Amazon is quietly piloting a program to let brands like Maybelline and Folgers pay to send free samples to consumers — all based on what the retail giant already knows they're likely to buy.
Why it matters: Turning free samples into new targeted ads plays to Amazon's strength as a trusted delivery service of everyday goods, something Americans already expect from the company. Amazon is betting the sample strategy is something its biggest competitors — Google and Facebook — can't match.
The big picture: Analysts see this as a big advantage for Amazon in its efforts to take on Google and Facebook's ad dominance. The tech giant has the purchasing data and logistics infrastructure to offer samples of actual products, which could be more effective than display ads on Facebook or search ads on Google for certain kinds of consumer packaged goods brands.
Display ads are currently how Amazon makes the majority of its roughly $5 billion in ad revenue. But Amazon says that marrying old-school samples with its customer data will provide brands "a higher likelihood of conversion than display ads,” according to a summer job posting.
How it works: Samples of new products are sent to customers selected using machine learning based on Amazon's data about consumer habits, according to recent job postings and details listed on its site.
Amazon declined to comment. The company has experimented with different approaches to samples, including one where Prime members can buy samples and get a credit for a later purchase.
Between the lines: Analysts predict that offering consumers samples of products in the convenience of their homes also opens up opportunities for Amazon to sell more packaged goods and products.
Yes, but: There could be privacy concerns. Customers are getting items that Amazon’s vast trove of customer data predicts they'll want to buy. But some customers could feel violated when something they haven't ordered shows up unexpectedly on their doorstep.
What’s next? “Ultimately, this product leader will develop a suite of sampling products and unify Amazon’s sampling offering, establishing core differentiated capabilities and effectively monetize this Ad format,” says the November job listing.
Our thought bubble: Facebook and Google built their ad empires through precise targeting and platforms where companies can spend millions without dealing with a human salesperson.