Amazon PPC isn’t easy. There are countless ways to make a wrong move, and the results could be disastrous. Now imagine if you knew exactly what these potential pitfalls were, and how you could easily avoid them to scale profitably.
That is why we partnered with our good friends at Skubana to bring you the Seven Deadly Sins of Amazon PPC. In this webinar you will learn:
- The mistake of not understanding business performance metrics
- Why understanding margins is critica
- How “set it and forget it” can hurt you
- And more!
Click here to learn more about how Skubana can help your business: https://www.skubana.com/
Don’t miss the full transcription of this webinar here:
Thanks so much for everybody joining here today. Just to kick things off, you are obviously here for the Teikametrics hosted webinar featuring Skubana. We’re going to be covering The Seven Deadly Sins of Amazon PPC. What specifically are these sins? How do you avoid them? And how do you actually leverage this to scale profitably?
Real quick. My name is Jason Magee. I’m the director of seller partnerships here at Teikametrics. My job here is to curate an ecosystem of best-in-class partners and agencies to help put those partners in the best position to succeed, as well as evolving into a platform. So if folks who are leveraging Teikametrics are looking for support beyond what we do, we bring them in folks like Chad from Skubana to help, make sure that they can be supported and onboarded and just overall making sure that they’re able to scale.
Chad, you need no introduction my friend. I think everybody knows you in this world. But you want to give a quick snippet for those who may have been looking for the last few years?
Yeah, quick snippet. Started direct to consumer selling vacuum filters, coffee filters, and air filters about a decade ago, before the Prime was even a thing, started scaling that across multiple different channels, about 25 different channels. Needed software to run my business. All the software that was out there just was ineffective or would crumble with my order volume. So it was either pony up a lot of money for a beast of a software building our own. So we built Skubana, which is an operation software. We do everything on the back-end to run and automate your business, from shipping to inventory to purchase to source analytics.
Also, was on the board of the Prosper Show. We were just acquired about a year and a half ago. I wrote a book called Cheaper Easier Direct. So I’m very involved in the space. I’ve made tons of mistakes in PPC, and I’m super excited to join you on this webinar.
Yeah man. Chad, I know you’re selling yourself short a bit. I mean, you’re running a multi-million dollar, a really big eight figure business on Amazon. You’re one of the top sellers there. You run Skubana that you founded. You’ve written a book. You’ve helped and mentored a lot of sellers as well. Yeah, I mean it’s an honor man. I know you and I are friends, but professionally speaking, it’s just really good to talk to somebody who really knows their stuff.
Folks, let’s start this. Let’s just start this off by covering the sins we’re going to be chatting about today. Sin number one, not understanding the vitals of your business, those metrics. Sin number two, not understanding margins and how this impacts or negatively impacts your business. The fact that if you don’t know where your product is in its lifecycle, why that’s a negative factor and a sin, looking at ACoS and not TACoS, taking the set it and forget it approach, failing to leverage keyword harvesting, and then not understanding the automation and systemization. These are all things that a lot of folks have failed to realize. And we, us as well, that’s how we live and learn at the exact same time. We’re going to be diving into these today.
You are in the right place if you are already leveraging Amazon sponsored products and they’re a linchpin of your business. Number two, you’re leveraging sponsored products today, but you know you need to be giving it more attention to scale properly. Or number three, you don’t currently leverage sponsored products, but you know it’s a big priority. Folks, this is going to be a little bit more in detail. Obviously number three is going to get a lot out of this as well. But Chad, I would say we’re talking about some deeper level things, wouldn’t you agree?
Yeah. This is definitely not for your newbie merchants on Amazon or brands on Amazon. This is really for people who need some more advanced clarity of how to win at PPC in today’s marketplace.
Yep, exactly man. I love kicking things off and getting the folks involved at home or wherever you’re listening from. I’m going to kick off a poll here which is, how much are you spending on sponsored products today? Give me one second to launch this poll. You all should see it on your screen here in one second. All right. We’re going to give this a few minutes here and let the numbers sort of play out here for another 10 seconds. Great.
I’m really curious.
Yeah, I know, right? I know. Let’s see our results here. Are the attendees able to see those poll numbers? Okay. Great guys. So you’re going to see here, we have about 40% doing 2500 or less, a really, really good cohort, the biggest cohort between 2500 to 50 grand. And then we have 7% which is a lot of folks, you’re spending over 50k a month on ad spend.
The beauty here is Chad, the overwhelming majority here are doing I guess serious commitments in terms of thousands of dollars on ad spend. That’s awesome. That’s exactly what we were looking for in terms of a turnout. Chad, anything you want to comment on? Keira says that what you-
I mean it’s … For me this is just important. I don’t really measure success by what you’re spending on Amazon. The people that are spending less than 2500, if you’re making 10x that or 20x that, kudos to you, and we’ll get more into that. But this is just an idea to give, to see where people stand on their PPC. Thank you.
100% man. That’s great. Now I really appreciate you all sharing that with us as well. I’m going to get back to the … I’m going to get back to the webinar here, my slide show here.
Sin number one, I’m going to … I’ll start this off. Sin number one you could commit, I guess would be the right verbiage for that, is not understanding the vital business performance metrics. What I mean by that? Look, if you don’t understand the vitals of your business and you go and start advertising, you could be solving the wrong problem. Case in point about learning, Teikametrics, we’re one of the first folks to build into Amazon’s advertising API years ago. When we first rolled out our first iteration called Sponsored Products Optimizer, we were looking purely at ad metrics and we weren’t taking into context other business metrics as well.
Chad, you and I are going to dive into this a bit. But here’s somebody who’s helped you scale during business and helped running your business. A lot of this can be applied well beyond this advertising. But number one, how much money is the business actually making? How fast is your business growing? What is the product mix and assortment? Chad, I know you’re going to talk a lot about bundling as well. Are these new products? Where are they in their lifecycle? Are you even profitable? I mean, how are the advertising, ads you’re running, how is it impacting your total revenue?
Chad, from a business perspective, I know this is really important, and I know Skubana show some of this too. Within our platform, some of the things in, regardless, it’s not just our platform or Skubana. There’s a lot out there. But if you don’t know how your business is performing over any period of time, if you don’t even know if your business is profitable and you don’t know if the advertising you’re doing and the spend, is it helping your total revenue? Is it actually crushing or cannibalizing your business? These are extremely important metrics Chad. Before we dive in to the next sin, anything you’d like to comment on here Chad?
I would just say the biggest mistake you can make in commerce is guessing. Amazon is really good at showing you what you make. They’re really bad at showing you what you keep at the end of the day. It’s not just about selling in Amazon by the way. I know this an Amazon PPC webinar, but you want to be selling across every channel and know where your money is going. So just having knowledge about these numbers that we’re showing across the screen right now, a lot of merchants don’t have that.
Just to preface, merchants that started like me that are like first generation Gameboy merchants on Amazon for example, we have had to try to move from being a organic merchant or a seller to being an advertiser. And that move is getting a lot harder and the delta between merchants who were organic and PPC merchants that actually have to do math to figure out what they’re making and where they should be deploying their dollars is probably the most important thing right now.
Yeah man. I think there’s two schools of thought. Some of this isn’t necessarily rocket science. You have to be able to find the data. At the end of the day you actually need to be having a way to track this over time. Obviously there are tools out there like ours and Skubana and certain ways that can help you. But even if you’re doing it manually, if that puts you a big step … I mean Chad, you still talk to multimillion-dollar sellers who probably don’t track profitability I assume, right?
Yeah. It’s why sometimes they come to us.
Yeah, 100% man. I like what you said about evolving to an advertiser is the plot’s only thickening. You always had to look at profitability. Now the toll of advertising particularly on Amazon it’s the ante to play the game, so it’s … Yeah, it’s really important that you actually are recognizing that at the same time. Sorry, I think you were about to say something as well.
No, no. I was just going to say as an experience share when Amazon first launched sponsored ads, I was just throwing money at the wall and seeing what would stick. I think a lot of merchants were doing that and we were all elevating the cost per click, bidding that up without actually caring about what our true profit is on those keywords or those search terms.
Yeah. Well, look, and the other thing too within Amazon is love them or hate them, everybody has an opinion. I mean Amazon’s MO is to get you to spend money and drive revenue. Tools like us, we and you as well, we’re here to help the seller. We want the seller to make sure that they’re going to be around in a few months, let alone next year or the next five years. This is why we’re focused on making sure the seller really has access to these metrics first and foremost.
Awesome. Moving on, Chad, this one is over to you my friend.
And are you controlling the screen Jason?
I can, yep. So just sit-
Yes, if you want to …
Just to intro, I started my career manufacturing commodity items on Amazon and on eBay and Jet and Walmart and Home Depot and everywhere else. There’s been so much margin compression from a) now there’s five million merchants on Amazon that we’d have to even hone in even more on what our true profit is, but not as an overall profit, but as a SKU level profitability. So if you go to the next slide, here’s just an example of how we are being forced right now to become smarter brands and merchants that sell across the marketplaces.
This is just an example of a way that you can develop a sensitivity analysis which is essentially based on what your ACoS is, this model here that we developed will essentially spit out what your profitability is based on your sensitivity of how you adjust your ACoS. You kind of can try to find out on a macro level what your sweet spot is on a broad level and then start to pick apart, which if you look at the next slide, trying to really pick and choose the battles that you want to be in with PPC that’ll generate the most fruit.
Now Amazon has all these fees. It’s really important to understand all the fees that Amazon takes in the process, whether you’re on Vendor Central or Seller Central to essentially make sure that you’re not doubling down on losers and you’re doubling down on the winners in your business. For example, the profit that we’re looking at on Amazon when we look at our Amazon business, we look at the pick fee, the pack fee, the storage fee, the long term fee, the return fee, we look at the cost per click fee, we look at our FIFO cost of the goods sold, and we also calculate our transportation into that. I mentioned there’s all these different fees that you need to be aware of as you’re selling so that you can know what your true ACoS should be for that specific SKU depending on your strategy which you’re going to talk about soon.
Yeah, yeah, absolutely man. Absolutely. And then Chad, here is actually a screenshot of your solution. You can see within Skubana, you can actually see the fee breakdown directly here.
Yeah. This is just an example. You can see your profit per SKU, per channel. Even talking about it I get goosebumps every time I talk about it. It’s like this was never around before Skubana. BS. So by unifying your business, you get all this intelligence in one place that you can automate. I have this very large eight future business. I have one employee. She’s amazing, and Kristen. She does all of our forecasting and demand planning. You Kristen really well. Yeah, man, she also can see where we should double down and make more money and which SKUs we should actually sunset and liquidate.
Well, it’s funny man. So obviously Kristen is great and blessed her now that you have the tools because she used to do all this manually. It’s similar to our story. Before we had big data and machine learning technology for automation, we did it all manually. It’s funny, because we actually show similar things. We’re showing SKU level economics and profitability. You and I, our companies Teikametrics and Skubana, we’re coming at this to solve two distinct issues. We leverage big data to help sellers optimize advertising for profitability, and then let advertise the automation takeover. You’re doing it to run the rest of their business effectively, especially when it comes to multi-channel.
The thing to take away here is the unit economics dictates how you do everything within your business, whether it’s advertising, pick-pack and shipping, how you … the logistics of whether you had merchant fulfilled or FBA, all of this impacts that. And then, yeah, Chad this is awesome when you were explaining this correlation analysis to me.
By the way guys, I was terrible at statistics in college. It was not my favorite course. But we’ve been forced to do that internally to raise the bar for our own company and to make sure, because again, we’re in commodity items.
Here’s a graph of where you spend money on Amazon, your spend to what you make. In the best case scenario your R coefficient and R squared right there should be close to one. If there’s a true correlation, these dots should be really centered along this red line. So what you’re seeing right now is that there’s not a huge correlation. This is just an example of somebody’s spend. There’s not a huge correlation to what they’re spending on Amazon to what they’re making. Every dollar that they spend on Amazon, they’re not actually getting that dollar back.
So if you go to the next slide, this is a … Sorry, if you go … Yep, right there. This is a much stronger corelation. You can see the dots are much more tightly coupled together and closer together. But this is just bringing awareness of where you’re spending your money and making sure that you’re putting your dollar on items that are converting. Do you want to share any thoughts on that? I would love it.
No, I completely agree man. Look, the beauty about Amazon, the reason why Amazon in my opinion is a better marketplace for a lot of sellers to leverage, it’s not only a traffic site, but they have, they give you access to a lot of data.
Look, it’s really tough to cross-reference the data and try and there’s a difference between having data that looks good and then action it, but at least the data is there. The person who actually not only has access to the data. It’s not about that. It’s how you actually make sense of it and how you actually take action with that data as well.
We’ll talk about this as well is, you need to be measuring the effect of what it is that you’re actually and track to make sure that you’re getting the desired result, or if you’re not, have a hard conversation with yourselves, we need to stop this. The golden handcuff rule applies here. A lot of folks invest a lot of time and heart in the SKUs that aren’t profitable or advertisements that aren’t working right. At the end of the day, you just got to put on your big-boy pants and not be blowing money if it’s unjustified, right?
Yeah, totally. If you look at the last slide again, just to go back, let’s just talk about those big-boy pants, if you go back. That first correlation where there’s not a tight correlation between where you’re spending to where your revenue is, that is all me working with the big agency. I tell you, I’ve made every mistake. If I take off this hat, you’ll see those mistakes in hair loss. But also this is just cash flow out the door, so essentially spending on keywords or search terms that are getting zero revenue, but you’re just adding a lot of clicks.
You lost the money, not the though, that’s the big thing, is you don’t … Most folks never even look at this. And even if they do, they sure as heck aren’t taken to this next step which is, “All right, let’s right this shit. I’m committed. I’m humble enough to figure out I blew it.” This is one of the things that makes these folks, like we have a lot of folks that says, “I don’t even want to see my profitability because I’m a bit nervous.” I was like, “All right, well, the calendar is still going to change. What are you going to do about it?”
Yeah, it’s funny. There’s a great quote from one of our clients, Death Wish Coffee. I was just at their office last week and I thought this was a great quote. It was, “I’m not mad at the past. I’m happy for the future.” At least, we now have this knowledge here that we can use forward and make those corrections to our campaign and of course stop wasting spend. Certainly stopped using that agency as well.
Yeah, absolutely man. Great. And then Chad, do you want to talk quickly about this, targets and accountability? I love this.
Yeah. This is just like us looking at where we’re at and where we’re growing, and tracking what those deltas are, and having targets internally. Choose whatever your North Star is. If you definitely want to target an ACoS at a specific number, or you want a return on ad spend, or if you want to target I don’t know more dollars per order, you should actually track the accountability towards that remit and have whoever’s running your campaigns work towards that in unison together with you.
Yeah, and I get it. I’ll spend a lot of time on this too. But I think it’s kind of BS in my opinion. If somebody wants to track an ACoS, I mean, they should track it for sure. But that should never be a goal. That’s a metric and a means to an end.
That’s a lot of what we talk about too, is the context of why does that ACoS even matter. Is it because that ACoS delivers a level of profitability for you? Is it because you want a certain conversion or revenue target? That’s fine. It’s important. But that’s only a metric, a milestone to get you to where you want to go at the exact same time. We’ll definitely dive into that, the way we can get really down into the weeds.
I’ll chat about this one. The next one is, the next sin I would say you could commit is not knowing where your product is in its lifecycle. If you look at this evolution here and you … Whenever I talk about Teikametrics, I talk about us being the narrative that is us, that you can apply to any business which is like, look, there’s sort of three chapters of our narrative. The very end, the holy grail of what we do is Big Data and optimizing and automating ads. Chapter one is understanding your business metrics. Chapter two is understanding the unit economics and profitability in the context. I’m going to dive into that here. And then again, we’re not even talking about ad strategy here. This is well before we even get to that.
So not knowing where your product is in this lifecycle, so there are four … Overly simplifying this, I consider product lifecycle to be broken down into four categories: a launch phase, a growth phase, a profit phase, and then liquidation. Now, depending on where your product is in its lifecycle, everything becomes contextual. The goals you expect, the outcomes that you’re looking to reach, the budgets that you set forth for advertising, your ACoS or we call it max, max advertising cost to sell targets and what your expectations are, every single one of these are contextual.
You need to really understand two aspects, and I’ll actually show you a graph. I reference this all the time. You have the data side, which is what is your gross margin for that product or a particular campaign, and then what is the context, layer on the objective. The objectives here that sort of … that match, what that is for, so launch phase for instance. If you’re looking to have a target ACoS that’s below your margin, if you … It’s just not going to … That’s not the point of a launch phase. The launch phase is not about profitability. It’s about increasing sales rank driving new traffic at the exact same time. I mean, only when you move to growth phase are you actually then trying to get your advertising to a point of which every ad tail is profitable, and that’s where you enter the profit phase as well.
Chad, anything you’d like to comment on here?
Yeah, I think you nailed it which is you can’t just look at your ACoS in isolation, especially if you’re in launch because PPC or spending on Amazon and getting that velocity and that gain, that momentum of the products will essentially increase your organic revenue as well, and essentially increase your placement and discoverability in Amazon’s search algorithm.
You can’t just look at ACoS in a box. I know you’re going to get into that in a second, in the flywheel, but that’s it really the concept, is that you want to spend where you’re at in the lifecycle so that if you’re in the launch phase, you may not be able to make money at this juncture in the product lifecycle, but you want to get more traction and this is the way to do it and get more reviews as well.
Yeah, yeah, absolutely man. That comes up to the next sin. This is where we start to get in some of the graphs and the data even beyond what you showed about the correlation in the regression analysis.
The next sin is when you consider ACoS but not TACoS. Just to put this in the frame of mind, I know it’s a cute term. This needs to be embedded in everything that advertisers and sellers and brands do. What is ACoS? As we all know, ACoS is your advertising cost of revenue. So it’s advertising costs over add spend. TACoS, total advertising cost of sale takes your ad spend and shows the function of that compared to both your organic and your advertising revenue as well. What this really shows you is for every dollar you spend on advertising, what’s a true return and how is it moving the needle on your total business?
TACoS, just as you said Chad, it captures the flywheel effect. Let this load here. Nobody advertises purely to drive ad revenue. If you are, you’re looking at it the wrong way. You advertise because you want to generate total revenue, total exposure, total sales velocity as well. Now you can track this correlation as you advertise, but tools like Teikametrics, we allow you to even look at total advertising cost at the SKU level. What we mean by that is when you advertise, how is those ad dollars, how is it actually driving movement of your product off the shelf even unrelated to advertising because they’re directly tied together?
The flywheel effect that, our solution the same flywheel after Amazon’s flywheel, I’ll widen this out towards the end but just from a data and advertising perspective, if you leverage very good data and you optimize your ad spend, therefore you’re optimizing the ad performance, it’s going to lead to increased sales. Increased sales drives increased reviews. Sales rank feedback which allows you to start ranking higher with Amazon’s A9 algorithm, which drives more organic traffic, which gives you a lot more data that you then dump back into the flywheel and it spins even faster.
Let’s actually look at a specific example here. Here’s an example of one of our clients who launched a product. You can see over the very first … the very first three numbers of three months of a product, I think one, everybody likes to say, “Oh, I’ve created a six-figure product overnight.” First off, that’s not the world we live in. I mean, this is a good example of a product that’s scaling. You can see this purple graph here in this scenario is revenue. Now what you can see here is this product’s revenue has 10x in the last three months.
Now, let’s actually look at this and track ACoS. If you look at the purple graph here, that’s ad spend. And then you look at the pink graph, that’s ad revenue. The first thing you notice is, Chad, I’m sure you’re thinking this as well, is, “Man, my ACoS, I’m spending money on ads and it’s not returning enough ad revenue.” A lot of folks would look at ACoS and go, “Oh, my goodness. This is a failure. Pull back. I know I’m launching a product I have to spend money. But I’m losing money. What am I doing?”
But guys, if you actually flip it and then you start looking at the obviously like I said your ACoS is rising fast here. But now if you look at ad spend, which is now the pink graph, and you compare that to revenue, total revenue which is purple, you actually see that the ad spent that you’re spending is driving a ridiculous amount of growth in that product. Guys, this product is actually on fire.
Chad, I know you want to chime in here as well, but I mean, feel free to talk about your experience with this. But this is the whole point of advertising, you know what I mean?
Yeah, I know. This is the whole idea of getting momentum on your SKU on Amazon. Looking at the whole picture of organic plus PPC revenue, I would probably just piggyback on what you’re saying. You’re purely looking at this graph from a I’m going to spend money and I’m going to make money, one-to-one. But a lot of companies don’t think about what the lifetime value of that client is. Essentially you might sell somebody a bottle of water, but they may come back at another time and get that bottle of water too, and you’re not even accounting for that in that graph.
Yeah, 100%. And real quick, Abby, Tim, I know a bunch of you all, and Isaac as well, if we will be sharing this. We’re going to be sharing the recording, as well as the slides here soon, a few others as well. So by all means, don’t worry. Obviously take notes, but don’t think you have to frantically record every single thing. We’re going to be sharing this with you guys as well.
So what I was saying is essentially the first thing is your lifetime value of your product that’s super important, I think is you’re not even, we’re not even underlining that or adding the exclamation point to that. But if I sell a vacuum filter and someone buys it the second or third time and I’m actually spending on that product, that’s a huge, huge win and that actually lowers my overall ACoS anyway. The second … Yeah, go ahead.
Go ahead. No, no, go for it. I was just going to completely agree with you man.
I was just going to say that I’m really in the mood for tacos right now.
I know, right? Isn’t this graphic awesome? Yeah, indeed it’s great.
Just leave it up there. Thank you. I haven’t eaten lunch yet.
As we talk, I actually haven’t either.
But the other thing too is, this is unrelated but I was sitting with an agency on site with them last week, and we are actually talking about the attribution. A lot of folks come and they’re like, “Hey, look …” Actually I’m going to save this because I think we’re going to get in this a bit later, but … I’m just going to leave everybody hanging here.
With that being said, I’m going to run another poll really quickly which is how often are you reviewing and adjusting your advertising. Give me one second to go here and launch this poll. I love these poll features Chad. I don’t know if you’re liking it as well, but it really-
I am loving it actually.
Yeah, great. So launching this poll here. Folks should see it, and I’ll give everybody a couple minutes here, or not even, probably … Awesome. Oh nice. All right, cool. I’m going to close this real quick for the sake of time.
Let me share these results. Chad, let me know when you’re able to see them my man.
Yeah, I see it. Looks great.
Great. Great. So yeah, I think the other thing … Chad, let me ask you this. What do you think? How do you look at the context of which how often you should be updating advertising? I kind of break it down into different segments. But before I talk about it, I’d love to get your take on it.
Yeah, I think we’re going to go into that on the coming slides. But I’m definitely in the weekly camp. We can get, I’m curious, your perspective.
Yeah, yeah, yeah. I know you’re going to get into it as well. I think, look, what it comes down to is you sort of have to break it up into what you’re doing, what the action is. I mean bidding, if you had the ability to do it, obviously either yourself or with a solution, it should be done hourly at least to check, to make sure that your bid was correct. Doesn’t mean you need to go in there and make adjustments, but you should be checking that very regularly. I mean shout out to us.
One plug is, we do, we’re one of the few folks who do hourly bidding. But beyond that, key word actions and if a product’s established, weekly is good. But if you’re launching a brand new product, you should be in that every single day looking at your auto campaigns, making sure that they’re moved to manual properly. That’s an ROI game upfront. You need to be spending a lot of time there.
Let me go and hide these results. Chad, we’ll get over into your setup here. Great. Chad, over to you my friend.
Cool. I think this is piggybacking on the polls here. You cannot take a set it and forget it approach because rest assured, your competition is not. They’re going in and they’re adjusting. That’s a great meme. They’re adjusting and essentially using their own strategy and logic and not all that … Like once you set it and you forget it, your competition will adjust and react immediately. This is why it’s called a marketplace, is that you have competitors.
I’m definitely in favor of making weekly adjustments of course using technology, I’m all about systems and we’ll talk about systems in a little bit, but essentially you need to be creating and using different logic for different products in your company and constantly be adjusting.
Yeah, yeah, absolutely man. Look, I think the other thing too is you are running a race trying to make this the best version of yourself and optimize your business workflow, but you have to act. Our chief growth officer said it really well. It was like, “No matter how big of a brand you are, you could be Folgers, you can be Nike. If you’re not acting like an ankle binder brand and you’re not having both offensive and defensive strategies, somebody else will.”
I’m going to go through some of these points here. You mentioned the same rules don’t apply to every category, kit, or product. But Chad, if you want to talk about some of these bullets here?
Yeah. We stopped looking at a waxing ACoS a while ago. We look at that measure, but essentially we started doing SKU profitability with ACoSes per group. We started grouping products. We started doing it based on price levels because we noticed that we were a lot more profitable at certain price levels. And as people buy more of a product with a kit or a combination, essentially you get economies of scale and a higher price point item, the PPC, so it just goes up just incrementally.
We have different intentions for each SKU. The same thing that you talked about which is launch, growth, a profit SKU, or a liquidation SKU. We employ all these different approaches and we’re constantly moving the needle on those different approaches.
For us, there’s a couple things. When it comes to actually … In an ideal world if you had all the time in the world, you might even want to run a campaign like an auto manual campaign for each individual SKU. But obviously that’s not feasible if you have hundreds or not thousands of SKUs, or if you’re an agency running multiple clients and it multiplies. It is, does make sense to group products together, like you said. My recommendation is like you said, give or take within 10% of the sales price, making sure it’s a similar product so you can piggyback on similar keywords. And then alongside of that, make sure that your margins are very similar and that this along those lines, making sure that they all have the same goal in mind. An example is a red and blue raincoat who can share similar keywords that were within a similar price. You’re trying to grow these products on Amazon and they have a similar margin. You could actually blanket those under their own campaigns and achieve the desired result at scale.
I don’t know if we’re going to be talking about this in a little bit, but essentially we started doing a lot of bundling and kitting and we started applying those variations. And this is very specific to your ASIN and your category that you’re in. But the idea is that you want to get people to buy more than one product a given time, because that’s where you’re getting the most bang for your buck when you’re doing PPC. Either that or you’re getting them into a subscription. Maybe you’re on subscribe and save. Maybe they’re going to come back and find your brand at another time. Those are really important things that we’re constantly evaluating and looking at internally.
Yeah, 100% man. An example too would be, if you’re putting together … You’re selling a recipe, maybe include, or you’re selling … What is it? Ingredients that you could reorder over and over again. Maybe include a recipe. They’re actually getting something else. That’s also how you can differentiate with Product Ads retargeting. If you’re going against a brand, maybe throw in something extra. If you’re going to sell them resistance bands, maybe include a free workout for them as well. That’s something you can even include with inserts, et cetera, but that’s where it comes down to branding at the same time. There are a lot of different ways you can do it. I love that the bundling and the variations which actually at the SKU level help drive sales velocity.
Another one that’s very good and definitely advanced is frequently bought with. You may lose or not make as much money on one SKU, but the frequently bought with is on fire. That’s just another example of how in the weeds you can be getting with this. But that’s the context that you need and that’s why you should be doing this on a regular basis.
Let’s just spit ball on frequently bought together. I know we’re digressing a little bit, but I think it’s valuable for the people that are joining. 30, I think I’ve heard a stat recently that 30% of purchases are happening with frequently bought together, 30%.
There’s actually a free tool called YASIV that’s out there that will essentially map how people discover your product. When you put the ASIN into the search, it’ll literally create a massive map, almost like a mind map of how people discovered your product on Amazon in frequently bought together. That does two things. One is maybe you want to establish a relationship with those other ASINs or those SKUs, or maybe that’s just an idea of the way that you can source your own products and solve that problem if they’re buying your product than somebody else’s.
Yeah, absolutely. Chad, can you spell that? That way folks can actually get a grip on that tool.
YASIV, Y-A-S-I-V. It’s for free. It’s just a great, great tool that you can use to dig into your listing, your product detail page on Amazon to see how people purchased your product and where they found you.
Chad, I want to throw this question over to you. Cathy wants to know how to set up a frequently bought together or what’s a good strategy when it comes to that?
That’s a great question. There’s ways that you can influence it. You can technically as long as you’re constantly redirecting traffic back to Amazon, you could … I’m trying to be very careful about what I say here. If you come out with a silicon baking mat and maybe you have people that you know would use that mat as well and you redirect them back to Amazon, it’s a great way where you can essentially influence bought together because frequently bought together is just an algorithm. The other approach that you can do is you can essentially solve that same problem or even create a kit or a bundle with that SKU to essentially increase the upsell.
Another thing too I think that’s important, I mean, number one, this is the importance of having a brand and similar products. If you have complementary products rolled up into one brand, there’s a natural element as well. If you’re selling baking mats, it’s a lot easier for you to cross-reference and sell something else in the baking category.
Also, that goes back into running a really effective storefront. Chad, I don’t know if you’ve had a lot of experience on the crucial side with setting up your storefront within Amazon, but that’s actually where Amazon’s moving. That branded approach is certainly something that’s helping as well.
The other thing you can do is you can do ASIN targeting or you can use other Amazon tools to essentially launch a display ad on the actual listing. That could also help because if someone is buying a cell phone case, maybe they want to buy your charger, and you can really be specific and get super granular on Amazon of which pages you want to advertise them.
Sponsored brands is obviously a good one. You mentioned like ASIN targeting. For those folks who, one of things I’d recommend is product attribute targeting. Product attribute targeting allows you to essentially not just on the sponsored brands section, but once they actually click on another ASIN or a SKU, you can follow them and actually latch on. Tisch, our CTO did a really good analogy called drifting which is you have the product that’s actually getting the attention. You’re just having your display and your targeting based on ASIN, and within that, you can target based on price, review count, number of stars, et cetera.
Now if you want to get very specific with two strategies that are really, really good, one we call the David and Goliath model. What that means is if you’re launching a brand new product, you go after the biggest, baddest, most successful product in there and you start launching a really heavy product attribute targeting campaign on that. Because that’s getting a lot of traffic, you’re bound to help raise awareness and get in front of the audience. That is a very high ACoS strategy. But obviously it’s very, one that can get you a lot of search volume.
The other one is sort of the crushing the weak which is you actually launch product attribute targeting off of similar products that are terribly priced, know their reviews aren’t good, the pricing is, like I said is high or whatever. Those are two distinct different strategies. Know that the results, so your ACoS is going to be different, your conversions are going to be different. You have to understand that the context that you’re going after different targets with that. But that’s something that a lot of our clients are leveraging from a product attribute targeting perspective.
Amazon is slowly and quietly launching a lot more targeting. They’re constantly launching new functionality and features to the back-end. They just launched recently demographic data. I don’t know if you saw that?
Yeah, absolutely. Just for the second time, do you want to go over this, two more sins left and I want to leave some room for questions. But Chad, this is one you should be all over here.
Yeah. Constantly when customers of Skubana or brands are approaching me and talking to me about their listings, they want to just drive traffic without being very considerate of the quality of the traffic that they’re driving and what keywords they’re optimizing for, and if their detail pages on Amazon are actually optimized. To me the domino effect or the linchpin of everything that’s driving everything on Amazon is keyword specific, which technically in PPC world is search term specific. You get an Amazon choice badge not on a product but you get it on a specific keyword. A lot of people don’t know that.
When people come to me, I’m like, “Look. Yeah, you want to make a lot of money on Amazon, or you want to do PPC on Amazon, great. But in order to do that, we need to essentially table stake, is create a listing that’s built to sell and built to convert. A lot of times when you’re creating an auto campaign on Amazon, and you can speak to this too, is that Amazon just scrapes whatever’s in your listing. So you only know what you know or Amazon only knows what it knows and it doesn’t know what it doesn’t know, which means that if you actually haven’t optimized for keywords and done the proper keyword research, you’re going to struggle to compete on Amazon. That’s why in this sin if you look at the next page, I have this motto, always be harvesting.
Real quick. One disclaimer. One quick disclaimer. So just to repeat. We’ll get in this as well. But if you look at the right sort of methodology that the workflow, you have auto campaigns which are exploratory campaigns, which is you assign Amazon the right essentially to give them a budget and they pull keywords out of your listing. We cannot, and I find myself saying this every single webinar. If you’d asked me what’s the closest to a silver bullet, like the one thing that you should do on Amazon, it will be a properly optimized listing because that is what Amazon pulls from when they were on auto campaigns. When you move from an auto to a manual campaign, you move from exploring keywords to exploiting them for the best results. If you don’t have good listings or keywords within your listing, they can’t pull from it very well. Not to mention, that’s how Amazon serves up your product organically when somebody were to go search.
Now it is all based on conversion as well. So they go, “Well, does this keyword match? Well, does it actually get an impression? Does it get a click? Does it convert?” Whether that’s an organic conversion or a conversion from advertising, a conversion is weighted very, very heavily on Amazon. I cannot stress enough how important the auto campaigns are because it actually is Amazon throwing actual spend and showing you specifically what’s converting.
But Chad, to your point, maybe that’s not necessarily enough, which I do agree with, but I have to say, this is an advanced pro tip. If you do not have the data for what Chad’s about to say and go through, or you don’t monitor your budgets regularly, you could easily blow out a budget just slapping up 100 or 1000 manual keywords, not knowing which ones are even relevant, or even if they have one shot at converting.
Chad, you obviously you’re running an eight-figure Amazon business, so you know what you’re talking about. You need to focus heavily on the auto, but if you want to get there faster, there are definitely ways for you to keyword harvest and leverage manual for you to do that. That’s my disclaimer. I got to say that because I don’t want everybody just going in and running manual campaigns only. But Chad, back to you on the ABH.
Yeah. So always be harvesting. First thing is I encourage everybody to just go to amazon.com and in the A9 search, when you start typing in a word, Amazon will … If you start typing uno, Amazon will start giving you in pecking order what are the highest searched keywords on their platform.
Now it used to be that you can put a hashtag and you see all the words before, but I now use a Chrome extension. It’s free. It’s called Amazon’s Free Suggestion Expander. Maybe it’s called just Suggestion Expander. This will essentially show you the keywords before and the keywords after of whatever you type into Amazon. This is just great to start seeing and identifying what are the keywords that people are searching on Amazon and that you’d want to double down on.
Got it. So Chad, I’m getting-
So when …
No, no, go for it. Sorry.
No, no. I was going to go very ADD on you and jump to … A lot of folks are asking for the name of the tool, the previous tool that you mentioned on the bought together. I just want to write it down so I just remember to send it to everybody.
Yeah, YASIV, Y-A-S-I-V.
Got it, YASIV.
I’m a big fan of not automating listing creation. Everyone’s looking for the silver bullet of how they can just spray and pray and just throw up props up on Amazon, without thinking about conversion, without thinking about optimizing it specifically for Amazon. For me, we spend most of our time on building really, really good listings that are built to sell. I’ll spend a lot more time and money doing that than anything else.
Dude, it’s the most important thing. I mean, if you do anything … Like that literally, you need it. Look, it is an art and a science when it comes to listening because you need to play to the A9 algorithm to make sure that you check the boxes when they’re crawling your listing. Same time too. It has to be aesthetically pleasing and convert I mean.
One other thing I didn’t want to mention on frequently bought together that just came up, one area that really does very well at frequently bought together or concluding similar, I mean, you got to be careful with your images, but your images can … If you have a lifestyle image, if you’re selling a mat, and you happen to be selling something, I mean images are a great way to also just kind of tell the story of your brand at the exact same time. But again, that’s a part of your listing. So whether it’s keywords or your images, these are all different things that play into how you actually structure a listing properly.
Jason, that is incredible. Okay, you just give me one more nugget I want to share with everybody which is the coupon stack. You can essentially apply coupons across ASIN. So you can, as you drive and look down the page, you can essentially upsell people on coupons. That can also influence frequently bought together. That is a great pro tip. That is amazing. I’m so glad you thought about it.
On top of that, in your images you can, I’ve seen this before, secondary images, you can actually have your coupon. I’ve seen it happen. I don’t know if it’s in line with TOS. I can only share what I’ve seen, not what I’m doing. So what I’ve seen is I’ve seen people put the coupon stack coupons, and if you buy these two products, you’ll get 10% off and it’s a coupon stack that’s already down the page on Amazon.
Yeah, and again like obviously disclaimer. Check Amazon’s TOS. But we can go off of what we’ve seen as well. A lot of folks too. Well, if somebody’s a tea company for instance, they may say, “Hey, this tea is best in an image,” they say, “This is best when it’s paired with this diffuser,” for instance. There are different ways to actually leverage that with the content and the imagery as well.
Again, play by the rules first and foremost. Amazon isn’t something you play around with. There are other areas in life you can skirt around and ask for forgiveness, not for permission. Amazon is obviously not one of those as we all know. Yeah, great. And then I’m just checking some questions here. Chad, can you repeat the ABH app which is Amazon’s Suggestion Expander.
I believe that’s what it’s called if you look it up on the … And we can always also clarify with a follow-up.
Yeah. And then that was and Mocha had asked those questions. And then how often should you harvest from Maya. Maya, look. I think it’s sort of two things. I mean you could do it as often as you want, but that also is contextual based on your sales velocity as well. The only way you can actually start harvesting and moving from broad to phrase, phrase to exact, or even auto in a manual is you have to have conversions. So if you have the conversions, you could be checking daily or every few days. A week seems to be the very, very good timeframe to do it, also because Amazon’s attribution window in terms of when somebody clicks on your ad and then converts, that you just got to make sure you’re accounting for that at the exact same time.
Awesome. And then Chad, real quick. I know you wanted to talk about using the following tools for keyword harvesting.
Yeah, I want to be respectful of everyone’s time, but essentially you can use a search term report on Amazon. For the first time Amazon will give you your conversion rate data for a specific search term. This is incredibly helpful that you can bake into how you want to spend your money on Amazon for PPC, see what’s converting, and also you can use this to figure out maybe your listing isn’t built to convert and you can go into the back-end of Seller Central and to the reports apparent by ASIN and you can actually start calculating your own conversion rate not based on search terms but based on the actual listing itself.
Yep, in the bulk upload reports.
It’s just, literally I’m just trying to shower everyone with as many nuggets as possible. Essentially to get outside keywords is also great, not just using Amazon A9 because believe it or not there is life off of Amazon. So using the Google Keyword planner tool along with Moz, it’s called the keyword explorer, those are great ways to find keywords. The other, if you turn that slide, there’s something called Latent Semantic Indexing. This is the way that Google essentially looks at your product detail pages.
So what’s happening real quick is that on Google itself Google will essentially rank relevance lists or relevant websites that have good page authority, and Amazon has incredible page authority. So what they’re doing is essentially they’ll rank your … You’ll see Amazon product, if you type in, let’s just say, cold brew, you’ll see an Amazon product rank number one on Google. Google is sending that traffic organically to Google.
The way to get that is essentially using Latent Semantic Indexing keywords. These are free search engines that are on Google that allow you to give you adjacent words to what you’re already selling. So if you’re selling an apple an adjacent word would be a pear or a fruit. These are things that you can bake in to create more relevancy in your project detail pages.
Yeah, and the thing is don’t, just because you grabbed something on Google, doesn’t mean just go crazy or ham with it. When you’re actually bringing it to Amazon, you need to test it out and have an iterative approach. Obviously just understand the context of that as well.
Yeah, so just real quick on that ham note. I’m not saying that you should bacon those to PPC. I’m saying you should actually build them into your listing itself.
100% man, 100%. That’s it. I think the point here is this all of this stuff is tied together. Your listing is a fundamental component of both advertising and organic. It’s very important to recognize that as well.
And then Chad, I know this is another one, which is all about keyword generation, which is it to your point what you were covering here. Yeah, feel free to take this one.
Yeah, essentially, look, if you’re just starting off on Amazon, there are some people on the call that are just starting off, you can start at Amazon’s recommended bid, you can go up a little bits. That’ll give you a good baseline that you can work off of. And then of course, I know you dropped in there using MWS data and apply that to your ad strategy.
Let me give you some points of this. If you have a new product or a product that it’s been selling, but you’re running a new campaign, you’re essentially cold starting with that. You have no historical campaign data. And even if you have something four months ago from an old campaign that you paused and restarted, it’s not relevant anymore.
A solution like ours, since we blend together MWS data, which is all of your total sales, conversions, inventory, et cetera, rather than rely on Amazon’s default bid, which is at times not nearly close to being correct, we will go in and look at your total sale … your sales price with our price aware bidder. We’ll look at your sales price. We’ll actually pull in your conversion metrics and actually run the algorithm and analysis to give you a better default bid as it relates specifically to how your product performs organically. You actually take what would be a one, two, three week period. We could actually shorten that down to a much quicker sort of instead of like walking before you sprint, we’re jogging or doing running before you actually go into a dead sprint. So it’s actually shortening that learning curve at the exact same time.
One last thing just to wrap up at least the sins is not understanding that systemization and automation, I just almost made up a word there, are keys to winning. This is … I’ll talk about what we do from a PPC side, but Chad, from an automation perspective and systemization perspective, talk about Skubana and how this applies.
Yeah. I think this goes to everything that’s happening in commerce that’s moving so quickly and things that you know are expiring. So going back to fundamentals and being a systems thinker is a great way to win in 2019. When you go to McDonald’s in Detroit versus McDonald’s in San Francisco, typically you’ll have roughly the same burger. The taste is the same and that consistency remains intact. When you have a system, whether it’s a PPC system or it’s an operation system or it’s Skubana, essentially what you do is you’re setting the foundation that you can grow on. You’re going to build a house versus crumble if you don’t have the right system and infrastructure in place.
Skubana, now we do like get rid of all the disparity applications and siloed information. We combine it all together in one place and now you can get intelligence that you can act on very, very quickly. Your profit per channel, and then lastly as you unify everything, you automate the heck out of your business.
Skubana is like a 24/7 employee that’ll create a purchase order which you’re looking at right now. This is a purchase order screen. It’s like one of the best employees I have, is a 24/7 employee and is based on my velocity across every channel, across every warehouse, including FBA. It’ll create me a purchase order awaiting approval with a bow on top.
No, I love it man. That’s why you guys have scaled as much as you all have. And then, just to round things out with a PPC flywheel. This is the methodology that we employ and that we call human assistant SAS. We give you world-class tech, but we’re marrying this with the context and the understanding to allow you to understand all the levers you can pull and how to do it properly.
Number one, you need to understand your business metrics. Number two, you need to understand product level metrics and set marketing goals before we even begin to launch advertising. Once advertising is launched, you want to use automatic campaigns to explore the most relevant keywords, and then you want to move those keywords into manual campaigns and exploit their results to really get as much as you can from an ROI perspective.
This involves taking broad keywords and moving into phrase. Phrase keywords are going to exact match at the exact same time, while leveraging value based algorithmic bidding to strategically bid on those keywords to increase your ROI with the expectation to gather more data. And then when you go back into the flywheel, you have more data to perform even better, faster, quicker. Sounds like your book title man, Quicker Faster Direct.
Cheaper, Keeper, Easier, Direct. Of course no surprises on Amazon.
Yeah, good book by the way, and you didn’t pay me to plug in. It is. Ask yourself these questions: Am I working in my business or on my business? Is this strategic or tactical? Can I delegate this? Can software automate this to achieve better results, as well as redistribute my man-hours to focus on more strategic things? And can I achieve scale with my current system?
Takeaways. Understand high-level business metrics and granular metrics are key to setting a winning strategy. Marrying this data with your overall marketing goals is how you effectively set targets. Make sure you are tracking the right metrics when measuring the success of advertising. Hint, ACoS and TACoS. Ensure that you have a repeatable, scalable strategy and system to win.
Chad, I know you’re giving away your time here, which is awesome. You want to talk a little bit about that?
Yeah. Look, if you like what you heard today and you want to just talk about e-commerce, for me, my role is to see how I’d help you save money, hair loss, or time. I would say a lot of the consultants out there, their advice operates on a very shallow level, just because they’ve actually never been a merchant. I’m a top 500 merchant on Amazon. It’s just for a lot of those folks that’s another way of selling their tool. For me, I’d love to collaborate. If you want to apply, we can spend some time if you’re interested in some of the statistics that we’re employing in our own PPC business, happy to help with that.
If you’re interested in Skubana, let’s talk about it. If you’re interested in just talking about e-commerce in general, I’m doing this all day every day, so you can apply, you can email me at firstname.lastname@example.org and I’m happy to help.
Yeah, man. Absolutely. I think what is it? Those who can’t do teach, Chad you’re a teacher and a doer man.
We obviously run a free 30-day trial of our solution. We definitely encourage you all to take us up on that. Thank you all very, very much. Chad, one quick question for you, for those who do want to listen. You and I, and we’ll just wrap up with these maybe two questions here. I know we’re at the hour. But regarding the coupon stacks. If the product profit margin is at 25%, how to best balance the good percentage to go with, with the percentage spent for advertising?
You’re saying like what’s your discounting strategy, your coupon strategy versus your PPC strategy?
Yeah. I think they’re kind of very similar. What’s your goal? What are you trying to achieve? Are you trying to get somebody to test your product for the first time? Or is it a repeat purchase? I mean, what do you … Do people know your brand? I don’t know if, Chad, you can get a little bit more granular on that based on just the questions I have, but that’s the first thing that comes to mind.
Yeah, no. I think your strategy is very important. I also think understanding what your profit margin is for that product is also important. And then you can start modeling out. If somebody buys two of this and here’s your revenue, here’s your cost, here’s your profit of that item, here’s what we can spend to make that money, you have to figure out what your unit economics are across different kits, variations of your own single one packs as well to figure out what the optimal product you want to pitch on Amazon is.
Yeah, and then …
So for me, let’s just say I’m selling coffee. I’m selling one pack. I can make a lot more money selling a six pack. Maybe I want to actually, maybe I’ll have a lower conversion rate, but every time I sell the six pack I might make $40 versus a one pack I’m only making $3.
Yep, yep, absolutely. And I think Kim, to your point too when you just clarified if you want to be profitable. The way you look at it is what are the unit economics there that as Chad said, at what point like, okay, I know if any … if my profit margin is 30%, is that gross or net which is a separate conversation. But in that basic example anything up to 30% giveaway is at least break even or profit.
See if there’s any last minute here. One last one is what if you are one P? From an advertiser’s perspective, the same context applies. I mean you obviously need to leverage and set advertising based on the unit economics. And the beauty is a little bit easier in a lot of ways because since you have a trade agreement with Amazon, you know what your profit margin is, and it doesn’t shift or fluctuate nearly as much as what is it? A 3B seller because your pricing isn’t fluctuating as well.
The workflow works very similar. There’s no ad groups on the one B side, but you drop it into one mass or ad group and you do the same, broad to phrase, phrase to exact, auto to manual rinse and repeat.
Awesome. Chad, it is-
Jason, we can … I know we’re up at the hour and I want to respect everyone’s time. If you have additional questions, maybe you’ll share with me some of the Q&A, and I can address those individually. If you have additional questions that we didn’t answer, Jason I don’t know if you’re revealing your email address, but my personal email address for those that are listening on this call is email@example.com.
Yeah, absolutely. Mine is firstname.lastname@example.org. Yeah. Chad, really appreciate it man. Always a pleasure.
Thank you Jason.
And yeah, looking forward to chat with you again soon. Folks, thank you all more so than anything else. Attendee late rate was very high and it was steady, which means you guys appreciated the content. Thank you all so much. You’re the real MVP. Thanks guys.