Amazon is a crowded place. As a veteran of Amazon, having managed the third-party seller platform, Brad Moss should know. It’s used in 10 countries, by over 2 million merchants, with more than 200 million customers and over 60 billion products.
Even if you don’t sell on Amazon (or at least not yet), it pays to listen because this platform is only getting more ubiquitous, and many of the concepts and best practices translate to online marketing in general.
Tune in to find out…
- The difference between an Amazon vendor and an Amazon seller
- Things to watch to make sure your Amazon product listings are effective
- Why you must match your supply chain with your marketing funnel
- How Amazon’s advertising platform actually works
- In-depth details and insights about the highly-complex inner workings of Amazon ads
Mentioned in this episode:
Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success Podcast. We talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I’m your host, Steffen Horst. Today, we’re going to talk about Amazon advertising. Here to speak with me about the topic is Brad Moss, who is the CEO of Product Labs, one of the top Amazon marketing consulting companies in the world.
His business expertise has won him three entrepreneurship awards. He spent over two years at Amazon as a business leader managing the third party seller platform, which is used in 10 countries by over 2 million merchants who serve more than 200 million customers purchasing more than 60 billion products. During the time at Amazon, he also created the Amazon Seller mobile app for third party sellers, which grew to a nine-figure business for Amazon. Brad, great to have you on the show.
Brad Moss: Hey, it’s great to be here, Steffen. Thanks for having me.
Steffen: As I mentioned to you beforehand, you know, this is the first time we’re going to talk about Amazon advertising. So, you know, for some of the listeners, when we dive into the topic later on, there might be some information they already know about. But for the first episode, I really want to keep our conversation a little bit more on a high level so that people that might have heard about it, but I’m not quite sure if that’s for them can find a way into Amazon advertising, before we go there. But how did you get started in advertising, and what led you to founding your own consulting practice?
How Brad Got Started in Amazon Advertising
Brad: That’s a good question. What got me going into kind of the whole world of Amazon, which includes all the advertising, was time inside of Amazon. So I finished, you know, I finished my Masters in Business. And I got hired into Amazon, and ran several different systems. And actually, while I was inside Seller Central, while I was managing the Seller Central platform, there’s a new team inside of Amazon. So this was like seven years ago, probably, maybe six. There’s a new team inside of Amazon called the Ad Team. Well, it wasn’t new for all of them. It was new for the third-party marketplace, sellers.
And they said, Hey, we want to launch this new platform, how do we launch it? And I said, Well, since I own kind of the whole Seller Central, this is where we put you. And they said, Well, okay, that looks great. And then we did a bunch of A B tests to find out the exact naming of their program where it should be. And we inserted them there. And they launched the whole sponsored product ads platform, which is now become a huge, huge moneymaker for Amazon. That was about seven years ago, I introduced them and pulled them into the platform, the Seller Central platform.
And that was kind of my first, you know, direct relationship with some of the core marketing people there. But, you know, after leaving Amazon, more and more, as I started this firm, more and more marketing is becoming a bigger and bigger deal. And so we’ve been in the forefront of all Amazon marketing since it very first came out.
Steffen: So you left Amazon to find your own consulting practice, is that correct?
Brad: Yeah, well, I left them for several different reasons. It wasn’t decided to start the practice but as soon as I left, so many people were calling me and saying, Hey, we need help. But I put together a little business plan with a former business partner, or a business leader from Amazon. And he’s my business partner now. And we launched a company we built. We built a bunch of really cool technology behind what we do. And we launched a full-service company to help brands large and small, make a real impact on Amazon and know what they’re really doing.
Steffen: That’s great. So how do you help companies with Amazon advertising? What are the services you guys provide?
Brad: Yeah, so we provide kind of three core things for our customers. We do a full-service management piece. So that’s the first thing we do is like a full-service management, where we help them we have a full analytics and metrics dashboard of understanding what’s going on with their inventory, how are their products listed. Are they listed the right way? Do we need new images? Do we need to change up the text? A lot of things like that. And then we go through and we do the full, you know, research into keywords, which we can talk more about later.
And then we do the advertising inside of Amazon and try and spend the right amount of money to grow their sales, but not so much money that they’re not making, you know, profits in the end. So we work with the strategies, kind of a full-service management of taking their brand and just running it like we would run any large business, whether I was inside of Amazon or not. And we take over the full Amazon channel for our clients.
That’s kind of the core thing that we do for our clients. So then we also do, we’re really big on strategic plans and strategic consulting kind of initiatives. And so for some clients, we just build out full strategic plans for them and say, Hey, this is the plan of what you should do is what your market looks like, and then how you should attack it. And then the companies themselves will take on the execution in those situations, but we build a lot of plans for them to large companies. And medium-sized companies we do that for a lot of that. So
Steffen: So you’re not only focusing on the media buying part on Amazon, you really also looking at the inventory side. And if that’s the case, how does that work? How do you help companies and manage your inventory as it relates to selling on Amazon?
Brad: Yeah, I mean, so we see it all. I don’t like to isolate one little vertical as a company. I believe that’s our offering, is we like to incorporate everything that we’re doing to the entire business. So, you know, if I’m driving, advertising and promotions, and driving sales up in a given month, I need to understand what kind of impact that’s going to have on my supply chain, and my inventory. And so, you know, we never step in and take over the purchasing, you know, of new products from things, but are from suppliers.
But for our clients, we say, hey, look, we’re going to be wrapping up these plans for the next three months, this is the inventory projection of the products that we need so that you can keep selling these products, as we’re wrapping up your AdSense. And we’re going to need X number of products in Amazon’s fulfillment center. So it’s really all to supply the full-funnel, right? Where on Amazon, if you run out of product, and then your listing comes down and no one can see your listing. So you need to always have product available. That’s why the supply chain is still critical, even though you know a ton of what we’re doing is focusing on the advertising piece.
Steffen: That makes a lot of sense. On Amazon, what type of Amazon advertising solutions are available? And who are they for? Are there specific solutions for a specific type of business? Can all the solutions that Amazon offers be used for everyone who sells products?
Options Amazon Offers For Advertising
Brad : Yeah, a lot to unfold here on this explaining the whole system in general. But if we’re looking at just the advertising piece, I mean, this is primarily for people who are selling on Amazon. Now there are some ad systems inside of Amazon for people who are not selling a product on Amazon. Those are some of the smaller systems and Amazon has, you know, they’ve been doing those for years, and they’ve even closed down some of those systems. But what they’re really focusing on are anyone who has a product to sell on Amazon, that’s the business that’s growing.
Because I can go in, I don’t have to necessarily do any creative, I can just say, Hey, I want to bid and spend this amount of money on this product. And Amazon will automatically take my listing and show it the right way and display it on the platform and sell it for people when they ask. So, you know, from a high level, though, let me take a step back, there’s a couple of different systems that you can use. I mean, it’s all Amazon marketing is kind of the full team. But there’s two different ways of selling on Amazon. Just from a high level here, there’s the selling through vendor, Amazon, and that’s.
Well they’re selling to a vendor and then selling to the marketplace or through third-party selling. Now the differences in selling to your vendor is like I’m selling to a Walmart or a Target or I’m selling to somebody who’s going to buy, give me a product, order a few and buy a bunch of goods from me and then they’re going to resell it for whatever price they can. And that’s the traditional retail model. That’s Amazon Vendor.
Then there’s a third party seller marketplace, where I’m selling directly to the consumer. So I get paid when the actual individual unit ships, and it’s sold to the consumer. Now in both scenarios, I can sell through an Amazon fulfillment center FBA, they call it fulfilled by Amazon. In both scenarios, I can do that. So it’s more of when am I going to get my money and who’s managing the price point and how in particular I’m selling? Whether it’s a vendor or seller.
Steffen: Yeah, so I think it’s also called Seller Central and Vendor Central. Is that correct?
Brad: That’s right. Yep.
Steffen: Okay. So I would assume that people who go with Seller Central versus Vendor Central, that there are two different cost factors that specific brand has to pay to Amazon for using one or the other platform? If that’s the case, what is that?
Brad: So here’s the thing, when when you’re selling into Vendor, you have you’re dealing with Amazon, and sometimes if you’re big enough to then you’re negotiating kind of contracts with them, right? Like a PNG has a different contract, and a Unilever versus a j&j. And even sub-brands, within those companies will have different contracts with Amazon of what Amazon is going to pay for each product and product line.
But in general, for kind of the average Joe selling on Amazon, which anyone still on Amazon is not an average Joe, but for the standard person selling to Amazon, the fees will probably come out pretty similar between selling through vendor side and down selling to the seller side. Now, I’ve seen a lot of situations where the vendor is more expensive, cost more than I think the situations where it costs less. And so the fees going to break down in several different ways. But when it comes down to it, you’re going to be giving up to Amazon, probably 30 points on your, you know, 30 cents on the dollar to sell through their platform.
If you include all the shipping, you might give up, you know, 45 or 40 points, because you’re including all the shipping. So Amazon’s gonna buy from you wholesale, maybe it’s 60 cents on the dollar for these products and what they’re advertised prices. And on the seller platform, you have the 15% selling fee, and then you have whatever the FBA fee will be, which is shipping that you would be spending anyway. So yeah, I mean, that’s some rough ideas. You know, every product is different. That’s why I can’t get like a super-specific, you know, it’s always 30% or whatever. But in general, that’s what you’re looking at.
Steffen: Brad, what kind of ads offer type of ads are available that an advertiser can choose to promote their products on Amazon?
Brad : Yeah. So that’s the reason that kind of defining out the vendor side and the seller said, because there are different kinds of ads on both sides. But well, there’s plenty of similarities as well. But kind of the core advertising platform that a lot of third party sellers are using now. And usually, if you look up Amazon ads is what you’ll find on Google is a sponsored ads advertising platform on Amazon. And that platform is primarily for sellers, third-party sellers. And what it is, is you go in and you define out a keyword. Or you can set up automatic campaigns, you define it out on each product. And you set what your bid price is.
And you say hey I want to bid between this amount and this amount, or I want this to be my max bid actually. And then you set it and you let it run. And you set your bid capacity and then Amazon takes those bids, and if your product wins the bid, it puts it up on the display page inside of Amazon. So when someone comes to Amazon, and they type in a keyword, they type in markers, right? They type in markers does your product, it might come up number one, or two or three. And they actually have the little title sponsored. That’s in like a light gray lettering. And many customers don’t even see that lettering, but that’s your ad that has popped up on the display page. That’s the most standard ad inside of Amazon.
They can show up on the first page they can show up on the second third or fourth if people keep looking for the products. And there’s some controls now inside of Amazon, hey, I do I want to increase my bid to show up on the first page or do I want to leave my bid and just have it be the same whether it’s played on the first page or like the last page. There’s ad spots there and there’s ad spots also on other products. So if I jump into click on the markers, and they jump into that detail page is what it’s called, where I can see the images of the product, and I can see the price. And I can click Buy Now. There’s a few ads slots inside of that page also.
And those are product display ads. So I can click on. And that’s just another ad placement that I can set through the sponsored products system. And I can display on other people’s listings, actually. So you can do a little bit of a conquest thing, where you can find someone else’s products that are like yours, you say hey I want to do advertising, I want to advertise on their listing. And you can again, you’re setting the price of how much was spent for per ad there. Now all those systems are all per click systems add per clicks, or cost per click systems.
And then the last one there is that there’s a headline from a headline search, placement. So if you type in a keyword, there’s a big headline, and you get a larger ad spot, and you have to have at least three products to display on that ad spot. But and they have to be branded now. And you can show up there and you know, says hey, buy this marker or this set of markers, or you know these other sets of markers. And you show there and people click on that, and they can go, you know, to your detail pages or to list of products to look at.
You know, all of them have their different, you know, so many details about what the benefit of each one of those slots. But those are core ways of advertising on the third-party marketplace side. Now, on the vendor side, you have access to similar kinds of ad slots. You don’t quite have the same kind of control in terms of reporting. And on the vendor side, if you’re using their ad platform, you may not own the buy box, which means if someone comes to the display page of your markers, and clicks buy now, if you guys are both selling like an Office Depot marker, then if you have another seller selling it, they may own the buy box.
And so, which means if someone clicks buy now, they get credit for the sale and not you. The ads that go through the AMS are the kind of the vendor side ad platform. If someone clicks on those ads, and then goes to your detail page, you may not get the sale on that product, unless you are the only one selling that product. If it’s destined markers, then you’re the only one selling those. And so you could send a lot of traffic to the vendor side to your product and get all the sales on them. So you get accurate reporting that way.
Steffen: Yeah, no, I think that was a great overview. So the sponsored ad sounds a lot like paid search ads. Is that very compatible? Or comparable?
Brad : Yeah, yeah, I think it’s probably pretty comparable. I mean, Amazon looking at what Google and Facebook are doing for their ad systems and they copied a lot of the best practices there.
Steffen: So with that in mind, is there information on the Amazon platform when you run your campaign that tell you what you would have to bid for example to end up on page one?
Bidding On Ad Slots
Brad : So no, yes, well, no. So what it is it shows when you go into set your bidding on the product, it shows a range of a low to high bid to win the ad slot, right? To win the ad. And if you do win, so if you’re if it’s like you know, three bucks, so is the high end and you put in like $3.25, hopefully, you’re going to be getting every single the top of all the ads when you do $3. Or the top position of all the ads there. Now there is a new, there’s a new system where you can say Amazon, I want to multiply my bid to make sure I show up on page one.
And so through that system you can say, Hey, I’m gonna multiply my bid, you could go back and set your bid to $1 and say, Hey, I’m going to multiply my bid by 3.5 to get up to only display on this first page. And so there’s some, so that’s like the new control they just added this year. So you can kind of tell Amazon that, hey, I want to show up on the first page through that. At least you can tell their system. It’s not like 100% guaranteed. But that’s the mechanism that you can use to make it go in that direction.
Steffen: So you mentioned or you earlier talked briefly about pricing for the ads. So with Google, for example, it’s a big black box, right? It tells you how much you have to bid to be on the first page. And then you have a certain max CPC, and then several factors like CTR, relevancy, etc. determine how much you CPC is going to be where you end up among the three to four spots on the first page. How does Amazon determine the CPC that one has someone has to pay for position one, two, and three.
Brad: So it’s essentially a Live Marketplace. And I’m not as familiar with how Google works. Amazon is essentially an open marketplace saying, hey, there’s other people who are bidding. You know, they’re bidding $1 on this. And so a dollar and then one guy is getting $1 50. So if you want to for sure when the ad because there’s only so much capacity.
That’s the other difference. Inside of Amazon. Google seems like there’s like limitless. Even though there isn’t, it almost seems like there’s limitless ad inventory, right? On Amazon, it’s much more limited than Google, even though it keeps growing. But you have a limited number of people coming for each one of those keywords, right?
Inside Amazon, people looking for, you know, maybe purple, dry erase marker. That keyword. How many people every day are coming to that keyword? Whatever that number is that’s the limited ad inventory you have, that multiplied by the number of ad slots on the page. But so you’re competing with other people on whatever that limited inventory is. And if you’re the top ten, then you’re going to get it for the next click that comes in.
So the next click that comes in the system goes through and sees who’s bidding and gives it to the top bidder and gives the top slots to the top bidder. And it keeps going like that until maybe the top there runs out of budget at 12 o’clock so the next person comes up. And the next one down comes up and the system says okay, this is the next topic. So we’re going to give that person the slot. That’s generally how the core system operates.
Steffen: Does a product have to have a certain price to be successful on Amazon? So if you, for example, have protein powders, those packages usually run around about 20 to 30 bucks. Can they be successful on Amazon? So from our experience, for example, when we manage campaigns like those CPC seem to be quite competitive and the $3 range, which would require quite a lot of quite a good conversion rate in order to be successful in to deliver a return on the investment. So we’re getting other products and from a pricing perspective that do better on Amazon than others? And if so, what kind of product audit or product categories?
Brad : Yeah. That’s like a super loaded question because there are, you know, there’s over a billion products on Amazon. Actually, when I was in there, I think we saw 6 billion products. Many were dead, right? Dead ASINs, but other ones are, you know, still active. I forgot what the active number of active products on Amazon. I think it was like 5 billion or something like that. Heard from somebody but the price, let me just give you a few anecdotes.
And you can take what you will from it. Price for us, but let me first just say, the average product, at least during my time at Amazon, the average price of every purchase on Amazon was around $20. That was the total average across all the products that were sold, divided, the price of all advisor sold divided by the number of units was $20. Around like $21, or something like that. So it was a that’s the average product price. Now, we’ve seen products sell for a lot higher, a lot higher hundreds of dollars, even thousands of dollars on Amazon. And we’ve seen products that are trying to sell for lower. Usually when you get to $10 sub $10, you’re losing money.
And the margins are really, really thin. Now the ads don’t necessarily, well. They don’t necessarily impact that one way or another. One of the key things that we do as a company is we actually have a framework that we use to help understand any product in any category. And the framework is like a McKinsey consulting framework. I don’t know if you’re familiar with them. But it’s a derivative of something that they’ve done, we’ve kind of adapted the whole thing for the Amazon Marketplace. And what it is, is, you know, straight-up math is convert it’s pretty simple, right?
Conversion rate times, unit sales equals, sorry, conversion rate times your traffic equals your unit sale. And so it breaks down, you know, what’s my conversion rate, and then how much traffic am I getting to this product? And that’s how many sales I’m getting. Now, when we’re looking at conversion rate, what we do is we isolate inside the conversion rate, there’s four key factors that we pay attention to. That contributes to your conversion rate. And those four factors are one, the text that you have displaying your product detail page. Number two, it’s the images that you have showing your product on that detail page.
Number three, your price is a big factor in your conversion rate. And number four are your reviews. So you’re paying attention to those four things, make up your conversion rate. So I can have a crazy high, if I had a really good and we’ve seen this actually several scenarios, really good product images, really good text, and really good reviews. And that means we can jack our price up. Right? If a product’s super high quality, that’s what Apple is right? Like really good reviews really good everything Apple prices, their products that like two or three x everyone else. Because the consumer is going to, you know, see the quality of the other three components.
And so you can improve your price and put it up that way. And that’s all that comes down to the core marketing here. That’s the fun marketing stuff that’s not necessary advertising its marketing of your product. So whenever we consider price point, we actually look at all those three, those four factors and say, well, what’s the competitive, what are the competitors doing on the market? How does it look with competitors on the market? And what are they doing with those with their products, and are we just head and shoulders above other people, right?
Like we launched a new brand, for a big client. And they, you know, they were competing as a, you know, like a 40-year-old big conglomerate as in the industry. And they came out and we had a higher price point than the competitors. And we just had a lot better than the top competitor that was a well-known brand name. But we had a higher price point. And we had really nice lot better images and a lot better text on that display page, or on the detail page.
And we came out we killed it. I mean, they grew to a million-dollar business within a couple of weeks just by launching, you know brand new with some of these core components there. You know, we love messing around with price and doing the right way, as long as you can kind of mix everything else in the equation of figuring out what should my images look like, what should my text look like? And then how do we make sure our review, we have really good customer service to help do reviews.
Steffen: What on average are to CPCs on Amazon? Do they differ a lot, depending on the category?
Variance In Amazon CPCs
Brad: They differ a lot, depending on the product and the keyword, not just category. But in general, you know, categories of products with high market. I mean Amazon treated like an open marketplace, right? So it’s the market that will stabilize and equal stabilize itself at some point. But so products with really high margin, like a lot of supplements, like we see the cost per clicks on those really high and sometimes stupidly high, like $30 per click on some things we’ve seen, which is just dumb. I mean, people are just going in and they just don’t understand what they’re spending the money on. And they’re not going to make back that investment.
And so when someone does something like that, they drive the price up for one else in the market. So in general, you know, you got to look at, it all comes down again back into the supply chain if you can get a product made for cheaper than the next guy that gives you an extra couple of points to use on advertising. And so you’re a little bit healthier to spend a little more on ads to drive more traffic to your product in those scenarios.
So but, you know, I’ve seen used to be like $7 was a lot of ads, instead of Amazon was like two years ago, maybe three years ago. And now most stuff is between $1 and $3. I see just the general things, but then some of the higher volume traffic keywords doesn’t start going up quite a bit in terms of cost per click.
Steffen: If people want to find out more about you and your company, how can they get in touch?
Brad : Yeah, you know, we have a website at productlabs.ai or productlabs.net. We have both. You can hit us a note inside the message there or you can just email. I think its firstname.lastname@example.org. Or just go to the website and hit that up. And you can find more information about us and we’ll definitely get you back.
We always want to hear what people have to say, what their problems are. We want to help out where we can because Amazon is very confusing and I understood that completely from firsthand experience inside of Amazon because it was even confusing to the engineers who are writing stuff and writing the code. So it is confusing to the consumers and the sellers out there too. But yeah, just hit our website and it’s up and we’d love to help people out or just your answer questions or whatnot.
Steffen: Thanks everyone for listening. If you like the Performance Delivered Podcast, please subscribe to us or leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital, you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ. Brad, thank you for joining me on the Performance Delivered Podcast and sharing your knowledge about Amazon advertising. In our next episode, you and I will dive deeper into Amazon advertising and talk about how to set up successful businesses.