Are you using the same strategy for Amazon ads and retail promotions? Why?
“The wholesalers are pedantic, the independents are slow and take up a lot of resource, but Amazon is quick and responsive.”?
Does this observation by an FMCG (fast-moving consumer goods) business owner resonate? In your company, there may be several reasons why you are looking for profitable growth on Amazon, alongside your other sales channels.?
Did you know that setting up retail promotions to drive sales volume is a completely different promotional technique to driving your product sales using Amazon PPC ads??
No-one is taught how to run a successful business using Amazon
Think about that as a business leader and expert in your sector. There’s a level of irony here.?You may have deep skill and knowledge about running a growing company, negotiating wholesale contracts or getting listings in retail outlets that, at one point, you spent hundreds of hours learning.?
Amazon is built differently to other retail platforms that offer advertising
When it comes to growing Amazon revenue profitably, there’s an expectation you and your team can leap into Seller Central or Vendor Central and be just as masterful.?
Furthermore, most firms learn to sell on Amazon through the experience of selling. However, this is an expensive and risky path to learning. Rarely, are you given feedback from the customer who didn’t convert into a sale and bought a competitor’s product. Often there is no explanation as to why your growth has stalled or why your pay-per-click advertising on Amazon isn’t performing.?
It’s left to you to guess what to do differently next time.??
Why promoting your product with Amazon ads differs from funded promotions in-store?
Funded retail promotions often follow shopping seasons. Your company typically uses them to drive incremental sales or to push end-of-line products. In most cases, companies take a percentage of margin to move inventory, grow brand awareness and get bigger volumes. This is set in advance and the promotion is budgeted as a fixed cost.?
In most cases, retail promotions tend to be short-term and time-bound. Companies also avoid setting promotions with no end date, as this does not incentivise consumer action. Rather, it is best practice to implement limited-time offers to encourage customers to get a move on. Companies can easily measure results with EPOS data on how promotional campaigns have performed. They can see where funding is spent, especially if the business is giving retrospective promotional support, or override discounts on volumes out.?
In contrast, Amazon ads don’t work like retail promotions. Amazon ads don’t just sacrifice margin for volume.?
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Amazon ads work as a tool for creating demand on Amazon for browsing shoppers
People are typing in a keyword in the Amazon search bar – and your product comes up as something that may be relevant.
In addition, effective Amazon PPC ads will be served to Amazon shoppers looking for a similar product, a solution to their problem, or browsing on another listing or a competitor product. Amazon PPC ads do not have to be specifically served to people searching for your brand or your product. In serving ads across various browsing areas and search terms, we seek to create demand for your product.??
Sales from Amazon ads positively influence your Amazon SEO ranking. Amazon will place your products higher in search rankings if more shoppers have purchased from ads. In turn, your improved Amazon SEO ranking will positively impact your Amazon Ad cost-per-click – i.e. your ads will become cheaper if your SEO ranking is high.?
Amazon ads are a medium-term investment in organic ranking, not a short-term margin sacrifice?
Let’s repeat this key difference Sales from Amazon ads positively impact your Amazon SEO ranking.??
Amazon ads can be a lever for shifting stock. But unlike funded promotions, Amazon PPC is also an investment in growing organic (non-paid) sales and improving your Amazon keyword ranking – your SEO performance.?
Once we understand this, we can see that we should look at Amazon marketing spend and sales forecasting in a different light
We are not budgeting market spend to drive volume sales. We are investing a proportion of margin to grow organic placement and drive consumer demand. If the sales grow, the investment should grow as it is a variable cost, not a fixed cost.
Amazon advertising is a medium-term approach, not a short-term strategy
Amazon ads and retail promotions must involve two separate budgeting strategies. The purpose and outcomes of selling your stock through these two vastly different channels demands a bespoke approach.??
This brings me back to what prompted me to write this article. On a recent visit to the London Toy Fair, I was surprised by the one-stop approach taken by so many FMCG business owners. Their frustrations with Amazon PPC were often down to their standardised retail budgeting approach to selling on Amazon. As I alluded to at the start of this post, business owners can’t expect their teams or themselves to be Amazon experts, to fully understand the added benefits of Amazon Ads and the longer-term game that they need to play.?
As Consultants for Amazon businesses, we can advise and implement bespoke Amazon PPC strategies
To find out how Sell Beyond, Amazon Consulting experts, can support your team by developing your knowledge of how to budget for Amazon Ads visit www.sell-beyond.com