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Ep 607: Rufus Reads Your Images – Why 40% of Amazon Searches Are Already AI-Driven
00:29:45
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Is it getting harder or easier to advertise or to grow your brand on Amazon?
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Right now you have to look for disruptions in the market and try and get ahead of that trend and ahead of that disruption and use it as an opportunity for your business. Right now there's one that's happening and it's Rufus. What Rufus is doing is shifting from a product oriented search into a problem oriented search. A lot of brands are likely still building their listing for keywords. We're not saying shift away from that, but you do need to integrate both. So how do you do that?
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A
And I am here with Tyler Mazur, head of Pilothouse's Amazon team. Welcome back to the All Killer no Filler podcast. And congratulations on your first kid you were just telling me.
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B
Yeah, thank you. It's good to be back. I'm right in the thick of it right now, so I'm excited To get back after being in pure dad mode for last couple weeks.
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A
Nice.
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C
In the fast and ever evolving world
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of Amazon, set the frame for us right now. Is it getting harder or easier to advertise or to grow your brand on Amazon right now?
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B
Historically, Amazon has been viewed as kind of like this gold rush. You can find a product, list the product and then print money. I think that's changed a lot over the last few months in the last couple years, to be honest. And it's because there's a few things at play. One, it's becoming way harder to be profitable on Amazon. Amazon keeps increasing their FBA fees and fees to sell on Amazon. The competitive pressures keep driving price down. So you're trying to fight this suppression from the top and this increase from the bottom. But I think the bigger, more interesting trend is the amount of large brands that are starting to take Amazon more seriously and the amount of ad budget that is moving from other channels into Amazon as well. Amazon is predicting around 96 billion in ad revenue spent on the platform this year, which is crazy. And it's one of their fastest growing divisions. And this is just a sign that a lot of people are seeing Amazon as an avenue for their advertising budget. But then there's also signs that there's bigger brands selling on Amazon as well at the same time that you're actually seeing less smaller sellers also come into Amazon to sell. So revenues are increasing for Amazon, ad revenue is increasing for Amazon, small sellers are decreasing, but the amount of big brands performing and generating revenue on Amazon is increasing. So you now need to have like a strong brand to compete.
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C
Back me up for. Why do you, why do you think
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A
it is that some of the, that bigger brands are, were averse to being on Amazon previously? And why is that changing?
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B
I had the luxury or the burden of working for a brand before joining Pilot House that was resistant to selling on Amazon. And, you know, talking to other brands and understanding why there's resistance. There is because you do kind of give up your control of who that customer is. Right. Like if it's your own direct website, you know who that customer is when they showed up to your website, how to retarget them when they go to Amazon, you're giving that up and you don't necessarily know who it is and when it's happening other than just the reporting that Amazon gives you. So there's that plus there's the margin suppression. So Amazon knows that they're the biggest online mall in the world and they try to take their tax with that, and that was a really big reason for the brand that I previously worked for. It was like, why would we want to move our products to a lower profitability channel? But the problem is their customers were choosing to buy from Amazon. So then if you don't decide to build a strategy and compete there, then someone else is actually slotting in and potentially stealing a customer that you had from another channel that now wants to purchase on Amazon.
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A
I think that makes perfect sense. And it's like a lot of these big brands probably have such large distribution footprint. So they're in retail, they're in all of these different places. So. So they see Amazon as like a, an additional place that, where they get lower margin. But the fact is it's the primary place for so many consumers at this point, right?
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B
Yeah. And I think we have a lot of stats to kind of back that up as well, especially in the U.S. so that's where a lot of the data is and stats are really based. But if you look at the US market, you have almost 70% of shoppers that are prime members in the US it's a huge number. I think there's 100 and almost 90 million prime members. There's stats that show that 63% of people start their product searches on Amazon now versus Google. So if you're even looking for a product, it doesn't even mean that you need to buy on the platform, but it's still a part of that journey. And that buying journey, you might actually do your research on Amazon to find it. So if you're not there, then you're not going to be a part of that equation. And then also there's evidence and data that shows that 10 to 20% of customers, depending on the category, they will only buy on Amazon because of Amazon's fast shipping, because of their refund policy. And just the overall trust in the platform itself makes sense.
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A
This is another point. But it's like once, once stablecoins roll out too, and Amazon is able to kind of create economies around people's shopping lifestyles. More on Amazon, I see it becoming even more entrenched in the future. That's a whole other point that we don't really need to get into. But you paint a really interesting picture here where we've got the bigger players moving in, pushing out, making it, you know, more competitive. You're going to have a hard time competing on price or budget against a behemoth, right?
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B
Totally. I think that's where you got to get scrappy. You got to get entrepreneurial you need to get creative and figure out what is that avenue for you to still beat them or compete. And I think this actually goes for those bigger brands as well. What I'm about to say, you have to look for disruptions in the market and try and get ahead of that trend and ahead of that disruption and use it as an opportunity for your business. And right now there's one that's happening and it's Rufus, Amazon's AI Shopping assistant. And Rufus is that disruption for a lot of these brands because it's changing how search is being done, but it's also changing how brands can show up for search based on how they optimize their detail pages or content itself. So I think the ones that are thinking about that, not only thinking about it, but then integrating it, there's a huge opportunity to try and move the Rufus type searches to your brand versus a big brand that might not be implementing that or a competitor that isn't implementing that right now, a hundred percent back up.
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A
So I've actually never used Rufus. I've just, I've been so, I'm such an Amazon. Like I've been used Amazon for so long, so so many of my, my online purchases are coming through there. I just, I search in the search bar. I find it this idea of an assistant to help me in this process. It, it's. I'm not there yet. I'm not using it. So what, what is the experience using Rufus like?
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B
Yeah, so Rufus is actually baked into that search bar right now. And there's like a little icon that shows when you can ask a Rufus question. Or there's like a sidebar that pops up and it's like a side chat where you could talk to Rufus itself before you even end up on a product page. I would say you're actually in the majority right now. So 60% of customers aren't necessarily using Rufus in their searches right now, but 40% of customers are and that number's continuously increasing. And Amazon's investing in Rufus and AI Shopping to also increase that number even more. So there's that, but then Rufus also shows up on the product page. So if you're looking at an image, there's now questions that show up underneath that. Rufus is essentially trying to help you get to your purchase decision, where it's like, how many times could you use this a week? Or what environments can you use this product in? And it's already suggesting based on the product content, what a customer might be looking for. And it's slotting that at the top of the page, right under the image gallery. So it is trying to start to integrate Rufus into that buying journey a
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little more on Amazon and in multiple places. I think it's, I think that's a good point too. Exactly. Not just an enhanced search bar, it's like baked in to the whole product. We've got Amazon CEO talking about it publicly. You're seeing this major trend and people using it more and more. So you're seeing it as a way that forward thinking brands in that like 5 to 20 million dollars range can compete against some of these, you know, billion dollar behemoths by, by getting ahead of the Rufus curve and optimizing for Rufus a little better.
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B
Absolutely, yeah. And I think you might ask, okay, why would I do that if only 40% of sessions or searches are using it? Well, in those Sessions there's a 60 to 100% increase in purchases occurring. So it shows that when a customer is using Rufus, it actually is helping them make that purchase in a way higher probability than it was before. So I think as Amazon sees that indicator, they're going to do everything they can to integrate it more. So yeah, it might be 40% today, but I think really you want to get ahead of that and try and set yourself up for when that shift does happen and it does tilt that. You're one of the brands that is there and optimized and ready for it
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and its efficiency, as you're saying, is way higher. So even if it's only 40%, if you've got a 2x efficiency on, on how well it's selling and converting, it's going to become worth it in a hurry.
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Yeah, exactly. I think the math kind of plays out itself.
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So what are some of the things that brands can do to prepare themselves for the world of Rufus?
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At the highest level, what Rufus is doing is you're shifting from a product oriented search into a problem oriented search. With problem oriented searches, you have more context around it, around the use case itself, around the customer itself. So you need to start integrating that into your written content, but also visual content. And a fun fact here is that Rufus reads and in air quotes here reads your images. So I think that's something that is really important to understand because it can actually understand the context in an image. So if you have a, I don't know, I don't want to use one of our brands but an air fryer and it fits, it's compact, it fits in like a small place, you want to show that fitting in Either a cabinet or in a spot above a fridge in your image. And Rufus understands that, okay, this is compact. This is the type of environment that makes sense for it. So you need to think that one level deeper and understand who that customer is that you're trying to speak to, and then bake that into your content as well and talk about that customer from different levels. So you're going to have customers that are kind of unaware of the solution to a product. They're problem aware and then they're product aware, and you need to speak in all three of those levels. And there's probably even more levels in between that. Right. But you need to help Rufus serve that customer at each step and give Rufus that context so that the customer can get served your product.
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A
Makes perfect sense. Why is that the analogy on this podcast all the time? People don't want a 2 inch drill bit. They want a 2 inch hole in their wall. And so the same thing with, like, they don't necessarily know they want a compact air fryer, but they do know that it needs to fit on their counter. It needs to fit. So. So you sort of jump ahead of that curve and show an image that addresses one of these main questions or problems that a user would have in order to buy that. So you have to kind of think 360 degrees about all the problems that your particular product solves and show those totally.
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B
And I think, you know, there's so many different ways that we can look at this for so many different products and brands. But another thought is if you have like a waterproof item in the past, you might describe what material it was that made it waterproof, but now you actually have to describe that in heavy rain. This product will protect you on hikes X, Y and Z. And start to build that context for Rufus, because someone might actually say, I'm looking for a jacket for hiking in Seattle. And then Rufus bridges that gap using your context in your content and the context that the customer gave it.
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The why, answering the why, not just the what.
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Exactly. And I think, you know, we're speaking high level here. And there's specific things that you could do in in the back end that also help Rufus understand, like backend keywords, but also image alt text. And I don't want to give away too much of the secret sauce, but I think, you know, image alt text is something that not a lot of brands are leveraging right now. And even if they are, they might say what the product is, but you want to describe what that product is and who that customer is for that product in that alt text.
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A
Does it mean you're having the alt text? Makes perfect sense as something everyone here should go and take a look at. And then when it comes to your actual product description, your images, are you adding more copy than you normally would? Are you adding more images than you normally would? Are you trying to, like, how many problems are you looking to build into your copy and your images? Is it like just the main one? The main one or two? Or are people really maxing out the content that they can put into their listings with this?
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B
So I think with all of these changes on Amazon, you're trying to still learn and understand and pivot and you're constantly testing. Right. So I don't have an exact answer for you, but right now I think it is, how can you add as much context with the real estate that you have? And if you have that real estate, why wouldn't you use it? But you still have to understand that it is a human that is going through your detail page as well. So what's that story that you tell and what's the order of those images or the order of that content and how does that show up on your page? So I think that's still super important. But if you have two, three more spaces for your images, why wouldn't you use that to reinforce that context?
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Do you know if this has any implications? Because I think a lot of people
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are still using AI on Claude or ChatGPT or Gemini or one of these other major platforms. And then if they're, then they'll be doing shopping and they'll get Amazon listings from the other external AI tool that they're using. Is Rufus also a bridge into like, answer optimization for these other engines? So, like, if you're optimized for Rufus, you're more likely to be optimized to be discovered on ChatGPT or Claude because it's similar logic.
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B
Yeah. So I think that's like a really astute point because now you're listing by optimizing it for Rufus and providing it that context, you're also more likely to show up in these other LLMs because they use a very similar algorithm. That said, if we're talking about trying to show up on, let's say ChatGPT or Gemini and have your Amazon listing show up there. I think Amazon is trying to beat them out.
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Right.
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So that a customer will never go there because Amazon has your purchasing behavior, your browsing behavior, and your search behavior. So come to us and everything will be more efficient. There. So that from their mentality, that's where they would like to win as well. But in the meantime, Obviously these other LLMs are still pushing people elsewhere.
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C
And then when it comes to reporting
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how, like how, how does reporting look when, when a sale has come from Rufus or Rufus was involved? Are you. Does Amazon report on when Rufus had valuable touches in the purchase chain?
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Amazon has actually added a new section in Amazon advertising reporting which shows you purchases or searches that were prompts essentially. So you can actually select anything that was a prompt and a prompt is anything associated to Rufus. So I think as this gets used more and more, there's going to be reporting that Amazon is now providing sellers to help them better understand. And then in turn you can use that to optimize. But it's not something that's like widespread right now. And I think you just have to use what's available right now to give you that indication of if it's working or not.
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A
And do you see these evolutions as ways to improve top line distribution or top line revenue sales, or are these also, you know, tactics and strategies that help improve profitability?
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Probably both, but this is where we need to track right. And set up reporting to understand the incrementality when you implement these changes. And I think, you know, they say that like conversion rate is your essentially another way to bid on Amazon because if your conversion rate isn't high, then Amazon actually won't serve you because they want to provide that best experience for the customer who's searching. So you might have the highest bid, but the lowest conversion rate, your ad's not going to be served because of that. So if you do improve your conversion rate, then it's almost like a compounding thing that happens, right, where if your conversion rate's high, you'll be served more, which means more glance views, which means likely more and higher revenue eventually. But on the way to that, because your clicks are more efficient, you're also saving on profitability. So I think to answer your question, it's still kind of hypothetical, but I think you can kind of serve both of those things eventually.
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A
So what are three simple steps that a brand who's never really thought about Rufus, never thought about the Rufus evolution? They've kind of just built, built their PDP for, for, for search reps for what are maybe three things that people could go do right now in their Amazon accounts to be more thoughtful of the Rufus future?
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B
Yeah, so I think a lot of brands are likely still building their listing for keywords. We're not Saying shift away from that. But you do need to integrate both. So how do you do that? Amazon is starting to implement rules where they will either suppress your listing or not index you if you're using certain words and terminology. So first thing I would say is get rid of that type of language. Examples of that would be like marketing language like premium superior perfect or like trust triggers. Right. Like 100% are authentic and then vague descriptions like fresh or taste good. Amazon's really starting to combat that. And I would say remove that immediately and start to add contextual language around the product and the use case and especially the benefit. So it's like mapping your features to the benefit that that feature provides and explain that. So that would be like a pretty easy thing to do. Immediately backend keywords. So making sure there's no repetition in your product pages what you're targeting. Back end and then also keyword stuffing. Exactly. So you're kind of shifting away from that which used to be very much an approach and now it's finding that balance between the two. And then I mentioned one earlier around image alt alt image text. So like if that, that's a pretty low hanging fruit thing that you can go and do now, especially if you're not even using it at all. And then you Talked about other LLMs. Well image alt text is also readable by Google and also these other LLMs. So that can also help their pathway into Amazon as well.
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A
And, and I think you kind of mentioned this as well. But it's, it's your listing having you know, thought about the problems that your, your product solves contextually. But then that's also carrying that through into the images and then further than that making sure those images have alt text that, that probably speak about the issue contextually as well. Well, there's a three part plan for anyone listening to go optimize for Rufus. Sounds cool.
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B
And the, and the fourth, the special fourth part of that plan would be the creative and the content itself. Right. And I think that isn't low hanging fruit like you need to work with either a team that can do that for you in house. But I think that is really where you're going to separate yourself. Especially knowing that Rufus is using your images itself to read and gain context. So making sure that you're not just offering generic images and just generic lifestyle like actually provide images that your customer would like a situation that your customer would be in or using that product.
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A
I think that's a great tip. It's so, and it's so Similar to what we talk about all the time for Meta and Andromeda. Right. Is really meeting where your customer. Where. Where you're at with your customer, having a real understanding of each of your customer avatars and how each of them engages at different points with your product in the. In the awareness and consideration and conversion phases and. And then making sure that your ads reflect those touch points. And it sounds like that's bleeding into. Into everything now, which is just good marketing, really.
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B
It is funny because you heard all this buzz around like Andromeda for Meta and it's like now Rufus is almost kind of playing that role now in the Amazon ecosystem, and you're almost creating creative first for your customer and then Amazon's almost like helping put that in front of the right people person rather than you having to do that yourself by keyword stuffing.
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A
Yeah, yeah. I remember one of our first podcasts we did on the Amazon team. We were talking about the ways that you can just. And those are the most annoying product listings in the world where they're just. You can just tell they. They have, you know, all of these extra adjectives in them that don't really mean anything because they're all. They're not objective, they're all relative, they're all. And they're all marketing words. So probably a good thing in the long run.
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B
I think it is. And it's funny because at a time that worked, that's why people were doing it. Right. But it doesn't offer a great experience for the customer. And I think Amazon always finds that out because their customer centricity is one of the best in any companies in the world. Right. Like, that's why they are what they are today.
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A
So Amazon is still a bigger opportunity than. Than anyone thinks. It's still bigger. Competition is getting tougher. And so Rufus is one of the ways you can look to get an edge against some of these behemoths, amongst many other ways.
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B
But yeah, Rufus is like one of those disruptions that's happening in the market right now that you might want to jump on so that you can be one of the first wave of brands to start to show up and optimize for it.
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A
You heard it here first, folks. And if you want some help in optimizing towards this future, then you got to come talk to Pilot House. And Tyler couldn't think of a better person to do it.
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B
That's right.
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A
Nice, man. Any news with Bezos? What's up? What's Bezos up to these days? I always like to check to see if there's anything new that he's up to.
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B
I think he's living the life.
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A
That's what he's doing now. He's getting, he's got good plastic surgery. I'm just seeing. Is there anything in the news? No, there's literally nothing that he is related to. He's not the CEO anymore. Nothing to report on Bezos or Lawrence Sanchez Bezos. Let's just stick to the, the beneficial facts about Rufus and such.
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B
I still think he's associated with Blue Origins, but for, for Amazon, I think he's letting Andy Jassy take the reins.
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A
Oh, I'm just looking the headline at the headline Jeff Bezos botched space launch was so bad it could threaten NASA's entire moon program. So that would be quite a feat if he derails the whole space program. But keep it up, Jeff. And Jeff, you can come on the podcast anytime if you want to clear any of this stuff up. Yeah, yeah. Andy Jassy as well, fully. Welcome to join me and Tyler on a podcast. But until then, thanks for coming on today. This was fantastic and congrats again on your five week old wonderful child. That's such a, such an amazing time. I remember it's you look, you won't remember it like so really cherish the moments because it just becomes an absolute blur when you think back to it.
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B
Oh, it's super fun. So can definitely feel that.
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A
Thanks again. Chat again soon.
- [29:13]
B
Yep, sounds good.
- [29:20]
C
Thanks for listening to today's episode. If you're not getting the D2C newsletter, you can subscribe for free at directtoconsumer. Co. And if you want to learn more about Pilothouse's all killer no filler services, take off to Pilothouse Co. I'm Eric Dick and this has been the DTC podcast.
- [29:36]
A
We'll see you next time. Sa.