Skai 5: How to Overcome The Top 5 Amazon Advertising Challenges in 2019

In this edition of the Skai 5, learn about the top five Amazon Advertising challenges and how the Skai’s Ecommerce team recommends to solve them.

Amazon Advertising has quickly become the third largest digital advertising platform in the U.S. offering [what we here at Skai call] Eccommerce Channel Ads (ECA). This relatively new ad channel offers a unique and powerful opportunity to reach in-marketer shoppers within an online store versus other forms of advertising that transport consumers from around the Internet into a store.

“Reaching shoppers with ECA just makes a lot of sense for retailers,” says Skai’s Senior Director of Marketing Research, Chris ‘Coz’ Costello. “While other modes of advertising act with varying degrees of success to influence consumers while they are doing something else—socializing, reading news, watching videos, surfing the internet—getting in front of them during the final stages of online shopping with ads relevant to what they’re already shopping for is a no-brainer.”

Spending increases 5x in 2018

We’ve been tracking the meteoric rise of this channel for some time and in the recent Skai Q4 2018 Quarterly Trends Report, we reported that monthly spending increased 5X between January and December last year.

Not only have marketers jumped on this bandwagon, but they seriously want to accelerate their investment with 80% of current advertisers plan to increase their Amazon ad budgets this year and almost 20% reporting that they plan to increase spending by 50% or more.

Could anything stop marketers from going all in?

Growing pains are challenging to advertisers who are ready now

The same thing that happens to ad channels that grow too fast that also happens to children that grow too fast…growing pains.

Advertising investment on Amazon is relatively growing as fast or faster than Google and Facebook at comparable time frames in their evolution, but digital marketers have much higher expectations of the native campaign management tools today than they did years ago when the other two launched their ad offerings.

And there’s the gap. The demand absolutely indicates that it’s a mature channel, but the infrastructure reflects the nascent state of Amazon Advertising.

Recently, Third Door Media released its Amazon Advertising Forecast 2019 which surveyed 681 digital marketers and advertisers to better understand the challenges and opportunities that Amazon advertising products present.

What are your challenges with Amazon Advertising? Are they reflected here by your industry peers? Are they holding back your ability to scale up your programs or just things that you feel you can sort out this year?

The following are some ways tips and best practices that the Skai Ecommerce team would like to share to help you get over the hump so you can rock your Amazon ads this year.

How to Overcome Amazon Advertising’s Top 5 Challenges in 2019

Amazon Advertising’s Big Challenge #1 – Reporting

Reporting is the life-blood of the digital marketing team. Almost every important decision throughout the campaign lifecycle (research, plan, buy, execute, optimize) requires measurement and reporting to point the marketers in the right direction.

The reality of reporting needs versus the raw data you get from Amazon is a major gap for marketers and it’s no surprise why that it was the top-reported challenge in this survey. Today’s marketers expect their marketing platforms to provide quick and easy access to various variables and granular campaign elements. The native platform is fine, but for enterprise ad ops veterans, it still needs some work.

Amazon advertisers want the ability to create custom dimensions and categories—and grouped the way they want them grouped— to make informed decisions and drive powerful optimization. For example, everything for sale on Amazon has a unique ASIN (the 10-character Amazon Standard Identification Number like a social security number for products), and marketers often need to report on groups of ASIN together based on various categories for the same products that might be in multiple campaigns. That’s a very standard functionality that would be assumed to be part of the native tool, but it’s limited.

Skai Ecommerce has insights and analytics

Skai Ecommerce provides countless dashboards, reports and data insights allowing you to make more informed decisions on Amazon Advertising. Gain unmatched detail and insights into product activity on Amazon—both from a campaign and a product-specific perspective. Clients can schedule reports to automatically send to your team so that they spend more time performing analysis than pulling spreadsheets.

Skai lets you hurdle Amazon Advertising’s biggest marketer challenge and get detailed, enterprise-level reporting at your fingertips. Our open platform allows Skai to ingest your key data sets. Whether it’s from the APIs or through your own 3rd party data, Skai can help you plan and manage:

• Advertising performance
• Product insights
• Market & competitive
• Shopper behavior
• Incrementality testing
• Reporting & analytics

Amazon Advertising’s Big Challenge #2 – Optimization Tactics

When a brand runs an ad, for example, in a magazine, that ad is basically set in stone. Digital marketers, however, expect to start a campaign and then optimize throughout the flight to constantly improve performance over time.

Advertising optimization can come in many forms from simple bid changes to deep, AI and machine-learning algorithms that can run campaigns virtually hands-free to drive the most results for advertisers.

But optimization is not just about the technical toolset available. It’s about experience and expertise. A veteran ad channel leader knows what works and what doesn’t, how to construct campaigns, and how to analyze performance to find the pockets of insight that can unlock success.

Today’s Amazon advertiser has both the toolset problem and the expertise problem that stem directly from the fact that this channel is simply just so new. The native tools don’t have the deep optimization features and there just aren’t enough experts available that have been doing this very long—and if they have, it may not have been at the size and scale that serious Amazon Advertising players need.

Marketing optimization is both a technology and a team challenge

Skai Ecommerce rooted in 10+ years in experience

Skai Ecommerce has benefited from Skai’s deep, proprietary technical assets and veteran engineering from over a decade as an enterprise Search, then Social, ad tech leader. Powerful features that ad pros expect in their tools such as advanced budget forecasting & pacing, algorithmic machine learning, and automated actions & reports are just the starting point for powerful program optimization.

In the Skai Ecommerce case study, Chacka Marketing Achieves 156% YoY Revenue Growth for Their Client, Fueled by the Early Adoption of Skai E-Commerce, David Grow, Chacka’s Digital Media Director says, “With Skai E-Commerce, I can access my product data with custom date ranges, helping me better analyze and manage all campaigns, keywords, and ads. Their simple, but powerful tool has turned hours of work into minutes – leaving time for actual optimization that impacts performance while saving me time and making my client happy.”

Amazon Advertising’s Big Challenge #3 – Expert Support

Amazon Advertising is very much like Amazon’s store: it’s very powerful and has a lot of options, but no one is holding your hand or taking you through everything to show you what to do.

For any marketers expecting that to change, you might be in for a letdown and nothing about that is going to change anytime soon. Amazon Advertising is very much a self-service operation. Unlike its rivals, Google and Facebook, the majority of Amazon’s revenue does not come from advertising, so it’s not set up yet to cater to advertiser needs and questions like its counterparts. Most agree that the company will get better in this area over time as its ad revenue grows, but for now, advertisers are mostly on their own.

To ramp up quickly on Amazon Ads, you basically have two paths to choose from: either learn-as-you-go and from your mistakes or turn to early adopters with expertise from a thousand cuts and bruises learned over time. If you are considering a significant budget for this channel, you may not have to time to learn on the job—you need experts today.

Skai Ecommerce support

In terms of expertise, the Skai Ecommerce account team has already worked with 500+ brand accounts on Amazon Advertising and will not only train new clients on the platform but also share their strong point-of-view and best practices learned from countless campaigns.

Skai’s Strategic Consulting Team are a group of highly experienced Amazon Advertising and product advertising veterans that can help at every level for new or experienced brands as they transition between agencies or build their in-house strategies and programs.

If you don’t have the in-house expertise, it might be time to talk to Skai.

Amazon Advertising’s Big Challenge #4 – Navigating Advertising Options

Visit the Amazon Advertising home page and you will see that there are different ways that advertisers can engage with the channel. They offer Sponsored Products, Sponsored Brands, Stores, video ads, display ads, custom ads, and even Amazon’s own demand-side platform, the Amazon DSP.

Sponsored Product Ads are just one of the options available to advertisers

An expert in this channel understands the pros and cons of each of these options, how much they cost, how to allocate budget between them, and more importantly, how to leverage all of the different opportunities available together to get the most bang for the buck.

But, as already mentioned in this article, Amazon Advertising experts are hard to find.

The latest best practice on how to approach your Amazon media mix is to optimize the bottom of your funnel first—that is, make sure that your standard Sponsored Product ads are working really well and you are reaching shoppers as they search for the most important keywords related to your existing products within Amazon.com.

From there, you build up your funnel. Are your product listings set to truly capture the attention of browsers to turn them into buyers? There’s a lot of data that you can examine within your ad campaigns to help you understand where your ad dollars are working best at this level.

Finally, once the middle and bottom of your funnel are maximized, using the rest of the Amazon ad options to drive awareness and interest at the top is the best way to take advantage of your optimized lower funnel. Today, the Amazon DSP seems to be a very effective tactic to drive programmatic, top-funnel activity.

Next steps

After following these steps, you will most certainly be way ahead of the curve of Amazon advertisers, but the bar is pretty low right now. There’s still so much more to do, such as…

• What is your cross-channel story? How do your Search, Social, and other paid channels work best in tandem with Amazon Advertising for maximum impact?
• How can you automate as much of the campaign execution and management as possible using technology so your team can spend their time on high-value, creative and strategic planning that humans do best?
• How do you manage your Amazon ad portfolio and forecast what could happen if you were to remove or incrementally add to your existing investment?
• What is the right budget for each of your programs, especially when considering when competitors might be increasing budgets by 5X right now?

Once again, if you are an advertiser with significant investments planned for Amazon this year, then you do not have the luxury of time. If you are having trouble figuring out how to navigate through all of the options available to you, try reaching out to the Skai Ecommerce team for a demo to see how the platform can help your brand or agency get better.

Amazon Advertising’s Big Challenge #5 – Proving It Works

The simple fact that this channel has been growing so quickly proves that marketers are getting great results. But, as budgets scale, the general rule-of-thumb in advertising is that eventually there’s a law of diminishing returns.

Where is that line for Amazon Advertising?

Few advertisers have probably reached that point yet, but it’s certainly going to start coming up this year as channel managers ask marketing leaders to increase funding.

One of the most critical ways that brands evaluate marketing channels is to pool key datasets together that can help shed light into the true story of what’s happening. For example, a particular Amazon campaign might seem to be a losing proposition at first, but when repeat sales and lifetime value are included in the analysis, maybe that product is a loss leader on the front end but ends up driving a ton of real value over time.

Skai Ecommerce’s open platform

Another example is that you can marry your organic Amazon sales data (within Skai Ecommerce) with your paid, ad-driven sales. This way you can determine if your programs—even the ones that seem incredibly efficient in ROI—would have driven those sales on their own or if the paid orders are driving incremental return.

Skai Ecommerce is an open platform that can ingest data sources that go way beyond Amazon’s native data to help you truly understand what’s working and what’s not.

The Takeaway: Use the Tools

In the Third Door Media survey of marketers, when asked if they are using any tools or platforms to help automate Amazon campaign management, 22.5% said they currently use tools. Another 44.4% said they plan to in 2019.

What early adopters of Amazon Advertising are discovering is that they need to leverage technology and tap into vendor expertise to help overcome some of these challenges. Advanced technology and white-glove support do not yet exist natively in this channel, so that’s why over two out of every three Amazon advertisers will have a platform relationship in place by the end of the year.

As it is with any new auction-based advertising channel, there’s a time in the beginning before the market is saturated and the impressions and clicks are at their absolutely priced at a market low. As more and more advertisers jump on board, it becomes imperative to make leaps and strides to stay ahead with Amazon Advertising and not baby steps to fall behind.

Be wary of the challenges that your peers have identified for Amazon Advertising. There are ways to avoid the common pitfalls and get up to speed quickly in order to benefit from this nascent and still-evolving marketplace.

You can win this year with Amazon Advertising! 

Contact us now for a quick demo or to talk with one of our expert staff.

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