James Thomson 7:10
So if you go back five years on Amazon, there was next to no advertising. And Amazon realized, wait a minute, there’s an opportunity to generate a lot of revenue here. You were part of the early team that was building the Amazon advertising platform, changing the way that consumers on Amazon interact with brands to tell us a little bit about some of the big types of choices that Amazon had to make as they move from pure organic search into a model where paid search became a big component of key real estate on the on the search result page.
Bobby Figueroa 7:43
Well, let me start by saying, you know, as you point out, I was fortunate enough to be part of that journey. Yes. It was a, you know, one of the most humbling experiences, you know, being being part of a building. What did It’s, uh, it’s, it’s now a very successful business for helping brands connect with, with shoppers, you know, you know, in a very relevant way. And that’s really a point to that because I think it’s important to understand that the, you know, Amazon being a very customer centric company, it’s it’s always been thought from a from an advertising perspective what are the ways in which advertising can help improve that experience and what was a you know, truly a very relevant way to connect with to allow brands to connect with shoppers, and having the systems to do that was a very, it happened in a in a very
connected way. What I mean by connected is having
customers so shoppers that go to the site, the ability to To discover new brands that they would have not been able to know off before, as well as to, you know, help with all the different signals in making in making better, better decisions for in their, in their everyday purchases. So, you know, five years ago, there was definitely already a platform around display advertising so brands could go in and transact by finding finding this elements of display advertising within Amazon. I think one of the biggest changes has been the introduction of what we what we know today as a sponsor products that you know, lead to a new iteration of all their products. And if you think of it, it’s a it is, in many ways very similar to search engines where platforms allow brands, the ability to promote their their products promote their listings. Knowing that in order to do that, it’s not just about, you know, the ability to pay a particular price to show up, it’s also knowing that you need to be offering very relevant products to that particular audience or otherwise that that listing will not show up. And that is a super critical component of it because going back to the comment around, you know, being customer obsessed and focusing on on the customer experience, the the intent and approach has been and I believe will continue to be to make sure that it continues to be a an experience that is as good if not even better than what complete organic experience would look like. For brands. I believe that this was also a great success because it allowed them to have a program participate in a program that will lead to very direct results that will help them understand their return. Whereas in the past marketing investments were not necessarily linked to the amount of purchases that that that particular product or that particular campaign generated. So I think that’s really been the the the big change the disruption change that has brought many, many brands to start utilizing and participating in these programs. As they know that one it’s trusted by by my shoppers, because it allows the the platform allows for only those relevant impressions, relevant listings, to show to them and to by providing two brands with probably some of the most interesting data points that connect all the way to the to the to the purchase signal. So that’s
James Thomson 12:00
why when I, when I look at my desktop, and I’m searching on Amazon, I’m now in a situation where depending on category product I’m looking at, I could realistically have 95% of my screen covered with ads, and actually scrolling down to get to that first organic search results, if I have to go through a lot of other products just to get there. And so at some point, I can see why some some companies are frustrated. And certainly some consumers may be frustrated by the vast amount of weeding through paid search results. So you need to get to before you actually get to see what is actually selling well already on Amazon what already has traction and traffic and bestseller rank. There’s a lot of stuff you have to work through before you actually get to see those products. How do you figure how do you how do you think about this balance of how much is too much paid search upfront? And how much is an opportunity to present new options to consumers to get them thinking more broadly about their country. iteration set.
Bobby Figueroa 13:02
Let me start by saying that I, I believe that it is important to always continue to focus on what that I’m just going to call it into an experience looks like and what I mean by that is the A when a shopper comes to to the side to look for a product, the answer I think the relevant element to focus on is, has the shopper found what they were looking for. When and I’m just going to give you kind of a quick anecdotal story. When you go to a physical store, your Albertsons, Walmart. Many, probably most consumers don’t realize that every single product that they’re seeing on the shelf has already paid money in order to be there. Yes. So they’re not required to put a label there that says, Oh, this product paid for being here and this product paid for being here. If you walk into the store you see an island a product, someone paid additional money for that product to be there. There’s no coincidence that when you walk to the cashier, and you see the products right there in the cashier, someone paid to be there. So, in a in a way, the experience is completely the same as what consumers have seen before. And because finding the products doesn’t finding the products that they need, what’s not an instance of them having to decide, well, if this brand is paying to appear here, should that brand should that particular product be less important than this other one that didn’t pay for it? And the answer is that no, it’s just basically the way in which an online platform now is able to present those those products. Now, if a product in that, let’s just say a search query, if products were to start appearing there that are new no longer relevant to that particular experience. Yes. And then it’s about experience it’s it’s the, you know, equivalent of walking into the, the water i o just to find milk there. Well, I, I know where to find milk. I don’t want to find the water here. But if you show me a water bottle as well, like, do you want to go on a camping? I want to have my my canister filter, we want it? Oh, that’s an adjacent that’s more relevant to me. And, you know, I went too close. Maybe I should have said, you know, water and I don’t know, coffee beans or water and, and baby foods. I don’t know. But you get the point. So it’s the same. It’s the same type of experience. And it’s not really about, you know, counting how many of these are sponsored by a brand or paid for versus how many are organic, so that from a, from a from a consumer perspective, I don’t believe impacts as the experience continues to be an experience. That’s true. element, again, you go back to was the task completed. So a shopper looking for a particular product, they found the most relevant products in the category. And that’s what the platform is the what the platform is able to accomplish. Now, from a brand perspective, the IE, you know, you mentioned, Brent’s can get frustrated by the fact that many of these placements are now paid for, well, it’s the same. It’s the same that happens when you go and try to sell your products anywhere else. Hey, if you want to be if you want to be in the catalog, well, you’re going to have to negotiate certain terms that most necessarily mean you’re going to have to pay some fees. And if you’re going to want to have any kind of placement that you believe will will improve the odds of your of your of your brand being purchase, then, you know, you’re going to have to pay for them. So I believe that really what’s happening today is more of the How can brands effectively Build through that transition? And what are the kind of tools and insights and partner teams that they need to work with in order to manage the understanding and ongoing growth of this particular channel?
James Thomson 17:15
Okay, so that’s a good transition for me to ask you about gradient. You You left Amazon and you started a software company. What your company does is a little bit unusual to tell us why you created your company and what what it’s meant to serve, who it serves, and what what ultimately people should be looking for if they end up using your business.
Bobby Figueroa 17:38
Thank you. Thanks for the question. James. So gradient.io I founded the company in early 2018. And what led me to to start grading was the inside of all these brands that I had the opportunity to work in close with. Realizing that with all the sophistication of the platforms, there is still a strong level of, of data and insights that is not available to any of these, any of these brands. When when operating with in this marketplaces, and I’m not just talking specifically about Amazon, I’m talking about any any marketplace that has a platform could be a search platform could be social. These platforms are full of its algorithms that make the decisions. There’s no human behind, kind of on the other side deciding, oh, this is how much I’m going to charge. This is where I want to where I want this brand to show. It’s really the work of algorithms and these algorithms, we you know, we typically refer to them as black boxes. So for a brand to be successful. And you know, this goes back all the way through to my years at Procter and Gamble, one of the first things that that That you you learn as you understand, you know how to drive success for your brand is how presence at a point of purchase is a leading indicator to your sales in the in the physical world. Companies will contract out teams that basically bring all that information of what’s happening at that at that point of purchase, they will tell you, you know where your product is being shown, what are the products that being that you see on the shelves? What are the what are the competitors are showing next to you? Yes, when you go into a into an online marketplace into an e commerce platform that having that information becomes really hard to get. First because every depending on how shoppers are looking for the products that we source could be completely different. And and there is a woman The last number was over 600 million products that exists on the catalog just in the US. So think about how do you how can you make sense of all of that information every day you hear about new brands entering the marketplace. Now, Amazon in particular has made it super easy for brands to to start to start their business as they helped provide with lots of lots of services. So, how as a brand Can you keep up with the dynamic of this of this space? So, that was the that was the problem that I that I sought to, to solve through through gradient. And the kind of the focus of what we do is machine learning. So through machine learning, having the ability to create ways in which brands can better understand what this digital shelf would look like and
make, make the recommendations to help them be successful. Late that late last Last year, we released the first ml scoring for four brands. So the feedback that we heard from for many of these brands was, what is how can we summarize a starting point for me? And the way we thought about it was, can we develop a universal scoring mechanism that will allow brands to understand their holistic health? in other industries, for instance, in the credit industry FIFO score is a great example of a metric that allows consumers as well as companies to understand what is the health of your of your credit. So we we we use a very similar approach where we have a metric that basically allows every single brand to understand how well they’re doing. It’s a it’s a score, then that can be decomposed into helping brands think about how well Are they showing their products in the experience? If a brand is showing, well, that will lead to more product page visits? How well is the quality of those, those pages? If those pages are going are doing very well, it leads to more add to carts. How well are other shoppers reacting to your product once they purchase it. And that is a big contributor for shoppers to ultimately make the buying decision. So in many ways, our score is this end to end representation of how brands go through the funnel within e commerce all the way from being discover to being purchase.
James Thomson 22:41
So what what are the types of tactical decisions that you see brands using? If they’re looking at the data that you provide them? What are the insights that you’d like them to be taking away? And I guess the second question is, what are the types of insights that today they’re not taking enough away and quite frankly, they’re Leaving opportunity to make their businesses better because they’re not thinking about how to use that data to better inform their business.
Bobby Figueroa 23:08
Great question. So, I would say that there’s basically three, three broad buckets. The first one is the OSI as I was mentioning precedence, you know, being the most important leading indicator to sales. And in very simple terms, what I mean by that is, if a brand doesn’t show up, when a when a shopper is is looking for products in your category, it’s guaranteed you will not get any sales at all. So, the first thing is understanding helping brands understand where are they showing, what are the what is the the context of when they are being shown. As you can tell from the experience today in Amazon presence is not just driven by search results when you are exploring products in their purchasing product pages, you will have opportunities to see other brands as well customers that purchase this also purchase that customers have seen these products or have seen these other products, these are sponsored products relative to these particular product. There is a large number of areas where brands will get exposure. So, first of all understanding where when a next which runs your brand is showing up, we’ll help brands make better decisions for understanding one how they’re how they’re appearing organically and to where are the opportunities for for driving more of those paid impressions once they’re able to start being visible to the right audience to the right audiences. The second big thing that we help those insights help with is what are the things about their product pages that can help them improve both their their They’re they’re organic and paid presses, but also in helping them get successful conversions conversions to add to cart. And this can be things like recommendations on their, on their titles and descriptions. Our system creates a universe of keywords that are relevant to every single category. And by doing that, we help understand brands, what are the most important signals in this case keywords and phrases that help drive the the relevance of products in that particular category. So many, many brands you will not you will not believe it, have it’s so deficient pages in the way they written their their product names to descriptions, the type of media that they utilize the lack of unity Seeing better layouts like eight plus pages. So our engine is basically provides the recommendations to help those brands improve those pages. And lastly, as it relates to how other shoppers are reacting to your products, we help them better understand what is the what is the, the rates of those positive reviews, the velocity of them velocity of negative reviews, how does he compare with all their other other brands? How often do shoppers provide feedback? So this is the kind of early stage of how we’re helping brands better understand all three components we believe there’s many more signals that we can help and just to give you a sense of, of breath, like how deep do we go? today for every single product that we observe, we’re looking at over 100 different variables that are then part have all of these three components that that were that we provide a score for. So if you basically do the math, it’s, you know, over 100 points, times, you know, hundreds of products in any given brand, and many cases, even thousands of products within a given category, it becomes a very complex system, that through the platforms, like what we have, we’re able to basically provide real time information on all of these elements, as well as the generation have recommendations to help improve them. So that’s kind of in a nutshell, what the what would what the gradient score signals and kind of some practical examples for how our platform helps brands.
James Thomson 27:48
So let me ask you this, Bobby, one of the unusual aspects of the Amazon platform is the huge number of me two brands that show up and let’s imagine you’re a big national brand. And you’re looking at the Amazon channel. And quite frankly, the hyper competitive pressures available where? Yes, there’s basically infinite shelf space on Amazon. But there’s still only one page of first page results. And so I’d love your thoughts on how do you how do national brands need to think about what they’re doing in order to be able to win in an Amazon channel where there is next to no barriers to entry for new brands to come in and try and nibble away at the market opportunity?
Bobby Figueroa 28:34
Well, I think that not just national brands, I think all brands are on equal terms. And that’s really the difference here. You you have the ability to enter the market in similar ways. And, and the way to basically think about winning in the channel is how to effectively connect with These with the shoppers in the platform, I believe it becomes also an opportunity for brands, again, of all of all sizes and of all kind of geographic coverages to be able to start driving a penetration into into this generations that are now shopping online. I mean, there’s a higher concentration of younger generations that do more of their shopping online than they do it offline. I personally believe that will continue to see both online and offline purchasing. But for national brands that have historically sold in, in in kind of confined environments where there’s a limited amount of inventory, a limited amount of brands, what they need to embrace is the ability of working with youth. Technology and a new teams that have the expertise to understand these dynamics. So yes, instead of being 10 brands said you have to compete against now you’re probably going to be competing against 100. So, it is a least an order of magnitude difference. And in order to manage that, you cannot be monitoring your experience on a monthly basis like you’re used to, you need to be monitoring your experience on a daily basis. You need to be able to have those signals to to look at how is your business changing today? How is it different from yesterday? What are the new brands that are coming in the new brands that are coming out? Is this creating more pressure points or opportunities for the types of products that that as a national brand, you have, have you been slow to develop new variations of your product that are actually picking up velocity with with these with these audiences? Do you need to innovate on on how you package your products that counts? The pricing? So it’s, you know, sometimes it’s thought as Oh, I don’t really have that many levers, and the platform decides if I show up or not, no, there are indeed a lot of levers and go beyond just the do I advertise or not? It It has to do with making sure that you have developed the right product for the right category for the right audiences. It to do that it helps having a much better understanding of what those audiences like, what they don’t like, what are the what’s the competitive landscape like, so that you can help so they can become, you know, as nimble as many of the others, older brands that exist now and kind of new to this channel, and and compete effectively.
James Thomson 31:57
Bob, I want to change gears here I want to talk with you About your early days working with brands, at what point did you realize you were good at helping brands to think about their online business, thinking about what they needed to do to be successful? Now, we’ve all been through the situation where we’re young, and we think, we don’t know anything. And all of a sudden, there comes a point where we say, you know what, I’m actually pretty good at this little piece over here. What was that turning point for you?
Bobby Figueroa 32:27
Well, I, you know, in terms of helping brands succeed, it really goes back to my early days at at Microsoft and then Google and Yahoo. So I’ve been I’ve been in this business for over 20 years now. And, you know, for me, it’s always been, what are the what are the opportunities in which, through technology, brands could be able to connect in much more meaningful ways with with consumers, and that’s really the premise that I saw in in the, you know, early super early 2000 Since when I started this journey, after after having to work at a brand manager, and and you know, having having rough understanding of, of how you you drive those connections and build brands through the offline traditional methods, it was well, you know, we have the opportunity now to utilize technology to help brands connected in a much better way. And then it was you know, that’s that’s always been the underlying premise that I’ve that I’ve been operating on there through through through the last couple decades. applying it now into e commerce, of course, because that’s the, that’s a I believe, still a very nascent area. I a stat that I like to remind people is that sales happening through e commerce still represent less than 10% of total sales. So in many for many brands, you know, this is their I would want to say they’re not paying Particularly brands that, that have, that are big already that have grown their business outside of e commerce. They they look at e commerce says, Hey, you know what, this is a very small portion of our business deal. Why should we put in so much attention to it? And and it’s a typical, I think it leads the way to becoming a typical disruption. moment where, you know, for brands that don’t have that, that that is haven’t developed their their their sales in a, you know, through traditional channels, and are all focused on e commerce. You know, they’re 100% 90% of their sales is what they sell through e commerce. So wonder how much attention they’re going to put to that particular channel? Yes, 90 to 100% of it. And that’s I think one of the one of the major things that I believe for for national brands, they need to treat this channel not as a smallest part of their entire business. The next biggest channel that they could potentially have in within the next five to 10 years
James Thomson 35:09
as you have become a small business owner and you’ve had to go out on your own and do things as you think they’re right, the right way to go and build your business, what is some of the best advice that your mentors professionally have given you, as you think about how to continue to be an entrepreneur and a small business owner?
Bobby Figueroa 35:31
Well, first of all, it’s a it’s been phenomenal experience and, you know, I’ve managed teams, so thousands of people, and, and I always go back to growing up, I grew up in a in a small company environment. My parents got their own business and, and I remember ever since being 12 years old, until I graduate from college stats, I was there helping build this business and it’s a you know, I learned I’ve learned a lot from from from both of my parents, one of the main things is in, you know, believing in what you are, what you’re working on believing in your own idea, and, and bringing with you people that, that, that you can trust that they believe as well in the same idea, but that trust and, and and are, are very good at what they what they do so that you can, you can learn from them as well. So, I think this, you know, it’s not just in building my own business but also as through my career. It’s been a two to two piece of advice that I that I’ve always utilize. You know, results don’t happen just because you have an idea you need. You need teammates and teamwork to be able to do this. So I’ve always been super humbled by the people that I’ve had the chance to, to recruit and work with them and and and you know, Being able to create a vision and, and kind of push it hard and be very passionate about it. The I think the most important part has been by by hiring this group of people, it’s just being able to be very agile, I tell my team I much rather get to the wrong outcome fast than not execute on anything because we fear that we may not be going on the right direction. So by by by acting fast and failing fast, I think we’re able to learn more and link work weaker and and adjust weaker. I I don’t necessarily believe in a you know, three year plan. As you know, thanks keep sharing particularly when you when you’re managing a small business, your plans get adjusted on a on a daily and weekly basis. But it’s it’s it’s, it’s I think because of the ability of of learning and using that data those learnings right away to keep going. So those are, like I said, some of the some of the great mentorship that I’ve gotten from from my parents as well from many of the, of the people that I had the
luck of working for and working with during during my
James Thomson 38:22
years. Bobby, I want to thank you today for joining us. For those of you who are interested in learning more about Bobby’s organization, please visit gradient.io. That’s it for today. Thanks for joining us.
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