Reverse engineering your customer’s path to purchase on Amazon isn’t as easy as it sounds. That is why, we partnered with Salsify to help you unpack your customer’s path to purchase. In this webinar you will learn:
- Why a properly-optimized listing is mission-critical (and the steps you should take to improve it!)
- Why you should focus on brand positioning, not your brand name
- How to position your brand to align with consumer expectations
- The Flywheel Effect: Why advertising kickstarts the flywheel and how it impacts organic ranking
- How to ensure you’re winning the Buy Box
Don’t miss the full transcript from this webinar below!
Thanks everyone for joining today’s webinar, Unpacking the Amazon Path to Purchase, five tips to Drive and Convert More Traffic. Hosted by Teikametrics and Salsify. So why don’t we get started with introductions? My name is Kyle Barron, I’m a senior client analyst at Teikametrics. My job as an analyst is to evaluate our customers’ whole Amazon business, try to understand what they’re trying to do and how do we execute an advertising strategy that optimizes towards overall growth and revenue on Amazon. Just a little bit about me outside of work, I play in a rec softball league, and I like to jam with my friends. I play keyboard and recently purchased a keytar as well and I’m really enjoying it.
Hey everyone, this is Chris Kiertz on the Salsify side. I’m a senior marketing manager and I’ve been at Salsify for the past two years. I’ve worked on the customer side, I’ve worked on the new business side and I’ve had the chance to see what works on Amazon, what works in e-commerce. So I’m excited to be talking about that, I’m excited to be here with the Teikametrics team, and as you can see, if I’m not at work, I’m whipping up homemade cocktails or finding some weird wine to try.
Great. So here’s what we’re going to be discussing today. We want to make sure that we cover a lot of topics. There’s a lot of things that all sellers and vendors on Amazon need to keep in mind when selling their products. So we’re going to be talking about brand positioning, why it’s important to make sure that your brand is represented as best as possible on your product detail pages. How to position that brand to align with what those consumer expectations are. What are they expecting your product detail page to have in terms of content, and then once they’re there, how do you make sure that you’re winning the Buy Box? When it comes time for them to executing on a purchase, that they’re buying your products. And then finally we’ll talk about how does advertising fit into this whole strategy so that you can continue to grow at a scalable rate, and all of the tactics and strategies that you’re executing feed into each other for continued growth.
So just to do a quick check here. You’re in the right place if you’re a brand owner and/or you manage content and your overall brand presence on Amazon. So if you’re in charge of the product content, making sure that you have the best product experience on the product detail page, and then lastly if you manage sponsored ads on Amazon. Some of you may be all three even.
So we’re going to start here with a quick poll. So how often do you review and update your listings? So I’m going to be starting the poll soon, and please, please mention your answer here.
All right, so we got a pretty good split here. Let me pull up the results so that you guys can see them here. So we have a pretty good breakdown of. Whoops, let me switch to showing in here. Yep. So a pretty good mix here. So some of you update it maybe once a year or every six months, and then the majority are updating your listings either in a month or every three months, and I think that’s a good healthy cycle there and a pretty nice mix of answers, and we have a wide variety of people who have signed up for this webinar. Great. So let’s jump back into it.
So I’m going to hand it over to Chris to cover some of these topics related to content. So Chris, take it away.
Awesome, thank you Kyle, and we still see the poll. I’m wondering if you could share the presentation again. Let’s see. I don’t think I can do anything on my end. While Kyle is figuring it out, I’ll just go over what I’m here to talk about, and you saw four tips and you probably signed up for a webinar with five tips and you may be confused, but we’re not depriving you of any tips today. We went through this and kind of consolidated two of them into one. So we went from five to four, so no, you’re not crazy. But anyways, I introduced myself earlier. I’m senior marketing manager at Salsify. My goal today is to talk about using your brand on Amazon. We’re going to walk through some research from Salsify, talk about some key brand positioning takeaways, show some examples, and then once you get people to your product detail page, how are you going to convert this traffic, and we’re going to talk about winning the Buy Box. Perfect timing Kyle, just in time.
So why should you focus on brand positioning and not just your brand name? And we’re going to talk about how your listing should reflect this. So the biggest misconception is that Amazon is a pure sales driver. Yes, it drives sales, but this is not in a a vacuum. You have to think of Amazon as a brand vehicle, and as you can see here, most product searches start on Amazon. 46.7%, that’s almost half, and then if you factor in Google at 34.6%, that leaves 18% split up by all other channels. That’s where people are finding your products. Now of course, your D-to-C site might be the best representation of your brand, but it’s not where the majority of people are shopping for your products, so you have to focus on Amazon.
So what do shoppers expect when they shop? We’ve been doing a consumer research study for the past three year, and no surprises, every single year consumer expectations get higher and higher. So we take a look at images and videos, you can see they’re across the board, but it’s a lot, and images, well you know, say you’re targeting the 35 to 44 age range demographic. You’re talking 13 different assets that you could provide on your PDP to meet their expectations, and we’re not talking about just packshots or product shots, this is where you really want to get creative. Show the consumer what to expect when they’re purchasing your product. And again, when we say different images, we’re talking different images, not just. I was doing research for this tonight, I found a product detail page for a 25 pound bag of salt and every single image was the same. They had nine images, but they’re all the same. So make sure you’re diversifying your images there. These are benchmarks, so this is the status quo.
So the big thing to take away here is that most brands fail to deliver this experience. This is the top performance on Amazon, and they’re still not hitting that average of six images that consumers expect on a PDP. So if you’re on this call, this is your chance to start to take leadership in your category. This is greenfield for you. And why is this important? Well, you might think that having a familiar brand on Amazon is important and sure, it’s somewhere on that list, but based on our study, it’s actually all the way at the bottom of why consumers abandon a product page. Number one is that there’s not enough information or details provided, and in e-commerce, on Amazon, product information is your brand because again, we’re not just talking about packshots, we’re talking about lifestyle, and context, and emotions. You got to show those emotions on the product detail page.
So with all this in mind, how do you position your brand to align with these consumer expectations? We’re going to be talking about the three pillars of brand positioning on Amazon. Now, the stems from if you’ve gotten your MBA, you probably know the Kellogg book on brand positioning. It doesn’t get talked about a whole lot these days because maybe it’s considered overly academic or it doesn’t apply, but I’d argue that it does. A lot of these three pillars really are incredibly relevant, it’s just thinking about them in a slightly different way. So if we move on to the first one, the target consumer. You know who your target consumer is. If you’re selling on Amazon, you know who you’re selling to, but does your target consumer know this? If I’m someone in your target market, it should be immediately apparent. The second I get to that product detail page, if that product is for me, through images, through copy, through keywords, enhanced content, whatever you can throw in that product detail page, it should speak to me. And again, showing just one image of your product doesn’t achieve this. This is where you can get creative.
So if we look at one example, Audio-Technica. I absolutely love this example for so many reasons. One, the copy they use. Professional, it’s praised by two top audio engineers, pro audio reviewers. They use rare earth magnets, whatever those are, I don’t know what they are but they sound awesome, so you’ve got me convinced. If you look on the left side here, they’ve got six images and two videos, and the big thing here is that they’re kind of toeing the line between professional and hobbyist in that this image is perfect to convey that you don’t have to be in a recording studio to use these headphones. So me, as someone who comes into work every day, I’m a perfectly viable customer for these headphones. So great job to Audio-Technica here.
So number two, frame of reference. This one is a bit more abstract, and what I mean by frame of reference is that it’s a way of seeing the state of the world, the state of products. Knowing your frame of reference as a brand is not enough. It’s understanding it and taking action, and that’s why you can’t really have this conversation without taking into account those personas or the point of difference which we’ll get to after. Now, a brand can establish its frame of reference by A, category memberships, so you claim memberships in a product category or B, abstract consumer goals, which we’re not going to touch on. We’re going to keep it to the former for this conversation.
When you say category membership it’s like Coca-Cola is soft drinks, Subway is fast food, DEWALT professionals/portable power tools. Now, to give you a couple examples here. When you think of light beer, one of my favorite things, you probably think of Bud Light, that wasn’t always the case though. Before 1975, light beer as we know it today did not exist, so when Miller Lite launched in 1975, they used that frame of reference of beer to then highlight their differences. So easy to drink, light, lower calorie. That was a differentiator, but then eight years later Bud Light joined the fray. Now 40 years later this is an incredibly saturated market. Saying you’re easy to drink gets you nowhere. So that point of difference, which differentiated Miller Lite back in the day, that point of difference became a point of parody. It no longer set them apart, so Miller Lite and other light offerings had to shift their frame of reference from beer to light beer, and when you think about it, Bud Light now owns that category because they’ve done a really good job of this.
Now bringing this into the modern era, dog food. Another thing I love, well I don’t love the dog food, but I love my dog. So very relevant for me as an Amazon buyer. We had this case study on Blue Buffalo. They just do such a good job on Amazon. When I grew up, dog food was dog food. As long as it came in a 50 pound bag, you could go to Walmart, you could pick it up. There was no Amazon, there was no Chewy. But 2002, Blue Buffalo entered the scene. They were on a mission to provide dogs with the best possible food. This was great for them as consumer preference started to change, they wanted more natural, they wanted more organic for themselves, they also wanted to do this for their dogs. But, then the market became saturated, and the point of difference became a point of parody, and if you can just go back for one second Kyle to the last one because I really love this part. If you see these examples, I don’t know if you can read it, it’s kind of small, but ranch grazed lamb is an ingredient on one of them, and Halo in the top left is, their tagline is the proof is in the poop. That has to be the best tagline I’ve ever heard. Definitely convinces me to want to buy that.
So what they did is they shifted their frame of reference from dog food to wholesome dog food, and in doing so this allows them to shift their brand positioning. Now they’re the fastest growing major pet food company in the United States, despite the saturated market and sold to General Mills last February for $8 billion. And just to showcase the parody in this dog food category. I did a search for dog food, this was not natural dog food or organic dog food, this was just dog food, and just look at the imagery on these detail pages. There are bears eating salmon in a stream, there is perfectly chopped white meat chicken on two of these, there’s a wolf in the wilderness. So they’re doing a good job at conveying their message here. If we look at the US pet food market in numbers, $30 billion market, the annual growth rate is 4% and that wholesome market share is growing faster at 10%. So this is a really good place for Blue Buffalo to be.
Now we get to the third pillar here, point of difference or the reason to believe, and this is why is your product or brand superior to everyone else out there. This has been something that people have been talking about forever. I call this the Mad Men pillar. If you go to the next slide, Kyle, yep. What would Don Draper do? The quote that really sticks with me from this show, and it’s actually from the first episode is, “The issue here isn’t why should people smoke, is why should people smoke Lucky Strike.” Now, of course this is many years ago. We’re not advertising cigarettes anymore, but he makes a point. People are already searching, they’re in buy mode. The issue here isn’t why should people buy a portable charger, or healthy dog food, or AA batteries, it’s why should people buy your portable charger, or your dog food, or your AA batteries. So what would Don Draper do or say about your brand or product? You got to channel your inner Don Draper.
So if we pull up an example here, Blue Buffalo again, they just do such a good job. All you have to do is just look at the words on the page here. Look at the ingredients. Blueberries, sweet potatoes, flax seed, other descriptors, natural, more ingredients, real chicken, garden veggies. It’s not enough to just be a healthy dog food anymore. They have to tell their story, and if you look at that image of that spread, I mean it’s nicer than anything I’ve put on my table the last six months. And the other tactical thing here that I want to call out, they’re using bullets in their image itself. This is really important for when you’re thinking about advertising or pushing people to your product detail page on mobile, because chances are those bullets are not going to show up. So they’re basically elevating that bullet to an image so that people can more easily find that.
Another one to highlight in the point of difference is vanilla. It doesn’t get more vanilla than vanilla, but McCormick is challenging that and this is where, yes, you see their logo, but that’s not what we’re talking about. We’re talking about positioning their brand. Again, awesome descriptors here. All natural, pure, gluten-free. It elevates baked goods, it’s certified kosher, it’s orthodox. Pretty much everything they could stick in here they stuck in there to make me believe that this is the vanilla for me. And if you look at these images here, they’re showing you how you can use this vanilla in a product. People don’t just look at the bottle, they use it. That’s the whole point of buying vanilla. So I don’t know what that drink is, but I know I want it, and obviously those blondies look incredible. So great job at conveying their story here.
And to tie this all together, I wanted to highlight a quick case study of someone who’s ticking all the boxes in these three pillars of brand positioning, and I just love this quote. When I was doing research on this company, the founder, “Knew nothing about starting a company, building consumer electronics, or selling products.” Now, if you look at these numbers, it’s astounding to listen to that quote and look at these numbers. It was founded in 2011, less than 10 years ago, has an annual revenue of $600 million, and a valuation of $1.1 billion dollars, and these are I think two year old numbers, so it’s probably bigger than that. So this company is Anker, and if you’ve searched for any consumer electronic on Amazon, you’ve probably seen this. I bought that one in the bottom left a couple months ago, I use it at home, and it’s just absolutely an amazing product. But to be clear, if you go to the next slide, this is a heavily commoditized market.
A search for mobile power bank on Amazon shows sponsored products, editorial recommendations, dedicated Amazon’s Choice section and tens of thousands of results. I don’t know if you could get to that next slide, Kyle. There we go. You see that 400 pages of results. So yes, their products are world-class, it’s a great product, I have to say that, and that was their ultimate goal, but here is the thing, a good product doesn’t get your product selling on Amazon. A good product doesn’t convert visitors on Amazon, a good product page does, that’s what converts and gets your products found on Amazon, and that starts with brand positioning. And not only are they charging a premium compared to cheaper no name brands, they’re also eating into Samsung and Apple’s market share. So huge props to Anker. Just to show this, hammer this home you can see all three of the pillars here, the target persona, frame of reference is obvious, and point of difference. Exclusive PowerIQ and voltage boots, I don’t know what it is, but sounds awesome.
Now, moving on to the Buy Box once you’re found. We’re going to get a little bit more tactical here, talk about the Buy Box. So this term might give you bad flashbacks of your darkest days in e-commerce, or if you’re lucky maybe you haven’t had to think about it much, but chances are you’re somewhere in the middle, and winning the Buy Box is like crucial isn’t even the word. It is so essential to you converting that traffic that arrives to your PDP. If you’re not winning the Buy Box, you’re not driving revenue. So let’s quickly touch on what the Buy Box is. I’m guessing a lot of people know this, but just want to talk about it a little bit here. It’s the call to action buttons on Buy Now, Add to Cart, on those Amazon product detail pages. So when there are multiple sellers that can fulfill an item, Amazon’s algorithm will automatically select one to fulfill that order when a consumer uses one of these buttons. So the Buy Box is like a time share in a sense because the ownership is shared amongst these sellers, and this is part of the reason why a hybrid strategy like 1P and 3P is yielding results. Now you can sell an item, but not necessarily be eligible to win the Buy Box.
Now if you go to the next slide, you’ll see a mobile example, and if it wasn’t important on desktop, it’s even more important on mobile to win this Buy Box. Other sellers don’t even mention on this right image to the user who fulfilled this item but it’s all predetermined by Amazon. So think about this, Amazon was ranked number three in a list of most monthly active users for all apps, across Android and iPhone in 2018. So people definitely shop using the app. 79% of smartphone users have made a purchase online in the past six months, and I think it’s important to mention that this is a webinar on Amazon, we’re doing all the screenshots from Amazon, but a lot of these online marketplaces, the vast majority of them, closely resemble this sort of Buy Box method here, and you can apply a lot of these to the Walmarts of the world, the Jets, the eBays of the world. So just kind of an important thing to keep in mind here.
So why do we care about the Buy Box? Top left says it all. 89% percent of all purchases are captured by the Buy Box. It’s where users convert. They don’t expect to click in to see other sellers. They’re going to click those call to action. Incredibly important on mobile. It could also mean if you’re not getting the Buy Box, that you’re not profitable with your retailer or Amazon, and huge thing there, especially since this is with Teikametrics, if you don’t have a Buy Box in your Amazon listing, they will not show up in sponsored ad campaigns. So very important thing to keep in mind there.
So we’re going to talk about five reasons why you’re actually losing the Buy Box, but we want to create action behind that and kind of give you some tips on who you can prevent that. So number one, the product is just unavailable, this is simple and this has greater significance than simply decrease sales. Amazon is going to ding your sales rank and it can take weeks or months to climb back to where you were prior to going out of stock. Yes, targeted AMS campaigns can help, but those add up in cost, and that’s why the flywheel, which Kyle is going to get to after this is so incredibly important. It’s not just about AMS, but the whole picture, that whole flywheel.
The other thing is your competitors can jump into this Buy Box and sell you under the table, and this can drive the price down, it can allow a 3P to take control over that Buy Box, really detrimental effects here, but even without that, if you are the only seller on this ASIN, going out of stock can turn customers away. Your sales rank will plummet, but more importantly your customer base probably is going to have second thoughts about purchasing your item because Amazon is the world of two-day shipping. If your product is going to take one week, two weeks to ship, there’s a good chance they’re not going to buy it.
So let’s talk about a couple action items here. One, consider implementing a hybrid strategy. So this means you’re doing a little bit of 1P and 3P, and this ensures greater availability of your products. For new product introductions you can kind of prime the pump to get the listing more sales right away. And each of these models have advantages. So if you are a vendor you have lower fees and more robust marketing tools. If you’re a seller, you have a bit more control, you have more analytics, you have better margins. So by kind of combining these two and getting the both of best world puts you in a really good position. The other thing is monitoring your availability and Buy Box percentage. How often are you actually winning that Buy Box? So if you have to constantly manually monitor all of these product detail pages, it’s just a waste of time. You have tools that can help you with this. Like someone like Salsify has built-in reports to do this. So rather than spending your time just looking for what’s wrong here, you’re actually going to be spending your time fixing what’s wrong, and that’s a huge time savings on your end.
Poor seller scores. So this is especially relevant if you’re selling both first party and third party on Amazon or if you have authorized sellers as poor seller rating is a major factor when selecting a Buy Box winner. There are a lot of metrics associated with your seller scores. Just going to go over those here on the next slide. So the first one is feedback rating. This is the culmination of all feedback score that the seller has received of the last 30, 90, and 365 days. Feedback count. Number of buyers who have given sellers feedback. The response time is how quickly are you responding to customer questions, and last but not least, shipment defect and on-time rates. You got to make sure that you’re maintaining these scores.
So what can you do about this? One, you’ve got to monitor your seller feedback on a consistent basis. Amazon does heavily weight the more recent feedback, so you’ve got to keep an eye on that, and the other thing you want to consider is FBA or Fulfillment by Amazon. Now, just some numbers there. Out of the top 10,000 sellers, 66% of them use FBA. It’s not perfect, Amazon does charge storage and fulfillment fees, but the advantage of this low effort logistics makes this a really great option for sellers.
Number three, you don’t have Prime. If you’re a one piece seller, vendor you probably have Prime, 3P if you are FBA or if you’re Seller Fulfilled Prime, you probably have it, and just to, let’s talk about Seller Fulfilled Prime here a little bit. This is a program that allows qualified Amazon sellers with professional selling accounts to display that Amazon prime badge, but they have to fulfill those orders either via their own warehouse or a third party logistics provider. In other words, Amazon is not involved I the fulfillment of these products. This means 3P sellers no longer need to rely on FBA to be eligible for Prime badging. Now, if you think you should have Prime, if you’re doing the Seller Fulfilled Prime and you don’t see this, it’s probably due to one of two factors. One, your on-time ship rates drops below minimum threshold or two, the order cancellation rate on your end drops below the minimum threshold.
So you have to think about the cost of your organization when you’re considering FBA versus Seller Fulfilled Prime. So basically who assumes this burden or Prime? You or Amazon? There are advantages and disadvantages to both. Would you rather ship full pallets to FBA or a 100 orders to a 100 different people to maintain that Amazon Prime standard. You’ve got to think about what’s right for your business. So when we talk about what you can do about this, you’ve got to be checking your Valid Tracking report in Seller Central and ensure you have these things. One, an order count greater than or equal to 10 orders in the past 30 days across all shipping options. Two, you’ve got to have a valid tracking rate of a 100%. Three, on-time delivery score greater than or equal to 97%, and finally a seller initiated order cancellation rate less than 0.5%.
So number four, another seller offers a lower price. Now, got all messed up here. So if another seller is offering a lower price, and we’re talking about landed price here. You want to think about landed price. This is not just the retail, but this is retail plus shipping. When we’re saying landed it means what does it cost for that product to land on the doorstep of the buyer. This is what you need to be tracking. Third parties are going to attack into existing listings, sometimes even selling counterfeit products, creating a net new ASIN or an additional variant on your ASIN and this can lead to price wars and you’ll see this chart on the next slide here. You got to know how many other 3Ps are selling your products, how many of them are undercutting your minimum advertised price or your MAP. With services like FBA, it’s relatively easy for 3Ps to steal this significant share of the Buy Box simply by offering a lower price. Now, if third parties continue to drive down that price, if you have promotions on other retailers, this is going to result in margin compression.
If this happens frequently enough, this can cause a problem with your 1P relationship, leading to what they call CRaP or Can’t Realize a Profit products. If products are consistently not profitable for Amazon, they’re just going to stop ordering or they’re going to disincentivize consumers from purchasing your products altogether. And here is what you can do about that. Make sure you can identify all the 3Ps that are attacking onto your ASIN’s variants, commonly done through different pack sizes. If you are a 1P vendor, definitely register your brand with the Amazon Brand Registry. This helps you protect your intellectual property in your product content on Amazon. So if you have all the right documentation available, this could take as little as 24 hours once you submit your claim, and this is not a silver bullet for all control of your PDP, but it’s definitely a great place to start if you haven’t done that. And finally when we’re talking about MAP policies or minimum advertised price policies, yes you have to have it, but you have to be ready to enforce it. And Amazon unfortunately is not in a place to enforce it. They’re very neutral on this, so you’ve got to be the one to do the leg work. You’ve got to do the research, find out who’s selling your product and it is under your minimum advertised price and you have to take it up directly with them.
Other things you can do, and this kind of ties in to Salsify workflows for example, if someone does violate that policy, you could automatically alert your internal stakeholders, so you don’t have to manually be following that on Amazon. And finally, this is a huge one. If the retailer is intentionally suppressing the Buy Box, you’re going to be missing out on a lot of conversions here. As we talked about, that means they’re basically getting rid of the Buy Now and the Add to Cart buttons on your PDP. Now, consumers can still buy this product, but the added factor of having to click through to see all buying options, that’s just not expected behavior on Amazon. Maybe five, six, seven years ago it was, but right now consumers expect to see those buttons. If you go to the mobile example on the next slide, that one on the right, there is no Add to Cart button, there is no Buy Now button. You can see kind of a call to action that’s hidden right in the bottom. All that it says is see all buying options. That’s not where you want to be on Amazon.
So best practices here, you’ve got to understand a lot of this comes down to profitability here. Low ticket items could be a risk for CRaPing out as we talked about, not realizing a profit. Not all products are great online products. This is really important. If you find out that your products are CRaPing out, you can solve this by creating multi packs or making more robust listings. Consolidating ASINs, so you get those listings where reviews and comments get aggregated and helps the overall strength of the listing. And the other thing is, actively try to protect Amazon’s margins. There’s a company we work with that on a daily basis, they take the price that their product is selling for in Amazon and they subtract the price that they sold the product to Amazon for. They monitor Amazon’s margins on a daily basis to ensure their products don’t CRaP out, actively trying to protect Amazon’s margins. Finally, just wanted to call out BigCommerce and this awesome chart that they put together.
Yep, there we go. There are just so many factors that Amazon takes into account for winning this Buy Box. I absolutely love this chart and to be clear when we’re talking about this, none of this is easy. The way I think about it is like a golf swing. Once you start focusing on one piece of it, you forget about the thing you were just focusing on, or you lose focus on something else. That’s why it’s so important to automate where you can, so you can use that time to focus on what you can actually change.
So to tie this all together, the takeaways here, number one, the Buy Box share is not guaranteed. It’s influenced by so many factors, you’ve got to earn your share. Online price wars are a huge culprit here and can suppress your listing. Having a robust fulfillment strategy. You have to ensure availability at all times and you got to have Prime, and one more thing we’ve really been seeing a lot of is a hybrid strategy. Even as a 1P you can find ways to sell 3P and this has done really great things for these businesses. Finally don’t underestimate the 3P sellers. You’ve got to constantly monitor your listings, address any leaky supply chains and get to the roots of the problems.
So that kind of wraps up my portion here and really excited to pass this over to Kyle and he’s going to talk about the Amazon flywheel.
Thanks a lot, Chris. So yeah, I think there’s a lot of excellent content in there that is going to tie really nicely into making sure that you’re executing the right strategy on Amazon sponsored ads. So what I’m going to be talking about is the flywheel effect or what can you do to implement in terms of an advertising strategy to constantly be improving, constantly be optimizing so that all the effort that you’re putting towards creating a beautiful experience on the PDP isn’t wasted by your advertising strategy, you’re driving the right consumers to your product detail page that will lend itself to revenue.
So just another poll here. We want to get some information from you guys. How many campaigns are you running per SKU? What’s your ratio of campaigns to SKU? So we have fewer than one. So you have, you’re running more campaigns than, or sorry, you’re running more SKUs than campaigns you have, are you using a one to one strategy for your campaigns? Maybe you have two or three campaigns set up per SKU. Maybe you have a manual and an auto campaign, or maybe you have many different campaigns, depending on the strategy per SKU or are you not currently running sponsored ads today. So we’ll give it a couple more seconds in here for folks to vote.
All right, so I am going to wrap up the poll now, any last answers. Okay, so let’s take a look at the results. So a pretty nice bell curve here. We have 41% running about two or three campaigns per SKU, which is great. You want to make sure you’re running both autos and manuals on those SKUs, and then pretty evenly split on either side with in terms of the ratio, and we’ll definitely talk a little bit more about setting up a campaign strategy that is conducive to growth and optimization.
So this is something I tell all of my customers here at Teikametrics, and they’re well aware of it too, but sometimes when you’re looking at AMS and you’re looking at ACoS, and you’re looking at spend and sales, it’s easy to forget that what you’re doing for advertising, what are you doing in terms of your strategy. Nobody is advertising to drive ad revenue. Everyone is advertising to generate total revenue. So what can you do on your side to make sure that your ad strategy lends itself to growing your total revenue and not just your ad revenue? So this is what we call The Flywheel Effect, right? We start with ads, start with your campaign set up. The whole point of running ads is to increase sales. So whether that’s launching a new product, maybe you want to liquidate your stock of a certain product, maybe you want to start to grow a product that maybe has become stale, or you want to make sure that you’re trying to find additional audience, trying to find additional consumers who haven’t interacted with your brand yet to increase sales, and the point of increasing sales is to increase your sales rank, get more reviews, and the more sales that you get and the higher that your sales rank is, that’s going to show up more in organic traffic.
So you want to be really highly ranked on that first page for the organic results, and the less money that you have to spend on ads and the more traffic that you can drive organically, the more efficient your advertising strategy is going to be. So the more organic traffic you get, the more data you’re going to be able to collect, and what are you going to do with that data? So one of the products that Teikametrics has to offer is Teikametrics Flywheel, which uses data science and takes this data set to optimize your ad spend so that your ads are really efficient, focused on growing sales so that you can bring more traffic in, increase sales rank, and you start to see that flywheel spin.
So let’s take a look at an example. So this is a product launch that occurred earlier this year with one of their customers that I was working with, and this is a brand new product that they launched. So this is the revenue generated for this product. So you can see we had a really steep growth month over month, and by month three, we are already at 10x what we were in the first month. So how did we get there? When you’re in Amazon advertising, you get to see sales, you get to see spend, and you get to see ACoS. So if we’re looking at this from an ACoS perspective, we can start to see that ACoS is getting worse and worse, to the point where we’re well over a 100% ACoS by the third month, and it’s very easy to look at that number and say, “This strategy is not working, perhaps we should think about pulling the plug on this product.”
ACoS is rising fast. What’s next to do? Let’s take a look at this from a different angle. Let’s take a look at total revenue versus your ad spend, and you can see here that the ad spend, although it’s certainly driving ad sales, the whole goal is to drive total sales, and so now you can see that this product is really taking off, and what we like to look at is instead of ACoS, we look at totally ACoS or TACoS. Now, these look delicious, and let’s talk about how we can make your TACoS look delicious as well. So TACoS versus ACoS, what’s the difference? ACoS is just looking at the ratio of ad spend to your ad revenue. By looking at TACoS, and including the organic revenue in that equation, you get to see what the overall effect is from advertising, not just what the effect is from direct response or post click sales. TACoS captures this flywheel effect, right? You want to spend on sponsored ads to make sure that you’re growing total revenue, not just ad revenue.
So what is ACoS good for then? ACoS captures context. So when you’re setting up your campaigns, you have a whole bunch of products that you need to advertise and you have a whole bunch of keywords that maybe you sourced from Amazon, maybe you used a third party tool, maybe you just spent half an hour going through different product detail pages to find relevant keywords, and then each of those keywords are going to have certain bids. So how do you create this map? How do you navigate this ecosystem and tie keywords to products, and make sure that you have the right bid in place for those keywords to again, lend yourself to taking advantage of the flywheel effect. The same rules don’t apply to every category, or kit, or product, or keyword. So one of the reasons that we ask why or how may campaigns do you have per product is to better understand how are you organizing all of your keywords and products together and how are you tying them, what is your strategy there?
So every keyword is going to have a different audience, a different bid, and a different ACoS. The different audience, you are going to see different performance, you’re going to have a different amount of investment that you’re willing to spend, whether or not somebody is putting your brand name in the query or not. And on the product side, every product is going to have different retail price, different margins, and a different life cycle stage. You might have different priorities or you might be willing to take a slimmer margin on products that are later in the life cycle that you need to liquidate, or maybe earlier in the lifecycle and you really want to hit the gas on the flywheel effect to see what the … What sorts of advantages that you can take with that, with that additional ad spend. So that means you need to set up a campaign strategy that takes into account each of your different products as well as each of the different keywords.
So let’s take an example here. This is just an example that I’ve created. This isn’t using real metrics, but nonetheless this is a story and a narrative that we see quite often. So this actually happens to be, and this is totally a coincidence between Chris and I, I actually feed my dog this Blue Buffalo food and she loves it, so I included it as an example here as well. And let’s say for example I’ve got a chart in here that we often refer to when trying to figure out what should an ACoS be for a given product. So you take into account what the margin of that product is before ad spend and where that product is in its life cycle. So let’s say for example this is in the growth life cycle. Blue Buffalo is looking to expand there, expand this line and perhaps take even more share of that wholesome dog food market and their gross margin range is somewhere between 11 and 25%, so therefore we should be shooting somewhere between an eight to a 35% ACoS, okay.
So if you’re just looking at AMS, if you’re just looking at the Amazon advertising platform, and you’re looking at spend, and ad sales, and ACoS, you can see that in this example, ACoS is getting better. We go from 11% to 8% in three months. That’s great growth, right? This product should be ready to be moved into the profit stage and we should be ready to start optimizing for a different ACoS, and maybe we can pull spend back a little bit, right? Well, let’s take a look at how ad spend is affecting total sales and what the effect is on TACoS. So while ACoS has gone from 11% to 8%, our TACoS has gotten from just over 2% to almost three and a half percent in that same time. So you as an advertiser, you as a seller or vendor need to take a closer look at the numbers and say why is my additional ad spend not translated to increased efficiency on total sales, and that’s where the keywords come into play. Like I said, each of these keywords are going to have different bids and different levels of performance depending on what the product is, and this is just a simplified example here.
I’ve taken three examples of potential keywords that you might use if you were selling this product. So you might have Blue Buffalo as one of your keywords, you might have dog food as one of your keywords, and Purina ONE which is one of the competitors, and each of these are going to have as you can see different ACoSs and different levels of performance. And this is the first thing that jumps out to me when I see this. The total percentage of ad sales has gone from 72.6% to 90% by June. So that means more and more of the ad sales are being driven by branded search terms, which is inflating the ACoS. We know that branded search terms are always going to perform better than non-branded search terms.
So what do you do to resolve this? If today you’re running, maybe you’re running one manual campaign and one auto campaign on each of your products and your manual campaign has all three of these types. This branded, this category or generic search term, and these competitor keywords all in one campaign, and you’re trying to look at ACoS or you’re trying to look at TACoS at these different levels altogether, that can lend itself to not seeing the whole picture. So what you can do instead is create different strategies, create different campaigns based on what that keyword is. So use Blue Buffalo in a branded specific campaign. So when you’re looking at the branded ACoS, you know over time what’s performing well, what’s working, what’s not, and the same thing for your generic and category. If you have an overall ACoS strategy or ACoS goal of 11%, you can still look at that on a whole, but being able to break it out by campaign and by these different keyword types, allows you a lot more flexibility in terms of optimizing each of those campaigns towards hitting your overall target.
So once you have your goals set in terms of TACoS and ACoS, you can’t just set it and forget it. You have to continually monitor the performance, optimize your strategy. Maybe you need to break out the generics into several campaigns on top of that. Maybe there are some competitors that you perform well against and some competitors that are going to be more expensive to compete against. So you should always be checking to see what can you be doing better, how can you improve your campaign structure and your strategy to lend itself to being better able to analyze your overall campaign success.
So we talked about the total sales flywheel and the organic flywheel. Well how about the PPC flywheel? So the first thing you need to understand is your business metrics. So before you jump into creating campaigns, before you start setting goals, understand what your product margins are. Think about which products have similar margins, which products will be relevant for similar queries, and start to think about those types of metrics and those attributes of similarity so you can be ready to analyze the ACoS, and the TACoS, and your post ad gross margin, to understand what it means to be successful and what it means to be winning on those pages.
So once you’ve understood your business metrics, study those metrics, understand, start to get familiar with where you start to plateau, what’s working and what’s now. Now you’re ready to launch even more advertising on top of that. So maybe you’re creating additional campaigns, or when you’re launching new products, you know what structure works best for your products. Don’t forget to always have automatic campaigns running to explore what the most relevant keywords are. The market is changing too fast for you to be able to know what they always are. Use the search term report or use a tool like Teikametrics that is constantly pulling in that search term report and suggesting which of those keywords that are performing well should be moved to a manual campaign. Continue to use the broad and phrase matches as exploration techniques, so you can start to whittle it down to your exact match keywords.
Now that you have a ton of keywords running, how are you going to know what’s working, what’s not, and how do you know where to set the bids at? So if you have 10 campaigns and each of those campaigns are running a 100 keywords, you are already talking about a 1,000 bids, and there’s no way for one person to be able to do that, unless that’s what their job was, and they were constantly doing that throughout the day, and even then, how are you ingesting the Amazon data. It’s just a problem that shouldn’t be dealt with by hand. We have tools and technology to solve these problems. Gather more data, repeat. Understand those business metrics. Know what’s working and what’s not so you can continue to grow your business.
So a few key takeaways here. Number one, Amazon is not purely a transactional site, so this is what Chris was talking about. People come to Amazon to shop, to learn about your brand, to learn about your products. They’re comparing your products with similar products in the market. They want to know if they’re getting the best price. They want to know if the ingredients are what’s best for their dogs. Are you winning the Buy Box? Once the consumer has made a decision to purchase, are you going to be there to take advantage of cashing in on that revenue, and the third, the flywheel effect, don’t underestimate the power of TACoS. Understand what the ratio of your ad spend is to total sales so that you know exactly what you’re investing in ads and how to grow your business and make sure that you’re advertising strategy matches your overall business strategy.
So just wrapping up here, Chris, do you have something to ad on the slide?
Yeah, every once in a while we’ll offer kind of like this free insights report for anyone. You can basically give us your top 20 ASINs, we’ll write a report free for you and send you those results. You can kind of get an idea of how you’re performing on Amazon, and it’s going to give you an idea. We’re talking about Buy Box, so are you winning that Buy Box? These are the sort of things we can pull and you don’t even need to add your product data to Salsify. So a super low lift on our end, low lift on your end. Kyle, I don’t know if you can send that link, salsify.com/pdp in the chat. That would be super helpful for anyone who wants to give that a shot. Thanks, Kyle.
No problem. So if you’re interested in learning more about how you can take advantage of optimizing your ad spend and starting to automate a lot of what you may be doing manually today in terms of advertising, you can sign up for a free 30 day trial with Teikametrics. We will import your information from Amazon, you get to start to see some of those metrics that we were talking about, how do you stack up today, and we also can optimize your bids based on historical data using data science to fuel those changes. So that’s at www.teikametrics.com and you’ll be able to sign up for a free trial there.
Thank you very much for everyone who joined. I know we’re coming up on the top of the hour here, but if you have any questions, please put them in the questions chat and we can, we can start to address in here.
Sure yeah, I’ll get to one here, and as you said, we’re coming up against the hour so I’ll make this quick. One of this is about a brand has thousands of ASINs, and they’re asking how would you recommend prioritizing or thinking about tackling those. We talked about at the beginning of the webinar, we put up that poll, how often are you updating listings. It runs again that a lot of people are only doing it once a year or not updating, but I would really encourage you to kind of pick your top products. Pick like a manageable size where there’s 10, 25, 50, and you can pull it by sales rank, profitability, whatever is important to your business and prioritize those, and then set out reasonable goals. Winning the digital shelf is a very lofty great thing to be thinking about long-term, but those are, winning the digital shelf is made up of kind of small steps. So set achievable measurable goals, something like add six images and a video to my top 25 PDPs by the end of September or something. That’s a really manageable thing that you can accomplish, and once you that you’re going to start to realize that it’s not that hard and you can continue to roll that out to the rest of your products.
Yeah, and I see a couple of questions coming in from the advertising side. The TACoS ratio again is the ad spend divided by total sales. So ACoS is ad spend divided by ad sales, and TACoS is ad spend divided by total sales, which you can do at a category level, you can do it at a SKU level or ASIN level. And there was a question about targeting ASINs as well. So the auto campaign source both keywords as well as ASINs, and you can create manual campaigns for both now. I think this is as of maybe a couple months ago.
Amazon allows you to create what they call product attribute targeting manual campaigns. It’s one of the options that you can select when you create a new manual campaign, is to specify what the targeting is, by default it’ll select the keyword targets, but you can switch this to be product attribute targets and you can not only target specific ASINs, but you can also target categories and you can refine it by certain brands. You can put price ranges, you can put star ratings. You can say I’m going to, I specifically want to target maybe two or three of my competitors and then create a price range that’s in the same price range as your product, and then say do you want to target products that are rated zero through four or four through five. So yeah, you have a lot of options there when it comes to targeting the ASINs as well as the keywords. Yeah, good question.
And there were a couple of questions on just the, on the tips again. So I can go back to the slide at the beginning if there were folks who hadn’t seen it. Yep, so we covered how to drive and convert more traffic. So to convert more traffic, you create a really rich experience for the consumer. Demands are starting to increase more and more all the time, and if you’re keeping up with those demands, you’ll be in good shape, and to drive more traffic is to make sure that your advertising dollars are being spent wisely. If your advertising dollars are being spent exclusively on auto campaigns or exclusively on branded keywords, you may not be spending your advertising dollars optimally. So by having the right structure in place and by looking at the right metrics, you can make sure that for each dollar that you’re spending on advertising, you’re optimizing it towards growing your overall revenue and not just looking at ad sales in a vacuum.
All right, Chris, are there any other questions that you wanted to address here?
I think that was it. I mean, if anyone ever has questions you can always email our team. Sarah, S-A-R-A-H @salsify.com and she’ll be in touch with you with anything. So feel free to do that and thank you everyone for your time today. This is really exciting for us on our side. We love working with Teikametrics and Kyle and his team. So I’m looking forward to doing more stuff like this in the future.
Yeah, likewise to you as well, Chris. Thank you everyone for joining today and happy Prime Day. Hope everyone gets through without too much trouble or grief and have a great rest of your day. Thank you.