September 17, 2019 by Rishi Talwar
Breaking even equals a sort of failure, right? Not quite, says Nich Weinheimer, VP of eCommerce at Kenshoo. Having started as one of the earliest SaaS platforms to help brands with marketing technology in search, Kenshoo has gone from helping 0 to over 500 brands scale their business since late 2017. Over the last year and a half, the company has leveraged strong relationships with Fortune 100 brands, agencies, and SMB brands, including all of the Big Six holding companies (WPP, Omnicom, Publicis Groupe, Interpublic, Dentsu, and Havas), to build out a global salesforce.
In the last 12 years that Weinheimer has helped brands build their businesses on Amazon, he’s noticed that as Amazon’s platform matures and makes more types of data available, the way we leverage that data and measure success has evolved as well.
I sat down with Weinheimer, who now leads Kenshoo’s eCommerce initiatives, to get his take on what brands should be focusing on when it comes to their Amazon channel, and what lies ahead for the future of Amazon advertising. This Q&A has been edited and condensed for clarity.
We had some brand manufacturers already using our search product who then took advantage of our eCommerce solution. Then a new major customer target for us popped up in Amazon advertising: Brand Manufacturers, who were not our traditional spenders in Search and Social.
These vendors have been a whole new cohort of advertisers for our eCommerce product that we’ve been able to tap into. They’ve actually ended up adopting more of our search and social products as a result of learnings that they’re getting by investing in digital advertising on Amazon. So they essentially use our products as a one-stop suite.
When you think about the algorithm for Google in their search results page, so much weighs on the relevance of the landing page and the customer experience. But when you think about Amazon’s algorithm, their search experience heavily weighs on advertisers’ ability to sell-through.
There is definitely a way to use eCommerce data to make smarter ad decisions. Here are some things to consider:
Utilize other retail data – In social advertising, for example, having weather or TV signals affects your strategy around where and how much you can invest. In eCommerce, it’s imperative for marketers to understand all of the key retail data available at their fingertips to make the most informed marketing decisions.
Breaking even on advertising cost of sale – Don’t be afraid to break even on your advertising cost of sale. Think of it as a way to use the paid advertising as a lever to grow your organic position on the site. This is important, because data has shown that the difference in organic sales from being #1 on Amazon’s organic ranking versus being #6, let alone #2, is staggering.
Understand your competitive position in the market – Amazon doesn’t make this easy. While there is campaign and performance data available from Amazon’s API, you also need to take into account inventory, profitability, and understand what you have the capacity to do. From all this data and calculation, you’ll need to identify where it makes sense for your brand to overinvest versus just playing on the Return on Advertising Spend (RoAS) and Advertising Cost of Sale (ACoS) margins.
Without this kind of holistic insight, you’re looking at a very messy data set, because there are so many factors that affect the ad data.
We first have to ask ourselves, “What is the ROI of Amazon advertising?”. Like my last point, it’s hard to pinpoint a specific answer. Let’s say you’ve ran a campaign, and see a 500% return on your investment with 5 new sales a month. And let’s assume you’ve optimized for the best brand and long tail keywords. Great. But you have to think beyond that. Are you acquiring new customers? Are you growing your business?
It’s important to find a balance between your specific business (in terms of your Amazon advertising strategy) and understanding your goals for your metrics. If your goal is to have a product rank #1 on a page, you might not immediately see positive ROI results from the ad campaign, but you’ll find yourself ranking higher organically in a search.
We’ve definitely seen extremely low ROI for product launches as a strategy to gain that search position and buy the history that your ASIN needs to show the sell-through to make Amazon’s algorithm believe that it’s a strategic product to position for the customer. This makes the “real” ROI very fluid.
There’s an educational gap between some of the largest and oldest brands. Traditional CMOs managing market spend are using the same methodologies or same playbook they’re familiar with, and are expecting the results and profitability that they’re used to from other channels.
They’re not used to having someone from search, social, or eCommerce business units explain with historical data that it makes sense to break even. Realistically speaking, making that case is not the easiest thing to do in those big organizations. But they will need to shift their mindset when running Amazon ads depending on their sales goals as a brand.
Overall, brands are spending money on advertising because they’re seeing the benefits of general growth of Amazon’s user base year after year making their business naturally grow. It’s a pretty good time for Amazon to develop a more mature ads marketplace that allows brands to have more control over competitive position and share. By gaining share, you can actually improve your top line and control the percentage of your business that’s ad-driven.
We have much to learn as the market gets better at campaign measurement and Amazon releases better tools. In addition, agencies and ad tech is getting better every day at proving incrementality across investments in the entire Amazon funnel (DSP, sponsored products, sponsored brands and future more mid funnel ad types like video, etc). Once we can start showing that incrementality, the ROI conversation can be more easily answered.
Nich Weinheimer is VP of eCommerce at Kenshoo, where he focuses on the go-to-market, product strategy, sales, and service. Based in Seattle, Weinheimer has 12 years of experience in the ad tech and retail enablement space. Previously, he consulted for Amazon businesses and had his own Amazon agency. He also worked at a more established Amazon agency called BuyBox Experts, where he led their advertising efforts.
Kenshoo is a leading digital advertising platform that had its start as a SaaS for search advertising. Over the last 13 years, its evolved and expanded into different solutions, including search, social, apps, and its latest product: its eCommerce business unit.