Why run ad campaigns at all in the current climate?
Things continue to evolve quickly and many customers are reassessing digital marketing strategy and spend. For some, the right call may be to pull back PPC and/or programmatic budgets and reallocate spend to CRO, SEO or even reinvest in business continuity. But, right now, most brands we work with at Expert Edge are seeing an increase in Amazon channel sales; and the fastest growing brands are the ones that are continuing, or even doubling up, ad spend.
If your brand can achieve diligent planning, precise strategy, accurate analytics and operational agility the rewards are significant.
Understanding behavioural changes and adapting your approach
Business as usual is a thing of the past. The forward thinking marketing leader is fully engaged with trying to understand how to navigate today’s turbulent waters and what the ‘new normal’ might look like once things settle down. Although the natural reaction is to cut back on spend, we think there is significant upside potential for businesses that can maintain their ad budgets.
In the aftermath of the last recession in 2008, ad spending in the U.S. dropped by 13%. But in 2009 when the recession was still alive and kicking Amazon sales grew by 28%. During this crisis, the trend towards Amazon is even more pronounced and opportunities exist for those bold and agile enough to take them.
Below are some suggestions of strategies to adapt and thrive in times of high ambiguity, based on our own learnings:
Adapt your approach to mirror changes in consumer behaviour and competitor landscape. Tweak your detail page, A+ and store content to speak directly to customers needs, as they stand today, rather than simply listing product features. Also, consider what your competitors are doing and if there are ways for you to expand into their customer base. For example, if you are benefitting from a surge in organic traffic, consider reallocating spend from Sponsored Product to Sponsored Display to grow your share of category without directly cannibalising organic sales. Similarly, if your competitors are groaning under the weight of supply chain pressures, up your Sponsored Brand spend to get a sense of the upside in increased sales.
Adapt your strategies to the changing dynamics of your own business. Whether your business has seen demand decrease or surge dramatically, your supply chain, cash flow and balance sheet are likely to have seen considerable adjustment. In either case, we’ve seen our businesses benefit from rationalising their focus to prioritise the health of their ‘life support’ functions. This means looking at which products are really driving revenue, the characteristics driving those sales (unique features, great reviews, awesome content, etc), the unit profitability of each product sale and how you can rework your product catalogue and/or business operations to increase efficiencies across your range. Once you have identified your heroes (or created new ones), review your ad strategy to focus spend on the best returning campaigns, for the best products using the highest returning tools.
Do the basics and make the most of Amazon’s toolkit. Small changes to campaign tactics can translate to much larger impact on ROAS or ACoS. For example:
Use Amazon’s dynamic bidding toolkit to set ‘down-only’ or ‘up and down’ bids allows you to make real time adjustments to campaigns, based on conversion. Since fixed bids require manual adjustment it can be tough for teams to manage effectively, especially given the volatility in CPC, ACoS and ROAS we’re seeing at this time.
Evaluate keyword and product targeting performance and remember to set negative product targeting for Sponsored Product and Sponsored Brand to avoid serving on products that don’t drive clicks or sales.
Regularly review campaign strategy based on key metrics and pre-agreed thresholds for ‘good’ and ‘bad’ performance. Tweak the weighting between Sponsored Product, Sponsored Brand and Sponsored Display accordingly and overweight your ‘core campaigns’ (the ones that give you the best return in line with your goals).
Understanding what’s next and how to position your business
Postponing Prime Day was a big signal that Amazon has prioritised achieving an element of stability before running their flagship sales programme. And, doing so without a new date, shows they are unclear about the full impact of COVID-19.
Right now, the trend is positive. We are seeing POs return for vendors, critical category restrictions are being lifted in some areas, Prime delivery estimates are coming in and Amazon FCs appear to be increasing capacity whilst adapting to social distancing requirements.
And Amazon’s strategy to protect customers and sellers during the immediate phases of the crisis seems to be paying off. Traffic numbers have spiked up to 60% and member rates for key programmes like Prime, Fresh and Family have rocketed.
As such, we remain optimistic about the short-term growth potential for businesses on Amazon and are bullish that the effects of positive PR, customer engagement and the broader increase in online shopping will create long-term growth opportunities.
David Jennison, CEO
ExpertEdge was founded by leaders in e-Commerce and is staffed by Amazon specialist employees. We offer a blend of tactical execution support and strategic consulting services to grow your revenues on Amazon. Get in touch if you would like to discuss any of the topics raised in this article or to find out more about what we do.