Former Amazon Ad Executive Gets VC Funding for Marketing Startup

(Bloomberg) -- Gradient.io, which helps brands advertise on Amazon.com, said it raised $3.5 million on Tuesday, the latest example of former employees of the largest online retailer trying to turn their inside knowledge into new businesses.

Digital ad veteran Bobby Figueroa left his job at Amazon.com Inc. in January to start the company. Flying Fish Partners, co-founded by another former Amazonian, Frank Chang, led the funding round.

Figueroa is looking to ride a wave of ad money shifting to Amazon, where more than half of all online product searches begin and sponsored products increasingly get the best visibility. Advertisers will spend $4.61 billion on Amazon this year, more than double 2017, according to EMarketer Inc., highlighting how Amazon is emerging as a threat to market leaders Google and Facebook Inc.

Seattle-based Gradient expects its target market to grow as shoppers shift spending from stores to websites and mobile devices. Brands spend $225 billion a year to market products in stores -- either through discounts or paying retailers for shelf space -- and more of that money will go to buy visibility on digital platforms like Amazon, according to the startup.

Typical marketing account managers lack the skills and tools needed to secure top placement in Amazon product search results, said Figueroa, who led the company’s global advertising operations. The site features hundreds of millions of products and uses algorithms to match shoppers and items. It’s vastly different than physical stores where brand managers negotiate for the best shelf space.

"Amazon’s platform is full of black boxes and algorithms that determine what gets shown where and to whom," Figueroa said. "No one human can deal with all of the permutations of numbers, products, keywords, bids and understand and optimize the levers to compete on the Amazon platform. You need machines to help you deal with all of that complexity."

Gradient is the latest example of businesses launched by former Amazon executives and managers to help brands and merchants sell on the site. Others include:

• Guru Hariharan in 2012 started Boomerang Commerce, which uses algorithms to help brands increase sales on Amazon.
• Michael Lagoni in 2014 launched Stackline, a data analytics firm.
• Eric Heller, who started Amazon-focused consulting firm Marketplace Ignition in 2011 and sold it to ad agency WPP in 2017.

To contact the reporter on this story: Spencer Soper in Seattle at ssoper@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Alistair Barr, Andrew Pollack

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