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Marketing on Amazon 2020: big changes, big opportunities


Read the latest article by Anders on Amazon Ads and check out Amazon Marketing report.


Dan: Good afternoon, good evening and good morning. I'm Dan. I'm the head of performance marketing for Ingenuity Digital and I have the privilege to talk to you guys about Amazon. We're just going to start with our panelists and our speaker just to do a little bit of introductions. They know themselves so much better than I know them. Kiri, would you just like to give yourself a brief introduction.

Kiri: Sure thing. I'm Kiri from Bobsled Marketing. And we are an Amazon specialist digital agency that has worked remotely for the last five years. All of this is sort of business as usual for us and I also contribute to Forbes retail as a columnist there. Host a podcast called Ecommerce Braintrust podcast, and have written a couple of books about Amazon as well.

Dan: Thank you very much for making the time. Elizabeth if you'd like to introduce yourself as well, please. 

Elizabeth: Sure thing. My name is Elizabeth. I'm the Senior Director of strategic marketplace services at Tinuiti which is a long title to encompass a lot of different things. I work directly on the marketplace team. But my previous roles were all in paid search. 

Dan: I'm going to let my coauthor Anders introduce himself, because as much time as we spent together again, he knows himself a lot better than I do. Anders if you'd like to talk us through who you are. 

Anders: Absolutely. Yes, I'm Anders. I avoid pronouncing my last name for people just to spare you. I'm Danish. But I actually live in Paris, France. I've been here for longer than I actually lived in my own country. I've been doing digital marketing most of that time, actually. 

I started back in the last century, I did some PPC as well. It's funny how PPC is actually a term that is pretty much North America. Whereas in most of Europe, we use other words, I came from research as well, just as Elizabeth and I've had the joy of discovering Amazon over the past few years. Basically, I've worked in digital marketing like ever since its inception.

Dan: Well, I won't take up too much time because these guys are the experts I'm really interested in hearing from. I'm sick of the sound of my voice already. I've been working in Amazon since 2012. I set it up as a side business to supplement my own income. 

I've seen Amazon from its very inception in terms of what marketing or paid marketing looks like then as well and I like to say I head up the performance marketing team at Ingenuity Digital, we are the largest independent digital marketing agency in the UK. Anders I'll hand over to you to start your presentation.

How Amazon Are Dominating the Current Marketing Landscape

Anders: Things are a bit crazy these times. I talk about us living in a VUCA world, VUCA for volatile, uncertain, complex and ambiguous. I think this is sort of a term that is winning people's ears, there are protest, movements, we're starting to use face masks, climate change is hanging over our heads literally. We've been through lockdown, there's terrorism in parts of the world. We're, I think, starting to come into a deep economic recession here. How do you actually manage all this?

Well, Amazon manages pretty well. If you can see the way things are evolving, it is only getting better all the time. The graph that you're seeing is the growth of Amazon ecommerce. This is both their own ecommerce and the marketplace. The peaks are of course, Q4 every single year. 

The growth is pretty steady at 20% year on year. Every single year 20%. We tend to forget that when we're working in digital marketing, we're working with Google, Facebook, Amazon is all massive, massive growth every single time. They're still doing this.

But they're even doing better than that, because part of their offering is around 40% growth year on year. That is AWS, Prime, Amazon Ads and stores. There are these four growth riders and I tried to bring some hashtags. It's about technical innovation. It's about the future of retail. It's about marketing, innovation and it's about advertising. Those things are pretty much defining as I see it, some of the direction of Amazon. These things actually represent 32% of Amazon revenue as of 2020. 

We're looking at Amazon Web Services first. I call this tech innovation. Cloud beats rain since 2013. This is Google Trends.This is cloud computing, which has gained a lot of popularity and even if you look at it sort of, quite recently, even more this may be again COVID-19. Amazon are sitting in the places where things are happening, very powerful on tech innovation. 

They're also quite powerful on the future of retail. They are leading the way with some of these cashierless stores. They're actually now licensing that technology out to other retailers, if they care. 

There's some marketing innovation and a very powerful one actually called Prime. Every time I talk about Prime in a presentation I usually, I ask, please raise your hands if you're using Amazon that's like everybody and then raise your hands if you're using Prime. Sometimes you don't have to do it. You can if you like.

I'm not going to be able to count how many of you; typically I see people in these types of crowds, 75% are Prime subscribers. That is massive. This quote is from the report it's Nick Weinheimer from Kenshoo saying Prime is probably one of the most genius moves in business history in terms of customer loyalty programs. You're actually paying to be in the loyalty program.

Then there's of course, advertising. Sort of the poker analogy of when you do advertising on Amazon it's a bit like a game of poker because you really have to consider which cards you're betting on whether you play or don't play. The winner takes not necessarily all but the winner takes a lot. And there are quite a number of losers as well.

Amazon Marketing: Research Trends

A lot of these things come from the research that we did together with Dan, Dan, a report called marketing on Amazon in 2020. I'm going to share some extracts from it. We interviewed seven experts, we did a deep survey of 20 Amazon marketing teams. 

When I say deep survey, we're talking 20 minutes of SurveyMonkey. We've got a lot of data from which I'm really happy for and thank you Elizabeth, you were one of the people actually participating in this and bringing a lot of value. Some of the experts we interview, I'm going to show you a couple of extracts here. We asked a question, who's winning on Amazon. And this is Adam Palczewski, we used to work together in a group many years ago. And he's now the Amazon lead for Philips. He gave us this sort of really quick, everything's in this quote here of how to win with Amazon, how to work with Amazon.

But the thing I want to extract here is that notion of it's always day one. There's no past, we're only looking forward, looking to the future. I think this is very valid in today's environment, because you really have to look into the future to figure out what you're going to do with Amazon. I think there's a lot of test and learn, we found that in the survey and also in the interviews. Working on Amazon or succeeding on Amazon is about testing and learning all the time.

One last quote here from Megan Harbold, also from Kenshoo. It used to be the power of the brand name. This is sort of in the beginning of Amazon brand was very important. If you had a brand product, you would stand out and you would sell a lot. After that it used to be throwing money at it. A lot of advertising was enough, just any advertising, just to throw money at it, and you'll be top of search. 

This has changed again. Megan says, what you really need to do today is dedicated focus to the consumer experience and consumer experience all along that user journey.  It's a bit of storytelling. Maybe we can talk about that later on.

In the report, we tried to sort of decrypt a little bit how marketing on Amazon works and we used this model which is from the 60s, 1960s, was one of the four P's of marketing were created, there was the product, there was the price, the place and the promotion. Now, all of these things play into to acting on Amazon, but the difference here in 2020 is that with Amazon, they become variables.

Price is not something that you set once, it's something that varies. Your product is not something that is just set, you need to change it you need to update, you need to position it. In terms of the place where you're actually putting this in terms of brand store, the keyword territories were shaped as well. The last factor of variation, which is maybe the one that we're the most used to is of course, the promotion of the various advertising solutions that you have available within Amazon.

I wanted to give a quick look at this one. We looked at the Amazon algorithm, what do you need to do to rank so we try to put all the factors and make a picture of it with three big areas, the customer experience obsession, on one hand, the product activity on another, and finally, sales maximization. I wanted to put in a couple of areas here because with COVID-19 there was suddenly the case of well, out of stock or no delivery, which kind of changed things. As far as I've understood, there's been an algorithm update to take into the account this challenge,

Very often when there's a crisis, a lot of advertisers will suddenly cut advertising, they will cut spend, they can't take the risk. There was a big shift there. What I described just earlier about the big changes just around the lockdown is based directly into the algorithm. 

There's been a reshuffling so certain product types, certain verticals were prioritized. Everybody else was told to please wait, hold back because basically Amazon wants to give priority to basic needs, but that was the first sort of a reshuffling in certain verticals. 

The second thing is, of course, certain warehouses were closed down to protect the workers or for other sanitary constraints basically, in the workplace. Fulfillment couldn't happen anymore in certain cases.

There were these advertisers stops and shifts that typically happen every time there's a practice. The algorithm update that I mentioned. Also, a last thing here is that if you look at the bigger picture, Amazon's role as an advertiser has suddenly changed as well because Amazon did and a lot of advertisers did, they cut their own advertising so that the Google auction or Google shopping auction suddenly changed quite radically.

That was my run through of the various issues. We're open for questions. I'll hand over to Dan

Amazon Marketing for Local Businesses

Dan: Perfect. Thank you very much guys. Anders that was a really detailed presentation, really appreciate the falls into that and all the work that we put in for the marketing report as well. What I'd love to do next, we've got quite a few really interesting questions that I want to go through. 

We've got a question here around how do we think that Amazon will help when you are a localised business. Yeah, who wants to take a stab at this one first? 

Kiri: This is an interesting one because I think it's going to depend on which market you're in. But Amazon does, at least in the US have a service component. If you buy a TV on Amazon, you can also arrange for Amazon to come and bring a handyman out to install it. It's going to be very dependent on the type of business that you're operating and what you're selling.

Anders: One of the challenges is if you're running on one Amazon, does that mean that you will be working on another one as well. Some are easy and some are difficult. As long as you stay in the English language, there is a lot of things that you can just tweak and adapt a little bit. 

When you go into other languages you're also in front of other cultures, you're in front of words that do not translate directly.  I've seen some people on LinkedIn sometimes say, "This fantastic new feature." Where Amazon will translate your ads automatically to another language and I'd stay away from it. 

Elizabeth: If I go to just the base question, how will Amazon help you when your localized based? The answer is they don't. Not really, that's not where I would go as a localized business, my first place to grow in the same way that I think they're thinking.

Dan: Yeah, I completely agree. As I mentioned to you guys yesterday, we've got a product live in France, but to have our own store name in Germany, we have to reregister through the German system. That's just a barrier there.

But Amazon says that it will help you through that, if you're a UK business, Amazon's got a lot in place to try and help you sell in the US, it actually encourages you to sell in the US and to help sell in Europe as well. It does obviously offer its own translation service but as Anders says, do not go anywhere near that. 

Amazon will always look out for Amazon, but it'll also help you, if you're good at selling and you can sell that helps Amazon so it'll look after you for that.

Third-Party Amazon Marketing Tools

Dan: Yeah, definitely. We've got a really interesting question from Christopher actually, in terms of third party Amazon tools that we all use. I know I've got a fair few and there's some with me that you probably wouldn't expect. But I'm more interested to hear what you guys use, because I talk way too much and I've talked too much already.

Kiri: Well, I'll jump in there. At Bobsled, my agency, we leverage third-party tools for most of our processes, because machines can do things these days just better than humans and faster and cheaper, more efficiently, and sometimes just better quality as well. 

I think one of the first things that you should look at to automate or get some computer involvement is advertising and there's lots of tools out there that are available for large, medium and small sellers. The one that we're partnered with is Kanchi and then I think going through the value chain, you can look for product catalog management solutions like Salsify, which you can use to upgrade your content across lots of different platforms. 

I'd also be looking at brand protection and alert tools to say other sellers who are reselling your products if you're losing the buy box, things like that. Amazon has a habit of developing these kind of solutions internally in the native system, but often the third party tools are better right from the beginning. One example I would call out there is repricing tools which have been around for a long time when Amazon released their own version of it. Just not as good as what else is out there.

There is a tool for everything, I think just go through the value chain of what you're doing on Amazon, everything from advertising content, brand protection, operational processes that could be automated. There is a tool out there for almost everything.

Kiri: Something to remember as well as with kind of talking about tools available for sellers on Seller Central, which has a much more rich ecosystem of third party applications. We should really take a moment and feel sorry for those poor large vendors who sell wholesale because they had nothing for a really long time. Now, I think that Amazon's just released an API for vendors. Very recently, we'll start to see a lot more third party tools which is very exciting for them. 

Anders: I was looking through some of the results from the survey just to still look at what we had there. There was few of these that say “we don't use any tools”; they are very few. There was 40%, we're using just one tool. Then a lot we're using two or three, and then somebody was using seven tools. I mean tools are essential to be able to automate things to make all these repetitive tasks go quicker.

But we also heard sort of the pain in there of the economic model in some of the tools which is just not sustainable if you're an agency. There's sort of the need for a lot of tooling. Doesn't seem to be a lot out there that can actually cover everything at a reasonable rate. A number of teams are also building their own in-house. 

Elizabeth: We have one. We have a bid management platform or campaign management platform. That and the nice thing about that is that flexibility allows us to not only do we connect to the Amazon API's, but we are then able to take that information, put it in a data warehouse and we say, "Okay, it's going to be surfaced in our UI, or we're going to hold it in this data warehouse, and then we're going to be able to connect to different reporting capabilities," like whether or not that's a Tableau or a Data Studio, or whatever it is. 

I understood your point in the survey when some folks are saying they're only using one or zero. We see that with a lot of the smaller sellers, because to your point, it's not cost effective after a while. When you're paying monthly fees for three tools, or you're paying my data load or number of keywords, that adds up really fast. I would say anywhere you can bundle is always a good thing. 

There are various tools out there that have like multiple aspects of it. Sometimes it's an add on to a main feature set. The question is then I always ask is, "What are your plans for the next two to three years? Are you only going to be an Amazon? Or are you looking to go beyond?" If you're looking to go beyond and add additional channels like multi-marketplace management, then these tools start to make a lot more sense and more cost efficient?

Dan: Very much on to point Elizabeth actually, when we're onboarding or preparing a proposal for a client, it's asking them what are you going to be measured in? When you have to send your weekly report to your boss, and one of the last customers she took on that actually feeds in nicely with SEMrush.They have a really useful tool that helps them because my client had to do a big issue in terms of conversion rates.

High ACOS Campaigns: What To Do

Dan: Interesting. We've got a question here asking about during these turbulent times when you've got a higher ACOS with some of your campaigns. Is it better to lower those bid dramatically and let the campaigns run or just turn them off? Who wants to jump in on this one first?

Anders and I were talking when we were writing to the report, we were speaking to people that were having ACOS levels as high as 40%. Again, it comes down to as long as you're making money off it and it makes commercial sense. 

One of the big things that we are going to see is that Amazon does tend to reward historic...historical data. If you've previously sold quite well with this product, if you've kept on backing your own sales during this time my personal opinion is that it would probably best to keep them running. Because in the long run, it'll benefit you in that sense as well in the fact that you'll still get sales coming through.

The more sales you get through, the higher your rank on the organic side of things as well and lower your ACOS in that sense. I appreciate my answer to everything is keep going, keep forward with it.

But I appreciate when you've got to look at your P&Ls, it's a bit difficult to sort of say, this ACOS has gone from 5% to 40%, in the space of two weeks what do I do with it? Again, it's looking at the data from my perspective, if you say, "Okay, this actually could be a good time to sort of look into those keywords and say what sales am I actually coming from these keywords? What am I actually getting from here," and then try and refine it down a little bit.

Try what you've done in terms of your ACOS spend in terms of letting Amazon choose your keywords, and then find those that are working for you, you'll know which ones are working best for you. Then target those, whatever is converting for you right now, focus heavily on that, but try not to forget everything else that you've done because in the long run if they help you sell, they will help you sell going forward, as well. That's my non-SEO off the fence.

Elizabeth: I'm a fan of the always on in some capacity. Because here's the thing, it's still a second price auction, so impressions don't cost you anything. I've been working with a lot of the newer retailers recently and it's a first price auction. My answer would vary very differently depending on the platform, but obviously this is Amazon so I would, honestly Dan I agree with you.

Dan: Anyone else got any thoughts on that in terms of the ACOS levels? 

Kiri: I would just say be careful of pinning all your hopes and dreams on your ACOS. It's one metric out of many that you should be looking at. I think in the example that was shared it was like what if you had, ACOS goes up for very specific campaign or a keyword then definitely that warrants investigation, but stick with a lot of brands who just want their ACOS to be as low as it can possibly be, of course, but that's not really giving your brand or your products the best shot of actually getting in front of each brand shoppers or people who might have searched for a more generic keyword than what you've been targeting.

The truth is if you want the lowest possible ACOS you can get that by using extremely long tail keywords related to your brand that are so specific that no one ever thinks to search for them and you get your target ACOS of 2% or whatever you want. To think what is the actual goal that you have? ACOS should logically follow that, it shouldn't always just be chasing the lowest ACOS possible at all times.

Dan: Yeah, 100% agree on that. 

Anders: There's going to be collateral damage if you turn it off. If I'm sitting down, taking it off with 30 days, I would have to rebuild the whole history of sales and build up and sort of take those battles with everybody else. If you stay there, you could be having to sort of live out that high level for a long time. It's actually back to Dan. It depends not on the technical stuff. It depends on your economic situation right now. 

As a business owner, I wouldn't... as many do and as actually Amazon did themselves as well. A lot of people just slash advertising as soon as there's too much risk, slash advertising and say okay, we're going to have to start over and reboot the whole system and that... Look into the future and say, "Okay, when will I restart?" It's not an easy call to make at all.

Amazon Marketplace Machine Learning Algorithm Changes

Dan: No, it is, it's very difficult to learn that. Interesting point, actually a question from Jason Bernard. "How much do you think the algorithm update during April and May were aimed at preventing machine learning from being derailed by some of these random or unique searches that we're coming through?" If we go back to what my personalized search history was, I've never bought Starbucks coffee. I've never bought toilet roll from Amazon before. But all of a sudden, these are coming up on my would you be interested in this sort of phase?

Is it more of a protective measure that Amazon put in place so it didn't... When we do think well, what is post COVID life going to look like? Not to mess with algorithm. Is it something that is put in place? Interesting question, and yeah, I'm interested to see what you guys think about that.

Kiri: To my knowledge, the protective mechanisms that were put in place were to ultimately curb the number of overall orders on Amazon. They took away a lot of the recommendation engines and the upsells. I'm not sure to what degree Amazon would want to prevent very specific user activity. But there was certainly a reduction in the number of programs designed to upsell and get people spending, getting more packages shipped out to them, essentially. What do you think Elizabeth with the algorithm?

Elizabeth: What I take the question to mean was a little bit more where change is made. Because it's a machine. I think in this COVID era, what we saw was somebody threw a wrench in that machine pretty handily. What those responses were to either anticipate and meet the need and or suppress flaws in the system, which I think we saw come out pretty fast and pretty hard.

One of the things I have noticed with machine learning in general is the machine is only as smart as you feed it. We went in and gave it a whole bunch of crazy information and I'm sure it derailed it to some extent. Like they had to make manual adjustments. I cannot see how you couldn't. 

Yes, I do think they do have some never before seen metrics in terms of volume, and some user behavior. At Tinuiti we did a few studies internally. We do know that clicks are up in general and this is actually an article on our Tinuiti blog that our director of research put together and he examined the number of clicks, click through rate and then conversion rate in comparison to that, obviously, what we saw is clicks are up. People are searching, searching for something, but we didn't see conversion rate fall in step with that all the time. 

The question was, did they find what they were looking for and then leave or did they find something else and then buy it ? We found in most cases, like if the conversion rate drops like that they weren't finding what they need. Machine learning-wise something would have had to change and because there's no way they didn't see that on their end and then make a change. 

Agency vs In-House to Manage Selling on Amazon?

Dan: One last question, I think because we will end up running short on time. Katie Mitchell, she's a small brand selling on Seller Central. What are our thoughts on getting an agency's assistance versus looking into third party tools and managing more in-house?

Elizabeth: I think it's back to the earlier point I had about what's your two to three-year plan? If you are looking at only through 2020. A couple of third party tools managed in-house continue how you're doing it today. But if you're looking at what kind of growth you're looking at to achieve, you may need help.

Kiri: Yeah, I agree. It's about context here as well. I think that from what I say speaking with brands, they usually have an internal capability around operations or around the marketing and advertising side of things. Where are your own interests and capabilities? If you're a really strong operator then maybe looking to shore up your advertising and marketing capabilities with some outside help is the right thing to do or conversely if you're a great marketer and you really love digging into the weeds with advertising then maybe book with some help with the operational side of things so look internally as well.

Elizabeth: One (I'll call it a hack) way that I've seen smaller brands or smaller like specially get help, interns. Internships, it's great that you pay them a little bit, obviously, but the benefit hugely is for them with that hands-on-keyboards experience.When they're done, they go get a job and they get a good job and so they're very happy to learn that with you. 

I've done that before where I get a third party tool and I give it to the intern and I say, "Okay, you learn how to use this and then you tell me how we're supposed to do it." Then we evaluate from there because they will have that time to dig in and ask hopefully good questions.

Dan: It's about your P&L at the end of the day. I know it sounds horrible. It sounds very much like I'm an accountant. I'm not. It's what you can afford to do plus where you want to be. But then you've also got to consider your time.

If you think about how much time you spend on your Google Ads or traditional SEO on your actual site. Can you then replicate that into a different field which is Amazon? Have you got the time to do it? If the answer's no, you’re time poor, then I'd say in that aspect, get an agency. If you feel like you've got time on your hand, there's a lot of tools out there and a lot of learning guides as well. 

Final Takeaways on Amazon Marketing

Dan: I just want to get the final thoughts from everybody here because I don't know about everybody else, but I've really learned a lot and it sort of helped me focus my thoughts. If we just go, we start off with Anders, have you got some final thoughts that you want the viewers and listeners to come away with today.

Anders: Yeah. Some of the things that we realized, people were thinking, “should I be going on to Amazon? Why should I base my digital strategy on Amazon?” Well, first of all, I'd say it's 10% of ecommerce. Are you interested in that 10% of the market? That's one thing. Second thing, I think I mentioned it in the presentation. It's a huge source of innovation. If you want to be where things are happening, you really need to be on Amazon.

There is the question of the user journey. There's prime and there is this whole Amazon obsession, where people go there for product search, so user behavior has changed. People go there to search for products. 

Amazon itself has a lot of data, a lot of insights that can be used either for advertising or for you to learn what's good for your product, look at reviews. Yeah, that's really good. It looks like they're kind of future proof. I mean, they're pulling through this brilliantly. The last thing I'd say is I'd like to quote, Frank Sinatra. If you can make it there, you can make it anyway. That's my closing comment.

Kiri: I think another thing that we wanted to talk about but didn't get around to is the storytelling content opportunities that Amazon has now and just look at the investment that Amazon's making, the bandwidth, just the bandwidth for live video, video ads, posts, all these rich sort of content, immersive experiences, and I think that's a way to differentiate on Amazon if you're prepared to put in the time and energy to create really engaging content, you're going to be lightyears ahead of your competitors.

Dan: Yeah, I completely agree. One thing that I'd love the audience to take away is the secret to win on Amazon is sales. I know it's chicken and egg. But if you're selling you are always going to win on Amazon. f you can drive sales to Amazon from an outside source, you're going to rank so much higher than everybody else on that as well. That will probably the royal flush to keep in terms. 

I'll bid you all adieu, thank you very much for tuning in with us, no matter where you are in the world. Good evening, good night, good morning. Have a good day. Have a good sleep. Whatever it is with you guys. Thank you very much for tuning in. We'll catch up with you all soon. Thank you very much.

Kiri: Thank you.

Anders: Thank you.

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