SVP, Media Strategy

Chief Growth Officer

Identifying Amazon Account Inefficiencies

How much is your brand spending on Amazon? Or if you manage a multi-brand portfolio, how much are you spending per brand?

When considering both circumstances, Rise believes in a highly granular account structure.  This method allocates budget in a way that maximizes performance for every product or keyword with ad spend while at the same time creating a relevant experience for customers. However, when we take over managing client programs, we typically find that the most common mistake is a substantial amount of wasted spend (typically 10-20%) allocated to inefficient or low performing keywords or products.
To ensure this is addressed both with the initial transition and as an ongoing optimization practice, Rise has developed a methodology of identifying waste in real time to ensure that we have the best mix of products and are bidding on the right keywords.
Developing the Right Account Structure
The foundation for success in any Sponsored Ads (formerly AMS) account is developing a highly granular account structure.  While this requires more significant up-front time and effort in setting up the account, this will lead to massive improvements and efficiency gains in the long run.
As an example, when Rise initially audits our clients’ campaigns, we notice they typically have dozens to perhaps hundreds of campaigns. Once we implement our core strategy, we will expand this to thousands of campaigns. By doing so, we can control the bids, the budgets, and the product experience at the most detailed level. From there, we can ensure that the words with the most ad spend are the words that are generating the most revenue in return.
Identifying Areas For Improvement
Now that we have expanded our account from hundreds of campaigns to thousands, there are a number of specific approaches we can take to maximize performance including:

  • Match Types: Match types need to be broken out so that negatives can be managed in a much easier fashion
  • Product Groupings: Group like products and like categories for relevancy to drive higher engagement/conversion
  • Room for Growth: Build a scalable structure that can expand as you add new campaigns, new products, and new ad formats

Optimizing the Right Product Mix
There are millions upon millions of products sold on Amazon. On average, an individual brand may have hundreds, thousands, or tens of thousands of SKUs that are all active on Amazon. However, not all of those SKUs should necessarily have media spend allocated to them.
Once you have implemented a granular account structure, you can then start to develop a product testing strategy. By analyzing product performance on a campaign level, you can identify which products are performing well, which products are performing poorly, and then substitute the lower performing products for new products that have the potential to perform higher.
What should you focus on? Remember that Amazon loves profit - with very low AOV products, it will be very difficult to achieve profitability. You may want to also consider testing different merchandising tactics including Bundling and Cross-selling to increase basket size.
The end goal is to select the most profitable products to put media spend behind. So how do we do this? While it sounds difficult, we believe in optimizing each and every keyword. Rather than a portfolio/account level ACOS or ROAS goal, we focus on goals at the most granular level possible to maximize revenue. Each and every keyword should be monitored and optimized individually based on goals and performance.
To do this, you must have a very strong reporting and insights capability. As everyone can attest, the Amazon interface is not the easiest to extract actionable insights. At Rise, we have both built and partnered with leading technologies to be able to automate reporting to get to what we call “better insights, faster.”

In conclusion, the first step of managing a successful campaign at scale is to ensure you have the right framework. This means a highly robust and granular account structure, the ability to identify waste and shift budget accordingly, and a reporting infrastructure that will enable success. In our next post, we will focus on taking this foundation to the next level by finding scale and growth within your account. Contact Rise today to take the first steps in identifying your Amazon account inefficiencies.

09/25/2018 at 03:36