Why Amazon’s ads will overtake Facebook & Google Ads

According to recent quarterly filings from Amazon, revenue from advertising is growing like crazy. The reason why may seem obvious but there are a few underlying micro-economic reasons why Amazon’s advertising revenue will grow to outpace that of Facebook and Google.

Amazon ads continue to eat up more page real estate.

The biggest reason is the fact that Amazon’s ads directly affect the organic rankings on their website. What sets Amazon apart from other platforms is the ability to influence your organic rankings and exposure on the site with PPC ads. This means, the more you pay, the better optimized your ads, the better your product will rank. The two huge ranking factors AMS (Amazon Marketing Services) affects are Best Sellers Rank and conversion rates. The strategy for new products on Amazon is to break even or possibly lose money in order to improve your rankings. You can also try getting those precious first few reviews this way but we recommend running ads after getting a review so you can have a better converting product listing. As Amazon grows its market reach, more and more people will be competing for ads which makes bids higher and thus more revenue for Amazon.

The next, least obvious reason is the diversification of Amazon’s products. Their are advertising opportunities in their app store, prime video, Pantry/Fresh, and even the potential for advertising with delivery. Let’s say you want to rank your product or content higher on these platforms, Amazon has the potential to commoditize rankings and exposure similar to their marketplace ads. This happens on competitor app stores currently so it’s a matter of time before it happens with Amazon.

Amazon is still a pretty U.S. centric marketplace but it’s expanding internationally at a rapid clip. They are attacking the European market with force and soliciting sellers to publish their products abroad. It’s enticing since current sellers are likely looking for new revenue streams as competition on Amazon.com gets stiffer. Look for Amazon to focus going further abroad in Asia as they are already creeping into Australia and South America.

Chinese investment into Amazon is unlike any other platform… more than Google and Amazon by my calculations. I ran some numbers (see chart) and it looks like Chinese marketing spend on Amazon is the third highest among all U.S. platforms ($2.5 Billion; AdAge). I’d like to caution that when dealing with Chinese statistics, it’s difficult to know you’re getting accurate numbers but anecdotally, I see the most interest in Amazon from Chinese corporations. AdAge also says Facebook is the highest digital marketing spend US marketing spend. Surprisingly, Google comes in 2nd with $3.8 Billion (according to DigitalInAsia.com) in advertising spend from China.

All in all, I wouldn’t be surprised to see Amazon get bigger and bigger. They are uniquely positioned to get more advertising revenue as well as be at the forefront of the autonomous vehicle revolution. If you’re already advertising on Amazon, look for it to get harder and harder to find great ROI. This stage in the advertising life cycle isn’t as mature and difficult as Google Adwords but I would give it another year or two before it’s equivalent. Make hay while the sun shines, Amazon advertiser!

Amazon is providing free shipping for holiday shopping season

According to a recent CNN article, “Prime members already get free shipping on all eligible orders with no minimum required, but without the holiday promotion, non-Prime shoppers must spend at least $25 to land free shipping.”

Amazon’s boosting sales and traffic to their platform by offering free shipping on all sales over $25 this shopping season. Image rights: localtvwhnt.com

The question for Amazon sellers now becomes, is this a good thing for my business? In our opinion, it’s a great thing to drive more people to Amazon to shop. The more traffic Amazon gets, the better for Amazon sellers. If you’re a company that doesn’t ship via FBA, this is even better for you since it virtually levels the playing field. Seller fulfilled products will see a boost in sales and BSR (Best Sellers Rank) during this “promotion”.

One of the questions we want to consider here is, will Amazon consider implementing this in the future? Our guess is yes, but we believe Amazon will want to provide more value to Prime members before providing the $25+ free shipping offer to all products.

The interesting angle with the FBA and seller fulfilled user base is the huge amount of Chinese sellers. This offer might be a way to aid them during the tumultuous trade war. Our opinion is Amazon and Walmart are the real liaison between the U.S. and China. Boosting Chinese seller sales will be a peace offering and a way to keep them selling on Amazon.com.

Original article: https://www.cnn.com/2018/11/04/business/amazon-holiday-shopping-prime/index.html

 

 

Check Out Sam on the Ecommerce9 Podcast

We discussed all kinds of Amazon related topics. There is lots of good information regarding starting on Amazon, marketing and PPC, as well as general digital marketing.


Optimizing Amazon A+ Content For Vendor Central Sellers

You’re a vendor on Amazon, congrats. This means you’ve caught the attention of Amazon in one way or another and you’re able to generate a media rich listing that will convert at a higher percentage than a regular Seller Central account. The task for new Vendor Central accounts/listings is how to maximize conversions and increase your sales and rankings.

optimizing Amazon A+ content for Vendor Central
The content section of Vendor Central listings is called “A+ Content”. They provide 12 different mini-templates and are aptly called, “A+ Modules”. These modules allow sellers to include the following types of content:
– Video
– Advanced text options
– Images
– Formatting options

Tactics for Increasing Amazon A+ Content conversion rates

Amazon A+ contentAmazon released a generic video trying to explain their “A+ Marketing Content” here: https://www.youtube.com/watch?v=c2IOTNIenjA. While it doesn’t go into detail, it shows the steps to getting started. More advanced tactics would be needed to optimize the content for sales and conversions.
For our clients, we test and retest. Split testing your product listing’s content is crucial to finding the maximum conversion rate. Things to test are:
– Ad copy
– Placement of video or image in the content
– Content of image or video
– Price
– Title
– Discounted pricing
– Bullet points
– Much more
Making ad copy compelling is crucial to your conversion rate. There is a sweet-spot for writing too much copy and too little copy. You have to convey your brand and help solve your customer’s problem/needs in as concise of manner as possible. We have some of the best ad-copy writers in the business and our client’s conversion rates back it up.

Amazon Marketing Services Optimization

Amazon PPC optimizationAmazon Marketing Services or AMS, is the PPC (pay per click) advertising platform for Amazon sellers. AMS works similarly to other PPC platforms like Google Adwords which allows sellers to bid on certain keywords and adjust cost per click. Vendor Central sellers actually have a more limited AMS platform than Seller Central sellers. VC doesn’t allow for multiple ad groups and has some limited reporting. We have developed work-arounds which allow us to optimize the AMS campaign and split test ads.
If you are an Amazon Vendor and are looking for help increasing sales and rankings of your products, contact us today at 972.955.5038 and we’ll give you a complimentary product audit and analysis of your competitors.

Benefits and Risks of Using a Launch Service to Increase Sales & Reviews

launch-service-for-amazonLaunch services have been extremely popular over the last two years and for good reason, they work. If you have used a launch service or are considering using a launch service to help boost sales and reviews of your Amazon product there are some things you need to know so you can understand the risks and rewards.

Benefits of using a launch service

Launch services work by offering products at a large discount in order to get “honest” reviews. You’ll see reviews on products saying something like, “I purchased this product at a discounted price in exchange for an honest review”. You can set the amount of products you want to give away and a percentage of those buyers will leave a review.

By selling your products (even though its discounted) you get an increase in BSR (Best Sellers Rank) which is directly related to your organic search rankings. Boosting this ranking will bump your organic sales.

Getting reviews to your product will also help your rankings as it is fairly evident that is a part of Amazon’s ranking algorithm. Having reviews is very important for increasing your conversion rate which is also part of Amazon’s organic search ranking algorithm. Using a launch service to get reviews to a new product is incredibly effective and a great way to set the sentiment of the product (people see lots of positive reviews and they tend to think positively of it as well).

Selling lots of products allows you to boost your seller feedback which is also an important part of Amazon’s ranking algorithm. Having good metrics in fulfillment and customer service will let Amazon trust you more and won’t throttle your sales (especially if you’re a new seller). This is slightly less important if you’re selling FBA.

Risks of using a launch service

First and foremost, Amazon’s TOS says manipulating their Best Sellers Rank is bad and can be punishable. Interpreting that can be tricky, however. If you’re using PPC within Amazon to boost sales and get your BSR/rankings up then you’re manipulating Best Sellers Rank but in a way that Amazon makes available to you. You could easily make an argument you’re giving away products not to manipulate salesrank but to increase feedback and gauge your product’s viability in the market. Regardless, you’re opening yourself to Amazon interpreting what you’re doing and they aren’t the best for siding with sellers.

amazon-optimizationAnother risk of using a launch service is the devaluation of reviews from discounted purchases. There have been rumblings from Amazon regarding the devaluation (and possibly removal or flagging of) reviews that were left after a discounted purchase. Before investing thousands of dollars into a launch service, you should consider the long-term viability and sustainability of the reviews.

After using a launch service you might notice a new seller on your listing. This happens pretty frequently. There are tons of sellers using the deals that launch services advertise in order to make some quick cash. They’ll purchase your discounted product and sell it on amazon for less than you. This can be harmful in brand degradation, customer service, and price dilution.

Conclusion

Before using a launch service to boost sales and reviews for your product you need to consider if its the right strategy to implement. Another consideration is the amount of product launches you do. It’s much better to do fewer launches with more products sold than to do more launches with fewer products sold each time. From our experience, launch services are best utilized by new brands with new products. Established brands with new products should definitely think hard before employing a launch service to bump sales and reviews. To mitigate some risk, a seller might create two product listing pages and use a launch service on one and market the other listing separately. You can always combine the listings later if you’re seeing some sustained growth and want to capitalize on the BSR and review count.