Future-proofing your Amazon Advertising
Mark Wang, July 13, 2023
Amazon continues to be at the forefront of rapid growth within the marketing landscape. Although this consistent growth does not appear to be slowing down anytime soon, it is still becoming more difficult for advertisers to remain competitive. With countless new entrants to each category and consumers being more careful in their decision-making due to the cost of living crisis, Amazon remains the right marketplace to be in—but only if you can keep up with competition.
With this in mind, we're presenting a framework that all Amazon advertisers can use to build a structure that allows for both nurturing current and targeting new growth, fostering an effective and long-term solution to help you thrive in an ever-changing environment.
You can keep up with the latest developments in Amazon Advertising with our quarterly Amazon Benchmark Reports, that give you data, news, and analysis of the shifting state of Amazon and retail media.
The three strategic pillars of Amazon Advertising
Our framework is built on three pillars: planning, execution and reporting. Developing a strategy around these pillars will help ensure that every step of the process is accounted for in future-proofing your business within the Amazon space.
Pillar one: planning
It's incredibly important to plan and identify what you are aiming to achieve before executing, but which factors are most important to concentrate on when preparing your Amazon Advertising strategy?
Make sure you're competing in the correct market segment
A commonly overlooked factor when it comes to planning is noting who exactly your competitors are in your specific target market. Looking at the Amazon category nodes or the Best Sellers Rank (BSR) are a good start, but these are only surface-level analysis methods for identifying your correct market segment.
What's easy to neglect is how granular your specific target market is. If you look to target competitors at too broad a level, you may have misaligned expectations on sales volume or current performance metrics. For example, if you sell luxury kettles, your market is indeed kettles, which is fairly broad. However, to identify your genuine competitors, you need to make sure you are comparing similarly priced kettles, which is a much more granular market. You will quickly find this makes a huge difference to your analysis.
You can identify your specific target market by taking into account factors such as:
Weekly estimated sales
This will give you a far better understanding of how to a) analyze your current performance b) set realistic targets going forward.
Granular research and targeting—use your Search Term Report and Share-of-Voice
It's easy to get swept up in what's happening in the here and now, only focusing on present metrics and results. Examples of this could include top term underperformance in one month, or failing to catch potential new search term trends by only focusing on what has worked in the past.
As advertisers, we must remember that only focusing on assumptions and past trends will lead to a very static bidding strategy that may result in restrictions. Changing consumer search behavior, among other factors, should also influence your targeting. Luckily, we can keep on top of developments with the Search Term Report (STR) and Share-of-Voice (SOV) tracking.
The STR is a report that shows which search terms customers are using to find your products. It includes multiple data points that will help you devise a targeting strategy, as it allows you to see what consumers are actually searching for, relative to your category and product. SOV, on the other hand, is the percentage of the market that your brand name owns in comparison to your competitors. Think of this as your digital shelf—an insight into the visibility of the placements you own on the Amazon search results page (SERP), both organic and paid.
You can use these tools to build up a picture of your current and new focus areas. Some questions you can answer with the data in these reports are:
What keywords are my competitors targeting?
What type of Amazon ads are my competitors running?
Where are my resources better invested as a brand?
What Amazon ad types are the most effective for my business?
What have I been targeting to good success?
What should I stop focusing on?
Where should I stop spending as I already have strong organic rank?
Engaging with the data and answering these questions will help guide your planning and ensure that you're well prepared for the next stage of your Amazon Advertising strategy.
Pillar two: execution
Having reviewed and analyzed your STR and SOV, you're ready to move from planning to action. It's time to execute.
Campaign structure: organizing for long-term success
To build a strong campaign structure. there are a few things you may want to avoid:
Focusing solely on flagship category terms
Spending too much money on tired keywords
Failing to take new opportunities into account
In terms of application and implementation, a method we have often seen succeed is to separate your campaigns into different buckets, each of which is geared towards a specific objective. For example:
Generic bucket: one collection of campaigns to host generic keywords and ASINs which are relevant to your products, with the goal of efficiently maintaining exposure, rather than driving growth. Targets to include here are:
Generic category terms
Strategic bucket: a second collection of campaigns aimed at strategic targeting, containing keywords and ASINs that you have identified for high spend velocity because you want to prioritize for high traffic. Suitable targets for this bucket are:
Seasonal keywords, such as mothers day
Specific ASINs for direct competitor conquesting
Keywords you want to aggressively gain rank and exposure on
If you set up your campaigns with this structure you can begin to build a flow from one bucket to the next. Essentially, once targets in the generic campaigns start to blossom and become key opportunity areas, you can transfer these into strategic campaigns and the cycle continues.
Pillar three: reporting
This pillar is arguably the most important of the three. Have your actions resulted in tangible results?
Connect your reporting back to your planning
Your reporting will be most effective if your planning was detailed and well-structured, as you can connect the two. If we loop back to our first pillar, which involves the use of real and trackable data within the STR and SOV, then attribution and result tracking should be relatively simple to identify.
Some key metrics to look out for using these two tools include:
Search Term Report
What performance did my strategic terms generate?
Which targets in the generic campaigns generate good results that I can transfer into the strategic campaigns?
Are there targets performing poorly that I should stop optimizing for completely?
Has my ranking increased on my targeted terms?
What competitors are dominating my terms that I should target?
Which terms do I have high organic rank on, meaning I could reduce spend to avoid cannibalization?
Monitor your market
Post pillar two, execution, the final factor to consider is how you now compare to your specific market. Metrics you should consider are:
What was my market share before and after executing this strategy?
Is my realized performance in line with the market? E.g., if you have grown 20% but the market has grown by 50%, you may have a skewed view of success.
Was there a specific reason why my competitors' performance was better or worse than mine?
Build a foundation for success in a growing market
One thing's certain: we know that Amazon and retail media as a whole will continue to grow. By creating a structure for your Amazon Advertising that is based on real data and takes into account not only the present situation, but also potential future developments, you set yourself up with a foundation for long-term success. Combine this with campaign structures that have their own specific targeting purpose and you'll have a dynamic, flexible strategy that can account for new opportunities and respond to fast-changing market dynamics.
To get started or learn more about how Perpetua can help you scale your Amazon Advertising business