-party apps. We’ll likely see a lot more of this as AI engines look to amp up their capabilities in what will be a hypercompetitive battleground. Amazon could be partly advantaged by its installed base – everything from in-home Alexa devices to FireTV.
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All the Ingredients
All this comes as Amazon’s local media, marketing, and commerce efforts ratchet up, independent of AI. For example, Amazon continues to push into local advertising as part of its broader revenue diversification moves. Ad revenue is one way it can maintain growth as its core business matures.
Its local advertising moves so far include services ads that are contextually targeted to product searches. For example, users who search for pool toys can be served ads for local pool cleaners. These ads have seen high performance, given high degrees of both contextual relevance and buyer intent on Amazon.
This effectively grows Amazon’s addressable market of advertisers beyond products into the long tail of local service providers. These efforts are in early stages now but will likely grow as they run parallel to the revenue-diversification rationale in the broader retail media space, which continues to ratchet up.
Add it all up, and we can include Amazon in the list of companies vying for local media, marketing, and commerce in the AI age. It has all the ingredients to be a formidable player, so it will be a function of how much it invests in this area and how it executes. Signs look positive so far, and we’ll be watching closely.
