Today we are going to be talking about advertising on Amazon. We’ll break this down into two areas. The first is advertising on the proactive side and the second is advertising on the reactive side. We will define both but will only be doing a deep dive into reactive advertising on the Amazon ecosystem.
What is Reactive Advertising?
Simply speaking, reactive advertising means your customers already care. Meaning that when they go into Amazon, they already have an intent to buy. It is important to capture that customer. For example, say a customer has the intent to purchase an external hard drive and they go to Amazon to decide which one. This is a reactive approach because the customer is already on Amazon with the intent to buy a particular item. At this point, we want our advertising to be in front of the customer so they will execute and we get the conversion.
What is Proactive Advertising?
Proactive advertising is when a customer does not know a brand. The reason we call it proactive is because the majority of initiatives we engage our brands with are on social media. For example, a customer does not have the intention to buy a hard drive, but they saw an ad and clicked on it to potentially purchase the hard drive, or at least now it's in their awareness mechanism, and they will purchase at a later time.
Now that we have defined both of them, we are going to focus on reactive advertising. We have a fully stacked advertising team and the only thing they do regularly is to win at the Amazon game. There are four main areas:
Branded Campaigns
Category Campaigns
Complementary Campaigns
Competitor Campaigns
Those four categories are generally fundamental for every single brand. However, they are different in each individual brand case. The reason we bring this up is each brand needs its own strategy. For example, you don’t want to heavily emphasize a branded keyword if nobody knows who you are. In that case, you would want to heavily emphasize categories. On the flip side, if you have a really strong front on advertising for other channels and you’re well known, then branded is potentially the way to go.
Let's take GoPro as an example. If you are in the market for an action camera, you are probably going to look at GoPro. Anything on that end is going to be a competitor or complementary keyword. If I am a lesser-known brand in the action/adventure cameras and I’m not GoPro, the chances of me going head-on with GoPro and being successful are very slim because they have such a large market share. It is not in your best interest to go head-to-head and advertise against the keyword “GoPro” because GoPro will monopolize that entire keyword on a branded mechanism. The category will be action and adventure cameras though. That category is going to be GoPro first, everybody else second. So you probably don’t want to advertise against GoPro in that category unless you have millions of dollars to spend and the majority of brands don’t have that or if they do have that, it's not solely dedicated to Amazon. The way that we need to frame this is the keyword “GoPro” is essentially owned by GoPro and falls under the competitor side. Those are the allocated budgets we would want on competitor keywords.
To put it even more simply, if I have $1000, and that $1000 is going to be allocated in all four categories (branded, category, complementary, and competitor), we may not allocate 50% of the budget for branded because nobody knows who we are. GoPro may spend 60-70% of their budget on the one keyword “GoPro” because they already dominate the industry.
To break it down, take a look at your brand, see how much competition you have in the competitor category. You may want to invest heavily first in the category and complementary campaigns before heavily investing in branded and competitor. That should be the first 90 days. For the next 90 days, you would want to concentrate more on the branded side because you have more organic purchases - spend about 60% of the budget between your complementary and category. Then you may want to invest a little more on the branded side because you want to be well known.
Our advice to you is:
Understand where your allocation of budget is.
Understand your brand maturity on Amazon.
Understand your competitors and how much money they have.
Develop a strategy to understand branded, category, complimentary, and competitor keywords, and then invest accordingly in where your want to grow.
If you want to grow to 10 million dollars in year one, then you may want to invest heavily in branded and category campaigns. However, most brands want to grow their advertising along with their organic sales.
