Ep 429: Are Your Amazon Ads Cannibalizing Your Organic Results? (Plus Prime Video Ads and Amazon Earnings) | AKNF
DTC Podcast · with Clifford · August 9, 2024 · 21 min
Summary
This episode challenges the common perception that increased Amazon ad spend always leads to incremental sales. It reveals that for highly-ranked organic products, additional ad spend often cannibalizes organic sales rather than driving new ones. Ecommerce operators should strategically reallocate ad budgets from protecting top organic spots to targeting competitor terms and top-of-funnel awareness campaigns like Prime Video ads to maximize true incremental growth.
Key takeaways
Analyze your Amazon ad spend for cannibalization: If your product consistently ranks in the top 1-4 organic spots for a specific search term, additional ad spend on that term may not generate significant incremental sales. Use Amazon's search query performance dashboard to correlate spend with actual purchase share.
Reallocate ad spend to competitor terms: Instead of overspending on branded terms where you already have strong organic presence, shift budget to target competitor branded keywords. Analysis showed a much larger incremental effect and less cannibalization when bidding on competing products' terms.
Explore top-of-funnel awareness channels like Prime Video ads: With potential savings from optimizing lower-funnel ad spend, invest in non-skippable Prime Video ads for broad reach and brand building, as they can be highly disruptive and effective for driving new sales.
Monitor competitor activity closely when reducing branded ad spend: While reducing spend on highly-ranked organic terms can be beneficial, continuously monitor the data for increased competitor aggression. Regaining lost ground is harder than maintaining your position.
Don't rely solely on AdConsole ROAS: The ROAS reported in the Amazon AdConsole can be misleading due to cannibalization. Conduct deeper analysis to understand the true incremental ROAS and value of your ad spend.
Subscribe to DTC Newsletter - https://dtcnews.link/signup Hello and welcome to the DTC Podcast. Today, we’re diving deep into the world of Amazon advertising with Clifford and Rob from Pilothouse. As Amazon continues to be a pivotal platform for DTC brands, understanding the nuances of ad spend can make or break your strategy. In this episode, we uncover the secrets behind effective Amazon advertising, the role of Prime Video ads, and the strategic balance between defending your brand and targeting competitors. Key Insights:
Amazon’s Earnings and Growth: Despite recent market fluctuations, Amazon continues to show significant growth, particularly in its advertising sector.
Sponsored Ads Cannibalization: Discover how analyzing the incremental impact of ad spend on high-ranking terms versus competitor terms can optimize your budget.
Prime Video Ads: Learn about the powerful impact of non-skippable Prime Video ads and how they can drive both awareness and direct sales. Why You Should Listen:
Optimize Ad Spend: Learn how to make the most of your advertising budget by understanding incremental impact.
Top-of-Funnel Tactics: Explore the benefits of Prime Video ads for broader reach and better attribution.
Stay Competitive: Get insights on balancing brand defense and competitor targeting to maintain market position. Timestamps:
0:00 - Introduction and overview of Amazon ads cannibalization
2:00 - Insights from the Amazon earnings call and tech industry trends
4:00 - Analyzing the impact of ad spend on high-ranking search terms
6:30 - The effectiveness of Prime Video ads and targeting strategies
8:45 - Discussion on brand defense and competitor targeting
10:50 - Shifting ad spend to top-of-funnel efforts and streaming TV
12:3
What does this episode say about amazon & marketplaces?
Analyze your Amazon ad spend for cannibalization: If your product consistently ranks in the top 1-4 organic spots for a specific search term, additional ad spend on that term may not generate significant incremental sales. Use Amazon's search query performance dashboard to correlate spend with actual purchase share.
What does this episode say about paid acquisition?
Reallocate ad spend to competitor terms: Instead of overspending on branded terms where you already have strong organic presence, shift budget to target competitor branded keywords. Analysis showed a much larger incremental effect and less cannibalization when bidding on competing products' terms.
What does this episode say about analytics & attribution?
Explore top-of-funnel awareness channels like Prime Video ads: With potential savings from optimizing lower-funnel ad spend, invest in non-skippable Prime Video ads for broad reach and brand building, as they can be highly disruptive and effective for driving new sales.
What does this episode say about brand & content?
Monitor competitor activity closely when reducing branded ad spend: While reducing spend on highly-ranked organic terms can be beneficial, continuously monitor the data for increased competitor aggression. Regaining lost ground is harder than maintaining your position.
What does this episode say about amazon & marketplaces?
Don't rely solely on AdConsole ROAS: The ROAS reported in the Amazon AdConsole can be misleading due to cannibalization. Conduct deeper analysis to understand the true incremental ROAS and value of your ad spend.
