Why Your Amazon Ad Revenue Is Misleading (Same SKU vs Other SKU)

Why Your Amazon Ad Revenue Is Misleading (Same SKU vs Other SKU) Speaker 1: What's going on, Badger Nation? Welcome to The PPC Den. Join me. I'm here, sitting in the forest here in Austin, Texas on a hike. Thinking about something related to Amazon PPC, which is, of course, Same SKU versus Other SKU ad sales. It's something that I've thought a lot about over the years. And really, my thoughts continue to evolve. And I take great joy in continuing to share this knowledge with all of you. So thanks so much for listening. A lot of advertisers don't really realize this, but when you look at your revenue column in your account, you're looking at the campaign level or the keyword level or the search term level, the number that you see for revenue isn't just the sales of the product you're advertising, right? It's the additive of your Same SKU sales and Other SKU ad sales It's related to the product that initially earned the click. So, for example, someone clicks on product A and they buy product B, that revenue in your ad account would get attributed to the Product A, which earned the click by default. Now, unless you know where to look, you would not be aware of this. So let's break this down and talk about what this means and what to do about it. So when somebody clicks on your sponsored product ad and they buy that exact same product that you were advertising that got the click, that's the same SKU sale, right? Clean, simple, exactly what you would expect. Other SKU sales are different. That happens when someone clicks on your ad, but instead of buying the ad that they clicked on, They end up buying a different product from your catalog. So if they click on a small size but they purchase a large size, that's an Other SKU ad sale. If they click on the red version but they buy the black version, that's an Other SKU ad sale. So it's everywhere. Amazon still attributes that revenue back to the campaign and the ad and the product that generated the click in the first place. It gets lumped together in this attributed sales column that you would see in Ad Campaign Manager. When you're looking at your ACoS or your ROAS, what advanced marketers can do is they, number one, they know that this is a phenomenon and now you do too. Basically, you need to know the split of attributed same SKU sales and other SKU sales. So the first thing to do is you can download this report from Amazon. So you can go into Amazon into the advertised reports and download a purchased product report. And what that will show you is it'll show you what got the click versus what got the sale. That's your first step in this episode. So I would recommend that you go do that. Just go to your advertising account. Go to the reports section of your advertising account and download a Advertised product report and a purchased product report and you can actually see how these compare. Now what's really cool about this is that you will find out which product has a high amount of same SKU sales, which product has like a 50-50 split, of same SKU sales versus other SKU ad sales, and you'll see products that have a high number of other SKU ad sales. So let's start with the cleanest situation where every dollar of attributed revenue came from the product that you're advertising. This is true if you have one singular SKU. This might be true if you have very different SKUs from one another. So if you're selling A coffee mug and a guitar case, there's going to be very little cross-pollination between these two products. So that means, the most simple terms, that really your advertising is doing exactly what you thought it is. Somebody clicks on the product, they buy the product, you have 100% Same SKU advertised revenue. So that's great. In this situation, it looks healthy, you scale, you treat it like a typical ad account without this added complexity of Same SKU versus Other SKU sales. And now let's get into it with a split pace. So this would be meaning you have a reasonable amount of Same SKU and Other SKU sales. It gets a little bit more nuanced, but let's talk through this. So if you're advertising a product that has $10,000 of sales and maybe $7,000 is Same SKU and $3,000 is Other SKU. The thing to remember is that the actual ACoS for the advertised product may seem worse than it appears. Like your total ACoS for this product may seem worse than it appears. If you look at the amount of spend that you spent on that product and then the total sales for that product, It's actually going to seem different because it actually generated $3,000 of sales for another product. But in your ad account, that will all show up next to that product. So it's a little complicated and it's worth paying attention to when you're navigating your Amazon account. And it matters because some of your optimization decisions might be pointing at the wrong direction. So if you're bidding aggressively on a keyword because of the blended ACoS or the Same SKU, Other SKU sales looks fine, but then the advertised true economics are mediocre, you might be overspending to drive revenue that isn't actually profitable to that specific product. So what you should really do is try to calculate the true ACoS for that product A to product A pairing. So this is where you look at the total ad spend for that keyword or that product and you divide it only by the Same SKU Revenue, that will give you basically like the same SKU, ACoS. You can then ask yourself, do the other SKU sales represent a lot of business value? And I would say in most cases, the answer is yes, meaning they're finding you through one product, they're buying another product and that is totally fine. You see this a lot with maybe, you know, your advertising. Here's a strategy. A lot of times you might have different sizes and the most expensive size Probably isn't the most appropriate to advertise heavily. Instead, you might want to think about advertising the smaller size to generate the click. And then if somebody did want to buy a multi-pack or a larger size, then they have that option to buy that variation. So that's why it's worth paying attention to what gets the click and what gets the sale. And that's actually incredibly common where you Have, you know, a single pack, a multi-pack, a 10-pack, and the 10-pack is $150 and you wouldn't want to advertise that because that's probably gonna have a really low click-through rate. But if you advertise the more inexpensive model, you probably have a better click-through rate, leaving anyone who wants to upgrade to upgrade right there on the product page. And if we sort of use this and we begin to think about the heavy other SKU ad sales, imagine a campaign where the attributed revenue looks pretty good, the keyword and the product level, product ad level, but then you look at the same SKU, other SKU sales, and imagine if 80, 90% of the revenue was coming from products We're not that exact product. So the mental model that I would use in this situation is relatively simple. So let's think through this. What do I do with a product that has a very high amount of other SKU ad sales? You essentially have two products doing different jobs. The first one's getting a click and the second product is getting the sale. And before you do anything, you need to figure out if that's okay, if that's working for you. Because if this is the case, Sometimes, you might just want to advertise heavily the product that actually gets the sale. Meaning, and that's a scenario where I'm advertising product A and everybody's buying product B in a huge amount. I'm talking more than 50% of the time. That means something. It either means one of two things. And how do I know if that first product is doing the hard work of getting the click and the second one's doing the hard work of getting the sale? So what you can actually do is look at the click-through rate for the advertised product. So if the product you're advertising has a strong click-through rate across its search terms, that tells you something. It's a good lure. It's good bait to get people to click on it. So what I would do in that scenario, I would look at the product that gets the click and the product that gets the sale and compare metrics. I would compare the Click-through rate across both of them. Again, I'm talking first click on the product ad. So look at the click-through rate and then you'd want to advertise the one likely with a better click-through rate because that's the bait getting the click. And then conversely, which one has a better conversion rate? You'll also want to factor that in as well. Which one has a better unit session percentage? Which one has better convertibility? Which one has a higher Cart value, all of those things will then factor in. And then if that's the case, if the other SKU revenue coming from that traffic is meaningful and those sales are profitable, that could be an absolutely valid strategy. So having a high amount of other SKU ad sales is not a negative. It's actually just fine. But the thing to know is you just want to know could that product that generates the bulk of that revenue Also be the product to generate the click. And the way that you would determine that is you would look at the click-through rate for both of those products, and then you can be honest with yourself, pull the data for it, and then you will know. So if the CTR is strong and the other SKU sales are meaningful, you've got a click magnet. Be sure you note that in your company intelligence and ensure that the catalog math makes sense, and that will work. On the flip side, if the click-through rate is weak and the other SKU sales are also low, Then that product is neither doing its job of being a click magnet or a sales closing magnet. So that's a clear signal that you probably want to advertise another variation and then cut that one, restructure the campaigns to ensure that you're putting your best foot forward. So the big mistake that people make in this scenario is looking at the combined ACoS from all Same SKU and Other SKU sales. But if you take even just a little bit of time, you can do this once a month just to get the data point. Go download a purchase product report, compare the same SKU revenue versus the other SKU revenue, and when you get into situations where a product has a lot of other SKU revenue, ask yourself if it's doing the deal, if it's doing the job of closing the deal, and then you have other products that do the job of generating the click. This is really common in things like clothing, and I would say it's fairly innocuous in things like clothing where somebody clicks on one size, they buy another size, and that's totally fine. And then if you think about it in that scenario, you wouldn't Have the highest click-through rate on an ad for the extra extra large size because that's least common and that would have a lower click-through rate. So in that situation, it makes total sense to serve the most popular one first. So I hope you gain some perspective on what the revenue means inside your ad account. And just a really simple quick report can allow you to determine what to do, if anything, about Same SKU Sales and Other SKU Sales. Again, recapping that, if you have a high number of Same SKU Sales and very low Other SKU Sales, that's fine. If you have an even split or if you have many more Other SKU Sales, what you can do is you can do a little research To determine if one product is a really good click magnet and the other one does a really good job at closing deals, and if you find that a product is not a good click magnet, it should probably be turned off in advertising and served the ad instead that actually gets the sale, could also get the click too. I hope you enjoyed this one. It's one of my favorite topics. I show everyone this and I recorded a related episode a couple of weeks ago about Total ACoS because of course the other SKU sales are reducing the Total ACoS of other products and actually increasing the Total ACoS of the product that got the click. So it's really important stuff to be aware of this and if what I just said about Total ACoS sounds new to you, go back and look at a previous episode a couple of weeks ago where I talked about Total ACoS. That, my friends, is The PPC Den for this week. Tune in next week for some more tips, tricks, and strategies to make your Amazon advertising life a little bit easier and a little bit more fun.