We’re interviewing Envision Horizons’ Director of Paid Media, Colin Bashor on Amazon ad management. In our second segment, we’re diving into advertising KPIs, Amazon dashboards, offsetting rising CPCs, best ad types for your objectives, the Amazon flywheel, and more.
If you haven’t seen the first interview, check it out here for a breakdown of what advertising on Amazon is, why it works, how brands can get started, best practices, and common mistakes.
Automated Tools for Amazon Ad Management
Many sellers want to know if the automated tools on the market actually work for Amazon ad management…
“The short answer here is no- there is no such thing as a completely automated tool in my opinion for managing Amazon ads. I think that there are some really really good tools out there, I’ve used Perpetua in the past and I think that’s a strong product. However there’s no such thing as “automated”- you can’t just set up your campaigns walk away and not look at it for two weeks and get the same results as if you were actively managing. With that being said, automated tools are great for cutting down on the amount of time that you have to spend on your advertising. Instead of spending 15 to 20 hours a week maybe you only have to spend an hour hour and a half per day looking at advertising.”
– Colin Bashor, EH Director of Paid Media
To summarize, automated tools are great for shortcutting and getting more performance for less time invested, but there’s no such thing as a fully automated tool where you can “set it and forget it”.
Offsetting Rising CPCs
With the rising costs of CPC (Cost-Per-Click) on Amazon and other platforms, it’s crucial for brands to find ways to lower expenses while still generating a good ROI.
CPC is a crucial metric to keep track of, as increased CPC can significantly impact your ad budget and therefore your overall profitability. To offset these rising costs, there are several strategies you can utilize.
- One approach is to focus on improving the quality and relevance of ad content, which can lead to higher ad engagement and conversion. Regularly reviewing and refreshing your ad content and targeting can improve your ad relevance and lower your CPC.
- Additionally, targeting a more narrow audience can result in a better click-through rate while also lowering costs.
- Another effective approach is to optimize your campaigns for conversion rate rather than click-through rate. This focuses on targeting users who are more likely to convert, rather than just getting clicks. Utilizing retargeting campaigns can help businesses maximize their advertising budget by only showing ads to users who have already expressed interest in their products or services.
Colin Bashor recommends developing an intentional advertising strategy and staying ahead of the curve will help brands make the most of their ad spend…
Crafting a clear, intention-based advertising strategy can help your business stay ahead of rising CPCs. Map out how much you’re willing to invest in acquiring customers and ensure that you’re maximizing every dollar.
Additionally, staying ahead of the competition is critical in advertising, so consider taking advantage of opportunities to capitalize on new ad formats. For example, Sponsored Brand video was a recent addition to Amazon that provided an inexpensive entry point because few people were bidding on it initially. Its eye-catching nature (being the first time video ads were shown on Amazon) resulted in high clickthroughs and great ROI. By being intentional with your approach and anticipating fresh developments such as this one, you can gain significant advantages over your competitors.
Amazon Profitability and Advertising
How can a brand balance profitability while advertising aggressively?
“The first thing that brands need to do is make sure they are doing a full margin analysis. This involves calculating your COGS (Cost of Goods Sold), recording any selling costs, deducting any Amazon fees (such as the FBA fee or the referral fee), and then looking at how much you have left over in net margin for your business. This is also important to know how much you can reinvest into advertising- and don’t exceed that number. For most brands I would say a healthy amount is anywhere between 10 and 25 percent of net sales being invested back into the channel for advertising. However that’s going to vary based on your brand and your product- there are some products that might have a higher shipping fee structure for example, and might not be able to invest quite as much. In other words, it’s important to know what amount you can spend and stick to that- it’s sort of a don’t gamble with what you can’t afford to lose situation.”
– Colin Bashor, EH Director of Paid Media
Amazon Ad Types
“I think if you’re a net new brand on Amazon you should be utilizing Sponsored Brands (and Sponsored Brands Video), Sponsored Products, and Sponsored Display in a limited capacity. Limited because Sponsored Display is a little bit of a newer ad type that needs some improvement, but is great for product defense.
When you’re just getting started a lot of brands want to steadily grow their account without a major investment. Using this basic advertising set is a good way to do this- you can slowly grow your business in a profitable way.
For more advanced sellers or larger brands, DSP and DSP video have become attractive advertising options as well. However, it is still relatively inaccessible to a lot of brands because you have to make quality videos and you have to invest a certain minimum in DSP. On the other hand, the barriers to entry also mean less competition which can lead to better performance.”
– Colin Bashor, EH Director of Paid Media
Key Performance Indicators for Amazon Ad Management
Our Director of Paid Media explained what advertising KPIs he most lives by in relation to the performance of ads…
- ACOS (Advertising Cost of Sale)
- TACOS (Total Advertising Cost of Sale)
- CTR (Click Through Rate)
- Conversion Rate
- % of Total Sales Reinvested
“I think an important top level metric to track is how much of total sales are being reinvested into advertising. From there we can kind of breaks down our KPIs based on campaign type- is it a branded campaign, is it a category campaign, is it a competitor campaign? For a branded campaign I think the standard is higher, meaning your ACOS needs to be lower and CTR (click through rate) should be much higher. By looking at click-through rate and conversion rate you can get some insight into the customer journey and diagnose where the problem. For example, if you have a high click-through rate but a low conversion rate, it means customers are getting to your detail page but they’re not making the final purchase. Maybe your price is too high relative to the competitors, there could be lack of information or missing details from your listing that customers need, maybe low quality imagery, etc. Whatever the issue may be, you know that the customer is leaving and they’re not making the purchase, which is a really important insight.”
– Colin Bashor, EH Director of Paid Media
There are a lot of key metrics that can help you sort of follow the customer journey of searching for a product or clicking on an advertisement, getting to the detail page, adding it to cart and finally making the purchase. These KPIs (Impressions, CTR, Conversion Rate, Add to Cart data) can show you where in the funnel you’re being bottlenecked- those are the insights to look for. Another really important metric on the DSP side is the total percent new to brand or total new to brand sales.
Why Invest in Amazon Ads?
There’s no doubt that Amazon is a major player in the realm of digital advertising. For brands looking to reach shoppers on Amazon, now is the time to invest in Amazon Advertising. With its massive customer base and wealth of data on shopper behavior, there’s no better platform for reaching potential customers and driving sales.
Envision Horizons Advertising Services
Build your full strategic media plan with experts in the Amazon space. Founded in 2017 as a full-service Amazon Agency, Envision Horizons has helped hundreds of brands grow and succeed on Amazon managing over $150M in Amazon sales annually. In 2020 Business Insider recognized Envision Horizons as one of the Top Amazon Advertising Agencies to work with. In 2022, Envision Horizons was recognized as a US finalist in the Brand Building category from the Amazon Ads Partner Awards.
Envision Horizons specializes in designing full strategic media plans, bringing clients the best return on every incremental dollar. Reach out to us to learn more about why you should be utilizing Amazon advertising. Connect with Us.
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