Many businesses we speak to struggle to understand why their product doesn’t automatically sell when they list it on Amazon. The fact is, that with its endless shelf space, Amazon has become one of (if not the) biggest retailers out there. To be found on that digital shelf, you need to be visible. And to aid visibility, Amazon have provided a vast real estate of advertising, powered by an engine that feeds off the consistency of your performance. To gain market share you need to earn and pay for that visibility, muscling your way ahead of the competition to reach the top half of page one. You do this by having great product at a fair price, compelling copy, strong images, good reviews and ads.
What do CEOs and Business Leaders need to know about Amazon Ads?
You need to understand how Amazon ads work to know how to get your products in front of customers. It’s a different world from that of retail promotions and funding arrangements. They aren’t even the same as Google ads, where cost and positioning is based on an auction of ad space demand, and ads have no effect on your SEO ranking.
Amazon ads are intrinsically linked to your listings in a symbiotic relationship. The more effective your listings are, with strong imagery, a clear proposition and competitive pricing, the more effective your ads are. Conversely, sellers are effectively penalised for poor listings, attracting a higher pay per click cost, and requiring more clicks to generate sales. Amazon ads not only create demand but resulting sales increase your SEO ranking and organic product placement leading to further organic sales.
How do you empower your team to succeed
You may have a really good team in place, or you may be considering if the right blend of aptitudes is present. Things change a lot and fast on Amazon and you need an agile team who can navigate that. By investing in Amazon training that’s specific to your products and category, you can ensure that your team are equipped. Training that encompasses use of Amazon’s most recent technologies and tools will aid productivity, effectiveness and your bottom line.
How do we make Amazon more profitable when ads are eating a greater proportion of overhead?
As Amazon has continued to expand its reach, businesses are finding a bigger proportion of sales coming from the channel. However, given the impact placed on margins by platform overheads, this often means greater volume with lower profitability.
How can businesses control and manage that?
- Focus your efforts on listing and promoting only the products that sell most profitably on Amazon.
- The profitability of Amazon PPC ads is dependent on the profitability of product sales on Amazon, ensure that information is available to those steering PPC.
- Understand that different variations of SKUs will result in different margins, gain insight on which variations are profitable, and consider cutting from Amazon, those that aren’t.
- Understand what good looks like on Amazon to assess if you’re above or below the benchmark and work out why.
Can businesses reduce Amazon ad costs and gain new customers?
In short, you have to speculate to accumulate, even if that’s for a short amount of time. Developing a new customer base requires investment. Doing it well involves testing different ads to establish what will resonate. If you need to operate within the parameters of a set budget you may choose to offset increased investment in new customer development by cutting advertising spend on less profitable products.
Does throwing more money at Ads improve revenue?
Whilst adding more budget can help to expand what we’re doing, putting structure and standard operating procedures in place can deliver significant value. Spending more time on Amazon PPC learning what you might do differently, is an important investment in profitability improvement.
It’s not a linear equation of money in value out. Adding more money to a stable ACoS doesn’t guarantee improvement. If you put more money in, you need to appreciate that you’re changing the dynamic of the ads and creating more variables.
Changing CPC might cause the ad to appear in different places. Increasing the CPC might improve your position and increase opportunity. Making granular adjustments such as to the time of day that an ad’s shown can increase or decrease performance. Often the best way to learn is by doing, but make sure that is executed within a controlled framework for accurate assessment and replicable success.
The hidden cost of stability
Whilst most business leaders crave stability, when it comes to metrics like ACoS, TACoS and ROAS stability might be concealing a lack of growth in your market share. This should be a warning sign. Because if you’re not increasing your market share, a competitor is likely to be working on stealing some of yours.
Software can deliver consistent performance in an almost set and forget capacity. But the danger is when this replaces human insight, and valuable opportunities are missed through a lack of human intuition and involvement. It’s such a dynamic environment, it’s important that any software used is actively managed by someone.
To outsource or in-house? That is the question
- Do you have a basic understanding of why you need Amazon ads and how they work?
- Have you got the time, resources and skills to run your Amazon account in-house?
- Is the knowledge shared between a team, or invested in a single person?
- Is your potential agency plugged into all of the Amazon tools available?
If you’re looking for answers to questions like these then we should talk.
Sell Beyond’s team of coaches train founders, leaders and managers to gain clarity and capability to both manage Amazon directly, or manage their agency partners with greater strategic insight. We empower professionals with the knowledge they need to be able to ask better questions for better outcomes. To find out more please get in touch, we’d love to hear from you.
You may also like to watch our interview on Profitable Amazon PPC which you can find here on YouTube.
Have you read The CEO Playbook yet? Six smart pages of fundamental ‘need-to-knows’ for CEOs of businesses looking to sell more profitably on Amazon. Read it now