As an ecommerce advertising agency, Tuff is constantly testing new channels and forms of user acquisition to stay on top of ecommerce trends and capitalize on new opportunities. In 2020, Amazon advertising became the number three ad publisher in the United States, accounting for over $15.73 billion in ad revenue. It’s estimated that Amazon’s ad business is growing even more in 2021, with a projected ad revenue of over $20 billion (over 30% annual growth).
Amazon drives most of its ad revenue through Amazon sponsored ads, which are search and display ads on the Amazon platform and managed by Amazon Seller Central. It’s estimated that 89% of their total ad revenue comes from ads within the Amazon platform, while the remainder comes via ads served on the Amazon DSP. Having an effective Amazon advertising strategy is an essential part of a growth strategy for e-commerce brands.
In the spring of 2021, Tuff partnered with Apothekary to test and scale new acquisition strategies, including overhauling their existing Amazon advertising strategy. Apothékary is an innovative provider of Mother Nature’s Farmacy™️, which are clean alternatives to over-the-counter supplements. Using food as medicine, Apothékary is a disruptor in the wellness industry: from skin-care to stress management, Apothékary provides a new way for users to be wellthy.
Increasing Apothekary’s Amazon Ad Revenue by 258% in 90 Days
When Tuff first began working with Apothékary, we knew that to be successful on Amazon we needed to drive volume at a positive ROAS to make it a sustainable platform for e-commerce sales. Unlike Shopify, or other e-commerce platforms, Amazon takes 20% of the revenue generated via your sales: so making sure your ads are scaling while maintaining ROAS positive is essential. Within the first 90 days of running ads on Amazon, we increased the daily revenue generated from our ads by 258%, while improving the ROAS from a 0.54 ROAS to a 1.01 ROAS. The increase in direct ad revenue, coupled with organic growth, lead to a total sales increase of 509% for Apothekary on Amazon.
Reviewing Initial Amazon Campaign Performance
When we took over account management for Apothékary’s Amazon Advertising account, there was only one campaign running, with a broad mix of targeting strategies being applied. We knew that to find scalable success, we would need to create a more thorough PPC strategy and test multiple targeting options.
To start, we combed through the initial automated targeting campaign’s settings, including placements, targeting, bidding strategies, and adjustments, to find any pockets of success we could leverage as historical performance indicators and potential avenues for segmentation.
After digging into the details, we observed that Apothékary’s ads were having their best success at the Top of Search placements. We also identified that Close Match and Complement targeting had the best ROAS, with Loose Match targeting far behind, yet spending a significant portion of the budget.
These results helped guide us when developing our strategy for new campaigns, but ultimately, we knew we have to test, test, test.
Introducing Branded Campaigns into our Amazon Advertising Strategy
Much like a successful PPC strategy on Google Ads, branded campaigns are highly effective on Amazon. They serve to drive super-high ROAS results, as well as ensure you are warding off your competitors from taking the top spot on the search results when you are being searched for.
Because Apothékary has an extensive social media presence and ad budget, we found that their branded terms also had significant volume on Amazon, with shoppers searching the brand and its products on Amazon in hopes of taking advantage of Prime’s great shipping times.
Unfortunately, Apothékary had yet to implement a branded search strategy on Amazon, and competitors were taking the ‘prime’ real estate of the top search result positions. Of course, we quickly identified a Branded search campaign as a simple and effective opportunity to improve performance and increase overall sales volume by capturing the top search results.
We created two campaigns; one ‘pure-branded’ campaign that targeted only Apothékary brand terms and a branded-product campaign, which targeted the names of Apothékary’s popular products that were being searched often, such as ‘chill the f out’.
Adding the branded product ads has also protected the real estate underneath the A+ content on the product pages. By ensuring Apothekary products occupy the “Customers Also Bought” section on the Amazon product page of their product listing, it increases additional product awareness and prevents other brands from using Apothekary’s product listings for their benefit.
Unsurprisingly, results have been stellar, with a combined ROAS of over 18.5 since launch.
Finding Non-Branded Amazon Ad Success
We knew finding success with branded search terms would be an easy, quick win, but we also knew that we needed to introduce the brand to new consumers searching for the best products in the industry to truly help Apothékary grow its revenue.
We set out on an aggressive testing strategy, implementing new campaign types and targeting options weekly. With Amazon’s incredible search volume and site traffic, gathering meaningful insights on things like CPC, Conversion Rates, and ROAS, was able to be done quickly.
A logical first test of a Non-Branded campaign structure included Manual Keyword targeting campaigns, similar to the Branded campaigns described above, yet focused entirely on Non-Branded keyword themes based on Apothékary’s products such as; use-cases, competitors, and ingredients. To our surprise, we didn’t find much success with a manual non-branded keyword focus, as CPCs in this specific industry were higher than projected. Coupled with low price points and slim profit margins, we knew this campaign targeting strategy wouldn’t be sustainable.
So, with data gathered, we quickly pivoted to other campaign types and settings options that would help us identify areas of success.
Using Automated Targeting on Amazon Ads to Gain Knowledge for Manual Targeting Campaigns
As mentioned earlier, when reviewing the initial campaign set up by Apothékary, we identified that Close Match targeting on an Automated targeting strategy was delivering a positive ROAS. To lean further into this approach, we created an Auto Targeting campaign and removed all other targeting options, such as Loose Match, Complements, and Substitutes. This allowed us to isolate Close Match product targets and set aside a daily budget specific to this campaign. To-date, this campaign is successfully scaling with a 2+ ROAS.
We also took this approach and created additional Automated targeting campaigns, isolating substitutes and complements targeting, with the goal of having Amazon’s automated matching strategy help us identify Substitutes and Complements products that we could then narrow in on and target manually.
With a couple of weeks of positive ROAS under our belts, we analyzed the Substitutes and Complements being targeted by the Automated matching campaign, and were able to identify over 20 unique ASIN targets that were delivering positive ROAS. Taking these results into account, we set up a Manual targeting campaign, targeting these ASINs specifically in order to segment spend and scale up the amount of daily spend going to these top performing ASIN targets.
To-date, we continue running the Automated Substitutes and Complements campaign as a seeder-campaign, or a way to identify additional ASINs to add to our ever-growing list of Manual product targets, with both campaigns operating over 1.5 ROAS.
Our Amazon Advertising Strategy’s Impact on Organic Amazon Sales
Amazon organic rankings are impacted by several factors. The two most critical factors are often considered to be total purchases, and review ratings. By increasing the total number of sales via paid Amazon ads, Apothekary has also seen an increase in organic sales, and blended ROAS.
Since taking on the account, Apothekary has seen an increase in orders from our paid acquisition efforts increase by 333%, and organic sales by 48%, without making a single change to the A+ content on the product listing page. These increases have led to a blended ROAS increase of 86%. Additionally, since the number of total purchases have increased, so have the total number of reviews – further improving Apothekary’s organic rankings.
Why an Effective Amazon Advertising Strategy is Critical for Long Term Growth
As you can gather from this case study, our Amazon advertising strategy for Apothékary in the first couple of months has focused on testing all of the available targeting options on Amazon Advertising. We’ve done this by identifying winning strategies: whether they are bidding strategies, targeting strategies, or placement strategies, and then isolating these winners into campaigns where we can scale by controlling spend at the daily budget level.
Not everything we have tested has been successful, but each test has delivered learnings that we have been able to iterate over. Overall Amazon revenue, both directly contributed to advertising efforts and organic, has grown each month. With July set to finish as the best month for revenue from Amazon yet, there is no doubt that these enhanced advertising efforts have contributed directly to this revenue growth.
If you are looking for a growth partner to scale your Amazon Advertising efforts, we’d love to chat. Drop us a line, and let’s talk about how we can take your Amazon ads to the next level.