How to Make Amazon Advertising Profitable in 2025?

How to Make Amazon Advertising Profitable in 2025? Michael Erickson Facchin: What's going on Badger Nation? Welcome to The PPC Den podcast, the world's first and longest running show all about how to make your Amazon PPC life a little bit easier and a little bit more profitable. We've been podcasting now for nearly 350 episodes, which is a wonderfully overwhelming amount of content. We break it down and distill it for you in an easy to follow along spreadsheet so you can find our SEO episodes or our conversion rate or our bidding and budget episodes all categorized for you Get the spreadsheet. It's in the description. I think it's the best Amazon advertising course. Today on the show, we have dear friend of the show, Abe, from XP Strategy, where we had a nice rollicking conversation about profitability, ways to track it at the catalog Product and campaign level and it's great. I hope you enjoy it. You should get bolster your desire to have different lenses in which you analyze your advertising. Unknown Speaker: I've launched campaigns and picked keywords. I've got my bids, set placements too. Now that we say. I've made a few. I've had my share of rocky roads, but I've. Abe Chomali: Thank you. Unknown Speaker: A creepy suit and my frail body. We are The PPC Den. We're talking about Amazon. No time for medicons, cause we'll fix the game. Michael Erickson Facchin: But you know what I love when brands cross over into the world of people wear them willingly. Like you see Kirkland sweatshirts being worn by like rappers, and I'm like, how'd they do that? Abe Chomali: Yeah, I, I always have very mixed feelings because Some brands are like sort of cool to represent and some sort of really just represent bad life choices. Like the guy that's wearing a Marlboro jacket, you know he's had to smoke 207,000 packs of cigarettes. I'm like, what exactly are you promoting? Michael Erickson Facchin: Although I feel like the Marlboro, I know what you're talking about, like the Marlboro leather jacket thing. I feel like if I were to walk into A thrift store, that would be like $350. That probably goes for a pretty penny. It's like a collector's item. Abe Chomali: There is an entire category on eBay for swag from failed startups. If you can find Lehman Brothers sweatshirts and Lehman Brothers caps, they command a serious premium. Michael Erickson Facchin: Speaking of Marlboro jackets, who would you rather get lunch with, Joe Camel or the Marlboro Man? Abe Chomali: That's hard. Okay. I think I'd rather get lunch with the Marlboro Man. I'd rather go to a party with Joe Camel. Michael Erickson Facchin: Right. That dude got down. Abe Chomali: Yeah. That dude's got game. Everywhere he goes, there's action. Michael Erickson Facchin: Right. Well, I live in Texas, right? So it'd be cool to not go out to lunch with the Marlboro Man, but I don't know, go horseback riding. Abe Chomali: Go to the rodeo with Marlboro Man. That's going to be a good afternoon. He'll jump on the buck himself. Michael Erickson Facchin: Oh, man. So, what is new with you in the world of Amazon Advertising? And do keep in mind that later today, I'm going to be going on your podcast. Abe Chomali: Yes, we are doing Podcast Inception, in which we are recording two podcasts when we might be able to get away with just one. Michael Erickson Facchin: Right. That is correct. We should have, could have thought of that and just. Abe Chomali: I'll send Robin the link. Michael Erickson Facchin: I say we go two novel ones and just see what happens. Abe Chomali: Yes. So for anybody who is not aware of what's going on, I have started my own podcast And I have been graced with the honor of having Mike join me later today. As best as I know, this is not a common thing that happens. Michael Erickson Facchin: Grace is a nice word. Thank you. Chore could be another word that you'd use to describe that. Abe Chomali: No. Chore is for the uncool hosts. No, no. I don't ever want to be a chore to anybody. Michael Erickson Facchin: Yeah. So what is new with you in your Amazon life? We're fortunate to see each other every Wednesday. In our mastermind, so I have a pulse on it, but for those out of the loop, what's been on your mind a bit over the last few weeks when it comes to Amazon ads? Like when you're talking to clients, what are they bringing up to you? Abe Chomali: The truth is the biggest thing that's coming up is profitability. It has been a trend forever that Amazon likes to steer CPCs upwards, that they like to steer more and more of the purchases towards that top of the page and the paid spots. They're constantly launching additional inventory spots, sponsored TV. Additional broad ways that matches show up whether intended or unintended according to the definitions we get. But these things, they're always sort of – they're expected. They are the context. Welcome to being in marketing. If you advertise newspapers, newspaper rates keep going up. Well, maybe not. That's probably not the best example. Michael Erickson Facchin: I would say absolutely. That is a trend. I've been doing digital marketing for e-commerce, for e-commerce companies for maybe 15 years now. And I will definitely say when I first got started, I never was approached to talk about profitability. It was just, look at the platform, what is the platform's return on advertising? That was it. And that was primary. And I would say over the last few years, Even off Amazon, so even like Shopify stores running Google Ads, they're having conversations about profitability as well. So I think the last few years, there's been a big shift for any service provider to have conversations, not just about the advertising itself, but also like the proceeds from that advertising. So of the products that your advertising is helping me sell, was I actually profitable at the end of all of that? Peeling out different levels of margin of different products, they want the connection to profitability, for sure. Abe Chomali: Yeah. I mean, from what I see, you know, before opening up my agency, I sold myself for many years. And I think that what has changed, what has shifted over time, is what you could expect for decades, for maybe as long as business is around. As long as you generally do the right things, you're generally Confident that you'll be profitable. It's really as simple as it is. If you're selling at the accepted price point of the market, if your costs are in line with industry standards, you're profitable. A thing sells for 20, a thing gets purchased for three. You have your rent, which is generally a standard thing. Ads are generally standard piece. Do A, B, C, D. Without looking too carefully, you should be profitable. That's not the case anymore. With all of the elements that have shifted each one in a different way, you can do everything right and not be profitable. There was a sort of honeymoon period. We love talking about our honeymoon periods, but there has been a honeymoon period In which people weren't aware of that shift happening. I think this trend is probably three or four years old in which you can do all the right things and not be profitable. In the last three years, it has not automatically been true, but because it has been true as long as anybody has known in business, nobody realized that those expenses are creeping up. In the last year, it has become very clear that you need those You need to do something extra besides the standard. And that's what I'm seeing more and more in my work. It never happened in the past that brands would track profits from within a week of launch. They were never aware of, they were never careful about costs within a week of launch. They were never careful about margins. They never had margin pressures on mature products. A mature product is something in which all of the over-the-top things you do during a launch have all been priced in. All the units you gave away, priced in. All the money you spent on initial visibility, all priced in. A mature product is known to the marketplace and has its sales. Not anymore. There is constant pressure always during the lifecycle of a product, and this is new. It's not technically an advertising thing, but it is because we have to fit advertising into the whole picture, and advertising is one of the very few levers we have for impacting costs. There aren't that many others. Most of your overhead is generally fixed. You have a little bit of flexibility with pricing, but the truth is most of that lever is downward price adjustments, which are helping velocity but not helping profits. So the only thing you can sort of cut down on as an expense is ads, or the only thing you can be more careful about is ads. Michael Erickson Facchin: You know, I was listening to an agency growth podcast, and they talked about how, you know, over the last few years, I think to your point, you mentioned it, you know, CPCs go up, of course, that's always been the trend since forever, they go up. In some particular categories, the CPCs have gone up precipitously. And also, I think like inflation has hit hard in the last few years, too, where potentially e-commerce companies noticed that all of their costs were going up. And the price of their product didn't necessarily change, right? So when there's a squeeze over there, there's a squeeze in digital advertising as well. So I think that's true across the board in terms of When I talk to service providers or tool providers, did prices go up? Did they not? I don't know about you, but did you increase your pricing over the last 12 months? I would say most people did not. We did not. Abe Chomali: It's interesting. I don't work with a fixed price structure. Each brand I work with gets a proposal customized towards the scope of work because everybody's a little bit different. But I have actively needed to charge more for the work. So, the benefit of not having a set price is the fact that I can factor in what really goes into it and not be stuck on a price which has been offered as being too low. Now, it doesn't mean that I can write an invoice for any amount I want. There is obviously still a dynamic marketplace in which I'm not the only person that exists, but within a 5% or 10% range, I can account for internal increases of 5% or 10%. Michael Erickson Facchin: The PPC's role, I think, has evolved to become more important than it was several years ago. I loved what you said about you can do all the right things and still be unprofitable. There was a person I knew in December 2024 that had one of the biggest return on ad spends and biggest revenue numbers. And then the first week of January, they were panicking because They were less profitable than they were the previous December 2023. And the reason was because not all their products had the same margin. Not all their products had the same ROAS. And just the shifting of all these dials led the person working on their PPC campaigns to be flabbergasted. They're like, what are you talking about? This month was worse than last month. We spent more. We got more revenue. We got to add a better ROAS at the account level. And the person doing their PPC was absolutely flabbergasted. And ultimately, they were let go by the person who hired them. And it was just like, they didn't anticipate the profit-mindedness of it. So I mean, I guess that brings up one question. When a lot of times when people talk about ACOS goals on Amazon, that's generally a Account level thing that brand owners generally look at is like, what's my ACOS? How much time should go into ACOS targets per product and then tracking that. Is that a solution to this to sort of just keep track? If you can't measure it, you can't really assess it as it happens. Abe Chomali: So ACOS is tricky. ACOS is trickier than it ever has been. Like I was saying about the past, as long as you kept your ACOS to within an industry standard, you would be profitable. These days, There is no such thing as a standard ACOS. There is much less of a real correlation between your ACOS and your profitability. Michael Erickson Facchin: Can we actually define ACOS? Actually, let's define profit. So, it's actually interesting when we talk about profit on Amazon. So, I would love to get your definition of how you define ACOS. I'm sorry, how you define profit. Abe Chomali: I'll give you all those definitions. I'm not really sure how there are varying definitions of ACOS, but there does seem to be some. As far as I'm concerned, ACOS is ad spend divided by ad sales and that's it. What piece of spend Did ad sales make up or vice versa? So that's it. $100 in spend, $1,000 in sales. That's a 10% ACOS. Simple. There are complications for accounting for fees. But those are all second level analysis of profitability. ACOS is The percentage of ad sales that needed spent. That's it. When it comes to profitability, the simplest level of profitability from an advertising standpoint is total ACOS or TACOS, which is ad spend against the top level numbers of the account. But that's not really where profitability comes in. Profitability is how much money is left after all of the expenses that Amazon bills for and after cost of goods. That's the profitability that I have visibility into. Amazon gives us all of the data on the fees they charge. Amazon gives us all of the data on the returns that come in. Amazon gives us data on ad expense and the brand can give us cost of goods. So when I have the cost of the units that were sold and every other expense that Amazon build the brand for, that's the profitability that I can give information on and from there, of course, that is not all that's included. The brand has their own rent. They have their own salaries for all those things. That's up to the brand to figure out how to account for. There are Many ways to do it. There are many kinds of company structures. Some people look at Amazon as being a vital sales driver. Some people look at Amazon as a necessary visibility driver, but not necessarily a profit center. Some people look at Amazon as just a channel to be visible on for when somebody comes to Amazon to look for their product. You need to be where the shoppers are. That's simply how they look at Amazon. Depending on how you look at it, you'll assign it a different piece of your overhead internally, I think. But I can't account for any of that. I can't account for whether somebody is paying US-based team members or foreign or whether the owner lives in a low cost of living state or a high cost of living state. All those impacts. Michael Erickson Facchin: So yeah, I think profit is the right word to describe that. I would also say truthfully, it's like skew economics or like net proceeds after marketing expense and Amazon fees. But yes, I would say the word to use would be profits, meaning I sold $1,000 of a product I spent $300 on ads and I had so many amounts of fees and there was cost of goods. That's essentially what is being referred to. It's not taking into account the cost of the brand's new computer that they bought. That's a line item for IT for them. Abe Chomali: Right. Michael Erickson Facchin: So, and I think the reason why it comes up, so like, agreed, yes, the people should be tracking that per product as well as they can. And there are some complications on that, which is obviously it's incredibly easy. So actually, It's more complicated than you think. So like the first thing, like there's account level ACOS, which is all the ad spend and all of the ad revenue as listed out from Amazon in the ad console. Where it gets super tricky, and I actually don't think enough people consider this or weigh this into anything, which is number one, if you focus on sponsored products, People click on product A, they buy product B. Who should get that spend attributed to them just for sponsored products? So that's one thing that makes it really tricky because when you look at a campaign report, you look at a keyword report, that is including, for sponsored products only, that's including revenue, For that product that got the click and any other revenue that came from it. And that makes tracking and attribution very tricky on a per product basis. And we haven't even touched on sponsor display or sponsor brands. So just on sponsor products, I'm curious how you advise, if anything, like if this is even solvable, where you consider the cost line item for sponsor products, When people can buy product B after clicking on product A. Abe Chomali: Right. So I'll suggest a different word. Solvable, we don't have the data to solve it. We simply don't have the data to solve it. Accountable for is much easier. What we do is a couple of things. The first thing is we understand that there will be some fuzziness in the numbers. And the simple concept that goes along with that is if you are micromanaging, if you need the penny, you've got other problems. So if you are working with a 1% margin and attributing a click to this SKU versus this SKU is the difference in viability, you've got other problems besides what's in that report. You should have enough room that there is That the lack of perfect detail is not crucial. Of course we want it, but crucial, not the same. So that's the first thing that we need to do is set the baseline that you should be able to handle some fuzziness in the numbers. Second thing we do is we work with the general understanding that most likely Those other SKU sales are going to be for other variations of the product. It won't be the case 100% of the time, but most of the time, what we typically see is the loss leader has the highest, if there is a one-pack, a two-pack, and a 10-pack, what we typically see is the one-pack has the highest cost and might be even losing money. The higher counts are more profitable or much more profitable. And those things look even more profitable because there's no ad spend attributed to it. You're not advertising the 10-pack, you're advertising the one-pack. So the 10-pack is pure profit, quote-unquote. Now, how do we account for that? We group the three together and analyze the numbers as a grouping. So this parent SKU, this set of products and quantities, we assign the spend to the group of the three. Our profits and numbers are there. Our effectiveness of ads is the effectiveness of advertising that parent SKU. It's a little bit trickier when you have 200 colors and patterns for apparel, separate conversation entirely, but most commonly, That's where your other SKU sales are going. And I don't know for sure, because again, Amazon is not giving us the data, but I'm pretty sure it's correct. I'm pretty sure that people are not buying a completely different product after clicking on a certain thing. Michael Erickson Facchin: Yeah, I think there's a habit for a lot of people in the Amazon world to want to, number one, there has never been absolute certainty with any kind of digital marketing on Amazon or off Amazon. That just doesn't exist. People change devices. They're using an ad blocker. There's so many different things that make data imperfect no matter where you are. So I think that's like absolute certainty does not exist. The other thing too, a lot of times in digital marketing, you look at some data that is in a different format than another set of data. Meaning when you are looking at your advertising data, like inside your campaigns and keyword bids and all of that, that doesn't one-to-one translate to Profitability analysis. So you're absolutely right. There is a bit of uncertainty that is baked into doing profitability analysis because when you're looking at total sales for a product, that is known. When you look at ad spend for a product, that is known for sponsored products. How many clicks did that product get? And it is possible that So what is the risk? The risk would be if that product generated a lot of cost that led to sales of other products that could potentially make that one product look very unprofitable, even though it attributed to many, many more sales. Now, that's why the reason I mentioned this was because when you are looking at that profitability analysis, you cannot have Black and white thinking or knee-jerk reaction, which is like, oh, let me just go stomp that out. You would go and look at the product performance inside the ad console and those other SKU sales would be attributed back to it. And you can get a good pulse on things. So you might end up with a product that has a very low ACOS because it leads to a lot of other SKU sales. But then when you look at the profitability for that product, it sucks. And it's because it has generated a lot of other SKU sales. So I think the best marketers are aware of the fact of some of these You can't get perfect data, and they can use that to inform what it is that they do next. Abe Chomali: There's another factor which we didn't touch on, which is also very much a component of 2024 and 2025, but was not existing earlier. Which is off Amazon traffic generation. Historically, Amazon is mostly its own closed ecosystem. Mostly. A shopper comes to Amazon, they spend the whole life of the thing on Amazon. The search for a product is on Amazon. Amazon was known as the shopping search engine. Other places were informational search engines. That was just, it was binary. You're either looking for information or you have intent to buy in your search. That was it. Your ad spend very tightly matched. What's different in the last 18 months is off Amazon traffic, number one, becoming a thing, and number two, Amazon weighing it differently than they ever did in the past. Simplest example, although there are many places that off Amazon traffic can come, And this might not even last more than a week, depending on when this comes out, but TikTok is our simple example. A lot of traffic, a lot of sales are generated from people seeing a product on TikTok. Now, that thing happening is typically not free. That thing happening is a function of Investing time to identify influencers, sending units out to influencers, giving influencers some sort of extra incentive to talk about your product. It is a whole ecosystem of expense and that is not reflected in any data that Amazon gives you. So, if you are not accounting for it, You might have a product that looks profitable on Amazon or you might have a product that is barely profitable on Amazon and that's not what the picture looks like. It's a lot trickier. Michael Erickson Facchin: You know, that brings up a good point, which is I like this concept of I'm a big believer in like when you show up to a different arena, you have to work with the data that you have there. So when you're looking at your campaign performance and then you are looking at keywords, and you're making decisions on search terms, the most granular level, a search term does not have an ad cost of total sales. A search term in and of itself doesn't necessarily have profitability attached to it. Which is why my general workflow is you look at your profitability report. That's your top level stuff. Total revenue for the product, total fees for a product, total ad cost for a product, and cost of goods for the product, and then you are left over after you subtract all those things, refunds, you're left over with the profitability for that product. All of that should be in the green, but you should be profitable at that level. If you are not or you are at a level that you don't like, then you have to then take that information, Go into a place where that information doesn't translate. So how do you take an unprofitable product and then go in and start making search term decisions? The way that I've always bridged that gap is that I do like to have target ROAS or minimum ROAS, or in the same way, maximum ACOS per product. Just based off the economics of, we're going to spend $10,000 for this product. We know how much that is. What is the break-even ACOS essentially? So as you bolt on revenue of a product, Sales for $100, you know that you're approximately going to have 15% fees and you know that you're going to have another 15% in whatever cost. What is the maximum amount of advertising spend that you can spend on that product to break even? So knowing that number inside your ad campaign and then having a desired ACOS or a target ACOS per campaign for the products that are inside. Are the way that I've always bridged that gap. So you know that, you know, without even factoring in, actually you do know. So like you sit down, you run that math and you know that you don't want organic sales to account for bad advertising. Meaning you don't want to look at the P&L for an individual product and be like, see, it's profitable. The ACOS don't pay attention to it because it has so much organic sales. We still want the ad sales to be on target. So I've always used that as a bridge between the skew economics of it into advertising where it's like, okay, we know that if we go over 50% ACOS on this product, there's no way we're making money on it. Abe Chomali: So, but are you looking at that on a campaign level or are you looking at that on a group of campaign level? Because there's a reality in which there are many types of ads on Amazon. Those ads all function in different ways. Those ads will all have different ACOSs. So any individual campaign is not going to have a uniform ACOS that's acceptable. And even no matter what ACOS you set, depending on how much in sales that campaign contributes, it can be more or less impactful. So, the simplest example is or are conquesting campaigns. Typically, some amount of money is spent on trying to capture sales when a shopper is looking for a competitor. Now, those sales are useful. They are helpful. They add to your bottom line. They're worth more, but they are the most expensive to capture. In the entire list of ways to spend your money, that is the most expensive because their intent is not you. Their intent is someone else. And that should be accounted for number one by allowing for a higher ACOS. But you also have to be aware, okay, if you allow for an ACOS, which is double whatever your standard is, if you work with a 25% ACOS that is okay for a product, that conquesting campaign will get a 50% tolerance. But that 50% tolerance is based on only generating 5% of your orders. If it suddenly generates 50% of your orders, 50% is not okay anymore. It hurts much more. Michael Erickson Facchin: Yeah. So if your target is 25% and you have a 50% conquest, Competitor targeting campaign. You better have some five and ten. Abe Chomali: Right. That's where the brand defense comes in. That's where your highest converting keywords comes in. So yeah, there is a dance and a balance. So when we look at things, we look at things at the portfolio level. We say, look, this group of campaigns contributed to your product. You were mentioning brands looking at it, evaluating their own campaigns. A question we get very frequently is a brand will look at their account and they'll say, hey, why does this individual campaign have a high ACOS? And I'll explain, that's intentional for this one. We know that it's not going to generate a lot of sales, but there is a purpose to it. Either we're trying to conquest competitors, which is important in its own way, or it's early in the life cycle and we are paying for visibility with keywords we know will take a while to convert. There are reasons to spend more than ideal. But they stick out if you don't have the right information in the right context. Michael Erickson Facchin: Hey guys, it's Mike here. I hope you are enjoying this episode with Abe as much as I did when I recorded it. I absolutely love Abe's perspective on things. I just wanted to jump into the episode really quick and let you know that Ad Manager has recently added about 75 new metrics to our tool. It's all related to the fees that you might experience as an Amazon seller. We look at unit session percentage, which is like Amazon's conversion rate. We look at fees and cost of goods and profitability. So we added sort of P&L metrics right into our tool. And the fact that it's integrated with our advertising platform means you can jump back and forth from your catalog level to an individual product level to looking at the product ads for that product. So we also do list Same ASIN sales and other ASIN sales. So you can even get a pulse on things that do accrue cost, but get sales for other products. So if you want to check it out, head on over to adventure.com. Check out our tool. It's gotten better every year since 2017. And now let's get back to the episode. There's a lot of nuance. With making goals and I think, yeah, understanding. So yeah, so in general, the hierarchy here is at an account level, meaning entire business level, total revenue, all the fees, all the ad spend, so on and so forth, minus the refunds, all of that should be profitable, just like all the skew economics. And then as soon as you start to get on a per Product level, you start to lose a little of the data certainty that you have, but you use it to guide PPC strategy. And that is, I think, a good workflow to follow, which is, oh, this product is very unprofitable. Investigate, is it because it's getting a lot of other SKU sales? Unknown Speaker: That's easy to track. Michael Erickson Facchin: Is it because the ACOS of all the campaigns for this are weighted too heavily? The ACOS of all the campaigns that involve this product are way too expensive. You can change the target ACOS on a campaign to influence the ad cost line item to hopefully come out profitable just on the ads economics and then you bolt on the organic sales too. So I think that is a good workflow that doesn't really get talked a lot about, but being able to look at a profitability report, look at account level, target ACOS, and then go in and make decisions on search terms is a tricky Balance. Abe Chomali: So I'll ask you a question. I know I'm the one being interviewed, but I'll ask you a question, which is, what timeframes do you utilize when analyzing profitability? Do you look at yesterday's numbers and say, hey, this is not good? Or will you always say, I need a bigger window of days? Michael Erickson Facchin: You know, I love this question because I feel like a lot of people, so like we're humans, right? We use days, weeks, months, years. When in actuality, like the most correct answer would be like, how much individual data am I getting in any given time frame? Meaning, you know, someone that does, you know, spends $100 a day gets data one-tenth as fast as someone that spends $1,000 a day. So it's like the frequency of data that comes in I think is a meaningful consideration. So again, most people don't think that way. I mean, it's very hard to think that way. I don't think that way. So it's like Most people, what number are they hitting for the 30-day timeframe? So it's like, what is this product doing in the last 30 days or for the month? I think this sort of big picture profitability analysis is generally done once a month where you're looking back, okay, what was the whole catalog profitability? And then let me see if there was any strangeness on a per product basis using month by month. I think this is an activity to do 12 times a year. Abe Chomali: Essentially, I find that what is ideal and what probably gives you the best information is diametrically opposed with the need to see things every minute. So we look, you know, everybody that sells on Amazon refreshes their sales page all day long. You know, they're always just tapping the app and pulling down and swiping and seeing their sales change. And the same with profitability. They are looking constantly, and there is a constant tension between saying, hey, 18 hours is not the same as 24, and 24 is not the same as 72, and you need a little bit bigger window to work with. I have brands, today is, you know, only a few days into the month, and I have brands already wanting to discuss how the month is going. And I'm like, we haven't even gotten a full weekend yet. It's a little bit too soon to discuss how things are going. Now, when things are super broken, you don't need more than a minute to realize that an adjustment is needed. But fine-tuning is much tougher in a day. Yeah. Michael Erickson Facchin: It's interesting too. I did a startup accelerator at one point in time and That world is very intense in terms of like, you better grow 5% every month from here to infinity. And the way that they really address that is by measuring every day, like, what are we pacing this month versus last month? And do we have a good grip on it? Which creates a lot of information analysis demand, but it is worth creating simple dashboards for yourself to know, okay, well, hey, we're down a little bit this month, pacing on the sixth of the month. That's because search volume was also down or that's because we lost ranking over here. So knowing why things are the way that they are, I think is a very valuable skill. Abe Chomali: So that leads to another question. I see I'm practicing my question asking skills. How much time do you think is appropriate to dedicate to analysis versus action? Analysis is by its nature a rabbit hole type of activity. That's it. You start out with three data points and within 17 minutes, you've got four spreadsheets open and you could literally spend all day analyzing and looking and digging. But most of the time, that is an exercise which will extract 2% extra value at best. But what is the sweet spot of how much time to use looking at your business? Michael Erickson Facchin: I think that there's routine things to look at and routine things to know. Abe Chomali: Wait, before you answer that, I'll ask what you're about to tell me. Is that what you look at as an ad person or an analytics person? Or are you suggesting what a person should look like as a business owner? There might be a difference. Michael Erickson Facchin: There is certainly a difference. I think as a marketing person, I like the idea of routine tasks and routine metrics that you receive on a regular basis, like a ranking report or rank change or PPC spend and breakout by Ad type and just sort of have those on a weekly cadence. I also like to schedule, as a marketing person, free exploration. A lot of times this comes into like answer, like just sort of going wherever you want. So like literally scheduling. A day a month to just like poke around the market, poke around like what everyone is doing to give you that pulse. Now, that's as a marketing person. I feel like the frequency is higher for, you know, founder type people who, you know, should be finding insight and then helping make everyone else's job a little bit easier. So like nobody knows the market more than like an in-house founder, I would hope. If not, what are you doing? So that person should know the market the most and sort of be banging on the battle drum of new information. So I think that's a balance that any good company has. You don't want your marketing person running off on tangents every day. Abe Chomali: No, and it's all too easy to do. So that's a marketing person's standpoint. Which data points would you say are the most important ones to start the day off with? Guy wakes up, opens up an account. I know which ones we look at. We typically look at yesterday's sales. We look at several data points for yesterday. We compare yesterday to the day before. We compare it to same day last week. And we compare it to year over year in an account where year over year is relevant. But I want to know how it did compare to the day before, how it did compare to the same day the week before. Those are the two windows which are most relevant for taking an action. Anything bigger than that is not a daily thing to check. So what do you look at when you open things up? Which numbers are the ones that you would consider to tell you success and to be the canary in the coal mine? Yeah. Michael Erickson Facchin: I like to do 30 over 30. So the last 30 days versus previous 30 days. And then I go 14 versus 14 and 7 versus 7. That way I can see like, is my 30-day Good or bad signal different than my short-term signal and Call me crazy, but I generally don't You know just in my position. I don't generally look at one day versus one day or like yesterday versus day before. Abe Chomali: So one day, the reason to look at one day is to catch a broken thing. So a broken thing is impressions go to zero. Well, you don't need seven. You average that out over seven days and it looks like a 15% drop. It's not the same as 100% drop yesterday. Also, if sales went up 9X yesterday, again, over a week, it looks like a 25% up this week. It's solid. That's different than 8X yesterday. So there is a value to spot checking the day before for outliers. Michael Erickson Facchin: Big time. I like the concept of like an anomaly detection process or an anomaly detection, you know, Way to detect that. Yeah, on top of that. Yeah, for sure. Abe Chomali: We've discussed this separately, but alerts are a big deal. The good and the bad of alerts is that you can use it to catch anomalies, but once you dig into how to define an anomaly, that is the ultimate rabbit hole. Michael Erickson Facchin: You'd look at how much you deviate each day on any metric. Abe Chomali: As an example, impressions, simplest impressions. So if in 24 hours impressions drop to zero, something is broken and I want an alert. But I have a different measurement for impressions over seven days to give me an alert, and I have a different impression for 30 days. So for 30 days, if impressions are down 15% or more, I want an alert. If impressions are down 15% yesterday, that's normal deviation. So all of a sudden, every number you'd want to know about being broken needs to be multiplied by three because the windows of deviation change. Michael Erickson Facchin: So we touched on profitability and how that is definitely more of an issue these days. We talked about striations of profitability in the sense of You've got it at the ad level, inside campaigns. You've got it on the entire catalog level. You've got it on a per product level, which incorporates non-PPC sales. And all of them have different reasons why you would need to look at all of them. And that is absolutely true. I actually think digital marketing services will continue to trend in that direction, both on Amazon and just everywhere, where it's just like, we don't necessarily help you with Social media marketing, we help you with profitability. So I even believe that it will eventually creep into, hey, I just make TikTok videos for brands. That brand is going to expect you to show the business case for what it is that you're doing. How does this eventually lead? Abe Chomali: To profitability, everything is measurable, even if it's by inference. So even if there is a shadow of the effect, there is still something to observe. You know, one of the big challenges that existed for a while, attribution is better than it used to be. But one of the hardest things is people would make a viral video and you didn't get actual traffic directly from the source of the video. But where's your shadow? The shadow is branded searches going up dramatically. And you see that even though they're not clicking straight from one to the other, the actual volume of the searches goes up. And it's definitely important to be aware of that. Yeah. Michael Erickson Facchin: You experience this a lot with like offline conversions, meaning like if you're working with like a local business and you're running ads for a local business and you don't have the data of like somebody searched, they clicked on an ad and then they eventually bought something in my Business. So you're looking at as much as you possibly can to ensure that things are trending in the right direction. Abe Chomali: Yeah. That fuzziness is super important. One of my favorite sayings is, I know that half of my ad spend is being wasted, but I don't know which half. And that's it. As long as the machine is running and as long as the machine is running profitably, Just hang on for the ride. Of course, you can always try and fine-tune and you must fine-tune. If you're not doing things to take action constantly, you will sink. But there will always be a part which is not clear, but it's making things happen. Michael Erickson Facchin: Well said. Abe Chomali: Well, I think we should leave it there, Abe. Michael Erickson Facchin: I'm curious as a final comment. You have such a cool office behind you and I'd be curious to have you point to an object over one of your shoulders and tell us a little bit about that particular object. I see a lot of interesting things. I see some cool art. Abe Chomali: Oh yeah. So I'll give you two and you can decide whether to show both or save one for the future. So above this shoulder is either a real Banksy reprint or a Banksy style reprint. And I sort of, when I purchased it, I liked it because it had a little Mario on it and it had that interplay of color and black and white. I'm like, oh, this is a cool picture. I purchased it. And my son, who is like 12 at the time, looked at it and started laughing his head off. And I'm like, what do you think is so funny about this picture? And he says, dad, the officer is saying that taking mushrooms is bad. And I'm like, I did not catch that at all. Michael Erickson Facchin: Right. Mario's being arrested and that's like a police officer. Abe Chomali: He's being arrested for possession of mushrooms. I'm like, wow, I did not get that at all. So that's like one. Michael Erickson Facchin: Love it. Abe Chomali: The other one is the trophy behind me, which gets asked about a lot. And that is to some extent a fake trophy or an unearned trophy. I am not an athletic person. I like watching sports, but not doing the things. And 15 years ago, a guy I was working with says, Abe, you are coming with me to play softball. Michael Erickson Facchin: I'm like. Abe Chomali: All right. I was not the worst person on the team. I was like the backup for the worst person on the team. Unknown Speaker: I'm not going to sugarcoat it. Abe Chomali: But my friend is an absolute beast at softball, and in three seasons, I won two trophies. Michael Erickson Facchin: Get out. Abe Chomali: So I have two large trophies that I did not at all earn, but I was on the team. Michael Erickson Facchin: Heck yeah. Earned it. Moral support, team spirit, all that stuff matters. Abe Chomali: Oh yes, I was the water boy. I was the guy that made the inappropriate jokes. The 126 hitting average. Whatever contributed is what I contributed. But yeah, those are the two things that stand out more than anything else. Michael Erickson Facchin: Excellent. So if someone wanted to talk to a champion, where could they reach out to you? Abe Chomali: All right. Number one place is LinkedIn. I'm very findable on LinkedIn. That's the place where I do a lot of business content and discussion. And the other place is the website, xpstrategy.com. There's a big fat button that says contact us. If you'd like to contact me, I like talking Amazon, as you can tell. Michael Erickson Facchin: Right on. Abe Chomali: And we actually do Amazon stuff also. Michael Erickson Facchin: Right on. Well, Abe, I'll see you later today on your show and everyone else, I'll see you next week here on The PPC Den Podcast.