#105—3 Ways to Ruin Performance with Dayparting on Amazon PPC

#105—3 Ways to Ruin Performance with Dayparting on Amazon PPC Speaker 1: A lot of Amazon advertisers out there are doing dayparting the wrong way. Speaker 2: And what's worse, they're teaching everybody and reinforcing these bad methods with their automation software. Speaker 1: In today's episode, we're breaking down three wrong ways to do dayparting that leads to fewer sales and lower profitability. Speaker 2: I'm Stephen. Speaker 1: And I'm Andrew. Speaker 2: And you're watching That Amazon Ads Podcast. Alexa, play That Amazon Ads Podcast. Unknown Speaker: Which one would you like to hear? Speaker 2: The best one. Unknown Speaker: Okay, now playing that Amazon ads podcast. These gentlemen are completely changing the game. Speaker 1: After listening to that Amazon ads podcast, my ads are finally profitable. Unknown Speaker: I also heard they're pretty cute. Speaker 1: All right, wrong way to do dayparting. Number one, probably one of the more prevalent ones that I've heard going around the Amazon advertising space is that you should take a look at your hourly total sales trend. You know, you can look in Seller Central, see your hourly total sales trend, and you should just set up all your dayparting rules based on how that trend is happening. Go after the sales volume, try to boost your bids in that timeframe. And Stephen, this is just not accurate. What do we have to say about that? And what do you think of people who are kind of trying to chase the search volume? Speaker 2: It's crazy how prevalent this is. It's probably 90% of people think that this is how day parting is supposed to be, because it makes sense, right? Like you're looking at the seller central, you see, oh, I get a lot more sales volume in the evenings. I want to be increasing my bids during that time. What you have to remember is Amazon is a pay per click platform. And so Let's just say there's 10 times the amount of volume, but 99% lower conversion rates in the evenings. That's gonna spike your ACoS. At the end of the day, ACoS is really just a function of two things. It's your CPC and your conversion rate. We actually need to do a whole episode on this. So that will probably come out in a couple of weeks. But your CPC and your conversion rates, those two things combined create ACoS. So if you have a lower conversion rate and you increase your CPC on it, you're going to be spiking your ACoS. So the reason why we say that is because what you'll find is in the daytime hours, You will have frequently higher conversion rates than in the evening hours, but there's pretty much always going to be more traffic in the evenings. But when it comes to PPC, you don't just want traffic for traffic's sake. Your goal is to find the highest quality traffic. You want the highest volume of high quality, high converting traffic. You don't just want a ton of low converting traffic. And so there are different audience behaviors during daytime hours versus evening hours. And I would say in a hyper generalized sense. Just kind of like how we've said in our topics on our episodes on placement optimizations, we've said that top of search very generally performs about 50% better than other placements. And while every account's different, for some people, top of search is the worst performing placement. Others, top of search performs, you know, 500% better. So there's always like outliers, right? But if you hypergeneralize the data, top of search on average performs about 50% better. And we have found that for, in a similar sense, Daytime hours in a hyper generalized sense tends to convert around 20 to 30% better than evening hours. And Andrew, why do you think that might be? What are some of the things that might influence that? Speaker 1: What I usually think about is whenever, just in my own life, when I'm shopping on Amazon and I'm looking for something earlier in the day, earlier in the morning, throughout the day, while I'm working, whatever, I've got other priorities. I've got other things that I'm kind of working on and need to get done. My speed to purchase on certain things and the things that I'm going and looking for and buying during the day, I'm going to likely pull the trigger on those things a lot faster because I got to get back to whatever it is I was doing. If you're looking at the evening timeframe, you know, you're getting a lot more traffic in the evening for a lot of people, but a lot of times that's just like browsy traffic. People don't, people aren't at work. People aren't traveling to work. People have more time on their hands and they're looking and searching. They have a little bit more time to evaluate all their options. Whereas those people in the early day time just kind of know what they want. They're going and getting it. They're making that purchase a lot faster. And so that's generally what I would say. Just from, again, Big broad stroke, kind of looking at the overall trends, but yeah. Speaker 2: Yeah, and I think one other thing that might be affecting this is the amount of shoppers that are on mobile versus desktop. Now, Amazon does not give us any reporting on that, but other platforms do. Like Walmart, for example, you can actually see performance by mobile versus desktop. I think the DSP does actually show that breakout as well. And what we've seen that in general, there are higher conversion rates on mobile than desktop. Kind of makes sense because when you're on desktop, you can open multiple tabs. You're doing a lot more comparison. So the click to purchase ratio is higher on desktop because they might click, you know, eight different items and they're only going to buy one. Whereas on mobile, because they can't do tabs when they're on the Amazon app, they're probably just going to open one or two products and then just pick the one that seems the best. And it makes sense that there are more mobile shoppers during the daytime. Because at least for me, after the day concludes when it's the evening, you know, if I'm just on my computer and I'm buying something, I've got a lot more free time. I'm not trying to like squeeze something in between meetings, but a lot of my mobile purchases will be like I'm just taking my dog on a walk. There's some item that I've been meaning to buy on Amazon and I keep forgetting about it. And so I'm just going to go on and buy it now before I forget it because I'm thinking about it. I'm like got some time between meetings. So I'm just going to get my phone, buy whatever Amazon says is the overall pick, something that has like a lot of good reviews, good price, and I'm just going to buy it right then. So it's a much more trigger happy audience that's shopping during the daytime versus evening. And that's why it kind of pans out that way in a very general sense. All of this gets put on steroids if you are a B2B business and especially if your keywords are very B2B focused. So if someone's typing for commercial vacuum cleaners, something like that, then in that case, you can expect to see significantly higher conversion rates and potentially even traffic in those daytime hours compared to evenings. But I'm going to say one final thing on this. What we have seen and we'll show you guys in a second. I forget when we're supposed to throw up this screenshot, but a lot of the times. People will have higher volume in the evenings simply because there's more traffic, just more people are home, more people are shopping, but it's lower converting traffic. But you can get more traffic in the daytime by increasing your bids. And that's something that Andrew and I have both seen with the several accounts that we've been deploying day parting on is, yeah, you have more volume in the evenings until you increase your bids during daytime hours. And now you've shifted the spend and sales curve to get more overall traffic in the daytime. But you also have higher conversion rates. So it's just resulting in more total sales, frequently even lower a costs. But yeah, anything else to add there, Andrew? Speaker 1: Oh, yeah, I think that's pretty well said. Just because your total sales trend is, you know, one way or the other doesn't necessarily mean that that's optimal. Like there's obviously a lot of other times of day where you could be converting a lot better and you're just not competitive in the ad auctions. And you could, by boosting your bids in the right timeframe and going after those higher conversion rates, really shift around that total sales trend. And in one of the accounts that I've recently deployed daypartingin, that's exactly what happened. We Generally see things kind of pick up in the morning, like it's natural, you know, kind of pick up in the morning. And then sometimes in the evening, we'd see like a nice little bump in total sales. But whenever we actually looked at the performance, the hourly performance data within ads, we found that there was a lot higher conversion opportunity in the morning. Speaker 2: Tell us, because this is the account you're talking about. It was a two week test that we did, and this is a large brand, right? So we're not, it's not, we're not talking about penny pinching here. They're spending like how much on average per month? Speaker 1: Close to a million dollars some months. So yeah, it's getting out there for sure. Big budgets, big overall sales volume. And so these little shifts make a really big difference. And the owner certainly felt that whenever we ran this test. But basically, as you can see there, we pulled, I think it was a 14 day timeframe before and after. In the before section, you can see that a lot of our spend is getting concentrated in the back half of the day, as Stephen was kind of talking about. That's where there's a lot of traffic. But if we look at the revenue per click in the back half of the day, it's dropping off. And we see that revenue per clicks are a lot higher in the morning. And so we set up our day parting rules to basically go after that high converting traffic in the morning. We essentially saw in our total sales hourly trends that we got a lot bigger lift in that morning timeframe. So there was a lot of untapped potential there that we really boosted into. We became a lot more competitive in the auctions and we're winning some of that high converting traffic. And you can see the after there. That total ad spend over the day is a lot more consistent, capturing more of that higher conversion rate, higher revenue per click timeframe, and our A cost is a lot more steady. In the before, we see that ACoS kind of spiking at the end of the day, whereas now it's actually dropping in that back half of the day because we're pulling back the bids there and just kind of modulating our CPCs in accordance with that revenue per click trend. And overall, this brand saw a pretty fat lift in total sales in that two-week test. We were up about 22%. ACoS stayed virtually the same. Speaker 2: Yeah, this is really telling. I'm going to add two quick thoughts here and then we'll move on to wrong way number two. But before we do that, don't forget to like and subscribe because that's very important to us and to you. So this chart, the revenue per click, which is basically just the same as conversion rate. It's just a dollar version of conversion rate rather than a percent. So, and what you want to do with dayparting is you want the CPC and the RPC trend lines to kind of move in tandem because that's ensuring you're getting maximal volume, maximum volume with the, basically the same ACoS, getting a more consistent ACoS. Like Andrew was saying, the target ACoS, I think is around 40% for this account. Is that right? So you see that previously, like the ACoS for the entire account might have been at 40% when you take the whole total, but you have some periods of the day where you have lower conversion rates and other periods of the day where you have higher conversion rates and it averages out well, but you're limiting yourself on how much volume you can get as opposed to keeping that ACoS consistent and getting more volume on the higher conversion rate periods and, you know, pulling back that CPC a little bit on the lower conversion rate periods. You're just shifting the budget. That's all you're doing. You're shifting the spend from, you know, a lower conversion part of the day to a higher conversion part of the day. And frequently you'll actually see that your ad spend stays the same and you're just getting more total sales volume. It can happen that your spend also increases or decreases just, you know, kind of depending on, A lot of factors, doesn't matter. But most of the time when I've deployed this, we see that the budget stays around the same. We're not spending any more or less. We're just shifting budget to put higher CPCs on the periods where it matters most. Now, you can see on that blue line, that CPC curve from before to after, Andrew's average CPCs during daylight hours went from around $3 bids up to like the $3.50 range. And that led to significantly more spend during those periods of the day. And some people might observe that the revenue per click overall kind of dropped after doing this. And there's a good explanation for that. Part of it is, well, I'll just say when you're doing day party like this, when you go from zero day parting to day parting, It's gonna shift some of the data. So you're gonna have to routinely optimize this for a good couple of months before things kind of fall into a little bit more of a steady, consistent performance. But it could be that during the daytime hours, maybe some of your more upper funnel keywords never got a chance to actually get that visibility just because you were being outbid by all of your competition. But now that you're actually increasing those bids, those lower conversion rate keywords that were still super important Just weren't getting any traffic at all, but now they are. So now you're getting that visibility. They're still hitting the target ACoS, all this good stuff. But that might just lower that conversion rate a little bit just because the mix of traffic that you're getting. You're getting a little bit more upper funnel traffic keywords, which could shift that curve a little bit. Speaker 1: A hundred percent. And then he also, you know, different products as well. Like this was an account wide adjustment too. So, you know, maybe there's some different products in there that didn't perform quite as well in that timeframe, but yeah, very well said. Speaker 2: All right. Let's go on to wrong way. Number two. Now, before we mention wrong method, number two, we have one more thought on wrong method. Number one, Which is that screenshot we were just sharing with those nice little trend charts. If you want to make those exact same charts, data visualizations of your hourly campaign data, and also get recommendations for how much you should be increasing and decreasing bids. You can use the exact same day parting calculator that Andrew and I use, that is also what that screenshot came from, in this video, which there will be a little button somewhere for you to click, but that is our We have an official video on how to do dayparting the right way, how to do it the easy way. So check out that video and the link to the dayparting calculator is in that video description. Now, wrong way number two is pausing and unpausing campaigns in the middle of the day. Andrew, your thoughts. Speaker 1: Yeah, so this is Definitely a popular one, mostly popularized by other software companies where they essentially will, you know, look at their hourly data and they'll say, ah, we're getting a really high ACOS or low conversion rate in this timeframe. We should just pause the campaigns. And so like in the nighttime, they'll pause campaigns. Their ads are just, you know, not delivering at all. And then the next start of the day, whenever things start to pick back up, they will reactivate those campaigns. So they're basically just missing a big timeframe of traffic, of having their ads actually deliver by doing this method. And there's a lot that's wrong with this. And there's some reasons why a lot of people have promoted this, which we'll get to in a second. But the biggest issue that I have with this is that you're completely taking yourself out of auction. You're giving yourself zero chance of actually getting your ads out there. Whenever people are actually shopping and like we were just looking at in that chart, you know, yeah, our conversion rates drop in the evening, but people are still buying. And so by pausing and unpausing your campaigns at that time is just completely eliminating your potential of actually driving any sort of sales volume or capturing any of that traffic that's actually happening. So I've got a big problem with that. You definitely are missing out on a lot of sales opportunity whenever you're using this method. And just generally I've found that this is not the most effective way, except there's a lot of people who say that it is. Speaker 2: Yeah. And one other thing I want to mention on wrong method number one as a quick clarifier. I forget if we mentioned this, so I just want to be extra clear. We were saying not to chase volume, but chase conversion rate plus volume. So if you have a really high conversion rate at 2 a.m., And there's no volume there. Then like, obviously, it's not gonna make that big of a difference. But that's why we're saying daytime hours, there's still a big amount of volume there, and usually higher conversion rates. But again, watch the other video, and that will dive into all that make way more sense. Now, on pausing, unpausing, whatever, I give this analogy, I hope this helps make a lot of sense out of what we're trying to get to. Let's pretend you got two different keywords. Let's say you're managing an account, target ACoS is 30%. You've got keyword A that has a 10% conversion rate and a 30% ACoS, okay? Then you got keyword B that has a 7% conversion rate and a 40% ACoS. So conversion rate's a little bit lower there, ACoS is a little bit higher. Are you just going to negate that keyword entirely and lose all of the volume and sales on that keyword because the A cost was too high and not profitable and the conversion rates were lower? Probably not. I hope not. What you should be doing is reducing the bids on that keyword So that you can just still get some sales, but just within your target ACOS. Now instead of keyword A, keyword B, those are different time blocks of the day. You've got one period of the day with a higher conversion rate, another period with a lower conversion rate. You don't want to just like pause outright on that one section of the day that just has a higher ACOS. You want to be reducing the bids there, right? We want to be riding that wave where the CPC is ebbing and flowing with the conversion rates as those are trending differently throughout the day. So You know, I think a lot of people who have deployed this strategy where they just pause or negate a keyword entirely or pause their campaigns entirely during a period of the day that's super high ACoS. Yes, they might see that their A cost drops a lot and that could be a really good case study. Maybe their tacos comes down a lot as well. Maybe they got lucky and like the organic sales kind of picked up because there could have been a lot of like organic sales cannibalization as well that was going on there. So they will have results that make them think very highly of the strategy, but they haven't actually tested a bid adjustment strategy. I could almost guarantee you that if they did, if they tested the day parting strategy with bids rather than just pausing entirely, they would probably get a lot more sales volume within the same ACOS without actually like affecting the ACOS at all. But I was talking with the CEO of another company who has, there's a few companies that do this, so don't try to guess who it is because that's not the point. But I was talking with the CEO Super nice guy and they do the day pausing strategy for their software and I was having a conversation with him and he told me that he agrees adjusting bids throughout the day is way smarter, makes much more sense, actually leads to better performance. The only reason why they don't do it is because the software has a whole bunch of other automations that the user set up, rule-based automations, that would conflict with day-parting optimizations. So if you're trying to, let's just say, increase bids on low-cost keywords and decrease bids on high-cost keywords and you have that running on a daily basis, and then you've got another rule that's increasing all bids and decreasing all bids by 10 or 20 percent, whatever, those rules are going to conflict, overwrite all these problems. So for them, they just said it was an easier technical solution to just pause everything outright because that way you don't have conflicting bid automations. So the reason why with AdLabs, which is the software we use, is able to do day partying without that problem is because the bid automations, the bid optimizations themselves are not automated. And we got a whole other episode on why completely automating your bids is a bad idea anyway, so you can go search our channel for that. That's kind of the main point, so hopefully that makes sense. It's better to get some sales at your target ACoS compared to no sales at all, and just controlling the bids throughout the day is going to be much better than just pausing everything entirely. Speaker 1: Yeah, very well said, Stephen. Sounds like some software people out there taking the easy road or just having a lot of complications with day parting. But you know, a lot of people that use this pause on pause strategy are doing one of two things. Number one, they're either pausing their ads in a period of time where it's high cost, but it's actually high volume and there's a lot of sales actually happening and a lot of traffic in that timeframe. And so they're just completely missing out on a lot of that traffic and volume. Or they pause it overnight or early in the mornings. And there's usually not a lot of traffic in there anyway. And so you're not really making a big difference because no matter what's going on, like even if you had your campaigns active, they're not going to spend a whole lot because the total possible traffic that's actually happening on the platform is not there. And so you're not really reducing the spend that much anyway in those timeframes. And so yeah, just generally ineffective strategy and definitely opt for adjusting bids over pausing and unpausing your campaigns. Speaker 2: Yep. That's a, that's a great point. And I do see a lot of people do that. They want to pause their campaigns from midnight to 4am because the sales volume is so low. And I'm like, Yeah. But like, it doesn't make a difference. It's like your total budget there was 1% of your total spend in the account. Like, yeah, it's just it's it's kind of a pointless endeavor. You can do that fine. It's just not gonna help you out. Okay, going on to the wrong way number three. Speaker 1: Alright, wrong way number three is something that's called day budgeting. This is relatively new. Some software companies coming out saying they got day budgeting tools. Tell us about that, Stephen. Speaker 2: I mean, this is just Crazy, man. I don't know where people get off with this, but it is the worst of both worlds. It's a combination of a lot of bad, just lack of logic and all these things, but it kind of comes down to this. People are trying to control the budgets throughout the day on their campaigns. And this is a daily budget setting, not an hourly budget setting. And the campaigns themselves only have two states. They only have in-budget and out-of-budget. And because this is a daily setting, not an hourly setting, that means if the campaign is already in-budget and you increase the daily budget on that campaign, it has no effect. And if the campaign is out of budget, and then you reduce the budget on that campaign, it has no effect. So either the campaign is in budget or out of budget, and it's either active or inactive, and controlling the budgets isn't going to do anything like that. It might just, if you happened to have a campaign that was out of budget, and then you increase it, it could turn it from being paused to enabled, and vice versa. If it was already in budget and you reduce the budget, to a point where it's like no longer in budget, then it would pause the campaign. So what you're effectively doing, what people think they're doing, is they think they're controlling the budgets throughout the day, but you're not. You're just inconsistently applying a day pausing strategy because the campaigns that are in budget are out of budget and you can't really predict because it depends on how much volume is going on and all these kinds of things. You're not able to control the ACOS more effectively like we can with bids. So you're missing out on that whole thing. And now you're doing an inconsistent day pausing strategy that just kind of depends on whether or not the campaign was in budget or out of budget when you adjusted the budget. So it's just, it's a whole mess of creating unexpected results, inconsistent methodology, and There's a few tools that are really big on this but Xnerta, formerly XMars, which I guess they got a cease and desist letter from the Mars agency which is why they changed their name in case if anyone was wondering, we were on their website that's really promoting their AI software and they talk about budget day partying. And Andrew, what does it say there for this feature they have? Speaker 1: This one really threw me off when as I was reading the description, I was like, what are they even talking about? This doesn't make any sense and doesn't sound like budget day partying to me. But their description of this is discover optimal bids for new targeting with low base bids and subtle bid increments acquiring clicks efficiently while minimizing costs. I'm going to help me unpack that because that doesn't make any sense to me. Speaker 2: Yeah. To compare that, because there's budget day partying, you see in the screenshot, there's that second tab that goes out to bid day partying. I mean, you can just go to their website to see this. But when you look at the bid day partying, it says schedule bids for peak performance, use bid day partying to adjust bids up and down during different time slots, maximizing performance based on time specific data and trends. I don't know what the difference is between that and their day budgeting. To me, it just seems like a typo. I think this is just the problem that you get when softwares create tools. And I'm here to talk to you about how to make money with VC money and it's not built by people who are natively active ad managers. That's gonna make a big difference. So I hope that this is just a website typo and not actually how the tool is operating. We were also trying to understand that image of like the conversion rates and high conversion window I mean, we don't really know what's going on there. But point being, they don't seem to know what's going on either. So day budgeting, I think just all around, hopefully we made the case for, we tried to explain the logic for like why it doesn't really work that well. And then for the tools that are trying to do that, they're having a hard time explaining it. So that should hopefully just reinforce the point. Speaker 1: Oh, I love it. Well, For everybody listening, you have something else? I was going to close this out here. Speaker 2: I was just going to say, I have nothing else to add to this point. Speaker 1: Okay, perfect. Well, for everybody listening, if you have any other weird things that you've seen or weird day parting strategies that you've heard of, make sure you just drop them in the comments below just so we know of all the crazy theories that are out there and make sure you like and subscribe. Got more content coming down the pipeline. Thanks so much for listening and we'll see you next week on That Amazon Ads Podcast. Speaker 2: Peace out.