Joe specialises in Amazon Advertising. He builds long term strategies to set brands up for sustainable success.
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In this episode we discuss:
[0:00:00] George Reid: Welcome to us Always. Day One. My name is George Reid, a former Amazonian turned Amazon consultant. Each week on the podcast, you're going to hear industry experts, brand owners and Amazon employees share their answers to the basic yet fundamental questions. You should be asking yourself, Bang your Amazon business. Now let's jump in. Hello, Joe. Thank you for joining me on the It's always Day one podcast really pleased to have you on today to natter through some Amazon advertising pieces just to give us a kind of 27 background on on yourself.
[0:00:34] Joe Shelerud: Yeah, so I started as a selling on Amazon in 2014, and from that point to built up at Advance, which is digital advertising agency focusing on Amazon. So I love to talk to you about anything advertising wise,
[0:00:47] George Reid: nice. So to keep things straight off. One of my stable questions, which I think is important right now, is how do you feel brands can create sustainable success on Amazon right now?
[0:00:59] Joe Shelerud: Yeah, So for sustainable success, it's really taking a look at Amazon and realizing that your product, your product listing and your advertising that goes with it. It's a marathon and It's not a sprint, and so everything should really be invested with that long term goal in mind. So when I'm looking at the advertising, you know we're not as focused on the shorter term results that we're definitely taking those into account. Like, for instance, product launches. Um, I'm putting the advertising in place to really build out that advertising for the product listing for the long term. So I'm trying to get those product reviews. I'm trying to get that sales history, that relevancy where then, from that social proof? Now I can convert that into long lasting sales and a definite advantage that you can sustain over time. So I think it's really shifting the short term and the long term focus and focusing a lot more on those long term aspects.
[0:01:55] George Reid: And it's interesting to talk about the product launches because traditionally the strategy is always kind of been around. Let's do these super aggressive launches. Let's deep discount. Let's hack our way success when you then look at the appetizing point of view. I really like your mindset just to echo it, um, of the marathon, not a sprint. But when you look at the advertising from day one. What are you looking to implement, then? In terms of practicalities to achieve those things, we want relevancy. How long is it going to take us to get relevant to what we need to do to get that?
[0:02:28] Joe Shelerud: Yeah. So from day one, you're really trying to achieve two different things. So one is you're trying to build up that sales history, that relevancy and that social proof. And then the other thing that you're trying to do with advertising is start discovering other search term or keywords that you can use in your long term campaigns. So from the ranking aspects, what we want to do is we want to get aggressive on those very high relevance, see keywords and search terms that, you know you shrink for overtime so we can do this through manual campaigns using high, top of search. Essentially, we want to hit all the high converting ads, and really, you're just trying to throw those initial flights Amazon saying My product works, It converts, it's relevant. It's good. And look, I have these great reviews from people, and people are buying it at that point. Once you get that product established. Now you can really use the other side of the funnel, which is trying to get all these keywords that have converted and you've discovered. Now start moving those downstream. At that point, you can start to transition from this very aggressive ranking. Sales focus campaigns back down to more of an A cost profitability focus campaign over time. So, really, it's establishing that initial relevancy giving all those right flakes to Amazon. And then at that point now, we can take more of a longer term perspective with a sustainable business.
[0:03:50] George Reid: Yeah, I really like your your strategy there. Like, I kind of think of it as kind of you push out quite aggressively, and then you kind of take back You can go. We're going out to gather as much data as we possibly can and so achieve relevant as quickly as possible and to kind of kick start that flywheel. Um and you're right. That is there a special number, though, with the social proof. I've always thought the figure of kind of 21 reviews was kind of that kind of point where it tips over. I'm pretty sure profiteer. Oh, have some data around this as well. Based on a recent survey which people can go play with, maybe put a link to it. Um, and but from your perspective, you're managing a brand new product. You're you're doing that kind of aggressive start going after those highly relevant top of search, high converting ads. Really like that. Do you go right, We've hit. We've hit our stride a little bit now because we've got 10 reviews them. We're looking at that conversion rate conversion where it's going up. We we take it back and we sit back in the pocket little bit and start to assess What can we put in place in terms of those long, long tail keywords now? Or how does it work? Kind of physically,
[0:05:04] Joe Shelerud: Yeah, I think it's really it's dependent on your competitors in the category. So one thing to keep in mind is that if I'm in a very niche category, um, 5 10 reviews may just be great if the top selling product has only got 50. Um, if I'm in a super competitive category, I may have hundreds of reviews, and I'm not even hitting that threshold because my key competitors have 10,000 reviews. And so, in general, as a rule of thumb, I would say once you get to like an order of magnitude below the market leader and whatever niche you're in at that point, gaining reviews doesn't mean as much. So say my market leader only has 100 reviews once I hit that threshold of 10 now, each incremental review that I get doesn't matter as much in terms of conversion, right? Um, but that being said those initial reviews, I mean, between 0 to 5 reviews, huge difference in conversion, right, 5 to 10. It decreases a bit in terms of impact, but it's still a major impact. And then once you get to that order of magnitude level where I'm an order of magnitude less than the leader in my category now it starts to drop off a decent amount. And so, in terms of when do we scale back? Those are some of the pieces that we're looking at. Um, obviously, it depends on how aggressive you want to be, too. Um, so if you're a larger company, you've got a lot of free cash flow, and you really want to get this product running? Um, you're going to push further. Um, if this is your side gig and you're starting it, you've got a limited amount of cash, like time is on your side. Save some of that money that you may spend on advertising and let it grow organically instead. So overall, I would say it's based off conversion rate. We're looking at competitors looking at the reviews and then, as a conversion rate really starts to level off as I'm getting those extra reviews at that point now we can start taking our foot off the gas a bit in terms of ranking and then just kind of set that baseline for the new, longer term performance of the ads overall.
[0:07:01] George Reid: And with that, with that conversion rate, I always doubt the number of people actually understand their conversion rate. I understand what you're going to look for it. No, it's in your business reports, Um, but when you say you're monitoring that, is that something as an advertiser, people should be like if I'm doing any sort of advertising, obviously know the answer myself, but to reinforce it if we're doing any sort of advertising, just how important is it to be looking at that conversion rate at all times or definitely weekly on the basis.
[0:07:35] Joe Shelerud: Yeah, everything ties back to conversion rate. And so when we talk about conversion rate we're talking about or your conversion rate, so if I get 100 klicks and I get 10 orders, I've got a 10% conversion rate. And the reason conversion rate is so critical is one. If somebody clicks on my listing and then they purchase, that's a flag to Amazon that my products highly relevant. So as my conversion rate goes up, Amazon says, Okay, this is an even better product. I'm going to rank them higher, organically, and then the other piece to keep in mind is that conversion rate is in its incorporated into the bit algorithms to because conversion rate is a major factor for relevancy. And so when you're trying to win that top placement for advertising, um, it weighs your bit in your relevancy. And so if you have a really high relevancy meaning really high conversion, right, you can actually get that top spot a lot cheaper than your competitors do who've got not as good as a conversion right, and then the final aspect of conversion rate is now. If somebody clicks on my ad and they're more likely to convert into a sale, that also improves my costs. And so you get this huge piece where it is like the core fundamental where you can increase your organic ranking, you can get the better positions for cheaper, and you can get a better return on your ad, all tying back directly into conversion, right? So overall, I would say it is the key metric to watch, and everything else is dependent on that.
[0:09:07] George Reid: Yeah, I think a lot of that then comes back to that content piece as well, which is an ongoing theme. But I feel it still needs to be drummed into people because the vast majority I'm talking 80% like I find it with the Amazon creators Facebook Group. When I go out there to try and find good content on Amazon, it isn't actually easy to do. You do have to search so bizarre and we have these conversations, you've had them in your podcast as well, and everyone is talking about the importance of content which impacts conversion rate. And then there's this big booming thing called Amazon advertising, which everyone's raving about these strategies getting thrown all over the place. But all of them actually mean shit. Unless you can actually convert that traffic that you're sending you can the best strategy in the world by the best advertised in the world. Unless you converse them, it's it's completely pointless now. You recently made a post on LinkedIn, and I'd like you to talk to a little bit. You said there's no such thing as a good a cost. Can you talk to that for me, please?
[0:10:08] Joe Shelerud: Yeah, So for a costs, um, that's another key factor that we're always watching for advertising. And if we look at what it cost is measuring, it's really what? How efficient is your ad spent? Um, the key thing that I think people miss is that there's a number of factors that impact your costs overall. And so if I compare different categories, say if I take supplements versus specialist computer equipment, um, a great cost say I'm getting like 30% in supplements and average around four supplements is 40 to 50%. I can begin a really good a cost on the supplement side for the computer space, 10% can be a good a cost and 30% can be really poor. And so it's really dependent on the margins that you have. And then the other key piece to keep in mind. And this stems back to the conversion rate talked to is that it's not our only goal to minimize costs, because the way that we can minimize it cost is we can focus on the super highly relevant keywords or just your branded terms. But say we want to broaden out the funnel to increase sales. Now we have to get to those keywords that may not be as
[0:11:20] George Reid: relevant,
[0:11:21] Joe Shelerud: but by targeting those not as relevant keywords but still relevant, we can expand our overall sales. But you may have to accept a higher a cost to get it just because those keywords don't convert as well. And so the key thing is this. Constant trade off between advertising sales between overall sales and what are the costs is and really we're trying to strike the balance between the two, where we want to broaden the funnel out to the point where it makes sense. We want to be as aggressive as we can on the keywords to where it makes sense. And then our cost target is a factor of that. And so you never want to just say Here is my a cost target and I'm sticking with it because I feel like this is good. You should always be doing testing on broadening out the funnel and then at the same time testing these different levels by adjusting bids and seeing how sales volume response.
[0:12:14] George Reid: And that's that's overall sales volume, isn't it? It's not. We're not just focusing on the impact of your advertising sales. You're looking at that overall impact to go well. Our ad sales are going up and it's costumes a little bit more of the cost is going up a little bit. But are reviews are coming a little bit more at the moment because we're making more sales over here? We're getting more relevance because people are clicking those ads and going from converting. Telling a nine algorithm that were relevant products were going up the rankings, which in turn is getting a small organic sales. So you're looking at all of these factors coming into it, and I think for most of your clients when you're having those first early conversations and perhaps a lot of those prospecting calls. I have it a lot as well and most overall kind of strategic conversations you have. They're obsessed with these figures, are you finding everyone on your side of the fence is exactly the same. Just going alright. What a cause can we get? It needs to be below this and they're just they're not thinking outside of that box.
[0:13:22] Joe Shelerud: Yeah, and it's the hard aspect to incorporate in is if I look at overall sales, it can be a legging factor. So say I'm being very aggressive for certain keywords that I know I should reign for. And I'm getting certain ranking juice from that just for always owning that top spot with my advertising and converting those customers into buyers. Say now I take the gas or my foot off the pedal quite a bit, and I'm not bidding as high, and I'm not giving that top placement for my ads. Um, in that instance, my overall sales might not be impacted as much right away, but now say my ranking starts to drop down just because I'm not being as aggressive on my advertising. That's a lagging indication where I may not see my overall sales drop down the instant I make advertising those. And so that's where you also need your intuition to. As I make these different changes in advertising, know that they may not be reflected immediately. Once I make these changes on advertising, my total sales may not be impacted immediately. And so it's taking that longer term perspective with your advertising still doing these tests. But then not immediately jumping on how total sales responded that day or that week, but looking out over a longer term time frame. But, yes, your point is exactly right. Advertising is one small piece of the overall Amazon puzzle, and you have to take into account overall metrics because at the end of the day, it's the overall sales and profitability metrics that are the key things that matter. And now what's the best way that we can utilize advertising to make sure that we're maximizing those two factors?
[0:15:00] George Reid: And I think, yeah, building on that point the other piece is if you are a particular type of brand selling a particular type of niche category, whatever it happens to be you're also thinking about Are we looking to acquire customers here or are we going and getting transactions? And the difference being transaction is obviously one off, maybe an orthopedic chair and you go well, we need to focus very much and making profit on the front end. Yes, we're building brand awareness. Yes, we're looking to get organic visibility so we can make more profit on future sales. But when you flip it around, so you consumable product. The strategy changes obviously again because it's not just how is it impacting our Amazon Success is. How is it impacting our our farmers and success, which is challenging to monitor? But the conversations you're having with clients? Are you poking them on this? Maybe that's not the right term that are there. But are you saying okay like maybe a cough is a little bit higher? Maybe we're a little bit more aggressive than we'd like to be. But how is how our website sales at the moment how website sales been since we've started being more aggressive here, you having those conversations? Are you seeing obvious things? They go look, business is booming since we've doubled down on Amazon advertising. It can be difficult to attribute, and companies are getting better and better and better, putting all the pieces of the puzzle together. But have you seen examples of that?
[0:16:32] Joe Shelerud: Yeah, yeah, we definitely have. And it's a continual conversation, and the tough part of it is that there's not this direct link between the two. But you can see the general trends moving, and you can attribute them to certain actions. Um, one nice pieces that Amazon is realizing this, too. And so they're trying to give us more tools that we can use the metrics that we can also use to justify this. So, for instance, sponsored display, Um, just on Friday, they launch new to brand metrics for audience started. And so what's really cool with this is I can use my new brand metrics now, along with my repeat purchase rates, which I can get in my brand analytics to figure out what my lifetime value is over new customer. And so from there, I can go back and calculate, all right. When I look at a cost, it only takes that first sale into account. When I brought somebody new into my brand. But if the average customer buys 45 products, I'm in consumable selling supplements. Now I can calculate what my lifetime value is of that client and then based off of the new brand metrics just recently launched. Now we can tie those together and paint a better picture versus just a Casa Rose, which is one snapshot in time. So with metrics like that, and then also just looking at overall long term trends, and then what are the key moves that we've made tying those together? Those are key pieces that we're always trying to paint for our clients. But it is tricky because it's not always this direct correlation like you're saying,
[0:18:04] George Reid: I wonder as we as Amazon advertising becomes more complex, more comprehensive, what we'll see with regard to if you look at what a Facebook pixel is, and it's not my area of expertise, but you being able to attribute sales over here on your own website Shopify store, based on an interaction on Facebook, I wonder if this is on its way with Amazon. You know, we've got things like attribution etcetera, which works the other way. If I'm correct yet going from a social platform to Amazon and the sale being made to help you attribute to that. But flipping it backgrounds because other than including an insert card and having a particular u R L on that and knowing that you can track that you are l to an Amazon customer because it's an Amazon, unique U. R L, for instance, other than things like that can be difficult to track. But I don't know me tree by your thoughts behind this. Do you think that's coming? The equivalent of the Facebook pixel on Amazon or Amazon Pixel where they go, we've seen you here. You can put this picks on your website and then you can attribute sales to people who have also bought from you on Amazon. You don't get the customer data like, Okay, here's their email, obviously, but you do get some sort of visibility on it.
[0:19:26] Joe Shelerud: Absolutely. And this is exactly what Amazon DSP is doing. Um, so if you look at the sponsored ads, really, they're always directing you to someplace internally on Amazon, and so that's kind of their tracking. So you don't need the pixel in those cases like you said Amazon attribution will take other advertising sources and then tie the conversion data from Amazon back to those other sources. Now, DSP actually has a pixel where you can track and send them to your website to other locations. Um, and you can see this bigger picture. And then another piece that Amazon just recently rolled out is called Amazon Marketing Cloud. And so it is this piece where you can actually submit information from different sources, use Amazon marketing clouds information, and then somehow it tie this information together to give you the full lifetime journey of the customer. So, for instance, I could see that when they click on a sponsored products advertisement, and then I could see when they click on a DSP advertisement, DSP tends to be higher in the funnel, then sponsored products is lower in the funnel and actually be able to see the lifetime journey of customers. So this is a piece that we're interested in. They just rolled it out. We definitely have to test it and get more involved with it as we go. But you're exactly right, and this is exactly where they're going. Amazon, like everything else that they've really perfected as they are trying to own this holistic advertising digital space and you can see the building blocks on where they're moving.
[0:21:01] George Reid: Yeah, I think you know that's the DSP is so fascinating. I'm clearly very inexperienced when it comes to it, so I don't speak to it too much. But I think the whispers I hear is more and more features transferring over to make DSP more accessible, that we work with the account manager and was in the UK, and it's still challenging. To get access, you need to be managing large volumes or spending large large sums of money each month. So it's not a simple process to jump in, and also it's not suitable for everyone as well. But some of the functionality do you feel like they're testing it a lot and getting loads of data with larger clientele and then slowly drip feeding that offering over to your normal advertising consult?
[0:21:52] Joe Shelerud: Yeah, so for DSP, if you go directly through Amazon, they're going to request like an outfront $50,000 charge to do DSP. Um, we have access to DSP and so we can get clients going on a much smaller scale So you want to start at 1000 or $2000 a month? Let's do that and then we can scale it up as we go. Um, just, for instance, in January, just with our retargeting campaigns for DSP um, we saw 9.7 row as, um and so really good returns, and that's just the very narrow part of the funnel. And then there's audience targeting, and there's all these cool things you can do with the pixels, like you can create videos and have them show up on your fire stick when you're watching a certain show. Um, there's so many cool things that you can do. And really, you need to go through an agency like us to lower that barrier to entry. But I would definitely encourage a lot of people to test out and try it or, if you're interested, like be happy to talk to you. Um, there's I feel like that is the next stage after you've mastered the sponsored product ads, which really it's just a whole different world and the targeting aspects that you have at your fingertips, our grid,
[0:23:06] George Reid: yeah, and those that jump on these new opportunities always going to be better off now. I want to finish with a quick speed round. Um, so far, for your answers as quickly as possible.
[0:23:17] Joe Shelerud: So question
[0:23:18] George Reid: one. How do you see data leveling or widening the playing field? So leveling or widening the playing field with data?
[0:23:26] Joe Shelerud: Um, I feel like it levels it, but only if you know how to use it. So I would say it actually widens it just due to increasing complexity. So Okay, you've
[0:23:39] George Reid: literally added both there. All right. What's what's the biggest threat to an amazin business?
[0:23:45] Joe Shelerud: The biggest one
[0:23:47] George Reid: threat?
[0:23:48] Joe Shelerud: Oh, the biggest threat to an Amazon business. I mean, it is such a competitive field, So CPC is going up constantly, driving out margins. It is a very cutthroat business overall. And so, finding any different advantages you can get, it's going to be so big long term.
[0:24:07] George Reid: And if you only had 10-K, would you start an Amazon business today?
[0:24:11] Joe Shelerud: Um, I would I would start in Amazon business today. Um, I started as a seller in 2014. It is much harder, so I would invest in getting the right resources up front like George. What you're doing from the front have good mentors who have already learned those costly mistakes so you can avoid them just with how much more difficult the spaces now than it was before.
[0:24:36] George Reid: That leaves me beautiful into my next question. If you're running an Amazon business on your own right now from scratch, who would you hire first?
[0:24:44] Joe Shelerud: I take it with a grain of salt. Usually I see people go with the advertising first just because it tends to be a different skill set with the very data focus pieces and all of the intuition and expertise that's required versus, like the product development side. So that's typically what I see people do. Take it with a grain of salt licks. I'm coming from the Amazon, Advertising said,
[0:25:08] George Reid: because I happen to run an Amazon advertising agency, I How
[0:25:13] Joe Shelerud: can you imagine? I would answer that
[0:25:17] George Reid: That was the night and final final question in today's market. Where would you launch on Amazon or your website? First?
[0:25:25] Joe Shelerud: I would personally, I would do Amazon just because the conversion rates are so much higher. Um, yes, you have to experience a lot more in fees, but if I look at average 10 to 12% conversion rate on Amazon versus you know, 1 to 2% on the average website. I feel like it's so much easier to launch on Amazon. Even though there's a lot of increased competition,
[0:25:48] George Reid: I can care. Thank you. Thank you so much for spending 25 minutes 30 seconds of your time with me. Naturally natural away like a couple of old ladies. But looking forward to hopefully having you on again in the future. And I hope you enjoy the rest of your day mate.
[0:26:02] Joe Shelerud: Going to be on George.
[0:26:04] George Reid: Hey, guys, just a quick one. If you are enjoying the podcast, I either have some actionable next steps or new ideas. I'd really appreciate if you could one subscribe to the show and leave us review. These are really, really important to us. As you probably know, being in the Amazon world and two, if you're looking for additional support with your brand, head over to the website. It's always day one dot co dot UK where we've got links to other resources. As often our guys speak soon
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