Making Amazon’s Advantage Your Advantage: Here’s what you missed

By |2020-05-15T13:35:52-04:00March 17th, 2020|Amazon Tips & Tricks, Webinar|

Winning on Amazon is a game of tactics that roll up to your larger growth strategy. The key is understanding what tactics are at your disposal, and the best ways of making them work for your business.

That’s what this webinar, co-hosted by Teikametrics and Skubana, is all about. We’ll dive deep on meaningful, specific tactical and strategic levers you can pull on and off the site, along with the method for doing so intelligently at scale.

Watch the video recording here and check out the full transcript below:

Transcript

Andrew Waber:
Welcome to the webinar. So today we’re going to be talking about making Amazon’s advantage your advantage. And my name’s Andrew Waber. I’m the director of insights over at Teikametrics and I’ll be your MC today. But let’s get started with the presentation. So I just want to introduce our two speakers today. So with us from Skubana is Chad Rubin. He’s the cofounder and CEO. And Chad has a really unique history both as the cofounder of this awesome company Skubana, but also he was a seller as well and actually still continues to be one. So has some awesome firsthand experience. And then with me from Teikametrics is Kelsey Rob, who’s the team leader eCommerce strategy team.

Andrew Waber:
And she’s been here and really in the space for such a long time and has helped sellers from multimillion dollar companies, multimillion dollar sellers all the way down to smaller brands, really succeed on Amazon. So a lot of deep expertise in the room here today. So we have a lot to get through today. So I’ll make this agenda run down quick. But first we’ll be passing it off to Chad really to cover first some common misconceptions about selling on Amazon’s marketplace. And really kind of moving that over into like, okay, ways to really think about improving your Amazon presence. What’s going to get you to the next level? And really then Kelsey is going to take over and really get deep into, okay, you’ve got your products up there, how do you make them successful? How do you drive more traffic to your products and get more sales really, right? Which is what we’re all after.

Andrew Waber:
And dog tailing with that, it’s a discussion on measurement performance. What are the best ways to think about your performance on Amazon and understanding ways to optimize that over time. And then finally, just some new options on the platform when it comes to ad targeting and growth. There’s a lot of new stuff that’s come out from Amazon recently and it’s kind of a good rundown of that type of stuff. So just a quick overview of Teikametrics. So we’re a technology platform, but we pair it with our team of expert analysts. So these are some of our customers here. And we have over 3000 brands that work with us. Again from large brands like Lands’ End to smaller upstart brands. And what we help them do is really maximize their advertising profitability on both Amazon and walmart.com which is a new channel for us as of about a month ago. So just really excited to again, bring that expertise to the table and then I’m going to pass it off to Chad who can talk about Skubana.

Chad Rubin:
Hello everybody. Chad here. Thanks for joining, thank you for the introduction. Skubana really is an operation platform to run and automate your entire business. We have customers like Bird, Hubble contacts, very, very large Amazon merchants and brands on our platform. All the way down to even some smaller brands you may have not heard of. But using my own software to run and automate my entire business. So everything from orders to inventory to purchase orders and to profit. That’s really where we play. Again, let’s move on to the next one. We have a very limited amount of time. This is not about Skubana, but Skubana is a great tool that a lot of brands are leveraging to run and automate their business. So are you giving me control Andrew, or you want to-

Andrew Waber:
Yeah, you should have control.

Chad Rubin:
[inaudible 00:03:10]. Yeah, I know. All right. So I’m going to need your control if that’s okay. I don’t have presenter control.

Andrew Waber:
Just let me know when you want to switch the slides there. That’s fine.

Chad Rubin:
I’m requesting control now.

Andrew Waber:
There you go.

Chad Rubin:
You can give it to me. All right, great. So look, I think this slide is just important to talk about just how much of a monopoly, a national monopoly Amazon is. They certainly are doing roughly anywhere from 50 to 60% of all online revenue flowing through their platform. So I think a lot of brands tend to ignore Amazon. Everyone thinks that they don’t need Amazon. And I think that’s a huge elephant in the room. So there’s all these articles that are coming out across all these other, these media outlets right now. And these media outlets are saying, “Okay, this brand pulled off of Amazon, this brand pulled off Amazon, we don’t need Amazon.”

Chad Rubin:
If you asked anybody, they would typically say we don’t need Amazon. And I think that’s actually a false hood. I think it’s actually that we need to embrace Amazon. They’re a friend, they’re a foe, and they’re a frenemy. And we need to talk about how we can leverage Amazon to our advantage. And that’s really what we’re talking about today is how do you sort of, everyone thinks that Amazon is leveraging their data to their advantage. But how do you take back ownership to your data and your customers and use this data almost like a data science experiment to your own advantage. So if you look at this next slide here, again, all of these brands they’ve pulled off of Amazon and I think they’ve actually … Well Away has never been on Amazon, neither has Allbirds. But if you look at Ikea, Birkenstock and Nike, they’ve all pulled back on Amazon and I think it’s actually done more harm to their brand than positive and we’ll talk more about that today.

Chad Rubin:
But every brand believes because they’ve created it that they are almost like Apple. And essentially most of these brands you see down below are commodities with a brand attached to it. And so I come from the thesis that you need to embrace Amazon, but be very careful of how you do it. And we’re going to go through those details today. So if you look at here, just the bullet points here, there’s a lot of misconceptions that brands just don’t understand about Amazon’s marketplace and the platform and the way that Amazon’s leveraging data. They don’t understand the fees associated with it. They certainly don’t understand PPC. And they also are really concerned about essentially authentic products being sold on Amazon. And there are some authenticity issues. But here, if you look at Amazon’s A9 search which they patented, about 70% of searches are not really shoppers looking for brand. They’re looking for a specific generic term.

Chad Rubin:
For example, luggage or apples or mayonnaise. And if you’re not showing up, you’re not relevant. And recently I went to an event and I got a chance to speak to the investors of Away Luggage and I thought this was super fascinating. So Away Luggage is getting just on their branded terms alone, anywhere from 75,000 to 100,000 branded searches on a monthly basis that they’re missing out on. And so what Amazon’s doing is showing other people that are advertising for that specific item and they’re just losing out. I don’t know if it’s 100% of that share, but certainly a specific percentage of that wallet share Away is losing. And I think that’s really, really important to note. So it’s important to not have like a hubris about selling on Amazon or about embracing Amazon, but figuring out how you can make Amazon work for you.

Chad Rubin:
So we’re going to go through some myths and some reality checks for those that are listening. I’d love this to be interactive. So if you have questions, I’ve got my phone handy and I can check. I can’t see it on my screen, but I can constantly check if you have questions. A lot of this information is actually the first time I’m actually showing it or speaking about it. This is me sort of imagine me going to a comedy club for a small audience. I’m testing this out as I’ll be speaking more broadly about these topics through the entire year. And so we’ll go through the myths of selling on Amazon. We’ll go through some facts, at least how I see the world and how you can embrace Amazon and how you can use Amazon’s data to your own advantage.

Chad Rubin:
And so again, if you have questions, just simply put in the chat box and I’ll get to it. There will be a bonus at the end after Teikametrics session, where you can sign up to get more information. It’s actually a really good goodie of a book that we’re just launching that we haven’t launched it yet. It hasn’t hit the market yet, but you will be the first to get it on the market. So just stay tuned at the end for that bonus.

Chad Rubin:
All right, so let’s get into some meat of this presentation here. All right, the first one. So jumping ahead here. So the first one is that a lot of brands think that they’re going to lose control over their brand if they actually are on Amazon. And that is so not aligned with actually what’s happening because essentially if Amazon’s doing, let’s just say 70% or 50 to 60% or 70% of all search queries online say for products themselves, if you’re not on Amazon, you’re losing a massive amount of number one, search query data. But you’re also losing out on revenue. So once you’re not pressing on Amazon, Amazon sees that and they’re like, “Oh yeah, people are searching for Allbirds on Amazon. Well, Allbirds doesn’t want to embrace Amazon, but we need to give customers what they need. So what does that mean? We’re going to now create a similar type of offering or encourage other sellers or other merchants that come sell that product on our platform.”

Chad Rubin:
So I think that’s something really important. If you look at this example down low, you can see Amazon came out with their own Allbirds type of offering because they see that demand and they want to capitalize on that demand. And I think if you’re a brand today, if you’re on this webinar right now, you need to understand that Amazon is not taking your data. They already have all the search volume data. You need to now get your brand on Amazon specifically and be very strategic about it. And we’re going to talk about how to be strategic in the coming slides.

Chad Rubin:
Rocking and rolling to slide number two or myth two. All right. So the beautiful thing is that Amazon has all this data. If you don’t embrace Amazon, you’ll never get access to key information to see what’s happening on Amazon today. So in seller central, in reports, for those that do have access to seller central, you actually can see how people are interacting with your product. You can see the sessions, which is essentially the visitors or people that are coming to your product. You can see conversion rate data. And so believe it, Amazon’s using this data, but you can now get access to this data in seller central. And if you’re a merchant on the platform and see how people are interacting with your conversion rates and your sessions, your traffic, and see how that relates to your own website.

Chad Rubin:
So a lot of people say, “Well, you know what, like our target …” A lot of brands will say, “Our target customer isn’t on Amazon.” And higher income bracket brands that are essentially exclusively focusing on a premium product may not embrace Amazon. And again, it goes back to my thesis. I believe that is a massive mistake. So if you look at how people, how brands today, these disruptive D2C brands are operating today, you can get discoverable on Instagram. Okay. But there’s other ways to be discoverable, which is on Amazon. And you’re missing out on all that search data, but all the customers that you maybe wouldn’t be navigating on Instagram. And if you looked at the numbers down below, where consumers start their search, 66 percentage of the people are actually starting their search on Amazon. And where do they end their search when they’re ready to buy? 74%. So there’s some 20% per brand website down to 10%. So again, this is one great way of saying let’s embrace Amazon. And Amazon’s target demographic, which you’ll see in the next slide is actually truly a lot of these brands target demographic.

Chad Rubin:
And so the other thing I just want to point out, you’ll see this tootsie roll pop there and that’s just like a reminder, a cue in my mind. I want you to go like figure out or even just when you’re on Instagram, how many clicks does it take to get to a buy? I’m playing on this idea of like how many clicks does it take to get to the center of a tootsie roll pop. How many clicks does it take to get to a conversion on your website or through Instagram? And then notice the difference of the clicks it tastes get to a conversion on Amazon. It’s literally one, two and three. Three clicks it takes to get to the center of a conversion on Amazon. Check it out, try it out for yourself. I do believe in it. The next thing that brands will say is that Amazon just cheapens our brand.

Chad Rubin:
It dilutes our brand image and attracts the wrong audience. Check this out at the bottom. This graph is awesome. It talks about the penetration of Amazon prime for household incomes. 82% and this is in 2017. So I bet you this has actually increased. 82% is at $112,000 income bracket or higher are actually prime shoppers. And you can see that this trend is just going up into the right. So the trend is your friend in this case. And if you want to expand your market share and appeal to a broader audience, especially not only in different income brackets but specifically in the income bracket that you’re approaching especially as a lux brand today. As a D2C brand, you need to think about ways to embrace Amazon. Any questions coming in? Just feel free to feed them into me.

Chad Rubin:
All right, let’s talk about myth five. Back one. Okay. So essentially what you’re seeing on Amazon is that there’s a lot of data they can get at your fingertips. You can see search query data on Amazon and people can see specifically if you’re looking to sell an Amazon as a merchant or brand. You can see that search query data and you can see if the demand is matched with supply. And if demand isn’t matched with supply, you can capitalize on it. To me, that’s an opportunity. So a lot of brands will say like, “If I put my product on Amazon, people will steal my idea or there will be a copycat.” The thing is that if you’re a brand like Allbirds or Away Luggage, people are away, are away, people are already searching for your products. Amazon already has all that information and will serve your competitors into the listing or into the search queries that will plug in that hole at the efficiency that’s on their platform.

Chad Rubin:
At the end of the day, it’s just data science. So no one’s here to steal your information. It’s all about how you can use this search query data to your advantage and represent your brand and take market share. And we’re going to talk about in the coming slides like different tactical things you can do to make this happen so that you don’t feel like your brand is being diluted, to slowly dip your toes in the water to see if it’s warm. But this example here at the bottom is literally you type in Away Luggage. Everyone’s capitalizing on that brand equity and maybe they’re not getting 100% share, but they’re certainly getting a massive percentage of share. Because at the end of the day Away is just again, a commodity item with a brand attached to it.

Chad Rubin:
And the other thing that I think is important that, well let’s just say you don’t embrace Amazon. If you don’t embrace the Amazon, and let’s just say Amazon doesn’t manufacture, like doesn’t want to make the next Allbirds sneaker to capitalize on that demand, you’ll have other third party sellers that will list your product and just [inaudible 00:15:36] it on Amazon. And it’s really, really hard to control. It’s kind of like playing whack-a-mole. So if you look up like Bonobos stretch pants today, this is somebody who just added this to Amazon’s platform as a listing. It certainly doesn’t represent, I believe that this even actually commoditizes and degrades the customer experience, the ninjas over at Bonobos that have worked so hard to build their brand.

Chad Rubin:
And they will misrepresent your brand and not give you the experience or the brand equity that you’ve invested so much money and dollars into. So if you don’t control the experience, somebody else will. This is just one small example of somebody … You can see tons of Bonobos product on Amazon. It’s all just built by third party sellers. These images, this description here at the bottom doesn’t actually properly represent the brand of Bonobos. And the same thing with Kylie Jenner. So this picture, this brand which says it’s like Kim’s Princess is the brand. And if you look at the reviews, these are like knock off products that are essentially degrading the actual Kylie experience that she’s so worked so hard to build an audience and a community and to rally around their brand. So you lose control of your brand if you’re not on Amazon. And again, there’s more to be gained than there is to be lost by actually taking control of your brand on Amazon. So much to gain.

Chad Rubin:
All right, so now we’re going to talk about some tactical things, strategies to make Amazon’s advantage your advantage. Buckle up. Here we go. So the first one is reclaiming the brand experience. So I don’t believe that like your list, your product, let’s just say you’re selling on Shopify or BigCommerce. I don’t believe in actually just duplicating content across the channel. I believe in actually curating the experience and using best practices on Amazon because every market, every channel is different and should be treated as a unique experience. So let’s just say you do reclaim your brand on Amazon. There’s ways that you can actually deliver strong listings to customers to get them to buy and convert. And you can actually get that conversion data by the way, which we’ll go into in a second. But you can see here these images, you can capitalize on secondary images. And because when you go to mobile on Amazon, you only see those images or those photographs, you can actually create text and value props and get people to this golden area, which is the buy box button.

Chad Rubin:
Also creating bullets that give you a better experience are also super important. The second slide which I’m trying to get to is unlocking Amazon’s data. And I already alluded to this earlier, essentially using the data that Amazon gives you at your fingertips whether it’s search query data. They’re also in the seller central report section. It’s a sorted by, I believe parent by [inaudible 00:18:50] in the reports will give you actually session data per SKU for a date range. So it’ll give you your traffic and it’ll give you your units ordered and you essentially can use that data to figure out what your conversion rate data is. So you can take say two steps ahead and you can see what listings are converting and what’s not converting and how you can actually be proactive. And taking that data even back to seeing what your own conversion rate data is off of Amazon’s platform. So use this data to actually inform decisions in your business.

Chad Rubin:
The third tactical thing I think is very important. If you look at this example here, which is Buffy Comforter, I had this concept called a diamond SKU. The diamond SKU is like sort of your most popular item or the SKU that you’re known for. So in Buffy, it could be their comfort. They have the most “comfortable” comforter out there. In Honest company, it could be the diaper. That diamonds SKU can be used as leverage on Amazon’s platform to understand discovery of your products, to take control of your brands. But also you don’t have to have every size variation built in to the platform itself. So one of the things that a lot of people leverage Amazon for is social proof. A lot of D2C brands today, there is no true social proof. Yes, they may have reviews on their site. Maybe those reviews are curated.

Chad Rubin:
However, on Amazon, it’s really hard to control the reviews and your ratings. So this is a real way to showcase your product to get reviews. But also, this isn’t really where Buffy … This is where Buffy started, but it’s not where the end. They have a whole wedge of products that they’ve offered on their site to get people back into the door, to increase their selection, their SKU count, but also to increase their lifetime value of their customers.

Chad Rubin:
So go to the next slide here. So if you went to Buffy’s site by the way, they would have the new sheets and the pillows that they’ve come out with et cetera. This is kind of, I guess the diamonds SKU. And I don’t love to use this example, is sort of like the gateway drug of product on Amazon where you can get people really amped up about your products, get the NPS score super high, and then drive value where people are like, “Oh wait, I love these socks, or I love this pillow. I want to go figure out what else they have. So I want to buy the rest.” And that’s really how Honest company grew. They started off in diapers and then they went and multi SKU. They killed it in diapers, then they went to baby lotion and shampoo. And that just really rings true for me because I actually have a child now. So I’m super relatable on the Honest company thing. Plus they’re one of the investors of Skubana or the founders and investors of Skubana.

Chad Rubin:
All right. So the other thing I think is really important, Amazon just launched this. It’s in beta, it’s called VOC, AKA the voice of the customer. And you can actually see what people are saying to Amazon, how they’re describing your product when they actually return it back. And what people are saying so you can see the defects, you can see the health issues with your products or the poor reviews and you can actually work to improving that. So I would say like one of the other things that are really important when you embrace Amazon is Amazon has a very high benchmark and they sort of force you to give Amazon life service to your customers. So you have to already offer Amazon life service. And then you already offer that to your customers off of Amazon. And it becomes just a great way to train yourself on how you can delight customers just because Amazon is forcing you to a higher standard.

Chad Rubin:
Another thing that’s very important is essentially understanding the lifetime value of your customer, whether a one time buyer or a two time buyer or a three time buyer and then what are those three time buyers spending across channel. So this is a great way to understand, okay so I’m selling this comforter on Amazon. Did that customer go back and buy it off of Amazon or did they actually go and return and buy more on Amazon or vice versa? Again, the diamond SKU to me is a great gateway drug. And like if people are buying the Buffy comforter, why not increase the average order value, increase the cart size, get frequently bought together. Just 35% of customers are actually finding products from frequently bought together and giving yourself either a broader total available market that you can address.

Chad Rubin:
The other thing that like not a lot of people are talking about is like repeat customers. You can get all your repeat customer data, the frequency, the real value of those customers cross platform. And most importantly you can get that profitability across channel. So are you more profitable maybe on Amazon? Can you take those dollars and deploy them and use it as a bridge back into your own brand experience off of Amazon? Or use that actually to like in a world where you have rising COA, the cost of acquisition is rising in a compounding fashion. How do you essentially create a way where you can actually take those profits that you’re making them the channel and redeploy that back into the business in new SKUs, in new ways, maybe in offline ways or other ways to evolve from just being a direct consumer, coming to a direct to everywhere company, to increase your wedge and to increase your total available market.

Chad Rubin:
So on top of that, when you’re analyzing this, it’s again, it’s going back to getting really involved in the data science of things. Using numbers as a way to decide if you’re going to invest in a product, if you’re not going to invest in product. Understanding what the sell through and the fees are at Amazon, and you can do that in a spreadsheet or with a platform like Skubana. You can essentially get all that profitability information in a system and make decisions on winners and losers really quick. Because Amazon’s in the business of selling your stuff and not storing your stuff. So they charge you for storing your stuff. But on top of that, there’s a lot of hidden fees at Amazon.

Chad Rubin:
They’re really good at showing you what you make on the top line, but they’re not good at showing you what you make on the bottom line. So it’s important to have the right operational infrastructure that’s not old school, that’s not legacy, it’s not clunky that you can deploy in a rapid way to make decisions and be limber and be quit and be agile. That being said, I think I’ve hit it in 26 minutes. I went through a lot. If you have questions, you can save them for the end. You can also message me at chad@skubana. With that being said, I give it back to Teikametrics.

Kelsey Robb:
Awesome. Thanks so much Chad. So now we’re going to jump in. You’re on Amazon and we need to figure out how to generate more traffic. We know it’s easy to be invisible on Amazon. If you don’t show up above the fold on the first page, you’re going to be missing out on 70% of the product click throughs. While ranking well organically is a great way to show up above the fold, there’s also advertising inventory such as sponsored brands and sponsored products that can ensure you have eyes on your products. A good product doesn’t get your product found on Amazon. If you remember back to Chad’s slide earlier on the Amazon product death cycle, the first step is figuring out number one, on product discovery. We know that a good product can help get discovered, but if you aren’t spending money on ads, you’re going to have trouble getting people to discover your product.

Kelsey Robb:
You may have a great product, but again, based on the competitive landscape of your category, you may have more or less difficulty in gaining visibility. This is a really great data analysis into the top million searched terms on page one of Amazon’s search results from August 2019. You can see that hobby oriented categories such as hiking and arts and crafts tend to have the highest concentration of ads and therefore are going to be the most competitive, while electronics and child oriented categories are at the other extreme. What we found in this analysis is that the top three results on the search page capture more than 60% of the conversions. That means three out of five conversions happen on just those top three products.

Kelsey Robb:
So you’ve probably heard of the flywheel effect, but we know in order to get it going, you need advertising. If you’ve ever joined a Teikametrics webinar before or you’ve seen us speak at a conference, you’ve probably seen this image. We’re going to kick it off in the upper right hand corner where it says ads. And we know that we need to put some money behind there to get the flywheel going. Advertising drives increased sales volume, which leads to more reviews and a higher sales rank. This leads to more organic traffic, leading to more data to leverage and analysis for optimizing ad spend and continuing that flywheel effect. In order to make the flywheel work, we do know that you also need to win the buy box.

Kelsey Robb:
So what is the buy box? On Amazon desktop, you can see an example here of what the product listing page looks like. The buy box is on the right hand side of the page and indicates which seller owns the add to cart and buy now buttons. You can also see on desktop who is losing the buy box under the other sellers on Amazon. And this is not where you want to show up. On mobile, it’s even more important to own the buy box because of where it’s placed on the page. The call to action buttons are right under the product image, above the description and any bullets on the product. And it’s also much harder to click through and see what other sellers might be selling that product.

Kelsey Robb:
So a few additional reasons to care about the buy box. People trust it. If Amazon puts a seller in the buy box, people are very unlikely to click out and find another seller for that product. As you saw on the last slide, it’s even harder to do that on mobile. And almost three quarters of Amazon customers worldwide have shopped via their mobile. If you have a suppressed buy box, it could mean your products aren’t profitable. And finally, if you don’t own the buy box, you can’t advertise, which throws a big wrench into the flywheel effect. This is a great cheat sheet from Bigcommerce. You can screenshot it now or you’ll also get the slides after the webinar. But essentially if you’re having any trouble winning the buy box, this is a great checklist to go through to figure out where you might be encountering those issues.

Kelsey Robb:
To summarize this conversation around the buy box. One, we know that there are multiple factors that impact the ability such as what was on the previous slide. We know that you have to have a robust fulfillment strategy regardless of if you’re selling through FBA or FBM. And finally, you can’t underestimate other sellers who might be trying to win that buy box for themselves. So jumping into advertising and properly measuring performance and optimizing. No one’s advertising on Amazon just to drive traffic or even just to drive ad revenue. They’re advertising because they want to generate more total revenue. If we’re looking at the revenue of a newly launched SKU, you can see that there’s pretty exponential growth over the first 90 days. However, there are two ways to measure the impact of advertising on how this revenue was generated. Here at Teikametrics, we like to look at a metric called TACoS or the advertising cost of total sales. This includes both ad revenue and organic revenue. The ACoS is specifically looking at just ad revenue and doesn’t factor in the impact that ad spend has on driving that organic revenue as well.

Kelsey Robb:
So when you look here at ad spend versus ad revenue over those first three months of the new product launch, you can see that spend rapidly outgrows the ad revenue. And as a result we see a really high ACoS over those first three months. You might think that that’s really bad and ad spend isn’t where it should be. However, if you look at this against the total revenue, you can see that that TACoS number is actually going down month over month because your total revenue is growing at a faster rate than the ad spend that you’re putting into your product launch. Essentially, TACoS helps to capture the full flywheel effect while ACoS helps capture context. So jumping into the context side of things here, you have your products and you know what keywords you want to bid on, but how do you know which keywords to put with which products and what bid to set each keyword at?

Kelsey Robb:
I’ve worked with many Amazon sellers and I can tell you, I still don’t know the answer to how to set every bid for every keyword. What we need i context. We know the same rules don’t apply to every category, product or keyword. Every product has a different retail price, margin and life cycle stage and every keyword has a different audience, bid and ACoS. So we’re going to jump into an example here. Let’s look at this Blue Buffalo dog food. Right now we’re starting in the growth stage with a slightly less efficient ACoS target to kick off that flywheel effect. The goal is to ultimately move that over into the profit objective once we see improved efficiency. If we look at these metrics, it looks like the product is ready to be moved over into the profit stage because we’ve seen a consistently go down month over month.

Kelsey Robb:
However, if we look at the right metrics, we can actually see that TACoS is consistently increasing, which means that the total sales, which is ad plus organic, are not growing at the rate of the increased ad spend. We break that down a little bit further. We can determine that the ratio of ad sales attributed to the branded keywords within each month increases over time, which means that we’re not driving incremental sales volume because those users are already in your lower funnel and we’re already looking specifically for your product to begin with. If you look only at ACoS, you can fall into the trap of being incredibly efficient from an advertising perspective, but losing out on incremental sales by pushing the most of your volume through brand.

Kelsey Robb:
While you should be using brand terms as a defensive tactic, they shouldn’t be your only strategy for driving growth because at the end of the day they won’t drive that growth. Here at Teikametrics, our recommendation is to launch one auto campaign with three associated manual campaigns for each of your products or product groups. Automatic campaigns can help you explore and find new search terms to add to manual campaigns, and manual campaigns help you exploit and determine specific bids based on each campaigns type strategy. For example, brand campaigns should be your most efficient while you can be a little bit more aggressive on competitive targeting.

Kelsey Robb:
So now I’m going to jump into a few new options for ad targeting and growth from Amazon. You’re probably familiar with sponsored products. And if you want to be a profitable advertiser on sponsored products, it comes down to winning those placements only when it’s likely to drive a profitable sale. For sponsored brands, you may want to change your strategy a little bit as you might want to show up at the top of a search even if it doesn’t result in a sale immediately. You’re betting that after that user clicks on your ad and then sees another product and does some additional research, that interaction with either a sponsored product ad of your own or your organic ranking later down the line may ultimately drive the sale. This is similar to sponsored display, which can be shown in any inventory spot, but it is an important strategy in picking up additional incremental sales from people searching in similar categories that you sell in.

Kelsey Robb:
So new to brand metrics is something that Amazon released recently. That gives you an understanding of customers who are buying from your brand for the first time within the past year. It’s definitely interesting to track for your sponsored brand campaigns, but context also matters in terms of how you measure your progress. In some cases, new to brand may be higher on generic compared to competitor terms. So it’s a matter of figuring out when those new to brand are over indexed or under indexed and making adjustments on your budgets accordingly to make sure you’re making the most out of those campaigns. So again, new to brand metrics are specific to sponsored brands, display and video units. It’s not available for sponsored products at this time. And keep close attention between the different types of terms and the performance of new to brand metrics between the two of them.

Kelsey Robb:
So here at Teikametrics, we use MACS or the maximum allowable ACoS as linchpin of our algorithmic bidding. Our customers already have these set for their sponsored product ads, but when it comes to looking at sponsored brands and sponsored display, we want to make some adjustments to make sure that it aligns with the strategy for each of those inventory types. For sponsored brands, we typically recommend increasing MACS from about 25 to 50% of where you are in sponsored products. For a sponsor display retargeting, we want to keep MACS similar to the sponsored product levels. But if we’re looking at interest based sponsored display, our recommendation is to increase those MACS to drive win rates. Across both ad types, if you find your win rates are low or you want to increase them, rather than adjusting the bid floor, we strongly recommend increasing your MACS instead.

Kelsey Robb:
So again, sponsored brands and sponsored display ads are both different from sponsored product ads, so your expectations need to be different as well. This is a conversation that I’ve had many times with the brands that I’ve worked with and continually have as we’ve worked through our relationship in different types of ad inventory that we’re spending on. Sponsored brands contributes to both direct response and brand building with the latter being a naturally longer term goal. As such, after turning on bid automation, you may see an increased ACoS and TACoS temporarily similar to what you see for a new product launch on Amazon. But in order to drive those longer term goals, it’s worth monitoring progress over several weeks, if not months, to identify whether your campaign is driving the ultimate bottom line results that you need.

Kelsey Robb:
This delay in reviewing inventory and performance is even more important when looking at sponsored display placements, which we’ve historically seen have even longer attribution lifetimes. So once you have a few weeks under your belt and you’re able to have enough information to truly understand the impact of either sponsored brands or sponsored display, then you can make adjustments to either your budgets, your MACS or anything else you want to change for those campaigns. So you’ve seen a lot of analysis in the recent slides that I just went through. I’m going to hand the mic back over to Andrew Waber who helped put these all together and will be providing a quick wrap up of what we went over today.

Andrew Waber:
Great. Thanks Kelsey. Yes. So just some final tips before we get into questions here, which we have some time for those. So getting back to what Chad was talking about, really understand what your hero products are and use them strategically on Amazon, right? They’re a great tool at your disposal for really driving a lot of what you’re trying to do overall for your business. So understand what those products are and be prepared to kind of leverage them there. And right, and another point that Chad made is are your products difficult to replicate? Are they difficult for someone to come in and try something to basically copy your strategy? And really if you can hit that good middle ground where it’s a product that you’re able to spin up and really create some differentiation there, that’s going to put you in a better position longterm on Amazon.

Andrew Waber:
And getting to Kelsey’s point, so your buy box win rate is incredibly important. It’s probably, it’s really what drives that flywheel effect that Kelsey was talking about. And your ability to just continue winning that buy box can ensure you’re not losing out more generally. What you want to do is again, just in terms of measurement, when you think about your campaign, you want to utilize TACoS along with ACoS to really gauge your advertising effectiveness. Now this means looking at for your individual items that you’re advertising, you do not just write what your ad revenue is from those items. But what’s the overall effect on those items that you’re advertising when it comes to their total, you’re adding in organic revenue in there. Because that gets at what Amazon, really how that, their entire A9 algorithm works, right? Which is incredibly important. You’re thinking about this.

Andrew Waber:
And really to that same point, you want to have a really granular understanding of your maximum ad costs of sale for every product and every campaign, right? For these bid adjustments to work, which is really a way to just increase your overall effectiveness when it comes to advertising. You really need to have a thorough understanding of, okay, here are all the fees that I’m paying on a given product. Here’s the FBA fees. I’m factoring that in to my bids and then giving, at least with a case of Teikametrics where you have an algorithm running, to adjust bids within these frameworks. So it really gives you a great idea of like, I want to be competitive, but only up to a point, right? I don’t want to bid limitlessly where I’m going to get an unprofitable sale.

Andrew Waber:
It keeps these guardrails in there but allows you to take their hands off the wheel and feel very confident. So yeah, just a couple final kind of offers here just on the Teikametrics side. If you’re interested in learning a little bit more, what we can do for you, we do have some special offers available. If you go to this site here, go.teikametrics.com/demo or even just our homepage, you can find it there. And then I know Chad, you had talked about this awesome new ebook that you’ve got there. I don’t know if you want to expand on that a little bit more before we hop into questions.

Chad Rubin:
Yeah. So we’ve come up with some rules of engagement, sort of ripping apart the playbook of the past decade for D2C brands. And we’ve come up with some new strategies on how brands can win in the coming decade. And so we haven’t launched yet, we’re just finalizing it. But if you want to get access to the prelaunch book, there’s a link right there. Sign up and we’ll send that off to you.

Andrew Waber:
Awesome. Thanks Chad. So let’s just get to some questions since we have some time, which is awesome. So I think the first one’s for you Chad. So this person asked I have a few nicely selling products. What kind of characteristics do you look for in like a “diamond SKU?”

Chad Rubin:
Diamond SKU is sort of like what you built your business around. It’s sort of the peanut butter to the jelly. It’s necessary to have it as part of your portfolio. And again, it becomes this sort of, I alluded to this earlier, the diamonds SKU is a signature SKU. It’s one that’s in your portfolio that you can use as a gateway drug and drive, learn from it, learn from the data that you get from Amazon, and then offer other variations and other sizes of exclusivity off of Amazon’s platform.

Andrew Waber:
Awesome. And I think this one’s for you Kelsey here. This next one is how often would you recommend I be adding new keywords into my campaigns and maybe what are some criteria I should use to decide this?

Kelsey Robb:
Sure. So it definitely depends on your business. But I think there’s a few factors that you should think about. Things such as click volume, conversion volume and the ACoS that you see on a given keyword is going to be helpful in figuring out if it’s worth moving that over from an auto campaign into a manual. These types of campaigns are also really great to find any potential new competitors coming up on this space. You see a new name coming up in a lot of search terms. It’s definitely more impactful to add those to your manual competitor campaigns before building out any keywords within your branded campaigns.

Andrew Waber:
Awesome. So next one here I think is probably a good one for Chad. So regarding the product investment criteria you went over, what are some good research resources for staying ahead of the larger market?

Chad Rubin:
Well, I’ve already alluded to having the proper profitability metrics across all the channels you’re selling, whether it’s B2C or B2B, offline and online. But there’s like other criterias that I think that are important for being a, I say direct to everywhere brand in 2020. Because I don’t really believe that going direct to consumer is sufficient in this period of where we’re at. And with the commoditization, how easy it’s become to sell. Complexities must take over and to scale, you need to be everywhere. So like just a few things I would say that are really important. And again, there’s a lot more in this Bitly link that we have here, with the commandments. But like one would be having scarcity.

Chad Rubin:
So scarcity of supply or something that’s like really differentiated, sort of markets where incumbents are stuck in the past. Even also on top of that is like if the incumbent isn’t on sale on Amazon that’s even a deeper opportunity that you can capitalize on because you’re not matching demand with supply. Having incumbents that don’t have a direct relationship with the consumer. I would say like that’s a really good start. But that’s where I would look for if I was actually going out and starting a brand today or even just embracing Amazon. You want to made sure that you’re capitalizing on some of the things that I just mentioned.

Andrew Waber:
Great. Yeah, that’s super interesting. So I guess, and the next one here I think is a good one for Kelsey. How aggressively should I be defending my branded terms on Amazon?

Kelsey Robb:
That’s a great question because obviously you don’t want to be spending too much money on your branded terms and losing out on any incrementality there. But at the same time it’s a necessary evil. If you’re not spending some sort of money on your branded terms, one of your competitors is probably going to be bidding for them. It definitely depends on how well your brand is known and how crowded your market is. But there’s a lot of ways that you can figure out where that sweet spot is. If you start to take spend down on branded terms and see that your overall sales volume is falling as well, then it might be worth to keep a little bit more volume behind those branded terms. However, if you’re pulling back on branded spend and you’re not seeing a significant decrease in your total revenues, so that’s ad and organic, then that means that you can continue to pull back on brand until you start to see that decrease.

Andrew Waber:
Great. And Chad, we’ve got a question here kind of really a listing strategy question, which is, is it worth doing a single listing on Amazon versus let’s say if you have multiple colors of a product doing a multiple color listing? I mean, do you have any thoughts around that?

Chad Rubin:
Look it all depends on your strategy. And if you’re already embracing Amazon today or not, and if you want to capitalize and leverage the data and build a brand off Amazon or just go all in on Amazon. So if you’re a brand that’s say not all in on Amazon and you don’t have anything up today, the idea is to get your diamond SKU up right away. And then any variations like get your most popular SKU up in any variation or exclusivity you use off Amazon. That would be more of a like a one to one conversation that we need to have about the brand. If you want to have that conversation again, I would suggest hitting me up offline. Chad, C-H-A-D@skubana.com.

Andrew Waber:
Great, thanks. And the next one here. We’ve got a couple that are kind of similar around this, which is looking at access to the various APIs that you may have. AMS versus seller central, et cetera. So one of the questions that I think speaks to this is how do you calculate TACoS for sellers versus vendors? So I think Kelsey you can take that one.

Kelsey Robb:
Yeah. So on the seller side, you should have access to everything that you need within seller central. Looking at ad spend from your campaigns tab and comparing that to your order of revenue under your business reports will give you that TACoS number. When you’re looking at the vendor side, it’s definitely a little different. Ad spend again is going to just be available in AMS. That’s pretty easy to grab. But when you’re looking at the total revenue that you want to calculate, there’s two different ways that you can go about that. Both of these live in ARA, but you can look at your ad spend as a ratio to shipped COGS.

Kelsey Robb:
If that’s what you’re concerned about and you want to be pushing inventory, then that’s definitely a way to look at what your actual net receipts are. But you can also look at ordered revenue. That gives a better indication of the actual volume that people are shopping for on Amazon versus what Amazon is actually able to ship out of the warehouse, which is what you see on shipped COGS. So depending on the ultimate goal of your measurement, either of those work for the 1P side.

Andrew Waber:
Awesome. So Chad, we’ve got another question here that I think you could probably help with. So it’s when you’re thinking about just looking at cross channel, where’s that, are you getting that information typically from ARA or are there other sources within Amazon where you’re trying to collect that data from?

Chad Rubin:
That’s a really good question. I know that as it relates to Skubana we’re capturing a lot of data since we’re not an advertising platform, right? But we are hooking into a lot of the available APIs where we have a lot of accounting functionality and profitability functionality. So we’re taking data from a lot of different data sources and mashing together so you can understand lifetime value. When it comes to profitability, you can see your profit where [inaudible 00:49:11] cost of accounting with every single fee, including the return fee if you’re Amazon FBA. And if you’re not FBA and you’re shipping out of your own warehouse and pulling that shipping fee. So it’s like we’re an operation platform to allow you and empower you to sell across channels. So we’re actually not just a dashboard, but we’re actually, you are able to do the doing in our platform.

Andrew Waber:
Awesome. So I’ve got another quick request to just define the flywheel effect again, just going back to that slide. So Kelsey, if you want to hop back in there.

Kelsey Robb:
Yeah, absolutely. So the flywheel effect is really, consider it like a hamster wheel. Once you get on, the hardest part is getting started. And then once it’s rolling, we’re able to keep that going. So if we look over in the top right, that ads, let’s consider that the hamster getting on the wheel. The first couple of steps are those ads increasing your sales. And then from there we get that flywheel really starting to spin. As you have more sales volume coming through, more people are providing reviews. Your sales rank is able to go up, which ultimately will drive more organic traffic because Amazon sees that product is something that’s selling.

Kelsey Robb:
When you have more traffic, you’re able to get more data, which gives you a better understanding of your performance, both from an organic standpoint and an ad standpoint. You know enough data to be statistically significant when you’re making adjustments to optimize your ad spend. So once you have that information, you can push that back into the ad side of things and determine if there are different strategies for brand versus generic versus competitor. And using that data that you’ve gleaned from the start of that flywheel to continue to push that moving forward.

Andrew Waber:
Awesome. Let’s just go back to the bottom here. So I guess this is just to wrap up here. I think it looks like we were getting … and also just to answer and to see some questions coming in about recording. Absolutely. You’ll get a recording. So within the next 24 hours, we’ll be sending out a recording to all the attendees here along with the folks that unfortunately couldn’t make it today but registered. So you’ll definitely be getting that. And just a final question to send us off here. Chad, I think is a nice one, which is like really just I think it’s a great question. Just is there a way to calculate how large the market for my product is. And really like when you’re thinking about expanding your product into a new category, really just understanding how large that that pie is.

Chad Rubin:
Is that going to me Andrew?

Andrew Waber:
Yeah. I don’t know if, what you can add on that.

Chad Rubin:
Yeah, I think you can use … So the thing is that there’s a lot of these Chrome extensions that can calculate sell through velocity for listings. And there’s no, none of them are actually absolutely accurate. But you can use some of those tools or apps to calculate sell through that your competitors are doing. And really if, let’s just say 90% of all conversions are happening on page one. I don’t know if you really necessarily get to go to page two. So I always look at page one for a specific search query and calculate what your total available market is based on those queries and based on the revenue and based on velocity. But again, the hard thing with Amazon is it’s very keyword dependent. So if you type in luggage versus carry on luggage, you’re going to get different listing nodes that are presented to you based on that search. So make sure you’re being very precise because it’s on a keyword level when you do that search and when you try to understand what the total available market is.

Andrew Waber:
Yeah. And what’s also interesting just to build off that Chad, the study that Kelsey had referenced earlier on the penetration of sensitive ads on page one. There was something that I helped with a few months back. And again, it’s really interesting when you look across and when you think about the keywords that are really going to matter for your product. Take a look. Amazon provides this report either on a weekly or monthly basis, basically showing for every of the top million keywords, the percentage of organic conversions that happen within the top three results. And so you can use this as a way to kind of gut check, not just the size of the market, which Chad talked about, but also how hard is it going to be to break in?

Andrew Waber:
So on a given keyword, how do people behave when they get to that keyword? Are they just going to that keyword and then first result is awesome or are they scrolling down the page? Like as one example a few months back, one of the top results on Amazon, literally the number one most search term was iPhone charger. Yet unlike right, we saw across all Amazon rates around 60% of organic conversions happen within this first three results. But on that number one ranked term, it was about 0.2%. Because on that type of term, people are more willing to, I want to go through all my options. So again, to Chad’s point, very keyword dependent.

Andrew Waber:
So definitely check out, I encourage you to check out that keyword report if you’ve got access to Amazon retail analytics. It’s super, super useful and that type of thing. So with that, thanks everyone for coming. Again, you’ll get a recording of this within the next 24 hours, along with the full slide deck some people have also asked for. So thank you again and look forward to hearing from you again soon.

Chad Rubin:
Thank you, Andrew. Thank you everyone. Thanks Kelsey.

Kelsey Robb:
Thank you.

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