[Kenshoo] How Your Investment in Amazon Advertising Measures Up
July 23, 2020
Here’s a glimpse of what you’ll learn:
- Nich Weinheimer shares his thoughts on the current state of Amazon ads and the evolution of the Amazon marketplace
- Metrics that brands can use to gauge the performance of their ad campaigns
- Nich’s advice to brands on what they should spend on Amazon Advertising
- How brands with a smaller advertising budget can compete with larger sellers and increase their market share
- Nich’s top tips for brands looking to drive traffic from social media to Amazon
- What does the future hold for Amazon Advertising?
- How to get in touch with the Kenshoo team
In this episode…
For any brand looking to join the Amazon marketplace and expand their business, advertising is an inevitable investment. However, smaller brands may struggle to determine just how much they should spend on advertising in order to effectively compete with larger sellers.
So what should these smaller brands do to better reach their target audience? How much should they invest in their ad campaigns in terms of money and time? How can they best optimize their listings in order to make the most out of their budget and compete with other sellers? The team behind Kenshoo has the answers to all of these questions, and more.
In this week’s episode of Buy Box Experts, Nich Weinheimer, General Manager of Ecommerce at Kenshoo, joins host Eric Stopper to talk about how Amazon Advertising measures up for both small and large brands. Nich shares his advice on how much smaller brands should spend on their advertising campaigns, what techniques they should use to compete with larger sellers, and how they can create a social media strategy that drives traffic to their Amazon listings. Stay tuned.
Resources Mentioned in this episode
Sponsor for this episode
Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.
The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.
Buy Box Experts prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.
Learn more about Buy Box Experts at BuyBoxExperts.com.
Welcome to The Buy Box Experts Podcast we bring to light the unique opportunities brands face in today’s e-commerce world
Eric Stopper 0:18
Welcome to the Buy Box Experts podcast This is Eric stopper. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. We’ve got a team of consultants I’m one of them come and talk to us go to buyboxexperts.com, click on the free analysis button. It’s completely free, no strings attached. And you’ll be connected with me or a member of my team and we can talk about whatever you need. This episode is part of a 10-part series that we are doing with the geniuses at Kenshoo. We thought to bring together our collective knowledge in a way that was fun and educationally indispensable. Today I’m joined by Nich Weinheimer, General Manager of e-Commerce at Kenshoo. Nich, welcome to the show.
Nich Weinheimer 0:57
Thanks, Eric. Really glad to be here.
Eric Stopper 1:00
So today’s topic is how your Amazon advertising measures up. And that can mean a lot of things to a lot of different people. And I kind of want to start off by just by just kind of reflecting on the fact that Amazon is a tough beast. For those who are listening, you’re probably getting your butt kicked. That’s fine, right? We want to help you out. You’ve got fees and listings and a whole host of other things that you need to be focusing on as a brand. And I wanted to talk with you Nich about some of the questions I get pretty often from the brands that we work with, and I’m sure you you have to deal with on a day to day basis when it comes to managing advertising spend on Amazon, and in general. So I kind of want to get a sense of you work out a really high level at Kenshoo kind of organizing these strategic partnerships and understanding kind of big data and how to use it. So talk to me about the state of Amazon ads in general, what are some of your perceptions and your thoughts and just the the latest word on the street?
Nich Weinheimer 1:55
Yeah, absolutely can dig in there. First of all, 10-part series of geniuses Kenshoo that’s a really nice introduction. So don’t remind them of it, though I didn’t live up to my team’s, you know, prowess in the space. And I’m certainly lucky to have the team that we do have the thinkers that have come from Amazon’s specific agencies or technology companies in the past. So excited that you guys are leaned in with this podcast. You know, for For my part, you know, I actually just for the audience’s record, I actually worked at Buy Box Experts leading all marketing and advertising on Amazon, years ago. And a lot has changed since then, Eric, I mean, you know, as I think about some of the experts that you guys are working with today, internally, and certainly that are on my team, the depth that they’ve gone with the backgrounds that they have in paid search and, you know, commerce search in general. It’s really fascinating. And just to see how much Amazon has expanded their advertising offerings, they, the placements that are available, the ad types, the ways that they’re kind of moving up the funnel in what they offer marketers, the tool sets kind of the democratization of their data that used to be very, you know, kind of disparate between their vendor and their seller programs starting to see that codified down. I mean, over the last It feels like almost five years, but it’s, it’s only been about three years that we’ve seen as it rapid evolution. And I think, you know, we’ve seen a huge demand from the smallest sellers to the largest, you know, cpgs, you know, the biggest vendors to Amazon, really thinking through what’s the best strategy, what tools do they need, what expertise and support do they need. But one of the key things that I think, is becoming clear in the whole space regardless if you’re a seller or you’re a large vendor, is really actually founded in kind of the tenants that we used to we used to tout at Buy Box Experts back in the day of the three legged stool, right like advertising is not a silver bullet for your brand to be successful on Amazon. Full stop. You know, you can’t have a successful advertising program without quality content so that the whatever traffic you are driving is converting, if you are a seller or a brand who’s trying to protect their own brand on the channel, if you have distribution challenges and you know, kind of gray market sellers, basically, if you if your channel isn’t clean, no matter how much you try to advertise, you may either be putting money in other people’s pockets or in one way or another, not taking advantage of the full opportunity for your brand on the channel. So I think, you know, I Amazon advertising has been a catalyst for large brands and the small sellers that do on their own brands to think through really rationalizing that three legged stool of content operations and advertising. And all those things are really coming together in a big way. Amazon doesn’t necessarily give you all the data that you need either to be successful on the channel. So there’s a whole world of third party data providers that are helping these brands. brand owners think through the calculus of how they can sync up their operational data with their third party data they may be acquiring to understand their share or their competitive set better. And then advertising data is certainly important, but it needs to be joined together in this broader analysis of ultimately, what is the effect of an advertising dollar on my whole business? Now, because for years, the the concept and conversation was, yeah, you got it as a seller, you got to be in in advertising on Amazon. And the whole measure was a cos or ro s. And, you know, how much return do I get from advertising dollar? And while that’s interesting, because it shows you with one element of the performance of your investment in advertising, it doesn’t necessarily tell the whole story of what is this advertising doing for my business? So I think what you’re seeing is an evolution of the thinking even small seller I’m a seller myself, I have a brand on Amazon all the way up to, you know, the largest cpgs going, Okay, it’s not just a math problem. How many percentage of my top line sales should be invested in advertising. And should I always be getting a 30%? A cos, therefore I have successful advertising program. Well, if your top line and your share is shrinking on on Amazon in terms of sales, and yet you’ve got a great advertising program, is it working? You know, so when you think about how does it measure up, so to speak, and where Amazon advertising is, is going, I think it’s catalyzing internally at Amazon, how brands think about, you know, the pay to play nature of the channel today and ultimately, how an advertising dollar affects their overall business and where in the advertising funnel of opportunities that Amazon provides you to invest that next dollar, or when to invest in that upper funnel DSP campaign, given where you are today on the bottom funnel or where you are in your your ranking in your category. So as a broad way of saying, I think it’s evolved a lot in three years, right, and that understanding the true effect of advertising on your business This is kind of the paradigm we’re in today.
Eric Stopper 7:02
So I have brands that come to me all the time. And I would say that 80% of my of my calls start with them telling me just generally like, how long they’ve been around how many sales they’re making? And then they’ll tell me Yeah, and we have a target a cost of like you mentioned 30% 10% 4%, I had this guy told me 4%. And I tell every single one of them to put that in a box. And to do not pay attention to it for right now. And to look at the business reports and the advertising to see what the total effect of sales are on your business, just as like a baseline way for them to get a better sense of the performance of their campaigns. Are there any other metrics that you can specifically point people to inside of their Seller Central or a mass accounts that they can start looking to see, oh, maybe I actually do have a problem and my measurements are Up to this point.
Nich Weinheimer 8:02
Sure, I mean, you there’s certainly no shortage of data gymnastics you could do looking at, you know, especially if you are a seller, and you do have access to the business reports that show you, you know, session rates, conversion rates and things like that on the page, that’ll give you a big indication of you know, how well that ad dollars performing, you can get it lifted advertising by increasing the quality of your content, you know, if your page is converting better, therefore, your advertising will convert better. There are some baseline things that Amazon natively has released and I think folks are probably aware of them by now. Interestingly enough, we’ve seen some very valuable insight during this you know, kind of interesting time of the of the COVID essential versus non essential sort of paradigm that we’re in, but new to brand is a great metric to start to think through. Is my advertising just catching the rain what I’ve gotten the sales anyway, or am I actually getting new customers to come in, you know, if I buy my products and engage with my brand, so So just as this as an aside, and I brought up the kind of current status, we looked at our index for new to brand, since, you know, in the in the period leading up to kind of the panic buying that started around the 12th 13th of March and sort of peaked around the 21st 22nd of March in the period prior to that, and then looking at that period, and thereafter, during kind of the broader stay at home, that has largely kind of spread across all of us at this point. We’ve seen a pretty enormous uptick across all categories of new to brand for, for all products. So the one of the sort of ongoing questions for analysts for investors for brands in general is, you know, did we just accelerate for years and four months in 2020, in terms of the adoption of e-commerce and there’s an argument to be made just looking at at a data point that Amazon shares which is that new brand reporting And that that lets us know that you know what even if only 20% of that incremental 54% I think we saw a new brand. Even if that, that only a percentage of that ended up staying as, you know, net new incremental e-commerce shoppers, one could make the argument that e-commerce has grown by at least a double digit percentage in just a four month period in 2020. So some pretty fascinating measures just with what’s basically available inside, you know, obviously, you could look at the nth degree of the path to purchase that you do see Detail page view, web page view rate, etc, as I mentioned in business reports, and then starting in advertising, you know, clicks, costs, conversions, new brand, but then there are the third party data sets that start to actually kind of give you those, you know, the proxy data you need to really kind of understand, okay, in a vacuum, I can tell this much of a story, but given the context of my category or my competitive set, I can really start to see and try And put a third dimension to my analysis of what my advertising is doing. Is it okay to have a breakeven a costs if I’m climbing in my rankings or shoot even go well underwater. And in a lot of times for a seller and I’m that way as well, I’ve got spreadsheet calculators that let me know exactly what I can spend on advertising. Because the way I operate my business is on the margins. It’s not, I’m not a venture backed product advertiser to where I’m making a big bet on advertising to climb through my share, I just want to sustain a certain level of sales, in which case maybe a cost is the best measure for that seller. But for a seller to think about climbing in the rankings and thinking through what is the incremental sales opportunity that I would get if my product was in a position just above the fold? I mean, it’s exponential. So if you’ve got that ability to climb, just that next level up in search results, and certainly advertising and more eyeballs to your detail pages help you climb in organic rankings as to sell through it. In all the other sort of pieces of Amazon’s, you know, organic ranking algorithm. There are arguments to be made of, you know, taking a loss on advertising to climb through the rankings. But again, you don’t necessarily have all of the data to understand where you are and your competitive set how often you’re showing up and how much share you’re getting, if you’re only getting a tiny share of your paid impressions for given important terms for you, as a business, you know, based on what you’re not getting, as an impression share that there’s a huge opportunity, there’s a right volume of traffic that you could be fighting for. And that should give you some indication of how far you could help yourself climb organically if you were able to buy that much more traffic. And so do you then go and look at a six month window and say, maybe I need to go find, you know, a partner, if I’m a smaller seller too, right? That’s that kind of requisite. 10s of thousands of dollars, maybe that it would take to go win on some of those terms to climb in the rankings. But the exponential amount of sales that you will get organically after you’ve climbed up to that position and maintained it is Well worth it and should pay off the investment.
Eric Stopper 13:03
Would you? Would you recommend to folks that, you know, maybe maybe they they follow the advice and we’ll and we’ll put a breadcrumb trail of how to get to the new two brand reports in the show notes for this. But would you recommend that once a brand figures out like, Oh, I, you know, I have this issue and they and they fix it right? There’s There’s something inside of their back end that’s that’s causing them some Distress, it’s wasting money? Would you recommend that they just dump as much money as possible on that? Should they slowly incrementally increase the amount of spin that they’re using and, and try to scale it that way? Or is it worth it to just say, look like, I found this one fundamental problem, let’s let’s blow this thing out of the, through the roof.
Nich Weinheimer 13:45
Sure. I’m never a fan of making sweeping gestures without the benefit of a data driven plan. Which is why I brought up that in many cases, you know, working with data partners to better understand the opportunity. We as Kenshoo, you know, we’ll tie together some of our data partners with our advertising data, sometimes at an index level, to go to a brand and show them an opportunity analysis of what they could be spending in their given category. If they may have assumed that they’ve sort of achieved their natural kind of status in their category, or they’re over there, they’ve hit their opportunity. And it needs to be an analysis that looks beyond again, limitations you they may have on how, again, they how efficient they want the campaigns to be. And so maybe they’re a little too focused on a costs. But if you can show them the opportunity, if we think the category is, you know, is worth this much in your current sales in the category or this, then we know, you have this amount of growth that you could achieve. And if you invested this much based on your current rate of return with some diminishing returns on scaling up a program, we think you could get to, you know, you’re basically mentioning how like how can I lift top line sales while using advertising as a lever? To increase, you know, glance views and sell through that, again, it’s it’s that that concept of building up your organic presence with, with advertising as the underpinning for that now, your kind of your question but more specifically do you dump just as you know, that needs to be a very clearly defined analysis, there is a top line of the opportunity there, here’s where you are today. I’m never a fan of you know, it’s not unlimited spend ever as much as a lot of marketers will say, hey, if I’m getting the return, it’s unlimited spend, you know, you need to have a good plan in place and and and look at maybe right for you in the size of brand that you are to just say this, the way that I’ve operated My business is that I want to make this much money and this is what I’m going to do. It’s not worth it to me to go borrow $100,000 to make a bet on advertising, no matter how much data there is. So it just depends.
Eric Stopper 15:51
I so he made some comments about the kind of this shift to preference for e-commerce right and i i saw a really cool article, that term The new economy which has probably been coined, you know, centuries ago at different points, right Industrial Revolution any anytime that happens, there’s always a new economy, but this one very new, right? Very different. And competition is very different if I, if I look at two gas stations, right, the competitive landscape for those two gas stations and the way that you get more people in are so different than what you would do to get more exposure on Amazon. And the main question that I have because I was talking with a paper manufacturing company to do like sleeves and as you know, like stickers and envelope labels, they are probably an order of magnitude smaller than the next largest seller, right? So we’re talking about a $10 million business as opposed to a $1 million business. So the $10 million business just has a big fat sack of money and they have a little tiny pouch of money. Is it realistic for them? to even consider taking real significant market share from that big leader is it? Does it really just come down to how big a bag of money that you have? Or can you really like make these super tiny changes to all the different aspects of your listing and the way that you’re advertising the keywords that you’re targeting in order to start nipping at their heels and stealing more than market share?
Nich Weinheimer 17:22
It’s a really good question. And look, there’s a number of different angles way to approach it. You know, there is a certain amount of protection and a moat that you can buy on Amazon that a lot of the largest, you know, brand owners out there conglomerates brand holding companies, they leveraged their their strength in their coffers to create that moat to drive up the cost of you know of advertising to such a degree that maybe it’s not profitable if you’re a commodity seller to come in and try to sell when you don’t have the economies of scale the unit economics and your you know the cost of your products etc. Were for the large brands. You know, that it’s less for them, in some ways a question of the marginal cost of advertising and more just yet another brand advertising channel that they want to, you know, dump them gas on that fire. So, if I’m the smaller seller with the smaller tool chest, what are my, you know, what are my strengths? I’m more nimble, I can be more creative with my product assortment. And with differentiation, they have, you know, obviously the old trope that the riches are in the niches like do I want to go in and try to beat out a lot, you know, the laundry detergent play against tide will not necessarily but maybe there’s a niche that I can play any laundry detergent that is compostable packaging, or is, you know, something that’s very focused on skin conditioner. I mean, I’m serious, though, that those there are those queries and you can build, especially as a small million dollar brand, you can build real value for a smaller segment of the market, because you can laser focus on it. And maybe your goal is to go sell to that conglomerate. At a Add a multiplier on the top line of the business that you operate on breakeven as opposed to profitably. So there’s different ways to think about your exit strategy as well, if you are one of these brands, other than just is the bag of money bigger? Because if you have and I always got this question too, when we were just getting into them called AP now DSP, where we would get these smaller brands that were barely even scratching the surface on their potential to grow in their category, just with search at the bottom of the funnel, where people are actually actively buying and the shiny object of Oh, you can go to target audiences in market lifestyle, you can do creative, you can send traffic to your website. It’s like guys, don’t look over here. Yeah, look, this is a 30 day view and click attribution window for display advertising display is not a performance ad, you know, ad for you. Like you’re gonna
Eric Stopper 19:48
scratching your head wondering if it’s working when you could just be bringing dollars in.
Nich Weinheimer 19:53
Yeah, this is an exposure, upper funnel average. This is to try to add new eyeballs to the top of the funnel that maybe in a few weeks will come Down at the bottom of the funnel, and hopefully I’ll see a lift in brand searches because I invested here. And if you’re only going to invest five grand, you’re not going to put a meaningful amount enough eyeballs to be able to understand. Did that end up, you know, you need to have kind of statistical significance and an investment in display. So if I’m the big brand, my biggest benefit is I can run this display advertising to ensure that more and more awareness, eyeballs are going into my funnel, I’m getting more brand searches, and I protect my brand searches. For the small guy, you’re still selling widgets, you still have a brand you want to protect your brand searches, but you’re probably going to be thinking about more creative ways to get eyeballs onto your page, whether that’s affiliates and influencers. You’ve got maybe a social program that’s brewing, you’re looking for more earned media as you’re building your brand from the ground up. And you’re focusing on a niche or you’re or you’re just happy with the pieces of the pie that you get even doing the exact same thing as the big guy because you look at some of the volume estimates for some of the largest, you know, brands out there. You and I running a small business, Eric, you know, we will Be happy but probably not happy but we would do very well with 10s of thousands of dollars a month in revenue at a healthy margin that’d be a healthy small business for a big brand not so much and so maybe there are niches they’re willing to you know completely disregard because it just doesn’t make sense. They can’t build a $2 billion grand Sure.
Eric Stopper 21:19
Sure. I liked the I liked a bit about finding finding the niche. I saw there was a there was a class action lawsuit about it with the whole tide pod craze. Someone made little dinosaur shaped tide pods that you know, they were liquid detergent inside. But they weren’t tide pods. They were some other weird brand. That’s a great idea. Yeah, maybe not like the right time to do it. Probably not a super good move. But at the surface, it’s a good idea to incrementally innovate your products around your your biggest competitors. Now, you mentioned social media strategies. Kenshoo has the ability to kind of marry all these things together and give you a Really actionable and beautiful dashboard to manage both the social, the Amazon that I think Google plugs in as well, you can you can view through on Google. And we
Nich Weinheimer 22:09
actually started our business was started in partnership with Google. So that’s where we’re we’re founded as a search technology partner with Google. We then built a social product. And then commerce is largely a pivot of then about 1112 years of search enterprise advertising technology toward the Amazon opportunity. So today, we have search social ecommerce, we actually have an Apps download product for like apple. You know, Apple search ads on their app store, nice Play Store.
Eric Stopper 22:40
So everyone that I talked to, I don’t know, maybe maybe like 10 people over the last six months have said that they’re driving some some traffic from social ads to Amazon. I want to get your thoughts on that strategy because my understanding is that when somebody lands on Amazon listing their propensity to purchase, right, the odds that they’re actually going to click the buy button are much higher than they might have been on a website, right? Where they don’t necessarily know that brand, the research kind of phases a little bit longer, maybe the conversion takes a little bit longer. So I kind of want to get a sense for what types of encouragement you give to brands in terms of their social strategy in the context of Amazon.
Nich Weinheimer 23:27
That’s a good question. And I would maybe even challenge it to a degree to say when you look at sort of social advertising and you kind of look at the general funnel, like if displayed at the top of the funnel to me, socialism mid funnel is consideration. Sure, there’s Dr. That you know, direct response advertising you can do in there drive traffic from these channels and convert sales. Amazon and retail advertising online is like the nth degree bottom of the funnel, where they are, they’re in market to buy something if you’re on Amazon, you still have our In the majority of the time you are you’re there to buy something you’ve got a list and maybe you add to it etc more and more it is becoming a product research channel we see a lot more research terms happen on Amazon they’re going there to just kind of understand what’s out there. Amazon for their their part is moving up in the funnel their ad offerings to provide more social like their posts that’s in beta right now. You know, video in search Amazon live, you know, those folks that are in research mode are going to be engaged with brands more but I would challenge I guess the question again as well in terms of what are you trying to do with the traffic if your ultimate goal is you want it to look just like your your A cos on on Amazon when they’re typing in a term for you know, dryer sheets and you know, they’re going to go buy dryer sheets, but are they going to engage differently if you come up with an interesting influencer story, social post ad that’s driving into Amazon there, you know, versus a website, maybe the websites more valuable because it’s a better set up right now to engage with your brand. And with Amazon, you’re kind of constrained to, you know, a certain way of presenting your products and look a plus is has made that better images video, you can add, I guess, yeah, there’s trust for the conversion. So you probably convert better, I won’t dispute that. But depending on what how you’re looking at that spend from like an a, you know, consideration phase,
Eric Stopper 25:24
I think could go both ways. By my mind, my mind is drawn to the kind of purchase journey that a lot of brands don’t ever consider. Right? They don’t know how people find them. They don’t know how people think about them, and they don’t know how people buy them. But I’m wondering, right, like, if, if I am an Amazon Prime member, and I get an Instagram ad, and it takes me to a website, I’m probably going to, you know, swipe up on my phone out of that website right out of Google Chrome or Safari. And I’m going to go to Amazon and I’m going to type something into the search bar. And so, you know, you’re kind of inherently creating these barriers if that person is an Amazon Prime member, I don’t know if there’s a way to track that in the back end of like a facebook pixel or or you know, how they’re tracking on Instagram. But my question is more about, like, the journey and whether it’s, you know, a good idea to be driving these social ads to Amazon as a, you know, as a grand strategy. One of the main strategies for your business.
Nich Weinheimer 26:27
Yeah, I mean, I can tell you, kind of white label anecdotal story one of the world’s largest brand holding companies that we work with. We were working with him on kind of their plans for 2020 and we’ve done some tests with them with the advent of Amazon attribution beta, which may be the world’s longest beta at this point. But where you know you we can we can wrap any click, you know, any click URL out of Facebook with the Amazon attribution click wrapper and then track the path to purchase on Amazon for any click that happened on Facebook or or Instagram or even through search now that Google allows sitelinks in their policies anyway, to go over to Amazon, they were going to spend 10% of their budget for retail digital shopper marketing dollars. So think about your Amazon advertising, spend your criteo spend, Walmart Media Group, etc 10% of that budget was going to be for all alternative digital marketing channels that typically the biggest world’s biggest cpgs were maybe doing reaching frequency spending on kind of branding spend on Facebook, but not really doing any dr performance marketing. And they’re now turning over this new leaf of You know what, maybe I can move a little farther down funnel to drive that many more incremental eyeballs to my product, detail pages or my brand store. So anecdotally, we’re seeing some of the world’s largest brands start to adopt this kind of full stack approach to leveraging their retail partners as their comms. Now, they’ve been given tools like Amazon attribution data, they’ve got the ability to track that and we with the kind of Switzerland position that we sit in between these giants actually help Solve the technical barrier between deep linking between the Facebook mobile experience and the Amazon app. And if you think about it, like the Facebook, when you click a Facebook ad, it opens in the Facebook web viewer, exactly your point, you’re like, I’m gonna leave Amazon, you know, even if there was tracking, you know, like, because stores analytics first came out before attribution beta. And so you could just add a query string. But even if you clicked into it through that web view, you weren’t logged in. So you left and you went to your app, you organically searched for that product you experienced, and then you you you converted or didn’t, and so that tracking was out the window. But we worked with Facebook to basically whitelist the basically the ability to allow the advertiser to kind of identify the Amazon app as their own app, and there was kind of a workaround for that, that allowed them through Facebook’s policies to do deep linking so that those tracking parameters could persist. And that’s that’s the biggest I think, hurdle technically that we’ve helped solve between the giants and I think from both there said, like, it’s not lost. on Amazon, how much traffic comes from Facebook and it’s not lost on Facebook, how much of an opportunity is to scale up CPG ad spin, you know, on their on their, in their advertiser base. So I definitely think you know, as a smaller brand, it’s a great strategy. You know, clicks are a lot cheaper, you can get a lot of exposure on Facebook. But you have to have a business plan that allows for that level of kind of beyond the bottom of the funnel marketing spend. And it’s, you know, a lot of the brands that we see that are the smaller upstart brands on on Amazon don’t have business models that have baked in significant investments in marketing are looking at a breakeven business model over three, five years while you’re building your audience, because you can on Amazon build a pretty good business on the margins. And it’s not necessarily the case in the history of launching small business. So while I think it’s an important strategy, I do still maintain that you need to really make sure that you’re bottom the funnel like the category growth you can actually You know that you’ve you’ve kind of maxed out your opportunity or sort of your niche before you’re going and saying you know what, I’m going to hold go launch this whole like external to Amazon strategy now I think there’s there’s it’s good to have a a you know distributed business you don’t have all your you know, if your seller account gets shut down and you’ve got people relying on right online a minute sure set up your.com run a social like build your business plan around some diversification of your of your revenues for sure. I’m always a fan of that, but and I think it’s absolutely becoming a trend,
Eric Stopper 30:34
Eric and, and for the for the listeners that have maybe never built a business model or business plan. We have some resources that can help you. There are some very simple models that you can use to to to consider all sorts of things right like even your everything down to your logistics partner so so just reach out I’d love to share it with you. Now we’ve we’ve talked a little bit about these kind of retail giants and some of the online retail giants as well, right we got Walmart and jet that are kind of throwing their hat into this ring. And they’re, and they’re, you know, they’re chomping on Amazon’s ankles. They’re not really commanding as much market share. But I want to kind of go a little bit deeper with you. And maybe just as the last question here, you’ve got this exposure and you’ve got this multifaceted experience across all these different verticals, right? you’ve kind of got the the retail The, the the big data, the advertising your business owner yourself. What is next, right a year from now the world is going to look different this economic trend is is shifting things around. What kind of things do you see in the future for Amazon advertising that that our listeners should be paying attention to?
Nich Weinheimer 31:47
Sure. I mean, I would almost maybe say that what I see in the future for maybe from the brand’s perspective on opportunities across more than just Amazon. Amazon advertising is is the cutting edge of saying, you know what, I’m an online retailer. But I’m so big and I’ve got such a footprint that I can actually go ahead even in the context of my retail relationships where they’re potentially paying me co operators on my, you know, vendors supplier, you know, kind of arrangement. I’m going to go ahead and give you advertising tools, and you guys are gonna beat the living crap out of each other competing for the eyeballs that are coming at grand scale on my channel, and what what is that done to the rest of retail? I mean, it’s, it’s, you know, you see Walmart Media Group, basically following suit and building out, you know, basically their version of what Amazon advertising built out inside the Walmart ecosystem with a ton of unique value that they could provide with their huge offline footprint. You know, they’re the retail business of Walmart, you know, I dare say, dwarfs, but it’s definitely you know, I think it’s almost, it’s almost a you know, 100 and I was like, 100 billion bigger than you know, than what Then what’s going on at Amazon. But what they what Amazon has effectively done is pressured the rest of retail to say, you need to have these high margin ad dollars on your balance sheet. Otherwise, you’re going to be further squeezed. And it’s a it’s a major ask for the rest of retail. And Amazon has also trained these brand manufacturers that are scaling up rapidly in their advertising ecosystem. They’ve trained these folks to want transparency and control over their digital shopper marketing dollars, and how they compete on these retail sites. And so it’s gone of the days of being able to kind of obfuscate what you do with Co Op dollars from a brand as a retailer in terms of you know, your own digital customer acquisition. Now the new paradigm is the brands want to be able to compete for those queries on your site. They want their their products shown when when you know, the research query comes into, you know, a next top 10 retailer and beyond. And you’ve seen you know the responses that some of the Giants have made in this space. You know, Microsoft acquired pretty Load IQ, which is the technology that you know backs about, you know, 20 of the world’s largest retailers after after Walmart in terms of their sort of digital supply side. So being able to have that site monetization criteo has been around for a long time with their network play for product advertising after they acquired hook logic was basically these product ads syndicated across somewhat of a blind network and more of a kind of the traditional Display Network play. But criteo is redefining themselves. So they come in and kind of build a more transparent advertising ecosystem inside retailers and so that brands can buy and understand the direct effect of their investment. So I think we’re going to see you know, these, these bigger players in the space really help enable the rest of retail to where brand manufacturers are going to be thinking given you know, $10 million sure five six of that may go to Amazon advertising and a couple more over to Walmart, but that remaining three $4 million. I’m gonna I want to know where’s the next best retailer to spread those digital shopper marketing dollars out. And that could be, you know, again, we start thinking about the data players that are coming in to help with this calculus problem of how is this advertising to affect my top line? Well, that data player here is telling me that there’s a heatwave in the northeast. And this my inventory information about my competitors, I’m getting from a third party data sources telling me that my competitors are out of stock in this region. So I’m gonna up my advertising there across this retailer set. I mean, this is a level of transparency and control that a brand has never had. They’ve looked at, how do we do in sales national account manager across you know, right. And they said, Well, we did this well, why?
Eric Stopper 35:37
Yeah, primitive at best.
Nich Weinheimer 35:39
Yeah. And if and then, you know, of course, you have shopper marketing team sitting over here that are going Yep, we set up endcaps. We did everything we did. Then the brands are saying okay, well, there’s trade spend for these national account managers that they can use to make sure their products are placed well and, okay, did we see a lift? You know, like, now you’re like making this more real time. What’s the competitive set? You know, who’s who’s in They’re shopping with again, what’s the weather that’s happening? Where is there a promotion going on from one of my competitors I should pull back on my advertising today. But in two days when they have stock issues because their performance I can keep my price high pump up my advertising and so this world is just gonna become these brand manufacturers who are some of the world’s largest advertisers are now coming into digital in a big way and Amazon is trading them. So I expect we’ll see the rest of retail continue to follow suit and it’s incumbent on us as providers in the space strategists, technology providers, that you know, we’re prepared to, you know, support these brands and doing that.
Eric Stopper 36:38
I think that’s, that’s excellent. You can connect with Kenshoo team at Kenshoo.com, Kenshoo.com. Nich is as you can, as you can tell, he definitely lived up to the genius part of this. If you did not understand some of the different things that he was talking about. terms of tracking the movement between folks are even understanding that you can turn off inventory in a certain region or start spending more in a certain region. If you don’t understand those things. Talk with Buy Box Experts talk with Kenshoo, we can absolutely help you build your business into something that is data driven, with actionable insights that you have a lot of control. And as as Nich mentioned, transparency. And so Nich, this was great. Thank you so much for coming on the show. Yeah, absolutely. Thanks for having me here. To finish today’s podcast, I want to share some final thoughts for third party sellers. To be successful on Amazon. You’ve got to get reviews. We Buy Box Experts are really big fans of the team over at e-commerce engine. And it’s tools that help Amazon sellers simplify the process of soliciting reviews from customers who purchase their products. For more information, go to ecomengine.com. Thanks for joining us today.
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