Tod Harrick, Sr. Director Customer Success, CommerceIQ
In my last blog, Amazon and Brands are Using the Wrong Availability Metric, I talked about the importance of correctly measuring the sales impact of ASINs, Amazon products, not being in stock. When an ASIN is out of stock, it loses more than just the sales of shoppers that hit that detail page. An out-of-stock product loses search relevance causing it to show up in fewer searches, resulting in lower sales, which further reduces search relevance. This starts the process of a downward spiraling cycle of declining search relevance and lost sales. The concept of relevance within search is critical in eCommerce.
Search relevance is essential to driving sales on all eCommerce retail sites, including Amazon which continues to be part of most shoppers’ journeys. When buying online, 63% of consumers start their product searches on Amazon, 90% of shoppers visit Amazon at some point in their shopping journey, and 90% of Amazon purchases are made from search results pages. How well a product shows up on search is a concept known as “Share of Voice” (SOV) or alternately “Share of Search” or “Share of Digital Shelf.” Studies have shown that an increase in SOV across all media will drive an increase in market share. Share of Voice is the number one determiner of future sales on Amazon.
To illustrate this point, let’s take an example of a major consumer packaged goods (CPG) brand’s 2020 advertising spend patterns on Amazon. As you can see in Figure 1, spend patterns were historically erratic, spiking and dropping, with spend increases never large or sustained enough to promote significant increases in total share of voice or sales.
In September, the brand started using CommerceIQ for their Amazon Sponsored Ads (AMS) and implemented automated strategies that managed bids based on improving share of voice for their ASINs rather than just focusing on ROAS (return on ad spend). A short-term but significant (157%) Sponsored Ads (AMS) spend to increase over July-August in the 1st half of September (Figure 1) led to a brief increase in the paid share of voice on Amazon but a more sustained 70% increase in organic Share of Voice (Figure 2).
Additionally, this resulted in a 34% increase in total sales (Figure 3). The brand reduced spend again in mid-September (Figure 1), but only moderately this time, and while Share of Ad Space dropped quickly (Figure 2), organic Share of Voice remained elevated as did total sales, even as paid sales also dropped (Figure 3).
In October, as seen in Figure 4 the organic share of search and sales did begin to degrade, driven primarily by spiking OOS issues, as the brand dealt with the unexpected elevated sales rates.
Based on the findings this brand was able to glean using CommerceIQ, they obtained hard data to justify the following next steps:
- Maintain Amazon Sponsored Ads (AMS) spend at sweet spot of 4% – 5% of sales, then strategically increase spend to 8% – 10% of sales for 1.5 – 2 weeks prior to peak sales seasons
- In addition to share of voice objective automations, implement inventory-aware automations to shift advertising spend to high-converting alternate ASINs on low-stock products.
If you’re interested in understanding your brand’s share of voice ranking and the impact on your growth on Amazon, drop us a line at firstname.lastname@example.org and we’ll provide a free assessment.