Answering the age old question: Where should I invest my next ad dollar?
Michelle Meleskie, February 10, 2022
Picture this. It’s a Monday and you are called into your boss's (virtual) office and told what is music to your ears - your retail media budget for next month has doubled. As you end the Zoom call, the excitement starts to wear off as you realize you need to make a lot of decisions on where to invest, and you need to do it fast.
There are many ways to approach making decisions on where budget should be allocated, here we have broken out some key questions to consider when going through the process.
What region should I invest in?
What percentage of your budget is going to each country? Does this align with how large the marketplace in that country is?
For instance if you are advertising in Canada and the United States, it makes sense to be spending more in the United States as their marketplace on Amazon is larger. If you were spending the same amount in each country you may want to consider if this aligns with your objectives.
What is your ACOS or ROAS in each country?
Consider this in tandem with how much you are spending. As budgets increase we typically see efficiency decrease. If you are spending a similar amount (relative to marketplace size) in different countries, and one has a significantly better return, it may make more sense to invest there.
What countries are you focused on strategically?
The above 2 questions are extremely important to consider in terms of how you are performing, but keep in mind all nuances to your business. Is your product expected to perform better in certain areas due to cultural differences? Is there an emerging market your company wants to focus in? Are you doing advertising on different channels in any countries that you want to complement these advertisements with?
** When comparing across countries, don’t forget to convert everything to the same currency so you are comparing apples to apples
What marketplace should I invest in?
What percentage of your budget is going to each marketplace? Does this align with how large each marketplace is?
Similar to looking at different countries, it is important to get a sense for how much you are spending in each marketplace compared to how large that marketplace is. For instance as Amazon is still larger than Walmart you would expect to see a larger portion of your budget going there.
What is your ACOS or ROAS for each marketplace?
Similar to when thinking about countries, consider how much you are spending in each marketplace as you may start to see diminishing returns as you invest more. Additionally, consider what other costs you have to sell in this marketplace and what your margins are - you may be making the same profit with a different ROAS based on this.
Are there new marketplaces where there is a first movers advantage or where they are growing quickly?
We have repeatedly seen that when new marketplaces appear, they can grow incredibly fast, and advertisers who are willing to invest early tend to see amazing results. Keep in mind that as more advertisers join marketplaces and competition gets tighter you might see lower returns - so capitalizing on as much growth as you can while the marketplace is small is almost always a good idea. On top of the good returns you typically see in new marketplaces, it it great to get your product in front of customers who are also new to the platform - they may be more open to new products/brands and ideally they can become lifetime customers for you.
Which marketplaces are you focused on strategically?
There is a lot to consider when it comes to how online marketplaces fit in with your overall strategy. If you are still trying to determine what marketplaces are a good fit for you, we have some helpful articles on Walmart and Instacart.
What ad unit should I invest in?
What is the purpose of each ad unit? What stage of the funnel do they fall into?
When diving into ad units it is so easy to compare ROAS across each one and throw budget where you have the best immediate return. Before you do that we recommend taking a step back and determining the objective of each ad unit. For instance with a Sponsored Product ad you would expect this to be bottom of funnel and would measure ROAS, but when looking at Sponsored Brands, this could be top or middle of funnel, and getting as many impressions as possible might be your objective. Taking this step back and remembering the purpose of each ad unit before you start making decisions on your strategy is critical.
What is my split of advertising between top, middle and bottom of funnel? How are they performing?
Now that you have your ad units categorized, look at how much you are spending at each stage of the funnel, and how they are performing relative to their success metrics. This is an area where your strategy really comes into play to determine how much you should be spending on each area of the funnel.
Once you have taken a look at the above - you will need to dive a bit deeper into campaigns and products to make some final decisions, but we hope this gives a great starting point!
Historically to answer all of these questions you would need to spend a lot of time downloading reports from multiple sources, and we are so excited to show you that has changed.
Introducing Perpetua’s Executive Dashboard
Perpetua’s new Executive Dashboard shows advertisers their campaign data in a consolidated way that makes it extremely easy to understand exactly how they are performing by country, marketplace, ad unit, and stage of funnel. By consolidating these insights we hope to continue empower our customers to make better strategic decisions.
Want to see how Perpetua’s new executive dashboard can help your advertising strategy? Reach out to us at firstname.lastname@example.org
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