076: Tactic Tuesdays: Is Amazon Becoming Your PPC Manager?

076: Tactic Tuesdays: Is Amazon Becoming Your PPC Manager? Speaker 2: Welcome, everybody, to another episode of Brand Fortress HQ. Today, we're excited to talk to you about something that's happened on the ad side of Amazon, which is, is Amazon becoming your new PPC manager for people that may or may not be familiar with other ad platforms, especially meta has really transitioned over into more intent marketing and not as much the keyword, different match types, and those types of things that we're used to. This is a great conversation to have today on what does this look like for the future of ads on Amazon. And so with that, Mike, I'm actually going to hand it over to you because I know this is something you've been working on quite a bit lately. Speaker 1: Yeah, for sure. So just being real, anybody who's been listening to the podcast for a while knows that as a brand, we're kind of in a rough space with tariffs and whatnot and a few kind of mishaps that happened that unfortunately cascaded with the tariff problem. It's put us in a real cash flow crunch. And so one of the things that that results in is we just have to be really, really careful. Not that we shouldn't have been in the past, but it's an absolute necessity right now. That our ad costs in relationship to the amount of revenue that they're bringing back really have to be dialed in right now. Like we just don't have any room for error. And so one of the things that came up recently was this, I don't know, trend, whatever you want to say, but more and more sellers and especially some agencies are starting to talk about this idea where Amazon is moving into this space. We're auto campaigns are getting considerably more exposure, let's say, than exact match or broad and phrase match campaigns. In addition to that, Amazon has rolled out some new features that allow you to, we'll say, give Amazon the leeway to decide who's seeing your ads. Now, of course, an auto campaign already does that, right? When you set up an auto campaign, essentially what you're telling Amazon is, this is my You figure out who to advertise it to, and then Amazon is off to the races. Now, what generally would happen in the past, and this is still true, it's not like you don't still want to do this, but Amazon would We're here to help you flood the platform and your product would end up in front of anybody and everybody. In the past, oftentimes it seemed like they weren't very good at figuring out who actually should be seeing your ad. Auto campaigns were not necessarily a performance campaign. They were a harvesting campaign. It was an opportunity to throw a big net and see what Amazon put it in front of and be What keywords and what types of products was your product performing well against? And then you would exit those out to, you know, exact match and phrase match and, you know, all of that. And those would be the performance campaigns. Now, I think we're moving into a space where much more, first of all, Amazon is getting better at putting those ads in front of the right people. I would say our auto campaigns, even just left alone, are performing way better than they ever performed in the past without a whole bunch of negation. Now, that doesn't mean you're not going to have to negate. You're still going to want to go in and negate certain products and certain key phrases and things like that, so don't think that you're going to avoid that. However, Amazon is getting better. Even better than that is that on the auto campaigns, you don't have that opportunity to say, you can choose, essentially it's an audience and it's kind of a bid modifier situation where you say, okay, Amazon calls it highly likely to convert, is the audience. And if you select that, you can give it a bid modifier, which in other words just says, pay more. I'm willing to pay you more to put my ad in front of that person that you believe has a high likelihood to convert. And what we have seen is that that audience does convert significantly better than the standard auto campaign, even though the auto campaign itself is performing way better than it used to. So Amazon's algorithm is getting way better at figuring out who will buy your product. And if you give them the space to make those determinations, ROAS is going way up in comparison to where it was. And like I said earlier, Amazon is starting to devote a lot more exposure to auto campaigns versus exact match. And so if you really want to get as many impressions as your product is capable of receiving, I highly recommend that you start moving into giving auto campaigns a little more leeway and a little more budget so that you can give Amazon that opportunity to put your product in front of the right people. And then AMC being added onto that and audiences is just going to be another layer that makes that just that much more effective. But that's kind of where we are right now in our research phase and what we're trying to accomplish. Speaker 2: Okay. Matt, anything else you want to add to that? Speaker 3: Well, I mean we, you know, the first that I had heard about this concept of automatic campaigns getting, you know, more love and actually a whole lot smarter. From Amazon was a video that I saw Chris Rawlings from Sophie's Society that Mike actually shared with me. We mentioned it to our advertising agency and a couple of weeks later, I was poking around in the campaign manager and it was fascinating just to see it live with my own two eyes, just how well those audience and bid Bit adjustments that Mike were talking about were performing. So it wasn't just a theory that you watched on a YouTube video. I was able to go into our campaigns and actually see how well different segments of our automatic campaigns were performing. And in some cases, they're some of our highest performing campaigns. So it was very eye opening to see the actual live performance of those after hearing that concept by Chris Rawlings. Speaker 1: And also, just to clarify that point, not just our highest performers in terms of, you know, say ROAS, but our highest performers in terms of number of orders that came in. So not only is the ROAS of those campaigns performing exceptionally well, but our top, like over the last three, you know, or month or two, Out of our top five campaigns in Amazon PPC, four of them are auto campaigns. And one of them is a brand defense campaign, which is a completely different animal and should obviously have really good ROAS. But four of our top five campaigns that are producing the most orders of anything are auto campaigns. And I actually think when I calculated it out the other day, I want to say that like 40% of the revenue that came in from our ad based, you know, ad based sales was those four campaigns. Speaker 2: Yeah. I think this is such an interesting topic because I kind of mentioned at the top of the episode, I mean, this is really where Meta is already at. Like they're very intent based and they're going to show ads to people that are going to be the, they think are going to be the most likely to purchase off of this. That's where you have like lookalike audiences, which they've had for a long time, but they've really gone even deeper on that. And I'm here to make meta, from what I understand, and again, I will be the first one to say that I know only the bare minimums about meta ads. It's been a few years since I've run any meta ads, so definitely not an expert when it comes to running anything on Facebook or Instagram. That said, I do think that there's some things to learn from what's happening over there of what we see for the future of Amazon ads. And I think a couple of things to keep in mind with what you're saying is that first, it's just in general principles, and this has been true for years, is that for most brands that are under Let's say an arbitrary line of like 5 million, 80% of your sales are going to come from sponsored product ads. So sponsor brand, sponsor display, DSP, those are all nice, but the reality of it is if you're looking at, hey, what's the 80-20 Pareto principle of what's actually bringing in sales and revenue, most of it is going to be sponsored product ads. And I think what really bolsters what you guys are saying is, is that the auto campaigns are getting more efficient and the broad match campaigns are getting more efficient in how they're targeting. And that really makes sense with the other thing to keep in mind is that broad match changed a couple of years ago to where it went from We went from being, you know, broad based on those keywords to being like really broad. And then we had issues where we'd have to do like, you know, for the people that like me that were really nerdy into it, what we call broad modifiers to say, Hey, we actually want like a little less broad than what Amazon had pushed out to you in order to get efficiency out of those. So it sounds like Amazon's kind of figured that out on the ad side. Now, what I would say is, and this all depends on the brand and what category you're in. So I can think of a client that we just started working with where they have a consumable product and they weren't doing any remarketing, which is primarily a sponsored display ad type. So this is where, again, yes, auto campaigns, broad campaigns are probably going to be A good thing to look into and to be working for a lot of, again, brands that are under 5 million, I think that there is like, you need to understand I think most likely customers to convert is probably an easy kill, but then also thinking about how you do those auto campaigns. And you may want to have multiple auto campaigns in order to control your spend on different things. So you might have an auto campaign that's just dedicated to close match, most likely to convert, for example. But you might have to kind of make things more granular for that perspective. And it really, again, it's going to depend on what category you're in, how competitive that category is, how differentiated your brand is, some of those other things in order to get the most bang for your buck, if you will, out of it. And again, this is as an agency owner's perspective. You know, putting my own, you know, kind of not agency owner, but brand owner hat on. I think there's a lot of good stuff to be had there, but I also am a little bit cautious that when you start looking at, you know, those granular details of how do I overcome a competitor where there's a big difference between being first and second, I think that's where there can be a lot of value in like thinking about like ranking campaigns, for example. Like you definitely, you know, For your hero product and the other products should be have tested, you know, regularly and looking at ranking campaigns, which is an exact match type. So I think in broad strokes, this is actually going to make PPC a lot simpler and more profitable for brands in general. That said, I do think that there is still a place and will continue to be a place for those brands that have an area where they need to get to that last, you know, From 80% to 99% because there's just such a big difference in sales between being first and second. Speaker 1: I think, so I would agree with that. I think that probably the thing to come away from this with is if you're a brand that's in a space where you don't necessarily have the funding to pay an agency, right? Because the thing about it is with an agency, there's nothing wrong with going with an agency and if you can afford to and you can find a good agency, I think it can be a good route. But you then have the ad cost and the agency cost. Now, of course, if you have it in-house, you have the ad cost and you have whatever the cost is to pay somebody to set up the campaigns. Right. Oh, yeah. No, for sure, right? Speaker 2: That's what you have to agree with yourself. Depending on how smart you are depends on how good you are. Speaker 1: What I would say is If you are, you know, either say a one-man show or, you know, a small team but right now your margins are a little on the thin side and you're wanting to find a way to bring your cost down but still get exposure for your brand and hopefully have ads that at least are performing profitably. I think you have an opportunity here where if you just simply set up a fairly simple campaign structure. With auto campaigns for each of those individual products and you set it to a very strong bid modifier for highly likely to convert. I think that with that simple structure, you could do relatively well without really getting super advanced. Now, there's stages in that. You could take that and then break that, as Jon was suggesting, like you could break that into, okay, I want a loose match auto campaign, and I want a close match auto campaign, and I want a substitutes auto campaign, so you can figure out which ones, you know, maybe are your best fit, and maybe some of them that have the modifier and some of them don't have the modifier. So you can get as complex as you want. But again, if you are in that space where you just can't afford the agency and you can't afford to put a lot of time in the management, the other thing that's important to recognize about an auto campaign is there is literally 1% bid management because you're only managing the bid at the campaign or ad group level and then your modifiers. There's no keyword bidding that you have to manage. That is a significant hurdle that you basically bypass by using an auto campaign. Now that's not to say that there's not going to be any value in doing exact match or broad match or any of these other things. But if you're trying to keep it on the cheap and you're trying to see if you can develop some ad sales at a reasonable price that you can manage, It's really moving in a direction where you could pull that off with auto campaigns, I think fairly effectively. But then as Jon said, you know, if you're trying to move the needle that extra, you know, 20%, you're probably going to either need somebody on staff who really knows what they're doing, or you're going to need an ad agency, you know, to run those ads and really, you know, pull that off. But, you know, I do think you are moving into a space where kind of Amazon really can be that PPC manager if, You keep things small and tight and you're really just trying to control that cost and make sure you're still getting those sales. I think you can do it, especially for smaller brands. Speaker 2: Yeah. And what I would add to that too is if you're a smaller brand and I guess starting with this, I think experience, because I mean, listen, I talked to a lot of different people that are brand owners that are selling on Amazon. And the reality of this is that a lot of Amazon agencies suck. That's just the reality of it. They just don't deliver on the results that they promise. So I understand from a brand owner's perspective why it can be incredibly frustrating if you're paying for an agency on top of your ad spend. And so I think what's also really powerful to think about with this is if you're having a terrible experience, and again, by all means, I would say, you know, and we've talked about this in a previous episode of set clear expectations, you know, just like you would with anybody, you know, any other vendor or employee or anything like that, like set clear expectations upfront. You have to give, you know, at least I would say 60 to 90 days, unless they're doing something, you know, absolutely horrible to see if they're any good or not. But then beyond that, if you're not getting the results out of it, I think what's powerful about this is. Knowing that you could do the 80% solution with something so simple that you don't need, like, it's not critical that you have an agency that if you fired your agency today, your account, if you have this setup is not going to fall apart tomorrow. And so, you know, don't feel like you are trapped or beholden to that agency because if they stop, you know, running your Amazon ads and all of a sudden your ACoS is going to go to 200% and, you know, your entire account is going to collapse. Because I think what you're saying, Mike, and what you're pointing out with this is that as Amazon gets a lot smarter, it is something that's, you know, a brand owner can do at a pretty basic level and still do all the other things that you need to do as a brand owner. Speaker 3: So we talked about, you know, most 80% of sales, especially for a brand that's just getting, starting out on the platform is going to be sponsored product ads. And while that's true, as you start to dabble, so in my opinion, I think that bid adjustment, bid optimization can be run by mostly by an AI tool. I think it's one of the few things in terms of Amazon advertising that can be run by an AI tool and you feel comfortable handing that operation over because it's essentially a math equation. If you get a target ACOS or a target TACOS, it's a math equation to figure out what to adjust that bid to. So computers are good at math. Algorithms are good at math. I think that if you add on a tool, some sort of a tool that does automatic bid adjustments based on some AI algorithm, I think you can start to get a little bit more advanced and even a little bit further up the funnel with your ad types. And still keep your campaigns less complex than say they are today, while leaning on automatic campaigns and having some exact match campaigns for, you know, ranking purposes and things like that. But using a tool to do automatic bid adjustments. I've used a couple in my day. There's a really, Takeymetrics is a really, really good tool that has a really, really good artificial intelligence algorithm that knows how to adjust bids based on different external factors. So, you know, I think adding on one of those tools as you start to kind of go up the further up the funnel into more complex ad types is a solid solution that doesn't really add that much more time to a solopreneur's time or day, but gives them the flexibility. Speaker 2: In the sense that, I mean, we call AI now, but bid automation has been around for a long time and you know, Having my own brand, working with numerous brands, testing a lot of different platforms, I think we all know that there has been a lot of terrible bid automation tools over the years. So the one important caveat that I would put on that, and this is something that I feel very strongly about, is that I think it is great to let the AI or automation I do kind of the computational math to say, Hey, here's my goal, a cost, you know, whatever. And there's some different filters you can put in there based on this, which bids are, you know, out of range or should get adjusted and by how much. What I think is critically important though is that there needs to be a human in the loop that reviews all that and clicks the button that says, I accept these changes. Because what we find time and time again is that if you don't have that human in the loop, the AI or automations or whatever starts to do kind of funny things. And it's not really on the automations. Things happen in unintentional ways because it's really hard to understand what the impact of some of those bid changes are when it's a completely black box that you're not looking at on a, you know, at least every, you know, once a week, let alone once a month. And all of a sudden your entire ad account goes sideways. So I do think it's important that somebody puts a, you know, human eyes on those bid adjustments. And I would say, again, 90% of the time, 90% of those, you're going to click OK on and accept. But there are those 10% of cases where You know, things are off and they can be off drastically, especially when you're trying to do things that are a little bit more advanced. When you start looking at ranking campaigns, you start looking at, you know, we talked a little bit about defensive targeting. If you start looking at offensive targeting, like there might be a really good reason why you have a campaign with a 200% ACoS because your goal is to steal as much market share as possible from a key competitor. Well, that's really hard to teach an AI or an automation to adjust bids for. Speaker 1: Yeah, I think that's absolutely true. I mean, I've used auto bid adjustment tools in the past, and generally speaking, they do quite well. Because again, as Matt said, most of it is just math. But I certainly have run into situations where the AI or the algorithm, whatever it is that is actually working in the background, whether it's truly AI or not, makes a decision on a particular keyword based on erroneous assumptions. So in other words, we've had keywords that were really important keywords for us that all of a sudden weren't producing anything. Because the AI made a decision based on a short window of data that didn't really line up with what we knew to be true. And so it made some adjustment and then all of a sudden, you know, our PPC kind of fell off a cliff or, you know, went the other direction and did some, you know, extraordinary number that didn't make any sense. And so we started spending a fortune on something that, you know, we would never have spent money on, you know, to begin with. So I think you'd have to be careful with it. But the good news is, like you said, Jon, I mean, if you're using a tool like that, 90% of the recommendations that it gives you, you're just going to click yes. And that's way faster than having to go through all the mental calculations yourself and make those determinations on your own. And so you're still going to cut that time on task significantly. And so the combination of letting Amazon kind of manage the auto side of things and then maybe having these selected campaigns for exact match and things like that, I think is really a good combination. And if you don't have the bandwidth for that, then stick with the auto campaigns because I do think that you can tailor them enough and do enough of the basic negations that need to be done to get them into a space where they're performing very well for you. And it's a very simple campaign structure to set that up. A couple of other things that I would say is one, Amazon is not going to differentiate an auto campaign between branded and unbranded. So at the very least, if you don't separate out your campaigns in any other way, I would make sure that when you set up the auto campaigns, you separate out branded search and brand defense because your numbers are not going to be right if you leave it alone because I can tell you that our auto campaigns, now this isn't the reason they're performing well. They're actually performing well even if we take this data out. It is serving up ads on our detail pages, so they're essentially brand defense ads, but they're in an auto campaign instead of a separate brand defense campaign like they should be, and so we're negating those out. But then it also shows up on branded terms like ProToughPoolPool and things like that. Well, again, you really don't want those branded terms in an auto campaign. You'd be much better separating those out into their own campaigns. So don't ignore the fact that there are some things you want to negate out and I definitely recommend that branded is one of them. You're going to negate that out of your auto campaigns, keep those in separate, you know, brand defense campaigns and stuff. But that is still a way simpler campaign structure than what we would have had, you know, two, three, you know, years ago, you know, especially if you got very many products. And that's, again, that's another important aspect of this. If you're a smaller brand, but you happen to have a fairly large SKU list, the fact that you can run these auto campaigns makes your life 90% easier than you think it does. And it really puts you in a position where you could do this. Speaker 2: Such an important point. I mean, I've seen a brand that they're doing Barely six figures on Amazon and I have 200 SKUs, which is a little crazy. Not something I recommend. Speaker 1: Yeah. Speaker 2: And so again, I would much rather have somebody set up an auto campaign for each, you know, maybe parent, if you will. And you know, run 10, 20 auto campaigns rather than creating one auto campaign and throwing, you know, all 200 SKUs in the auto campaign because your performance across those, you know, Those parent ASINs is wildly different where you have some parent ASINs where they've got some pretty good traction, they've got some decent reviews, and they're having some success. And then you have others that, quite frankly, are just duds. Well, if you put everything into one campaign, well, what Amazon's going to do is it's going to take, say you have $100 a day budget in there, it's going to spend that across whatever clicks, not what sells. And so now you're really struggling in order to adjust things in order. You really don't have a whole lot of. We have a ton of control in order to push that money in the direction of what's working for you. Speaker 1: It's also going to confuse Amazon. Speaker 3: You're confusing the algorithm at the same time. Speaker 1: Simpler does not mean run a single auto campaign for everything. Simpler just means you don't have 12,000 exact match campaigns. Maybe I've got 10 auto campaigns. Speaker 2: You don't need an exact match campaign for every single keyword you want to target. That was a cough people can interpret later if they clamp back slow enough. So, okay. I think this is a fantastic conversation. I think this might be a good place to wrap on it. So, takeaways for brand owners who are listening. I guess I'll start with you, Matt. What's the action item that you would give to brand owners that are listening to this? Speaker 3: Well, I'll give a little bit different. I'm not going to answer your question directly, but one of the things that we haven't talked about, you know, we talked about Meta's gone down this route before Google's gone down this route. And actually TikTok is actually right now currently going down this route. They've actually removed all the other ad types. And now there's one ad type GMV Max, which essentially is their automatic campaign. And it's performing better than all of the other manual, more manual type campaigns were before. So TikTok just removed access to all of them and now you have one ad type. And so you give it an ROI target and it meets that ROI target incredibly well. So even more proof that these big platforms, as they start to mature, They learned that, you know, and these platforms, their goal is to make money and they do that by selling products. So if they have data that tells them which listing is the highest likelihood to convert, they're going to rise that one to the top. And that's essentially what these ad campaigns are doing or these types of campaigns are doing is giving them control because they know who's going to convert. So just more proof that this, this is the way that Amazon is going for a reason. All the other platforms have already done it. Speaker 1: I think for me I would say, one, recognize that the evidence does show that Amazon is moving this direction. It only makes sense that they would considering that everybody else is moving that direction and Amazon's got so much data, you know, obviously they would be able to make these sort of determinations. And I would say because it's true that it's moving this direction, you need to get ahead of it because not everybody understands this yet and not everybody is using it. And even if you don't dismantle the whole rest of your campaign structure, If you just recognize this one point and you start utilizing this to get more exposure, because again, auto campaigns done right can give you a lot of exposure right now, more exposure than you're going to get from running a bunch of exact match campaigns. And there's two things that that does for you. One, if the auto campaign is performing well, then obviously that creates more orders that are profitable. But secondly, don't forget what Jon mentioned earlier, which is sponsored display. Sponsored display, you can use that as kind of a mini DSP for remarketing and things like that. Well, you can't remarket to somebody that you never had an ad show to in the first place. So if you're using sponsored products and you're getting more ad impressions to the right people at the right price so you can afford it, then you're giving more fodder to that sponsored display campaign for that remarketing and so you can kind of spin that wheel a little bit. So I just think it's definitely a space that you need to pay attention to and also understand Amazon is only going to get better at it. It's not as if it's going to go downhill from here. Amazon is going to continue to gather more and more and more data and they're going to get better and better and better at this. So get ahead of the curve now. Get your campaign structure set up to take advantage of it. And I guarantee you six months from now, it's going to be even more effective than it is today. Speaker 2: Yeah. And I'll leave it with this because I think it's really important that, you know, one, that you guys, that as brand owners selling on Amazon and just, you know, being on the platform that you are, I think you're a hundred percent right, Mike, you, you know, staying ahead of these things that are happening and seeing how, where this is going with ads. I'd also add that, or include that just as a general principle, ads is never going to be, you know, set it up and then like YOLO, you know, You'll know Amazon ads management, like let it do its thing and never look at it, never touch it. But it's also doesn't need to be the bulk sheet, you know, bid optimization with pivot tables that we used to do, you know, four or five years ago. There is, you know, a right in between there, and it's really going to depend on what category you're in, how big of a brand you are, what your brand goal is, and a few other factors on Amazon. So I think finding what is that right level for where you're at right now with your brands for managing your ads successfully on Amazon. Speaker 1: Also, one last thing before we close, don't forget that A lot of times exact match campaigns and whatnot are used for ranking. And obviously at the moment that's still valid and still useful and important. But AI is becoming the tool that people are going to be using to find their products. And so more and more how you rank in the actual search It's going to become less and less relevant. It's going to be much more important how you rank in what AI tells somebody is the product that they want. So, you know, don't ignore exact match. Don't ignore the possibility of ranking using those tools, but just recognize that is a dying strategy. You know, like that is a strategy that's going to become less and less and less effective over time. So I would not be investing a massive amount of time and effort into that. If you've got an agency or you hire an agency, obviously in the short term, you're going to want them to be doing that because it's still effective. But if you're not focusing in on AI ranking, then you're missing the boat. And you know, that campaign structure is going to, it's going to reach a point where it's not serving your needs and you're going to fall off a cliff. Speaker 2: And that's a great segue into something that we will cover on a future episode. So stay tuned because that's definitely something we'll cover. Thank you, everybody, for listening. And we look forward to seeing you next time on another Tactics Tuesday. Thanks for tuning into the Brand Fortress HQ podcast. 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