Shannon: All right everybody, welcome to the webinar. Thank you guys so much for joining. My name is Shannon Roddy. I am the founder of Marketplace Seller Courses, online courses, resources and tools for brand owners and private labels looking to grow and scale their business on Amazon.
I have with me today special guest, Jason Magee. He is the Director of Seller Partnerships at Teikametrics. Jason is obsessed with helping brands successfully scale on Amazon using their incredible tool. And when he’s not curating world-class partnerships to spread the word about how their Teikametrics can benefit brand owners and sellers on Amazon, he spends most of his time chasing around his two-year-old son. Jason thanks so much for joining me.
Jason: Appreciate it man, thank you so much. It’s – I know we’ve been wanting to do this for a while, so for us to actually get some Facetime and do this properly man, I’m pumped to speak with you today.
Shannon: Yeah, I think it’s going to be really great. So, guys, just to give you an idea of what we’re going to cover. We are going to talk about some really vital topics around Amazon advertising. We’re going to talk about some high-level strategies because we could get into the weeds but we find out that without those high-level principles and overviews and strategies, it makes it really hard to get into the deep ends. So, we can go deeper at some point but I want to cover the high-level thing because those actually make the biggest impact specifically for brand owners, which is a majority of the audience that we cater to.
Jason, to get started, tell me a little bit about Teikametrics and your background and how you got involved because I think that’s really part of the really neat story working up till today.
Jason: Yeah, absolutely. So, well, my history and I guess sort of a bit about my background. I’ve been in the Amazon ecosystem for probably the last five or six years. I used to run partnerships in North America for a company called World First which did global payments for companies and individuals but they actually created the ability – provide local bank accounts for cross-border sellers. Ironically, I met Alasdair at a conference probably about five years ago in the SCOE Conference, Sellers’ Conference for all online entrepreneurs, not around anymore.
But there actually I found Alasdair, introduced myself to him and I said, “Alasdair, we need a partner. I see you’re doing a – you’re creating a lot of very good tools leveraging Amazon’s API to help sellers.” At that time then it was more inventory management and repricing. So, long story short, I started a relationship with him. We worked together for about five years while I was at my previous company. And Alasdair goes, “Look, Jason, we’re building something great over here. Even though we’ve been doing this a long time, we’re really about the scale massively I’d love for you to come join.” And I looked under the hood at Teikametrics and I was just blown away, most importantly, the caliber of folks of the people here.
Teikametrics, we’re a data science company that helps the sellers and brands optimize their Amazon business for profitability. So, our bread and butter and our crown jewel was being one of the very first folks to build into Amazons advertising API and building automation tools around that. Since then, even though that’s still the crown jewel our advertising workflow and automation, automated bidder, we now do a lot more that provides all the contexts for sellers to understand profitability, the relationship between advertising spending, their total revenue et cetera. So, our latest addition, which we’ll talk about, Teikametrics Flywheel, blends all of that together.
Shannon: Yeah, it’s just that you guys just got another round of funding to really massively grow and build the business. And I saw the cool picture with the rainbow over the headquarter building highlighting that. But you guys are on massive steroids growth but committed to maintaining quality, committed to bring in the right people. And I know that there’s actually a pretty significant percentage of sort of the statistics in terms of the – is it the gross revenue that Teikametrics handles in terms of income.
Jason: Yeah. Well yeah, so we – so now, we’re – and by the time this probably airs, we’ll probably have more but we’re about 80 folks primarily based in Boston. We managed – we have thousands of sellers that use us and we actually manage about $6 billion worth of Amazon’s GMV. So, looking at their – what the percentage is, let’s say, 4%, 4.5% of Amazon’s total GMV, we’re powering and optimizing for them, we’re pouring in data in behalf of that. So, it’s very, very significant.
Shannon: And what’s cool is it’s not just like you took that that that’s what they were already doing it and just manage it. You’re actually helping businesses scale and get there like actually increase that. And I imagined the more companies you bring on and the more they scale that percentage is just going to grow.
Jason: Right, yeah, you nailed it. I mean so for us a few steps I think are important. So, on average, we run a cohort analysis of folks who use over the course over the first 60 days, we were increasing their revenue on average of 34% while maintaining a constant ACoS. So that actually plays in what we call Flywheel which Amazon actually kind of dubbed it as Amazon’s flywheel which is a series of small activities that you’re doing on an individual basis. The compounding effect of raising the overall total aspect growth of your business, that’s what we do here. So, yeah, you’re exactly right. And we talk about ACoS sort being like a made–up metric by Amazon and then you and I sort of geeked out over talking about total ACoS right?
Jason: Which is “Hey, for every dollar you’re spending, how is that impacting your total revenue?” That’s what we’re here to do.
Jason: We’re not here to manage folk’s businesses as they are. We want to be the catalyst that helps some scale.
Shannon: So, let’s go ahead and start with Amazon advertising growth and I’ve got a couple of statistics. This is from an article that came out just a couple of months ago. If you look at the current numbers, you have Google still controlling about 37% online advertising, Facebook, behind that with about 20%, and Amazon only with 7%. But the important thing to note is not the current percentage. It’s the rate at which they are growing. And what they found that is from Q3 of 2017 compared to Q3 of 2018, brands increased spending by 250%.
Shannon: So, the effect of the growth is massive. If you look at companies and your betting stocks and stuff, you can look what all the current companies are in terms of what their current valuation is current revenue. That’s great. But what you’re really looking for is the growth because that’s going to tell you the future. If you have some companies that are basically tapped out and they’re either sort of maintained or even slightly declining, that gives you a clear indication of the future. And what we know is…
Shannon: …Amazon advertising is becoming such a significant portion of the Amazon business as a whole that I believe probably within the next three years, no business or very, very few businesses are going to be able to successfully mitigate the Amazon without having Amazon campaigns and PPC as a significant part of their strategy unless they have just complet off Amazon influence or affiliate status.
Jason: A 100%, a 100% I mean even the biggest brands who never like sort of work with Amazon, you see Apple and you see like J. Crew, Nike. These are folks who are like ‘I can’t ignore Amazon. We’re actually going to partner with them now.’ I mean, let’s see if there are some more stats out there just looking at some of them might be written like the Q4 revenue was 3.4 billion which means it was a 95% growth over Q4 of last year and that they’ve created a $10 billion business with ridiculous growth every single quarter.
And one of the stats that’s really important is Nanigans – actually, our CTO came from Nanigans. And so Nanigans are – they say that Facebook, Google cap – of the ad spend Google gets about 21% of it. Facebook gets about 19% and Amazon is already up to 14. But over half the brands who were a part of that study are going to be significantly increasing their Amazon presence as well. So, and I think the thing that I wish I coined this because it’s so cool but they said that Facebook is where you go to see what folks like. Google go – is where folks go to tell you what they want. Amazon is where they go to buy. So that’s the reason it’s becoming more measurable and you know in Amazon, folks are going there and they’re not looking for statistics or a cool video, they’re going there to actually buy something.
Shannon: A 100%.
Jason: Yeah, I know. I said this – I was quoted in article saying this, it’s like literally the most powerful direct response weapon ever devised. And we’ve both seen the black and gray hat tactics with Amazon which is just terrible. This is the most white hat in alignment when Amazon’s Terms of Service and you can do it to healthily grow your business.
Shannon: Yeah, I agree with that. And we’ll get into some of the details in terms of conversion rate but you know from what I see, a typical e-commerce landing page is going to convert it you know 1.5% maybe 2%, 2.5% if it’s really good. With Amazon, we look at average conversion rates of between 5% and 10%.
Shannon: And if it’s healthy, you know, 15 – you know 10% to 15% and if it’s strong, 15% to 20%. We have some companies doing 30% conversion rate. That’s in pain and it’s because it’s a closed system and it’s because it’s trusted platform.
Shannon: You’re not going to get that anywhere off of it. But let’s go ahead and talk about the next component which is why campaigns are so vital. So, let’s go ahead and dive in and cover that topic.
Jason: Yeah. Yeah. Well, I guess the thing about Amazon is we may cover this as well but a little bit later. But Amazon has a sort of two different types of campaigns you can run. You can run automated campaigns and you can run manual campaigns. Actually, before I get into that, the thing about why campaigns are so important and advertising is in general is if you – regardless of whether you have sales velocity or regardless of whether you have reviews, Amazon, you can literally spend money on advertising and get that top of mind placement. You can get above the fold placement which is most – that literally is the most important thing that you can do. If you go to Amazon’s website, maybe we should even take a screenshot or something, if you look above the fold it’s all advertising.
Jason: There was a time you have to scroll down to actually get to an organic listing. So…
Shannon: Yeah. Like Table-Mate is one of the companies I worked with and because we have brand ads and sponsored brands, you know sponsored product listings, if you search in Table-Mate, nine times out of 10, you’re going to see our brand ad at the top covering the entire top out fold and then three sponsored product listing. And we own that. And one of the reasons why this is so important is just for brand protection, making sure that your brand is protected because if you don’t bid on your own brand names somebody else will and steal sales right up front.
Jason: A 100%, man.
Shannon: Now, so that’s one aspect of why campaigns are important simply for brand protection.
Jason: Well, look, a really good way I’ve heard it phrase when it comes to advertising you have to have offensive and defensive strategies.
Shannon: A 100%.
Jason: And with product attribute targeting which is a feature that Amazon are releasing as part of their advertising which is the ability for you to run ads and target our competitor’s ASIN, you can sort by price, you can sort by review like their review, review amount or review like number of stars. You can literally go out there and target somebody else’s brand and we best believe if you’re not protecting your own brand and bidding on that, somebody else is. So that’s very important that you actually leverage that strategy as well.
Shannon: There’s another fun thing that I want to mention about this. We’ve got a couple of companies that we’re working with, they’ve got accessory products. And they’re actually going to be using that product targeting to actually advertise their accessory products on their primary products, which also mean that if their advertising on their products, their competitors can’t. So again, brand protection, increase in sales. Let’s just talk about from a driving traffic standpoint. If you have a certain percentage, you know if you haven’t started running campaigns, seems overwhelming, it’s confusing. You’re like “We’ve got organic sales. We’re doing 15,000 a month, for example, you know it’s not bad, it’s decent growth.” Let’s talk about what campaigns can do to increase and enhance that and what that looks like over time.
Jason: Yeah. So, I think there are a number of things. I mean one, again, going back to the Flywheel and I don’t know if this is sort of off topic as well but the whole point of advertising is not just to drag ad sales, it’s to drive organic visibility and growth. So, Amazon when you pay to play on Amazon, what they – whether they come to your listing organically or whether they actually click on your ad and Amazon wants to see, they want to see that it’s relevant and it converts.
The beauty about advertising is you have the ability to get – to get folks to click on your listing therefore when you actually get that traffic to convert, that’s positive on Amazon’s eyes. So, by having that advertising strategy, that’s directly impacting your search relevance when it comes to your organic rankings as well. I mean you probably you see this very often in the folks that you work with, I’m sure. But yeah, it’s all about – it’s all about just making sure that the advertising that you’re driving is not only helping the search relevance within Amazon but by advertising it and generating sales which generates reviews, product feedback and this gives you more data to double down on as to how you advertise. That is actually what’s going to drive your business forward. I mean that’s why it’s such an incredible weapon.
Shannon: Well, let’s step back and talk about two strategies. One is simply that there are two aspects of running campaigns. One is new customer acquisition, for sure.
Shannon: We always say that Amazon is a branding platform before it is an e-commerce platform. And that’s something that a lot of people don’t think about. They go, “Well, I don’t really want to be on Amazon.” Or, “I’m not sure if Amazon really makes an impact.” Over 55% of product searches start on Amazon. And even if people plan on buying in-store, they’ll do the research on Amazon because they know that there for – majority of it they could trust reviews, they can look into customer comments, they can see the number of sales. You know, based on the number of reviews and that kind of thing. So, just the ability to make sure that your listing is optimized, that it represents your brand well is so critical and advertising is a way to get in for that new potential customers.
Shannon: People think well, I don’t want to advertise on Amazon because you know it means it’s not my customer. That’s not the point. You can still effectively build brand awareness by using Amazon campaigns effectively in conjunction with listing optimization. So, I think those things are super important. And then as you mentioned, it’s not just you know, new customer acquisition, it’s making sure that you’re staying in front of your current customers. You’re old, you know, people who have purchased from you in the past. You have to fight for because if you don’t, somebody else will. And again, everybody is looking to do it, it’s just a matter about who does it better and who does it fast.
Jason: Well, look, here’s a good point too. And when you look at campaign strategy or forget about campaign strategy which we’ll come to this. Look at search strategy. If I’m a buyer I’m either going to go on Amazon and I’m going to look up something generic. Like your water bottle, I’m going to look up you know stainless steel water bottle. That’s’ a generic search. Or, I’m actually going in there and look up a brand. I’m going to go look at YETI. So, if you don’t have – if you’re trying to build your brand, you need to make sure you’re dominating – I mean nobody is searching your brands. You need to make sure you’re dominating the generic searches and then even maybe bidding on your competitors as well.
And once you get to this point and you “made it” and you’re a searched brand on Amazon, you then can run campaigns specifically for your own brand which the conversion is going to be unreal because folks are looking to search for your brand to buy your brand. That actually is how you can refine your strategy moving forward. So that’s actually another way that you can look at like campaign structure in terms of – and just literally this – just putting yourself in the shoes of a buyer or a purchaser who’s going to the website. So, that’s just one strategy. And like if you’re – and to your point, you’re building a brand, before they know who you are, you need to help build up that audience as well. So, that actually allows you to gather new customers as well as stay in front of folks who are now looking for your brand. So, it’s sort of an all-encompassing strategy.
Shannon: Yeah, 100%. I mean again, using Table-Mate as an example, we went after the very basic search form of TV tray. You know, they’re one of the original TV trays, been around for 27 years at this point. But that was our target. We knew there were several thousand people searching for Table-Mate so we are going to be able to get that traffic but including the search term TV tray in our listings strategically, we went after that generic search term and that’s what allowed us from a campaign standpoint and then affecting our organic standpoint to becoming number one bestseller.
Jason: Yeah. Absolutely.
Shannon: So we just – you just dominated that category for the last couple of years. It has been awesome to see a tremendous amount of growth. We hinted at this a little bit. Let’s talk specifically about how PPC impacts organic.
Jason: Yeah. So, well, a few things here. Number one, I think we should even just start with listing optimization. I don’t know if you want to chat about because I think this plays into why PPC matters as well. So, if you look at – and Shannon, you and I are actually on a call about this early this week talking about the importance of a properly optimized listing. But if you have a properly optimized listing, first off, you just hit the nail in the head. If you actually can target your own brand name within your listing and generic terms like TV tray, one, that allows you to cast a very wide net.
When you’re looking at Amazon’s algorithm both of how they advertise and how they do you organically rank, they actually pull directly from your listing. They want to make sure that your listings, those keywords are all relevant. When somebody goes to search that when they actually do click on it, it actually does convert as well. So, from an advertising perspective, number one, we – so I mean, from an organic perspective number one, they’re actually going to – when you – to assign how you search or rank organically based on your campaign. Then we look – assuming, based on your listing. When it comes to your advertising campaign when you run an automated campaign, it pulls directly from – Amazon is actually going out there and grabbing keywords from your listing and they’re creating a – actually testing keywords against you’re your product.
Jason: So, if you do that properly, that’s the first domino to fall. You already have or setup to rank organically as you get to traffic and conversion in the sales from the advertiser perspective. Now, you’re showing up – Amazon is testing relevant keywords against your listing. And then when you put those keywords into a manual campaign, we know that those are keywords that are already converting because Amazon is giving you the data.
Now, when you’re advertising effectively and like I said, you’re showing up, they’re relevant, they’re converting very well, that is a phenomenal impact about how Amazon sees your product in terms of search relevance. So that directly impacts how you rank organically. So, that’s sort of how that all works together
Shannon: So, let me step back and there are two principles that I want to cover. These are both things that we cover in our weekly webinars as well as in our course. The first one is let’s break down the Amazon Flywheel, OK? So, this is the Amazon Flywheel we’ve discovered on Amazon and it’s actually pretty simple if you can figure this out how to do it well and effectively leverage it, you will be successful.
The first one is optimize your listings, right? We talked about that. You got to do the keyword research. You got to integrate it. You got to work on your images, your title, product features, descriptions, enhance brand content and the search terms in the backend, all very critical, OK? That’s step number one.
Step two is launching your products. Most people never move to step two. They put it out there, cross their fingers, hope it sells. It doesn’t. So, step two is launching your products and there’s a two – there are two ways you can do that internal traffic using campaigns or external traffic using things like click marketing, partnership marketing, et cetera.
The third step is that is analysis and analyze your listing looking at your sessions, your conversion rate, and your sales. All of those are important. One thing to note just as a caveat, as you reach and cast a wider net to get new customers, your conversion rate is going to go down because there’s new people who are seeing your listing that aren’t converting. But your sales are going to go up as long as those metrics fall in line, you’re doing OK. So you have to look at things holistically and understand how to analyze it.
And then you wash, rinse, repeat. You go back and say, now that we’ve looked at this analysis, how can we make tweaks to optimize our listings and then drive more traffic and then analyze. And you just continue making small finite things, you know decisions and opportunities within that Flywheel and it just continues to spiral and grow and build your sales and your brand.
Jason: Yeah. You nailed it, my friend. And then looking at advertising as a microcosm of that as well, it’s the same thing we do. I mean we – our Flywheel is if you have data science, that’s particularly looking at you know your margins, bidding, keywords, et cetera. And we continue to fine-tune how you run those campaigns. Your campaigns will perform better. Performing better means you drive more conversions, you know, you’re selling more, you’re leading them more reviews, more feedbacks, your leading to more sales. And then what does more sales give you? It gives you more data.
And then bring it back into your Flywheel and start looking at your conversion metrics, your keywords, et cetera. I mean there are so many different Flywheels within it. Or, there’s a huge Flywheel with a very different components of it as well. I mean you’re exactly right. You just need to pay attention to all of it and doesn’t even need to do something drastic. We need to do – you need to do – what is that really cheesy saying “I’m not a big star. I’m just a small short star that kept shooting.”
Jason: That should be hanging off in my wall. I’m in my house by the way. But yeah, you’re exactly right. Then we see there’s series of small things very well and just repeat the process.
Shannon: So, let me bring into another principle that we discussed, I don’t know if I coined this term but I use it a lot and I call it the Amazon Trifecta. And again, you’ve alluded to aspects of this but I want to break it down because then if you understand the Trifecta, you’re going to understand how to optimize and run the Flywheel. So, the Amazon Trifecta is again three components. The first one is discoverability. How does Amazon’s A9 search algorithm discover your product? And then conversely how do customers discover your product? And you have to start with SEO keyword research. It’s imperative. Do not create a listing if you have not done an SEO keyword research. Second of all, understand how to integrate that into the listing. So, discoverability, how people discover your product.
Number two is what we call viability and that just means an optimized listing, the images, product features and all that. What percentage of people will hit that landing page are going to want to buy the product? And if you look at it for a specific term, if I search that term, that becomes discoverable that a customer searches it and my product comes up organically or via sponsored product. They hit the landing page and our viability is high, meaning we’re going to get a good conversion rate, that impacts rankability.
So, if I search TV tray and then my listing is optimized for TV tray, I’ve got SEO keyword terms in my listing, the detail page is optimized so the viability is high and they click purchase on that then my product will increase organically in ranking for the search term TV tray. And so, there’s the two aspects whereby customers search and they buy, there’s two weighted aspects of it, one is organic which is weighted slightly higher because people know – Amazon knows if somebody is organically searches it, finds your listing and buys, that’s a really good sign.
Shannon: But advertising and PPC also plays into this. Because if I search TV tray and even if it’s a sponsored listing, if organically I’m still on page three or page seven, it doesn’t matter. If they click on that and buy that increases the sales performance history of the ASIN. Amazon loves that. They know that that search term is relevant for that product and even though it’s weighted slightly less than organic, it directly impacts the organic ranking of that listing. So that is the Amazon Trifecta combined with the Amazon Flywheel, you basically have your recipie for success.
Jason: I really have to write the Trifecta down because it’s so great, man. Yeah, I haven’t heard it anywhere so we’re just going to say you coined that. I think you really did by the way. No, but you’re exactly right, man. And the – I mean it’s almost, it’s kind of – I think it’s almost like a cheat code. I mean look, it’s kind of that you get to pay to play which is kind of frustrating in and of itself. It’s like another tool. But if used effectively, you’re not spending money on doing these other things that you can’t measure.
The whole point of doing things properly is to be able to measure them and then tweak them. The beauty of that advertising is it’s very black and white. The challenge is without using a solution, look and there’s a lot out there, I’m not saying that we’re the only one, doing it on your own is a tough – it’s tough to do. You have to know where to go. You need time to actually do it and cross-reference these reports et cetera. So, the thing is this, the beauty is, especially if you’re a smaller business and maybe a couple of ASINs, you don’t need necessarily – you know crazy tool, I mean obviously they’re still going to help but like the beauty is a level playing field in a lot of ways, So that’s what’s exciting about it.
Shannon: Yeah, you know I’d say here’s the basic analysis. If you only have three to five ASINs, and three to five campaigns, you can to an extent manage this on your own. Once you’re doing even five, even $7,000 a month, there are opportunities that you are going to be unable to uncover without spending hours and hours every single week and again, Amazon does not make this easy, it’s just the way it’s setup. You have to pull on these different reports, you got to sort the CSV spreadsheet, figure out which broad match terms are converting and which ones are negative and like it’s very, very time-consuming. You can’t…
Shannon: Once you get past that point, you got to make a decision as a business owner when do I bring in somebody else, when do I hire the big guns. But…
Shannon: Let’s go ahead and talk specifically about strategy for automatic campaigns and then after that we’ll cover strategy for manual campaigns. Let’s talk about automatic campaigns.
Jason: Yeah. Yeah. So, automatic campaigns are incredible. So just to – for those who – I’m sure everybody knows but if not, you can run an automated campaign which what is happening is Amazon – you set a budget and then Amazon will go and pull keywords from your listing and then Amazon will then run the advertisement based on those keywords and then they’ll actually run the conversion analysis as to what keywords they are actually looking to not only driving clicks and it’s impression, clicks and then conversions.
Jason: So, if you’re able to see the impression, clicks and conversions you can go, “Hey, by the way, I – that keyword is converting very highly.” So, the beauty about that is you’re not having to go – you do keyword research for how you want to optimize your listing and actually use Amazon’s automatic – it’s good strategy to use the automatic campaigns, the results history, to actually then go back and refine your product listing. So, the beauty there is that you set a budget then Amazon is actually grabbing those keywords and then testing them on your behalf. So that just shows you right away do I have a good listing with that?
Shannon: Yeah, for sure. And I want to highlight something really quickly. Amazon pulls from your title as the primary search field, it’s the most heavily weighted search field beyond that it is the search terms in the backend which I can tell you from experience doing this for over six years with 80 brands, 98% of all sellers do this wrong. So, make sure you delve in and learn how to do search terms because if you don’t, and we’ve got our course on optimizing listings which shows you exactly how to do that. If you don’t do that correctly it’s going to make it difficult for Amazon to pull correct terms using the automated campaigns and your results just aren’t going to be as good. So, of you optimize that correctly, the automatic campaigns are automatically going to be more effective.
Jason: Yeah. And I think the thing about that as well is you’re trying to please two folks, you’re trying to – you’re serving it to two things. One, when you’re create a listing in the – like you said, your title, you’re trying to be a good servant to Amazon’s algorithm to make sure that it’s relevant. At the same time too, you’re also – you have to make sure that you’re writing it for human to read. So you’re also subservient to human’s ability to read and have it resonate with them. So, I remember, I mean you probably saw this years ago too when picking with keywords stuff the heck out of their title.
Shannon: Yeah, it’s three lines long.
Jason: Yeah, three lines longs and you couldn’t read it. It was like red cable black great at home made in USA. All these things like and it did flow. So, maybe if we help – if we’re Amazon at that time, Amazon has obviously wisen up since then but you read it, if I read it I’m going to be immediately turned off. I’m like, “Man, that is like a massive like I don’t – I am turned off by this. Like I don’t feel any connection with that, you know what I mean?” So, you have to really, really blend it together for the readability for human element and then actually make sure you’re ticking the clock to Amazon algorithm at the same time.
Shannon: A 100%. It is a fine delicate balance between science and art but that’s the beauty of it. It creates a – it requires a lot of creativity but once you nailed and hone it in then…
Jason: You had it clipped, man. I mean you’re right like I think we – the term that we use very regularly here is called human assistance sass. There are things that we could automate, that should be automated as a part of your business. That’s great. You don’t want to turn everything over automation because they’re not going to be able to write a headline, I mean these AIs and that could get to be able, I mean probably but not for us, to be able to write a headline that that’s great.
You want to be able to take into context the human going, “Look, I know the strategy, I understand how and you know, how things look from the readability perspec – or I think I knew things that I can do to impact to business. I want to delegate to make sure that this is running itself because [A] I don’t have the time, [B] I’m not a computer and I have to you know sleep at times and see like I understand – I’m not as smart as a computer running those complex algorithms.” So…
Shannon: Yeah. And it’s just – it’s just data. And so, what we look at is automatic campaigns are great to not only give you key indicators or search terms that convert but also it’ll help you discover the long-tail SEO that may not show up on any search engines or keyword research tools that you use. So, acquiring long term, long tailed data is incredibly important.
Shannon: And you know to your point, looking at Walter Isaacson’s book The Innovators, where he talks about the invention and innovation of the computer over you know several hundred years. He talks about this idea people always asking this man versus machine. And you know, computer is going to run everything or are going to humans going to run everything? Who’s better? And then truth is it’s symbiosis between both. And once they discovered that and realize, oh, there are things that computer can be better than a human, maybe calculations for example. And there are things that human can be better than a computer that a computer is never going to be able to do. So…
Shannon: That’s why they said, well then we need to create an interactive, a simple interactive interface. And that’s why we said well, people are very visual so let’s make a screen and then second thing they’ll use is our hands so let’s make this keyboard and a mouse.
Shannon: And that was literally how they created the computer we are both using today. And we’ll get to this at the end but Teikametrics basically takes that and says OK, here’s what the computer can do best. We’ve created a really clean and simple user interface that you can as a human easily do what only a human can do and create that interaction.
Shannon: Just make it as simple as possible.
Jason: Yeah, man, and I’ll give you one specific example that just came up yesterday. So, I was talking to an agency you know we work with obviously with a lot of agencies and we were talking about the lacrosse balls. And we were talking about like obviously, you know you can think about all the strategies that go in and the search ability and then he was like you know a big market potentially could be like dogs that love lacrosse balls. And I never thought of that and the computer wouldn’t necessarily think about that.
But I was literally running on the trail with my dog yesterday. And she literally ran off the trail, ran into somebody’s backyard because I never ever leash her badly. She’s a Lab. She’s a perfect dog. But she comes back with a lacrosse ball. You know sitting there like I could not make this up. I called this guy yesterday I was like “You’re not going to believe this, man. But she…” That’s the thing is like, that’s like OK light bulb OK, now, I mean you see it like I think about like I mean like another one is like trigger pointing, right? You’re like a golf ball like I roll it on my foot like trigger points and so I try and run. Like people they – you don’t want to sell the most expensive golf ball at them but if you have like lower quality golf ball, like you could also then go, “Oh by the way, this is great for trigger pointing.”
Jason: That’s just another way that human element can then start to impact the machine.
Shannon: So, we’ve covered automatic campaigns as a great way to get started, as a great way to acquire some long tail SEO terms. Let’s transition and talk about strategy for manual campaigns and how automatic campaigns directly play into that.
Jason: Yeah, yeah, exactly. So, manual campaigns, what that is, is not that you know the keywords that are working for you, you can go out and you can – you have campaign level then you had ad groups within the ad groups you had keywords. So what that means is you control the keywords that you want to – that you actually, instead of Amazon grabbing the keywords for, you actually have the ability to hone in on specific keywords. You can set the budget and actually adjust the bid on those keywords as well.
Now, the recommended flow is to have on – it’s called the mirroring structure which is you have an automatic campaign and then within your automatic campaign you have at least one manual campaign that sets you with an automatic campaign. And that manual campaign, the ASINs that you’re driving traffic to is you’ll have similar margins maybe similar pricing, similar products. You want to make sure that that’s setup correctly. And the right flow is within the manual campaign by the way, you can have broad match like a boot that pulls in everything like women’s boots, men’s boots whatever. It’s just very broad match. And you have phrase which is like men’s boots. Or, you can also do an exact match which is men’s brown boot size 10.
So, as you look at the searchability, you’re going to get, broad is going to get the biggest but the conversion is going to be worse but the phrase you’re going to have less, better conversions, the less traffic and then the exact is going to be less traffic but you’re going to convert the heck out of that thing. So the right workflow that we recommend is having a automatic campaign, we find your winners and then your automatic campaign, you move them into a manual campaign and then when you look at your manual campaign, you then need to do targeted, retargeting there which is take the broads that are performing well that should be moved to phrase or moved those to our phrase match. Take your phrase word that are doing well and move them to an exact match as well as well and then you can continue to refine and needle and test what’s actually working. So that would be the structure that I recommend, very basic one-to-one mirroring structure, that’s what I recommend.
Shannon: Yeah, and I agree with that absolutely. And for people who are less familiar, automatic campaigns only use broad match. So, if Amazon’s automatic are running, they’re not going to use phrase they’re not going to use exact. And in some cases, you know we’ve actually had situations where phrase match will convert better than exact match. And so, that’s – there’s just so much data. Like I said, once you’re running more than three to five products, once you’re running more than three to five campaigns and even at that level, you might be doing such a significant volume of sales and you might have so many different search terms that it becomes impossible to manage manually.
Jason: A 100%.
Shannon: We know that you know having done this again working with Amazon for over six years we know that there are tools that to be successful on Amazon you have to use third party tools. And when you look at you know growth in conjunction, those tools give you scalability which means it takes time off your plate. It typically reduces cost, you know if you’re using an agency for example or different things, it typically reduces your cost and allows you to focus on running your business, looking for new product lines, you know building and growing, creating brand awareness whatever the strategy is, whatever you’re doing it frees that time and energy. If you do all these manually, you do not have a scalable business and you’re going to be locked in front of your computer 12, 15 hours.
Jason: Yeah, and what is it, working on your business instead of in your business, right?
Shannon: So, we’ve talked about automatic campaigns, manual campaigns give you the ability to dial in real quick. I don’t want to go too deep into it but let’s touch briefly on adding negative phrase and negative exact match. Can you just talk about what that is and why that’s important?
Jason: Yeah, exactly. So negative keywords would be keywords that are driving impressions and they’re driving clicks but they’re not converting. So, an example of this maybe, I’m trying to think one-off top of my head.
Shannon: A good example of it could be like boot laces for example. Well, you don’t sell boot laces, you just sell boots. So, here one is searching boot laces, Amazon is serving up your listing for boots because it’s in there.
Jason: They can see the relevance, yup.
Jason: But it’s not converting. Yeah, so that and another example then would be like let’s say you have a slim wallet and then you’re selling a slim wallet and then they have a traditional wallet is the keyword that they’re serving off and you say, “No, this isn’t a traditional slim wallet.” The thing is this, if we can – Amazon actually, their data from Amazon obviously we can help here achieve. But Amazon will show you look, you’re driving impressions and clicks but they’re not converting and we have to go find the report. You can actually negate that keyword which means do not serve up my ad for that keyword at all.
So, you have the ability – we call it wasted ads then. So, if you know that these keywords are costing you money and they’re not converting and they’re not relevant, make sure you don’t show up for those. So you actually negate keywords from your advertising though where you’re not showing up which is a great way just to, at least save you money straight away. But there may be a strategic reason you want to actually lose money like if you’re – to your point, we are going after a competitor, you’re going after a YETI with you know your water bottles. Well, you may know that it’s not going to convert well yet but you’re still getting you know shared brand or shared market or whatever it is. So, that’s where you have to decide whether you’re willing to lose or not.
Shannon: Any tidbits on terms – in terms of using negative phrase versus negative exact in the sense that just like phrase match and exact match, you’ve got negative phrase which means including these keywords. Are there chances where you could include negative you know a term is a negative phrase match which actually might block out some of the ones that do convert and is there any recommendation between each of those different negative match options?
Jason: Yeah, and I get – I’d love to have your opinion on this too. I mean it’s so contextual, right? Because I go back to the boot example, you might not necessarily want to show up or you may want to phrase out – you know, you may want to phrase out your boot laces but you actually you want to cross out laces as well. So there maybe reasons you actually want to show up for it. So, yeah, I mean it’s tough without looking at specific example but then I would just look at the context of their raw strategy and what they’re trying to do.
Shannon: Well, it comes back to human element then that – that you need to have the data, the goals making the data accessible and making it easy for you to make those decisions as a human.
Shannon: A really good example just from the proactive, you know, broad phrase or exact. The campaign may say, hey look, you’re biding way too high in this keyword, bring it down. But we know that that’s actually our brand and we want to overbid on our brand. We’ll be in the $5 to $10 range just if anybody decides to get cocky or try, we are going to dominate and own that, nobody will be able to steal our brand.
Jason: That’s a very good point.
Shannon: And that’s something that we have to do. So, we’ve covered the strategy for campaign. We’ve talked about phrase match, exact match. We’ve talked about automatic and manual. I want to dive in and talk about how – how this affects the Flywheel effect and then talk specifically about Teikametrics and how you can make it really easy for Amazon sellers to navigate that Flywheel effect and use your tool on service.
Jason: Yeah, I think you hit the nail on the head. Actually, one other thing just to detach on the negative exact and things like that, one strategy that folks might want to use is when you move your keywords from auto to manual you negate that broad match within the automatic campaigns as well. So that way you’re not, I mean you already know it works. You don’t need Amazon to tell you again. You can control it more. So that’s one of the strategy you could potentially use.
But going into the Flywheel effect, I think you hit the nail in the head which is we talked about everything that you can do and yes you can do it manually. There comes a point where you need to look at where is my time being spent? How can I scale my business effectively? So then you start needing – you need to create systems about monitoring and the actions that you’re going to take as well. So, I think that’s where a company like Teikametrics comes in is and again, I know this is more so about the value but diving into what we do.
One, a lot of those, I think there’s basic blocking and tackling as we call it which is do you have the system to see negative keywords and be able to remove them directly? Do you have a system from moving auto to manual? Do you have a system for refining manual keywords? And then do you actually have a system for actually bidding? That way I’m not having to go in there and adjust bids. Short answer is yes. We obviously do the basics there but it goes a lot more, it goes into a lot more detail than that.
What we do here and Shannon, you know this a lot. There’s sort of two APIs that Amazon has opened for folks to get data from. They are advertising API which because you only advertise data and WSAPI which is all of your sales, conversions, inventory listings, et cetera. What we do and what we found when we actually created the advertising, our first iteration of the advertising platform got sponsored by an optimizer, folks are coming to us going, “Hey, we want to do more advertising.” And while we’re doing that and we had thousands of customers using it, we go, “Wait a second. What if advertising isn’t solving the right issue for this business? What if it’s a Band-Aid on a broken leg? How do we know that they’re effectively advertising the right products and setting the right budgets?”
So, we then look at how we – because we used to do this manually before we had tools, we go, well, how you set your ACoS Targets or we call it max advertising cost but you’re willing – your attribution cost or acquisition cost. It needs to be a function of how your profit. So, if you want to set you’re ACoS at a certain level and then you want to make sure every sale is profitable, you need to know what your cap is.
So, what we’ve done is with Flywheel, we go, all right, if you could look at the merit of that as Teikametrics then break it down to three chapters. Chapter three is advertising, great. But Chapter one and two is OK, let’s look at our business metrics. Are we profitable as a company over this period of time? What’s the relationship between advertising I spend and how it’s actually driving my total, my total sales? We call that metric, TACoS. And you and I talked about this a lot. You’ve calculated it and have a different term for it as well. And then I said, or we understand business metric chapter one.
Chapter two, let’s understand product label metrics. What are TACoS on – what’s TACoS on that product level? What is my margin? What products have a similar margin? Or am I advertising products that shouldn’t be? Or, are there very high gross margin products aren’t being advertised at all? And now that we have this context of understanding how my ads are grabbing up total sales, how – what my margin is on a skew level, you now have all these data to effectively set your advertising drive you were just talking through. So that’s – forget about our tool for a second, that’s a context that I would recommend folks approach their business. You don’t need necessarily folks like us at certain times. But there are things that are very, very pretty much impossible to do without companies like us. But yeah, that’s sort of our workflow and that’s our narrative as we say.
Shannon: So, let me bring two things into this. One, Henry Ford, when they were manufacturing parts, they would calculate the cost of the parts down to a 100th of a penny because of their economy of scale, mass manufacturing products all over the world. If they make a change in one factory, they would make it on all of them. But if they said, OK, we can save 0.02 cents on manufacturing this one part we’ll go ahead and implement that change because it results in a millions of dollars across our whole business for the whole year. And most people don’t even have that data and I could tell you 100% if you don’t have that data, you cannot make the right decision for your business period. I also know that to manually come up and try to create you know, it’s an intense – very labor intensive amount of work to create spreadsheets and everything to say, OK, how in the world will I calculate all of Amazon’s referral fees and the FBA fees and my cost of goods – I mean it’s insane.
Shannon: And to give an input on how most business leaders because it’s so complicated within Amazon. I was talking to Heather Jeffcoat from Seller Account a couple of weeks ago who’s telling me about a seller that he had consulted with. They did over $2 million on Amazon last year. And you go, wow! That is a thriving capital business. But when she actually looked at it at the end of the year, she only made $10,000, $2 million in sales, $10,000 in actual profit and didn’t find out until all of the dust didn’t settle at the end of the year. And I can tell you that is painstaking and not very efficient or effective way to run a business.
You have to know at the skew level your profitability and what makes sense because again try to calculate that on your manually and keep up with it because Amazon just raised FBA fees earlier this month. You’ve got to know what the margins are. If you have the data then you can make decisions. I don’t want to go back, we talk about this but Teikametrics really takes into account. Some people think why I spent $2,000 on ads and I got $4,000 on sales, Amazon calls it a 50% ACoS my Acquired Cost of Sale, that’s not worth it to me. I don’t have 50% margin. I’m going to stop my campaign. I’m going to stop spending. They didn’t’ realize that the $10.000 they were doing in organic sales was a direct result of their campaign spend of only 2,000. And we have seen this where businesses have made a narrow decision not taking into account the full picture.
Jason: A 100%.
Shannon: They stopped spending PPC, they didn’t realize it was impacting organic and they saw their organic tank, in fact, one of the consultants that I work with she said, the company made this really poor decision, they did not have all the information. They said well, you know campaigns are effectively stopped like and they’re organics sank tails up – and they work for three to four months and they still have not been able to get them back up to where they were before. You have to have the data and profitability is number one. I don’t care how much money you deal on Amazon, nobody cares if you’re a seven-figure seller, that does not make any difference. Only profitability matters at the end of the day.
Jason: A 100%. Five years ago, it used to, and Alasdair, our CEO, jokes about this when he got started he was actually selling, he was actually an e-commerce seller like a million dollar, multimillion dollar seller, not even on Amazon back in his dorm room when he was in Harvard. Amazon actually – he was one of the very first third party seller back in 2003 and Alasdair went on to sell that first business and he talked to us, he says, I used to walk around saying I was a million dollar seller because I thought it meant something. And then when I went to sell my business and you have like private equity companies and looking at like looking at the numbers, he just – they just took a to me. He was like, I just realized that like there’s a difference between a seven-figure seller that everybody wants to hit. I would rather be you know, I’d rather sell 500K a year but make the 100 grand as opposed to being a seven-figure seller you know, $2 million seller or something and making 10K, right?
Jason: So, that’s it. And I think the thing is, is like we have the data now. And the thing is just like for you to do this on your own, by the time you calculate it in Excel it has already changed because you’ve already made sales. What happens if you adjust your price et cetera? So this is why it’s important it’s important to understand the context of this on a rolling basis. Now, this is make a stamp in time but actually in a recurring basis.
Shannon: I want to talk real quickly about the one thing that sellers will be required to do and this is something that you need to do anyways. But Teikametrics makes it easy. You need to as a seller calculate your own cost of goods that way so you’re going to know your cost of goods coming from whether it’s factory or manufacturing house as well as your inbound shipping cost. That’s going to be your total cost of goods that you can upload easily in a CSV file to Teikametrics because again that information obviously that they’re going to have without you providing it to them,
Jason: Yeah, yeah, yeah.
Shannon: Plus it allows you to see it obviously all the information within Teikametrics is 100% confidential. And there are some people who get scared and nervous in what are you going to do with my information and stuff? It’s your information. It’s safe and secure. They’re a trustworthy company. Their goal is to help give you the whole picture of data with their easy to use dashboards and interface. Let’s talk about – I want you to just through the tool real quick. Talk about some of the different things they can expect to see using the tool. And talk about how much time they could expect to run that campaign on a weekly or monthly basis.
Jason: Yeah. Yeah. So, actually I use that chapter example where the narrative that I was talking about. So, when you come into our tool, on our home screen, the first thing what we’re going to show you is we’re going to show you hey, over [A] select the period of time that you want. What is your total sale? What are your total ad sales? And what is your gross margin, your gross profit over that timeframe? And the last metric that’s straight away is TACoS, the Total Advertising Cost of Sale. It’s a number that represent, how – for every dollar you’re spending on advertising, how much is returning on total revenue
So, an example of that is you want to see, let’s say you have ah TACoS of 2.5 which means 2.5% of my advertising spend is a percentage that you my total revenue. We want to see that number is still the same and if that was increasingly then you’re actually driving over the sales or have that number go down meaning I’m having – even spending the same or spending more over the numbers load meaning that my sales are driving a higher return on revenue. Then that – obviously that’s a context and you can see what’s happening and see the bid changes that have been done, we keep a ledger of all of that. We give you quick actions and you could take from that home screen.
Second, is product level metrics. We show you the profitability on a skew level the total sales, TACoS, what campaigns are associated with. So you can say, OK, now looking at the individual level. Am I advertising the right products? Am I missing any? Are my products grouped together properly, et cetera? Then goes to Chapter three, OK, now let’s see how my – do I have any negative keywords that I need to remove? Do I have auto campaigns, auto – words from auto campaign that should be done into manual? And then manual, what are the phrase, phrase or exact? We give you reporting on all of that.
And then finally, the crown jewel is our value based fitting platform, which is you give us your targets of what your ACoS or your max or what you’re willing to spend. We’re not a rules basis and we’re actually – it’s data science. We’ll go, “OK, let’s take into account your conversion rate. Let’s take into account your price. Let’s do a series of thousands of very small changes and measure the effect to whether that’s working on the bit of adjustment level and then doubling that on the letters.” So…
Shannon: So, yeah, go ahead.
Jason: I was just going to say, one thing about time. Before we had this solution, we used to have our own manage service. We did this manually. They took us about six to 10 hours a week per client to do this effectively. So, yeah, times up by four, you’re talking between 24 to 40 hours like a literally they take up entire a week of your entire month just for – on a company level. So, folks that use us, once its setup, you’re spending about 15 minutes and that’s all. Obviously, you can be spending more time on strategy and concepts et cetera but we’re replacing about six or 10 hours a week into 15 minutes a week. So that’s the time savings right there. And not to mention, now, I’m going to save the ROI of what’s your value of an hour of your time. Also, we’re getting you more results than you would be getting on your own.
Shannon: All right. I had a job where. They gave me a 20 hour a week job. It was part-time, two part-time jobs. One of them is 20 – and I took – I made more efficient, I took a 20-hour a week job and made it in 15 minutes a day and they laid me off. Thank you and here’s your pink slip.
Shannon: But the whole point is I want to make another analogy for the Flywheel because this is – again, people are – they look at the cost and they go, I don’t know, that seems expensive, right? How do I justify the cost? And I want to look at the Flywheel and again, look at the long-term effect on your business over the like course of your life on Amazon. The business isn’t the brand’s life on Amazon.
So, one of the tools that we recommend is the Feedback Five, right? For requesting product reviews. And it’s very, very simple. A customer purchases a product and they get a feedback email. We are able to work with that customer if they have any issues or questions about their order. And then we send a follow-up email asking them to leave us product review. Completely in line with the Amazon TOS, part of the app store. And people looks at the cost and they go, “Well, I’m only getting like a couple of extra reviews maybe per month on a single product sending those emails. Is it worth the cost?” And I said, “You have to look at it from a long-term standpoint.”
Again, let’s look at the Flywheel. If I did a couple of extra reviews per month but that causes my product to rank a little bit higher which means more customers see it and because once they hit that page we talk about increase in viability. Now, it’s got you know 12 reviews instead of 10 reviews for example. People – the conversion rate is going to be higher. Now, more people are purchasing it. Guess what? More people are getting the email and I told the guy, I said, “Look, you’re spending $30 a month which is just the base plan.” I said, “You’re spending $30 a month. We get a couple more extra reviews a month.” I said, “That can literally equate to thousands of dollars per month a couple of years down the line.”
You have to look at the big picture and literally, I explained that to him like what went on and he goes, “I get it. I got it. It makes sense.” So, if you think about what Teikametrics can do to get you one more sale, to get you one more new customer and get that Flywheel going increase your gain and bringing up your product which in conjunction with things like Feedback Five, give me more product reviews, increase your ranking, increase your commercial rate, and all you do is start spinning that Flywheel. We’re talking about taking businesses from thousands of dollars a month, hundreds of thousands a month and millions of dollars a year within a much shorter timeframe and understanding the profitability. That’s the whole game plan. I mean that’s the whole package right there.
Jason: It is, man. It is. It is. And I know we’re wrapping up here and I know – and thank you for the kind words on Teikametrics. The one thing I’ll say about Feedback Five, to your point as well, is obviously, the fundamental effect you can have on you know down the line, also a very, very powerful tool of soliciting feedback and product reviews as well is understanding if there’s an issue with your product. Or, you are – they purchase it for the wrong reasons. So if you then make then a listing adjustment to prevent future issues or making a listing adjustment that garners you more, more conversions or more sales I mean man, it’s – you hit the nail in the head, man. There’s just so many ways to calculate it.
Shannon: You optimize, you launch, you analyze. You wash, rinse, repeat, that is – that is the Amazon Flywheel. Jason, you guys have a special offer for Marketplace Seller Courses audience and viewers and attendees. Talk really briefly about what that looks like and then there’s one more thing that we mentioned before we wrap up.
Shannon: Bur we’ll have that link below the webinar whether you’re watching on YouTube or Facebook or on our website. Talk about what that offer would look like.
Jason: So, we put our money where our mouth is in terms of our solution. We’ll give everybody a free 30-day trial, full access to the solution for free. All we ask is that we have a very, very good you know help center that guides you through to make sure you’re setting up properly. And not even our tools to make sure your Amazon house is in order, right? If you do that and you set this up effectively and in the correct way, you’re going to see for free how it can impact your business as well. So, you’re going to get matched up with a consultant. We’re just going to help make sure that you’re in the solution and everything is working right. If you have questions, et cetera, they’re going to guide you through it as well. So, free for a full month to be able to do that with us. So, we recommend everybody to give it a try and we’ll give you guys a link that will be put below. So…
Shannon: Awesome. Jason, thank you so much for joining me today. Anybody who has any questions about this, we’re going to add Jason to our private Facebook group if you purchase our courses and you will be able to tag him on any questions. He’ll be able to help respond that any questions you guys have. But thank you guys so much for joining us today. And Jason, thank you so much for being a guest and being on.
Jason: Yeah, man. Shannon, I really appreciate it, man. Thank you so much for your time. I look forward to chatting with you soon.