This post was created with insights and data from our partners at Profitero.
With increased emphasis on optimizing Amazon Advertising, brands are beginning to look at advertising as a part of a more holistic approach to their business. Finding the balance between paid traffic and organic traffic is only becoming more challenging as the competition for ad space on Amazon increases exponentially.
As more brands understand the opportunity they have on Amazon as it relates to ecommerce, ad dollars are shifting in order to stay relevant on this ecommerce platform. And with this increase, Amazon is quickly becoming more of a pay-to-play platform now than it ever was in the past.
When looking at the first search page, we are seeing it become increasingly flooded with paid placements including sponsored product ads, sponsored brand ads, and in-search video ads. This surge in advertising comes with a cost.
Our partners at Profitero used their digital shelf platform to examine the number of sponsored pad spots on various retailer sites. On average, Amazon is trending at 8-9 allocated paid spots (this is looking at aggregated keyword, so for some keywords this will vary). But looking ahead, other retailers are really starting to follow in Amazon’s footsteps. If we look at the chart below, Walmart in the last year has nearly tripled their paid ad real.
Improvements in Data Measurement
Although Amazon is increasing ways to spend, more optimistically, they are also constantly making improvements in their visibility and ways to measure this data and in updates for new product releases.
- Amazon Attribution Beta: Although this has been around in beta form for some time, it is now built into the Amazon Advertising platform. Fortunately, it is now easier to understand where traffic is coming from, where your ad dollars are going and overall sales results.
- Sponsored Display Advertising: Amazon is providing more opportunities to tweak and optimize sponsored display ads in the forms of the below:
- SD Purchases Remarketing: this empowers brands to remarket and reach audience based on historical purchase behaviors and ultimately create brand loyalty.
- Imagery Creation in Sponsored Display: switch out creative instead of starting from scratch with those call-to-action banner ads.
- NTB (New to Brands) Metrics for Sponsored Display: These metrics for sponsored brands allow you to see how you’re increasing market share and acquiring new customers on the platform.
With third party tools like Profitero, you’re able to see competitive insights that you can’t always capture from Amazon analytics. Some of the data and deep knowledge of competitors include:
- Competitive Sales & Market Share: benchmark insights show what is moving the needle as well as understanding where you stand against your competitors.
- Pricing & Promotion: as much as you’re controlling your price, so are your competitors. Using these tools allows you to capitalize on your competitors’ pricing and promotions strategies.
- In-stock rate: Having a good view of competitors’ inventory health and out-of-stocks will arm you with the capability to compete effectively.
- Product reviews & ranking: Allows you to identify the correlation between number of reviews with search rating on various retail sites.
Prioritizing Content Optimizations for Organic Lift
Brands see 4 times more sales by getting products on Page 1 organically than through paid ads – certainly, the “earned” approach to advertising matters. It’s critical to understand retailer algorithms the levers that drive organic search placement and have a strategy in place to prioritize accordingly.
With the additions and improvement of enhanced content, such as image, video, A+ content, can significantly impact sales, traffic, and conversation rates. Doing an analysis of your portfolio to determine what products may have missing entities is the first step in improving overall organic rankings.
Determine Your Advertising Target
Ad Spend Based on Goals
Approaching advertising at a high-level, understanding how ad spend influences brand awareness and the organic sales that result from that authority is critical for success. Looking at your Total Advertising Cost of Sale or TACoS, a metric for understanding how ad spend impacts total revenue, allows for the reporting and measurement of how their advertising is impacting organizational long-term growth.
Based on your goal in the funnel, whether that is awareness, consideration, or conversion, this will allow for strategically determining your TACoS. This metric will often require an increase as you go up the funnel to acquire new customers.
Ad Spend Based on Product Performance
Additionally, it’s also important to take an outside-in approach by running an analysis to determine what products are performing the best and may help to increase market share. This analysis helps to identify which products are the “healthiest”, most retail-ready, but also which can be improved with simply shifting ad dollars.
- High Traffic, High Conversion: These are the products you want to defend with content optimizations, guaranteed in-stock rates and high ad investment.
- High Conversion, Low Traffic: Often these products provide an opportunity to grow market share if given additional advertising support.
- High Traffic, Low Conversion: These products can benefit from improved content or promotions.
- Low Conversion, Low Traffic: these products are typically struggling the most to stay in stock so it’s risky to allocate too many ad dollars to these products.
Finding the balance between the resources needed for fighting chargebacks and the loss associated with these shortages for your business, the best option is to avoid them altogether to limit the costs overall.
Test Promotions & Measure Shifts in Ranking
As a form of paid advertising, promotions should be just another piece of the full-funnel strategy. When wanting to test a promotional campaign, it’s important to measure any shifts in product ranking to determine the benefits or pitfalls.
When running deals and coupons, being strategic while also balancing it with MAP and other retailers will result in the best success.
With the abundance of opportunities and challenges presented through Amazon Advertising, having a tactical and holistic full-funnel strategy inclusive of organic and paid traffic is more important than ever. Using these two ad approaches in unison, while finding the right balance for your brand is the key: Paid traffic drives organic traffic, and vice versa.
Retail Bloom works strategically alongside Profitero to bring our customers the most comprehensive eCommerce performance analytics. If you’re interested in improving your ad strategy, schedule a consultation with our team if to learn how Retail Bloom can help you achieve your marketplace goals.
Profitero is the leading eCommerce performance analytics platform of choice for leading brands to understand and grow online sales faster than their competitors.
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