Amazon Unbound by Brad Stone

Author:Brad Stone
Language: eng
Format: epub
Publisher: Simon & Schuster
Published: 2021-05-11T00:00:00+00:00

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In a shake-up that summer, Paul Kotas was promoted to senior vice president and placed in charge of the entire advertising group. Lisa Utzschneider, Amazon’s longtime global VP of ad sales, who had previously reported directly to S-team member Jeff Blackburn, quit in frustration six months later to work for Yahoo. Amazon’s nascent advertising effort was in tatters.

Kotas had joined Amazon in 1999 from D. E. Shaw, the Wall Street quantitative hedge fund where Bezos had conceived the original idea for an online bookseller. He liked to tell employees the story of how Bezos had actually recruited him to join Amazon in 1997. His bags were packed for Seattle when he decided to stay at the hedge fund at the last minute. The change of heart ended up costing Kotas millions.

Other than a fondness for punk and new wave music, Kotas was, like many of his colleagues, obsessed about metrics, like the length of time it took for ads to load, and fanatical about the leadership principles, such as frugality. “Tell me more about this dinner on your expense account” was a familiar refrain to his direct reports. When ad execs gathered in “war rooms” at the start of the peak season to monitor the performance of the holiday ad campaigns, Kotas could be relentless: “If any of you are thinking about going to grandma’s house and turning off your phone and not being available, think again!” an ad exec recalls him saying one year.

Kotas took over as sole manager of the beleaguered advertising group just as the possible answer to its perennial problems began to reveal itself. At the time, Amazon’s marketplace business was clicking into high gear. Third-party sellers—including the flood of merchants coming online from China—were eager to boost the visibility of their products on the increasingly crowded pages of search results. The solution was obvious: charge them for it, just as Google taxed web publishers to promote their websites in its search engine.

Amazon’s Google-style-search ad auction was called “sponsored products.” It allowed a third-party seller of bedsheets, for example, to place a bid to feature its linens whenever customers entered terms like “bedding” into Amazon’s search engine. At first the ads showed up at the bottom of the first page of search results; if a user clicked on a sponsored listing, they were transported to the product page and Amazon collected a fee.

As Amazon expanded sponsored products into more product categories and the ads migrated to the right-hand side of the page alongside search results, the advertising team had trouble developing the necessary technology fast enough. It had to build a search auction system to take bids from advertisers and a tool to track the effectiveness of the ads and report the results back to them. Amazon’s first search advertisers recalled that early versions of these services were flimsy. “The reports you would get back about the success or failure of the campaigns we ran were very, very poor,” said Jeremy Liebowitz, the former global e-commerce vice president of Newell Brands, maker of Sharpie markers and Elmer’s glue.

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