Originally published on April 8, 2020, updated April 8, 2020
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In the last few weeks our world has been turned upside down. Schools canceled, working remotely, stay at home orders, and social distancing requirements have changed almost everything about our daily lives. The impact on retail and eCommerce, including Amazon, has been huge. Some brands and retailers are seeing a surge in demand and can’t keep products in stock, others are watching their sales plummet.
As an Amazon seller it can be easy to buy into the panic mindset and make rash decisions regarding your business. However, by taking a step back, evaluating strengths and weaknesses as well as looking for opportunities and not just focusing on the obvious threats, Amazon sellers can set themselves up to come out of this crisis stronger. I’m going to specifically discuss Amazon advertising and what Amazon sellers can do right now with their ads to help keep their businesses running and positioned for long term success.
Amazon sellers can set themselves up to come out of this crisis stronger.
First, let’s look at two very different scenarios for sellers right now. Either you sell in-demand products like health and wellness or grocery and you are scrambling to keep product in stock. Or, you either are or have been classified by Amazon as a non-essential product, so sales and conversion rates are quickly dropping. I’ll touch quickly on how to handle advertising during a sales surge, then discuss how to manage ad spend and maximize your sales regardless of which trend you are seeing now.
Sellers in the grocery, health and personal care, supplements, and other “essential” categories are all seeing unprecedented surges in sales. We’re even seeing this in categories that do not fall under Amazon’s essential label but are seeing a surge in demand due to the change in lifestyle we are all experiencing. Toys, games, electronics, and other items that people want to use while confined to their homes are experiencing increased demand. If you do have plenty of stock and are trying to maximize sales, make sure you are adjusting your ad budgets to handle the increase and that you are using the tactics discussed below to maximize reach. Continue to optimize bids and definitely use your search term report to find new keywords to add to your campaigns.
If you are going to run out of stock and are trying to keep a lid on sales, start pulling back on your ad budgets and bids to help slow things down. Do this on a case by case basis for products that are short on inventory and allow other ads to continue running where inventory is available.
Sellers who are not in a high demand category related to the COVID-19 pandemic, especially those using FBA who have had Amazon push out delivery dates to 30 days, are seeing sales drop. However, the good news is that other sellers are starting to pause operations and advertising, leaving an opportunity for sellers still able to keep the lights on.
If you are in a high demand category, there is also a great opportunity here to maximize your sales right now if you can keep your inventory restocked. In either case, there are several things you should do now to ensure you are maximizing your reach to the right audience and ensure a solid return on Amazon ad spend.
The first priority is to control any bleeding and adapt advertising to the recent situation.
To do this watch your conversion rates closely on advertising. Many sellers who are seeing big drops are finding it’s due to Amazon delaying delivery times for their customers. If that applies to you, consider switching to FBM so that you can fill orders faster and make the sale. Turn off your FBA listing so the FBM listing takes the Buy Box. We saw one seller’s conversion rate double after doing this.
If you are not able to make the switch or are already FBM and seeing a drop in conversion due to lower demand, check the dropping conversion rate against ACoS and pull back bids on your poor performing keywords. If ACoS is really spiking, consider pausing keywords for anything that is really performing badly and preserve your margins until things calm down.
Also, review at the product level. If you have specific ads/products that are experiencing a large drop in conversion rate, pause that ad for now. Keep a list of ads that are paused and revisit later, especially once delivery times improve.
As sellers are dropping out of advertising and slashing budgets, we are seeing cost per click come down. As advertising becomes less expensive, this is a great time to double down if you have the budget to do so. Pull a bulk campaign file and review keywords with low CPC and high conversion rates that are within your ACoS targets. Keep a competitive bid (but one you can afford) and look for similar keywords to add to your campaigns.
This metric is specific to Sponsored Brand (SB) and DSP ads. It measures orders from customers who have not purchased from your brand in 365 days. We’ve seen this number go up in the past week as more people are beginning to shop online. Review your Sponsored Brand ads. Find the ones with strong new to brand metrics and optimize bids and budgets to maximize your exposure to new audiences.
If you are not seeing strong NTB metrics or are not running SB ads, start now and make sure you are highly visible to any relevant audiences coming to Amazon for their shopping. Keep any new campaigns tightly targeted with low budgets at first. Watch them carefully and close them down if they don’t perform. If you are experiencing a significant drop in sales, you don’t want to be spending a ton of money on experiments right now.
With the surge in traffic to online channels like Amazon, retargeting ads through Sponsored Display or DSP will help keep customers in your purchase funnel. These ads will allow you to target any customer who has viewed your product page after they have left Amazon. With more people at home and spending time online, make sure they don’t forget about your product as they leave Amazon and start browsing somewhere else. Sponsored Display is a little hit and miss on performance, so use a small budget at first to find out if it works for your product line, if it’s not, don’t be afraid to shut it down.
A still underused feature in Sponsored Ads, sellers have the ability to target and place ads on a specific ASIN. Get creative and experiment with what works. Target complementary products, competitor products, or even your own products as an attempt to cross sell. Experiment with smaller budgets at first until you find the right combination of products to target.
Now is the time to be paying close attention to your advertising and ensuring you are maximizing both reach and return.
With some of the tactics just discussed we are already seeing improvements to ad performance in both cutting unprofitable spend and stabilizing sales. Now is the time to be paying close attention to your advertising and ensuring you are maximizing both reach and return. It’s not a time to panic. Instead, review the data and look for the opportunities. This is an unprecedented time on so many levels and sellers who are nimble and adapt quickly will come out stronger on the other side.
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