Since 1996, I’ve helped clients generate awareness, clicks and conversions via search engines. Over the past decade or more, Amazon has transitioned from a major advertiser on Google to a real threat to Google’s future. According to a Kenshoo study, 56 percent of consumers start product searches on Amazon. That number increases to 2x in a similar BloomReach study. On the seller-side, 63 percent of Amazon Advertisers plan to increase budget next year (a larger percentage increase than Google and Facebook spend). In short, Amazon is the new Google in many respects. If you don’t have a solid Amazon marketing strategy in place, you’re at a disadvantage. This article explores best practices when creating an effective Amazon marketing strategy.
Whether you are a manufacturer, physical or online-only retailer, you need to evaluate a presence on Amazon. Many brands are already on Amazon and have been for years, but I regularly talk to small brands and boutique retailers that are not on Amazon and are hesitant to jump in with both feet. To assess the viability of a presence on Amazon, you must build a strategic plan.
One of the first and best places to start is to evaluate the competitive landscape. If most of your competitors are on Amazon, that indicates the potential need to remain competitive by joining the fray. Conversely, if your competitors have yet to set up stores on Amazon, it may indicate an opportunity to gain a competitive edge. Manufacturers have a greater challenge, as they must consider the impact on the wholesale/retail channel relationships. They also may have to compete with resellers listing their products on Amazon. Some manufacturers create Amazon-only sub-brands or product lines to protect brand and channel perception. Retailers must also be aware that competitors may be creating ‘unbranded’ stores to protect brand equity, yet still leverage the channel.
Regardless of the number of competitors, the next logical step is to conduct keyword research to understand which brands and products are most popular and competitive. Within the Amazon platform, sellers will see keywords ranked based on the Best Seller Ranking (BSR), which is determined primarily by sales volume, but includes other variables. While searching on Amazon is helpful, utilizing tools like Google Keyword Planner and MOZ are helping see the entire keyword universe, including search engine traffic. Developing and optimizing keywords specific to each product ASIN is critical to maximizing the visibility and overall SEO performance of your Amazon presence.
Once you’ve identified your product selection, the next step is to develop a pricing strategy. Setting pricing is one of the single greatest influences on ranking factors in product searches. While lowest price is an obvious evaluation criteria, it is not the only factor. The goal on Amazon is to own the “Buy Box” or yellow purchase button associated with every product. Over 90% of Amazon’s $250 billion in sales are triggered by the Buy Box.
While there are a host of dynamic pricing tools available, Amazon provides an ‘Automate Pricing’ tool on Seller Central to help automate pricing decisions.
Amazon uses an algorithm to rank sellers of the same product against each other and rewards the seller with the highest overall ranking with ownership of the Buy Box. The Buy Box is often constantly rotating. Amazon no longer rewards a single seller with the Buy Box on a particular product listing, but instead assigns each seller a percentage of the Buy Box web traffic based on the seller’s ranking. It is still possible to achieve 100% Buy Box ownership, for example, if you are the sole manufacturer & seller of a product, but it has become increasingly more difficult as more sellers enter the Amazon Marketplace. Some sellers have adopted a strategy of purchasing inventory wholesale through other outlets and reselling products on Amazon. This can create frustrations for manufacturers who sell their products on Amazon with the assumption that no one else is listing their products for sale.
A seller’s ranking depends on many factors including seller history, price, shipping time, and fulfillment method, amongst others. The below chart offers a comprehensive list of all the major factors in determining what seller wins the Buy Box.
A common frustration for third-party Amazon sellers is failing to win the Buy Box on product listings where there is little to no competition. This can even happen to sellers who manufacture and sell their own products on Amazon. There are several factors that can prevent a seller from losing out on the Buy Box, despite no competition from other sellers. The most common issues plaguing sellers are their Amazon seller rating, and Amazon’s Buy Box algorithm identifying similar products being sold on and off for a lower price.
Amazon sellers should constantly be monitoring their seller ratings through Amazon’s Brand Health page within Amazon Seller Central and address any issues as soon as possible to get their seller account back in good standing. Amazon tracks its seller ratings on a 30-day period. Failing to meet benchmarks in Late Shipment Rate, Cancellation Rate, Order Defect Rate, etc. will often cause the seller to lose its Buy Box eligibility.
A less widely known issue many sellers experience in losing their Buy Box ranking is how Amazon’s Buy Box algorithm compares the seller’s pricing to identical and similar products both on and off Amazon. If Amazon’s algorithm determines a seller’s pricing to be too high, the seller may lose Buy Box ranking, even if there are no other sellers currently offering the same product on Amazon. To avoid this issue, sellers should avoid marking up their products sold on Amazon compared to any other online channels their products may be sold. Sellers should also research similar products offered both on and off Amazon to ensure their pricing is in-line with typical pricing often seen within the product category. Sellers on Amazon’s Seller Forums have even mentioned that lowering a product’s pricing by as little as $0.01 can have a significant impact on their Buy Box ranking.
Before we delve into product page optimization and advertising, I want to touch briefly on a key business decision that will influence how you market your products or Amazon store. Before you sell any product on Amazon, you must decide where it will be warehoused, who will manage inventory and shipments and provide customer support. Amazon offers two options: Fulfillment by Seller and Fulfillment by Amazon (FBA). In short, FBA is generally a great way to get product onto Amazon, with potential to reach Prime customers and even achieve Buy Box status, although pricing is typically higher and thus less competitive. In this model, you ship your product to Amazon, and they manage fulfillment for your direct sales. This is ideal for smaller businesses that need to focus on product development and marketing instead of warehousing and logistics. Fulfillment by Seller provides more control over pricing and inventory, however.
Organic Product Page Optimization
There are two primary categories of Amazon ranking criteria: performance and relevance. Performance factors are primarily sales-related, while relevance factors are keyword-related.
Since Amazon is a retail marketplace that monetizes transactions, product pricing and sales history are important performance factors. A complete list of performance ranking factors include: product pricing, product options (model, color, features, etc.), product availability, sales history, customer reviews and click-volume.
While product options, availability and sales history are straight-forward performance factors, pricing is its own complicated beast. Since pricing drives most purchases on Amazon, setting the right price is critical to generating ideal sales volume, product reviews and rankings. Achieving an optimal conversion rate requires data analysis. To view your current conversion rate, go to: Seller Central: Reports > Business Reports > Detailed Page Sales > Traffic > Unit Session Percentage.
Another key performance factor that is challenging but essential to manage effectively are customer reviews. In 2015, Amazon transitioned to a weighted system for measuring average star ratings. The algorithm for customer reviews is weighted with the following criteria: if a product is purchased at a discount, the age of the review and how helpful the review has been, based on visitor feedback. With a more sophisticated average formula, you can’t incentivize reviews. You can remind customers to write reviews, however. The ideal outreach frequency is twice: after the order has shipped to set the expectation and a few weeks after the product has arrived, to give the customer time to use the product.
Like Google’s ranking algorithm, relevance factors focus on keywords embedded in the product page. Amazon’s ranking algorithm is also like Google in that it does not appreciate keyword-stuffing or otherwise negatively impacting the user experience with poorly crafted copy and irrelevant keyword usage. The primary relevance-related ranking evaluation criteria are outlined below:
When it comes to helping Amazon rank your product pages above the competition, it is essential to incorporate relevant keywords across all relevant fields mentioned above. The current keyword character limit is 250 (not including spaces or punctuation). The length limit applies to the total content in all generic keyword fields, with a max of 5 attributes.
When optimizing product pages, Amazon provides guidelines for sellers:
While the algorithm weights brand name, product title and description heavily, sellers cannot underestimate the importance of optimized product images. Best practices for image optimization include: providing high resolution (1,000 x1,000 pixel images) that are zoomable; images of the product from a variety of angles; product label closeup; action shots of the product in-use; product comparison or contextual images of product relating to a human hand or other point of reference; images including informational charts, graphics or even text.
Amazon has transitioned from online retailer to advertising juggernaut in the past decade. Total Amazon US ad revenue in 2020 was previously projected at almost $10 billion. 66% of all product specific searches across the web originate on Amazon. Advertising on Amazon is an effective way to drive traffic and ultimately sales of listed products. It also can be a great tool to boost brand/product awareness & visibility as Amazon sponsored brand and sponsored product ads often appear at the top of search result pages.
Amazon currently offers three core cad products: Sponsored Products, Sponsored Brands, and Sponsored Display.
Unfortunately, not everyone can take advantage of all of Amazon’s Advertising offerings. Amazon’s Seller Eligibility Criteria include two primary requirements: you must have an active professional seller account and enroll in Amazon Brand Registry to use Sponsored Brand ads. For more information about Amazon Advertising, check out the following links: How it works, Amazon Ads FAQ, Advertising specs and policies
and Amazon Sellers Education YouTube channel.
Amazon weighs many parameters to choose a winning bid across campaigns. The ad ranking system includes the following factors: daily budget, keyword relevance, ad rank, ad relevance and buy box eligibility. The advantage of an aggressive spending approach is that you’ll get data more quickly. The more insight you have into impressions, clicks and sales, the more effectively you can build high-performing campaigns and decrease spend as optimization strategies make an impact.
Be sure to build ad campaigns to be profitable, which means understanding your break-even Advertising Cost of Sale (ACoS). As a key performance indicator, the ACoS indicates the ratio of ad spend to targeted sales. The chart below from SELLICS outlines the basic ACoS math:
Beyond optimizing product pages for organic Amazon searches and mastering AMS offerings to increase reach and sales, there are other ways to increase traffic to your Amazon store, like social media and blog posts. Product posts and promotions can perform well on social media, but descriptive blog posts linking to product pages can perform even better, both in terms of organic search rankings and conversions, since shoppers are already engaged with your brand. Email marketing is another way to drive traffic to Amazon product pages, especially if you do not sell direct on your website. Don’t forget to create an affiliate link to maximize margins.
With more than half of all product searches beginning on Amazon, manufacturers and retailers can no longer afford to ignore the marketing juggernaut. A successful Amazon presence requires research, planning and a long-term commitment. After conducting competitive research, setting pricing and optimizing product pages, focus your efforts on advertising to maximize reach and conversions. As the old saying goes, ‘if you can’t beat ‘em, join ‘em.’ If you need help with your Amazon marketing program, help is available.
Kent Lewis founder of pdxMindShare, an online career community and networking group mentioned on Seth Godin’s blog. Formerly a CMO and founder or co-founder of multiple agencies, he’s known as a thought leader in digital marketing. He’s been an adjunct professor for more than 20 years at Portland State University and a volunteer instructor for SCORE. Lewis co-founded SEMpdx in 2006, a trade organization for search engine marketing professionals. His recognition includes Marketer of the Year by the American Marketing Association and Top 100 Digital Marketing Influencers by BuzzSumo.