Aaron Conant 0:18

Happy Wednesday, everybody. My name is Aaron Conant. I'm the co founder and managing director here at BWG Connect, networking ship knowledge sharing group with 1000s of brands. And we really love to do networking and knowledge sharing with some of the smartest people out there that are doing some of the most impressive things in the digital network. And so as we kick off this one, just a couple of housekeeping items. If you have any questions along the way, don't hesitate to drop them in the chat there. And we'll try to answer as many as we can. You can always email me Aaron@bwgconnect.com. And we'll feel questions that way. If you have questions that pop up, you know, after the call today, tomorrow, next week, never hesitate to reach out, I spend the majority of my time actually talking with brands and just helping them out with Hey, what's going on across the digital landscape, newest trends, strategies, pain points, and just help a lot of people out with service provider selection as well. So we've got over 8000 brands in the network that kind of get their feedback, so more than happy to connect with anybody on that front. The other thing is, we're starting this with three to four minutes past the start time, we were in trying to wrap up three to four minutes early as well. unless we've got a great group of questions that we just need to get to in that case, we might go a little bit past, but we're gonna try to end a little bit early to make sure you get on to your next meeting without being late. And with that, let's jump in. I mean, a lot of times you need to we explain the topic, but I think everybody understands why we're having this topic here. So, Nicole, you guys are great friends, partners, supporters of the network. Thanks for jumping on here. I'll kick it over to you. If you want to do a brief intro on yourself and retail boom, that would be awesome. I know Laura's on as well. But Nicole, you want to kind of kick us off here.

Nicole Reich 2:01

Absolutely. Thanks. Thanks, Aaron. Hi, everyone on the call today. I think our last webinar was in October or November, I can't really remember. So it's been a couple of months and happy to be back on the call with everyone today. As Aaron mentioned, I'm Nicole. I'm the co founder, one of the co founders at Retail Bloom, I lead all of our marketing and sales efforts. I've been with the company since inception. And outside of the role that I currently do, I've done everything from picking orders in the warehouse to running our catalog to advertising to building out strategies. So always love getting the opportunity to speak with Aaron and share some of the insights that we have that we've learned over the last 12 months. And then what we're expecting for this year, which kind of goes to a little bit of our agenda that I'll bring up in a second. Before I do that, though, just wanted to give you an idea of recap limb if you have not heard of us before, we are a full service marketplace provider on sites like Amazon, eBay, Walmart and Amazon International. On the left side of the slide, you'll see are two big core service models. One of them is a third party seller, we work with brands that maybe don't want to sell to Amazon aren't ready to launch their own Seller Central account yet. And they shipped to us and were their preferred seller. In that scenario, we're doing all the backend doing all of the purchase orders content advertising, front end optimization and growth strategy. But then you also work with brands that either sell directly to Amazon, Walmart each have their own Seller Central account and and those model in those scenarios, it's more of our managed services model. So whether we touch the inventory or not, our approach is working with brands and manufacturers develop a growth strategy and then implement that for them both back end and front end on Amazon and other marketplaces. One of the big things that always comes up with some of our traditional brands is that when they go from 1P two, 3P sometimes they can't control by box and they've got sellers out there, they've got pricing problems. That's why we've developed our brand protection services that helps brands with developing policies, enforcing those policies with the ultimate goal of improving your pricing integrity and knowing who's selling your products on what flip platform. So we're in our agenda today. Pretty straightforward. We've got two big sections. The first one is the Amazon holiday recap. So starting with some total business trends, I pulled these from some of our research partners, some of the most of them are actuals. And then I'm going to then tie in what our retail bloom learnings have been. So what is the actual data and their performance in q4? What did we learn when it comes to advertising and promotions. And then from there, dig into the Amazon 2020 23 outlet and then same type of approach. Some of that will be based on industry expectations, some other resources that we have that I'll quote and put in here, and then kind of what our approach and what we think is going to be happening to retail media spend and other opportunities there. After that, we'll close it out with questions. And again, as Aaron mentioned, keep it to an hour. If you had at joined after a little after the first couple of minute minutes, I mentioned to Aaron that Amazon FBA released some updates that will be hitting all sellers on March one, I just dug into that last night. And I'll add some of that context. And hopefully that's a potential solution, around the biggest challenge that a lot of us saw in q4 of last year. Amazon holiday recap first. So what this slide shows you is the total Amazon business, all brands, 1P 3P all categories, their sales in blue, by total monthly sales at retail, and then the orange line represents the year over year growth. So as you can see here, the just summing it up the total business is about 427 billion for last year at retail. And overall, if we add up all the sales, they were up about 20%. So 20% 2023 versus 2022. A lot of the growth you can see happened in July with that very, very strong Prime Day. And then from there, sorry, I think someone's not on. Hello. Aaron, can you hear me? Or Matt? Oh, am I alone here? Nicole, I think I'm just gonna get Aaron connected again. Okay. All right. So we will continue as we wait for Aaron to come back in. Sorry for for all of that. I'm sure he might have some questions here. But we'll wait to have him joined to add some context. But just for sake of time, we'll we'll keep going through the bit of data here. Overall, again, the platform has been up about 20%. Year over year, a lot of that coming in July, it fell off a little bit into q3. And then was around that, you know, between 15 and 20% in October, November and December. It if we drill into specific the quarter for the holiday season being October, November and December. So the exact same graph just zoomed in, you can get an idea of their year over year growth. So for q4, they were up 19% Compared to q4 for 2022. And then also want to give you some insights in between 1P and 3P What were the growth actual so the 1P business grew 7% year over year, and the 3P business grew 28% year over year. And that's been consistent with the rest of the year for 2022 as as well as I believe 2021. 1P business still in sales dollars, sticking with 3P but 3P driving a significant amount of the growth year over year. Last point I would say on this slide is the average order value increased 5%. Year over year, it it's up from $29 ish to $30 $30.95 was the average order value on Amazon for q4. I think before I pulled this I was expecting it to be up five to 10% based on some of the price increases that we had to see on the brand side but did come in a little bit lower than I was anticipating at that 5% mark. Then this slide, I won't go into every single category, but just wanted to give you an understanding of by category on Amazon, what was the year over a year change. So it's the entire business was up around 20%. What categories on Amazon drove a big portion of that of that growth. Most of them were 14% growth year over year, Toys and Games was down a little bit from the revenue change based compared to the the quarter in 2021. But overall on the revenue side, all up significantly. In this third fourth column, you'll see the conversion change year over year. And that's actually the complete opposite of what happened to revenue across the board conversion was down in almost every category outside of pet supplies and baby products. Some of this, you know why does this happen? Well, if you look at the last column, you can also see that traffic was up 20 to 30% over 30% Sometimes. So if you put these all together and we think about revenue, conversion and traffic, the number of eyeballs were up, call it 20 to 30% year over year, because conversion was down up to 14%. Even maybe a little bit more than that. You only got that revenue change of 20%. So different way to think about it. If you're in the brand's shoes and you can control conversion, you can optimize that those product detail page. You can optimize content, right the traffic is still coming. It's the conversion. That's been a little that was down year over a year.

Aaron Conant 10:01

So really quick. And Nicole, I'm back here. The Do you think that people were just looking for deals? I mean, that's what I see when I'm looking here, you know, because when I when I talking to brands on the direct consumer side, you know, traffic was down, but conversion was staying the same. In this case, it's like, people were going to Amazon they had money to spend. But knowing that it was going to be a bigger year of discounts, they might have been bounced around a little bit more looking for a better deal.

Nicole Reich 10:33

I think that's a piece of it. And I actually have some data on how our promotions work this year. And they outperformed every other year, which would further backup that assumption that Amazon was more of a promotional play. But I also would say that conversion is impacted by your inventory position, whether it's crying, or they're going to get it in two days, right. So all of that impacted this. I also think another reason why the pageviews are out is because advertising and ad spend is also up. And that traffic isn't coming not only on Amazon as it usually comes from but it's also coming from off Amazon sources and driving to Amazon as DSP as sponsored display ads become more popular.

Aaron Conant 11:15

Awesome. Love it. Cool. All right. And

Nicole Reich 11:20

here's some q4 advertising data from our partners that pet view just gives you an idea of quarter over quarter year over year change. Comparing 2022 Verse 2021. For the sponsor product ads, the primary or there's still the number one ad unit on Amazon, Click through rate was down 8%. Year over year, cost per click was down 14% year over year, and conversion was down. So we already talked about conversion a little bit, but on the cost per click side and click through rate. Again, just some assumptions here. But there are more ad units, right. And in those new ad units, people can get much more creative with the way that they're advertising. We can do videos Oh, much better. Now we can do banner ads, we can update those sponsored product ads are still the very basic in search, right? It's just a thumbnail picture, and you expect them to click on it. So not surprised to see any of these by any means. I also think that the cost per click, and this is part of our expectations for 2023. As brands pull back and concentrate on profitability, huge opportunity to take advantage of advertising on Amazon with lower cost per clicks. But in addition to that, the more ad units they have available, the way the more advertisers can spread out their budget, and then the cost per click will go down as well. Row as just as the last plus here was up a little bit not too much. But this is certain to steady hours, we looked at this over 2019 2020 2021 You'd see significant changes when it comes to advertising. And it's starting to normalize. Sponsor brand side, the second advertising unit that you can use on Amazon, Click through rate was up 1.9%. Again, this is another one where you're actually able to add more creative. So no surprise, their cost per click down a little bit. Conversion down significantly. I would maybe assume that this one is because our Amazon store pages aren't always updated. So as you stock out a product, you may still be running a sponsored brand ads, so you're paying for the ad to go to the store to not have traffic and then that could lead to lower convert and out of stock. And that would lead to a lower conversion rate, which is basically flat year over year. So some key takeaways just summarizing the the PPC side, cost per clicks were relatively flat ad revenue and row as we're both up 20% year over year. And I would say that this is a summary of our advertising performance for q4 and not necessarily for the entire industry. But I talked to our director of advertising and he gave me some of these metrics. So ad revenue as a percentage of the total revenue up significantly year over year. We expect that to continue. And then also a ton of great insights on the DSP side. So we're having a lot of success when it comes to running retargeting campaigns and consideration campaigns together, both on platform and off. And then we're also seeing that the click through rate is up and the cost per click is down on DSP, which goes back to again, more inventory available as we're able to create more ads. We expect the competition the cost per click to go down. The last piece I would say comes from when we audit DSP accounts, especially when we're maybe potentially taking over from the advertising the Amazon DSP team. A lot of the times the Amazon DSP team is not segmenting the category. reason enough for breaking down the ad units by orders, devices, views or purchases. So if you're currently working with the Amazon DSP DSP team, please take a look at that. And maybe question if you can segment that a bit more, you are able to get very, very creative in the way that you're targeting the consumer with those campaigns, it just takes a lot more effort than, say, a sponsored product ad. But when we're able to do that, we've had some really great results on the DSP side for q4. Other takeaways that we learned, I already mentioned this one around, walk the store. So a lot of the times late in the year, in December, we had some stock outs. And it was very important on the Amazon side on the advertising side, that we bring back our spend and potentially pivot that towards in stock products. I know that happened on the 1P side, not as bad as probably what we had anticipated to be early December, but still still some out of stock. And we also saw a ton of depressions and crapped out skews in December. So when that happens, and you're driving traffic to the store, you'll see the screenshot on the right where it says see buying options. And that's reflected when you have suppressed by box meaning Amazon's fees the product at a cheaper price on an other channel, and then doesn't allow the shopper to add to cart. So this will impact your advertising efficiency, and obviously conversion and overall sales. But I think we probably saw more suppressions in December than we did stockouts. And then the only thing, the only other thing that I would say as a takeaway is monitor your sell through rate versus your days on hand that will help in real time on a daily basis during the holiday seasons from Black Friday, up to the first of the year, watch what your days on hand inventory is and as you expect, you know, you may be able to see that you're going to stock out on the second of January, you can start to pull back some of that spend or some of those promotions because you know, you're you know you're gonna run out anyways.

Aaron Conant 17:10

That's really interesting. Yeah, just reminder, everybody, if you have questions, drop them to the chat, you can drop them into the q&a or you can email them to me Aaron@bwgconnect.com. But I mean, that is like, it's just interesting, because the last thing that people want to do is dial back paid media during the holidays during q4 Then yet that's what, that's what you're saying people had to do, right? You either had to find backup to be able to ship inventory, which is you can't do last minute, or dial back paid media.

Nicole Reich 17:46

Yeah. So the and then you have this other scenario that happened where you're not right sized in December or November, where you were overstocked on some items, especially on the seller side and then not able to replenish your core items. Because those other outlier heavy items have too much inventory at FBA, for example. In those scenarios, within you know, real time again, we are taking the spend from the core items and putting it back on potentially those items that have too many days on hand or about to hit a long store long term storage fees, right, it was a, it was a good opportunity to potentially sell through some of that inventory that you're heavy on. One other way that we got around this, too was going more towards DSP, if we anticipated that inventory would go out at the end of December, we took that that ad spend in one more upper funnel. Now of course, that's not going to have the same return. So you'd have to change your expectations for ro s or for tacos. But that actually worked really well and has set us up pretty nicely for the first two weeks of January, when we were able to get back in stock again.

Aaron Conant 18:58

Yeah, it's just I know a lot of brands, when you're sitting there and you've got to hide a hot item, and it's selling fast. You know, the good old days, you just ship more in and you ramp up advertising and you stay at the top right. And in this case, just because what Amazon is doing at the inventory levels minimum. So no, I love it, though. It's just it's changing year to year. Right, like?

Nicole Reich 19:21

Absolutely. We mentioned early on the impact of promotions. So I did look back to our recap that we did in February of 2022 on 2021. And one of the things that I mentioned to dig into for 2022 is being a bit more intentional about promotions. A lot of the brands that we worked with, sometimes they run them sometimes they don't. We didn't ever have this really sound strategy of starting in January. What do we want our promotion scheduled to be? And how do we build that promotion budget into our overall ad spend? Because typically That was the best way, especially on the seller side to budget for that. So here are kind of the results of what we've done from this year, especially into the holiday season, I wanted to give you an idea of what our what we found the sweet spot to be. And then also give you an example of how we built out those promotions for 2022. And what they looked like. So we found that discounts of 25% or more, did much, much better than the dollar amounts, where it's like a fixed dollar instead of a percentage or anything less than 25%. We also found that in certain scenarios, when we did spotlight deals, those especially on the one piece side, got a bit more traffic and exposure from off Amazon sources. So as a, maybe an easier example of this brands that are on Oprah's list, right, when we were able to do that type of coupon promotion on Amazon, Nash with some out off Amazon, big PR push that worked really, really, really well. In addition to that, we found that some of the spotlight deals actually got picked up from other media outlets driving that traffic back to Amazon, which is an example of that as on the right for one of our brands. So not to say that it always happens, but we are seeing Amazon take maybe in maybe they're investing in their own span or whatever it might be. But take these really good deals both on the 1P and the 3P side and get the exposure for the brand off of Amazon and then drive it back. That's that's worked really, really well for us. Um, the other thing I want to just point out is just an example of what we did to test out some of these promo schedules. So we focused around the really huge promo days, right Prime Day, summer Prime Day fall, we did a coupon throughout November for just an overall holiday promo, and then got pretty aggressive on cyber five. On the right side, I just give you an idea of the sales year over a year from the same periods of the prior year. So for example, on in July for Prime Day in summer of 2022, we did a spotlight deal at 30%, a similar coupon but not spotlight for the prior year. And we were up 245% year over year. So Prime Day in July was great. Follow that up with another fantastic October for Prime Day, up 120% year over year, and then even over cyber five up 103%. I would I point this out because we didn't see as much of a big difference in the non holiday brand promo time periods. So you can see that we tested in February, and April, I believe we even ran a little one for Father's Day, those didn't see as meaningful as a lift. So from our results. If you are looking to test promotions, I would probably start with the big promo holiday windows, and then maybe test some other things that make sense for your category. So someone had asked, What was the your your performance on non peak events? Yeah, so that was less I mean, I it's less than, I believe, 80% year over year when we ran these promos. But I would tell you that in 2021, we didn't do these non holiday brand promos we weren't as aggressive. So on the year as a whole, the brand was up significantly way above what our forecast was. But I wouldn't say that they were so great that I would be intentional about them again in 2023. So Nicole, hopefully that answers your question. And if not shoot me an email, we can dig into it a little bit more.

Aaron Conant 23:53

In really quick recording. Yeah, we can send it out afterwards, we can just ping everybody. And we'll just once we've edited, you know, the front end and back end. So just if anybody wants a copy, then just ping us. And when we release it for sure, we can just give you a link to download it. Perfect.

Nicole Reich 24:14

Well, so I was gonna have a slide on here around obstacles in 2022. The big one obviously being inventory. I mentioned early on, I have a better potential solution versus just kind of complaining about all of the inventory issues that we saw within 1pm Three peat, but outside of not being as prepared sometimes with certain brands that were just a little late to the game and planning and getting the right assets. The other The biggest concern was still being very manual when it comes to replenishment into FBA. And then obviously chasing the refund orders on the 1P side those were still our biggest issues which Aaron I would actually say has been really the biggest issue since 2020. That hasn't changed a whole time they're getting matter, but the big impact in October where all of a sudden they just cut all of the 3P limits was definitely not anticipated on our end. And it was a bit of all hands on deck to figure out backup. So we definitely saw that our on our end, we worked with a lot of the seller teams to get increased limits, but those were pretty much one offs. And I'm hoping with the march rollout, they'll have a better solution for not only q4, but just 2023 as a whole. Cool. Aaron, on your end on the 2022 side for the holiday season, Amazon, anything that I might have missed that you would want to add in? I know you you missed some of the data early on. No, I mean, I think the tough

part is Amazon continues to shift the goalposts over and over and over again. And, you know, the one thing that, you know, I want to make sure that we get across here just because you know, I'm talking, you know, one on one with so many brands is like if you're if you're struggling to understand what's going on, and if it's pain in the butt. And if it keeps you know, everything seems like it keeps changing, like everybody's feeling that way right now. So I don't know if that makes anybody feel better. But you know what to do with retail media budgets. Now that's kind of up in the air with the inventory restrictions. And this just, yeah, I think everybody wants to get through q1, you know, they're, you know, is the recession starting? Is the recession here? Is that really a recession? Is it going to be a light landing and soft landing? Is it going to be crazy? We're trying to figure that all right now and try to adjust our plans towards it. And yet, we're still at a time where if you haven't locked in your numbers for your you know, for what you're going to do in 2023, you're going to have to within the next two weeks here. So I'm glad we're getting to this 2023 Amazon outlook. I do want to comment just not specifically on the recession, but Amazon performance as a whole. So I know that they didn't have the best releases of their overall performance. Right? I, I won't speak to that at a macro level. But at the brand level, the data in the beginning shows at the retail side, whether it's Amazon 1P or 3P that Amazon still was up 20%. Now I'm not gonna say what they were supposed to be out versus if they're down whatever, the projections, that isn't something as a whole that I would be able to speak to, but when I'm talking to brands and getting questions around, you know, should I still make Amazon a priority? Is it going anywhere? It's the data at the brand and retail level that we have access to still shows us that they perform pretty well. I don't look at any of the numbers and look at the 20% year over year growth or 19% for q4 2022 versus 2021. And say, Oh, wow, this is not going to be the best platform for EECOM or for marketplaces. Right? It's it's definitely not a set it and forget it by any means it's not going to grow on its own. But customers are still up, right and pageviews are still up. So just wanted to throw that in there that I wouldn't just not that anyone is but it still is very meaningful to make Amazon a priority. Even though it takes a lot of work and is probably the most frustrating channel we all have. Yeah. So for 2023 expectations. This chart on the left was created by one of our partners Cleveland research company, they make some estimates every year about Amazon's total GMV. And then the difference between their 1P online sales and then their 3P seller services. So just to point out here the 3P seller services is not what 3P sellers are selling at retail, it's what they are making in fees and FBA fees and all of that. So just some call outs here is that the 1P business is expected to grow a little less than 10% Over the next couple of years 2023 at 4.3%. But you can continue to see those 3P seller services growing pretty well

expected to grow 14% year over year in 2023 versus 2022. And that does try to go back to some of the restock limits that we see the the extra FBA surcharge fees that we've been seeing some shifts in potentially the referral fees right they are they are trying to monetize this three bit these this 3P business as much as they they can and that side of the business is still growing. Not great for us as sellers. That just means our fees are going up. But it does show you that there can they continue to invest in this piece of the business When it comes to the media ad spend this was pulled from insider intelligence. It just I know we had this graph last year. So I wanted to add it again with the updated information. Blue blue line shows you the percentage of media spend that is going to digital ad, digital ads, and then the red represents the change. So in from 2022 to 2023, the ad spent ad spend is expected to grow about 25%. This is an increased need for omni channel reports and insights meaning that as people continue to invest in digital ad spend, they want to understand where those ad dollars are going, and what is the ROI. So for example, when I do DSP, when I do Google PPC, when I do Amazon advertising, how does it all work? And what is the ROI from an omni channel perspective, so we expect the need for those insights that that we have within Rita Bloom to continue to grow, because you're only going to have so many dollars, it the more data that we can show you to show you the impact of the return on those dollars, the better decisions we can make on where to spend it. The other thing I would say is that on adspend yes, there's, there's more dollars, but we also want to make sure that we're spending those profitably, you're gonna see I think where especially as the 3P fees go up, as the 1P fees go up every dollar, we need to be very specific about what the intent of that is. And our brand awareness has certain targets and then our conversion intention have certain targets. So we'll see those shift around as well. Here is the 3P's Seller Central inventory update. So we'll have to take a little bit of time here. Yesterday, this rolled out, you can click on this link, I can send it in the chat as well. But basically on in the beginning of March, they are changing the way that they do their capacity with on the 3d side. So instead of it changing weekly on Mondays, it will change in the third week of each month, once a month. And on that date, you will see your capacity. Oh, sorry about that, you will see your capacity for the month coming up. And then estimated capacity for the two months following. So by the end of every month, you get should get an idea of what your capacity is going to look like for the next three months. The limits will be set based on volume, which I think will really help us going into the holiday season. But they will still show it as units because as we're doing inventory planning and replenishment, we need to see that as from a unit perspective, not just volume. This last bullet is the most important part that I haven't completely wrap my head around again, it just released yesterday, but I figured it'd be worth mentioning. They are giving sellers the ability to request and bid for more space. And this is the part where it gets a little confusing. I feel like the first portion part is pretty straightforward. The second portion is if you want to pay more or more space, you can bid for additional space up to 20%. The flip side of it is that they're basically once you bid and if you get accepted from the way I understand that, if you have a pretty good sell through I believe it's 80% Plus or however they define it, they will give you credits to offset what you're paying them. So it's a very weird bidding system. You bid for more storage space based if you're the highest bidder in whatever scenario it might be. You get that space, you pay Amazon for that space. But if you sell through at a at the rate that they think works, you'll get credits. So it'll pay back for the bid that you made.

Aaron Conant 34:15

Yeah, Amazon, Amazon Amazon, right. I mean, another level of pay to play. Unbelievable. Unbelievable. Yes.

Nicole Reich 34:24

I figured you like the I know you're hearing this for probably the first time but um, we will have a vlog on this in probably a couple of weeks. But that's the best way I can understand those. The news that came out on the seller side so yeah, I mean,

Aaron Conant 34:38

I know we're gonna record a podcast. Maybe we do some of that on the episode as well. I mean, this is the could offset reservation. I love I love the wording it's it's Amazon. I don't Yeah, interesting. That's all I can say is super interesting. Uh, you know, it'd be really interesting, I would say three to four months from now, to follow up with a couple brands, I mean, with 1000 or so on the network, I'm sure we're gonna have some who try it out. I think there's also going to be a bunch of people who just saying no way, no way. Not worth it. So that'll be interesting. More to come.

Nicole Reich 35:19

So I really liked the first couple of bullets, though, I really love that they're switching the capacity to updating it once a month, I love that they're giving us an idea of what it would look like for, you know, 90 days in advance, that's a huge step in the right direction for an inventory team. I know that they'll probably love that. As it relates to the bidding system. More to come, I guess. We don't have any other choice, we will figure it out and figure out how to optimize it for our brands for our own seller accounts and be happy to share those insights when we have them.

Aaron Conant 35:52

So yeah, it'd be interesting. Is it? Is it a nascent bison basis? Or is it a brand volume?

Nicole Reich 35:59

So it's for the entire storefront? Okay, so it's based on your total sales trends, and then you can split that up from what I am reading, you can split that up however you'd like.

Aaron Conant 36:14

All right. Yes, it's gonna be fun conversation, you know, four to six months from now,

Nicole Reich 36:18

though, some other expectations that we have for this year, I mentioned this, in a little bit of the results from q4, we really do feel that high tide raises all ships, the more that we are able to build in off Amazon traffic to Amazon, maybe do some retargeting from Amazon to the b2c side. They don't have to compete anymore, we're seeing it work really, really well. So that's something that we'll continue to focus on. As it relates to our own advertising efforts and how to bring those together in the right way. We also anticipate that the aggressive advertisers will win share, because it's lower cost per click, we see some brands that may pull out those that remain will probably see lower cost per clicks, and hopefully better conversion rates if we can get the other inventory pieces in the right spot. The other thing is that we will continue to see ad revenue as a percentage of total revenue continue to increase. This is happening every month for us. I think when we first started maybe 5% of our total revenue came from ad revenue for q4, a lot of our brands we're seeing 50 to 60% of their revenue come from ad revenue. Very much another, you know, do repeating what you said, Aaron, it's it's becoming a pay to play for sure are, are our organic efforts are not seeing the same type of results as they have in the past.

Aaron Conant 37:53

Yeah, really quick, just going back to the last, you know, slide here because, as you Harland put in a no question, how do these limit changes relate to 1P? Have you seen any adjustments on the 1P side? I mean, outside of that the overall number seems to be around, you know, back in September, early October, Amazon was looking to carry about point six months of inventory. So just over a couple weeks, right. I don't know if you've seen any updates on the on the 1P side as we've crushed.

Nicole Reich 38:23

So there hasn't been any news releases related to storage limits or anything like that, on the 1P side to directly answer the question. Anecdotally, what we've seen is that they're still pretty lean in January. On the 1P orders, we've got that brand that I showed you about all the promotions that did had a phenomenal year. I know they've been struggling on purchase orders and it's all replenishment, the pre booked orders are not as consistent or not as detailed as they had been in the past. So I haven't seen any huge news that would indicate that that would get better in the next couple of weeks. I'm not sure. I mean, it could be happening right now for all I know, but I haven't gotten any feedback from our brands that it's significantly better than December

Aaron Conant 39:10

No. Okay. Awesome. Thanks. Okay.

Nicole Reich 39:15

We also anticipate shifting some of our KPIs from our typical conversion row as to KPIs by funnel. So of course on branded terms on sponsored brand sponsored product ads will still have tacos, but we also want to be focusing on KPIs as we create ad campaigns that go more upper funnel. So things that we will probably be adding on our end. We already have a little bit with our with our brands already. Total cost to acquire a new customer. How long does it take, how much do we have to spend? How many touches do we have to have with the customer before they purchase? Long term value of the customer, especially on the CPG side we're tracking you know, it may cost us $10 To acquire Are the customer one time, but if they purchase 10 times over 12 months, that's very meaningful and still makes that ad adspend worth it. Repeat purchase their rate. And then new to brand sales. Also other metrics that we're going to be building into this more full funnel advertising approach as Amazon gives us. And I'll show you some of the ad units that are coming out more ways to reach the customer through ad spend. I put this one in here as more of an optimist, I know. But I do think that our Instax rates will improve, maybe because of Amazon updates. But I also just think as brands as sellers, we're getting used to the types of processes that we need to create internally to ensure that we are meeting their requirements or anything that they throw at us. So yes, October absolutely stuck on our limits that cut, but it did force us to create processes internally, to send in more orders, sending orders more often to rethink the way that we are paying for our shipping inbound fees to renegotiate those if we could. So I just see that overall brands and third party sellers will get more sophisticated. Because we don't have any other choice. Right, we have to develop the processes internally, in order to be prime on the seller side for FBA. Or on the seller side you have to do FBA, basically, there's only a couple of other backup plans. And I just think that as we get more comfortable with a little bit the unknown or the things that they're throwing up, those rates will improve. I also think that the suppressions, and last by box will continue to occur as Amazon, you know, in the holiday season is putting an emphasis on potentially promotion. So we talked about how you know, the promotions over 25% works really well. We also said that, you know, suppression has happened a lot more. And if Walmart discounts and Amazon still high, I think we'll continue to see that. In case unless you know, brands get very aggressive with their MAP policies or econ policies. So nothing new there, I just think that will continue to be a factor. The other the next couple of slides that I'm showing you are just some of the new ad units that have come out over the last call it 90 days that we've been testing and really have liked just from an engagement perspective, are still testing some of the results. So under what used to be very much like a sponsored brand campaign, you are now able to do a sponsored store spotlight video. So if you click on the product, it takes you to that product. But if you look click on the banner, it can take you to any page on the Amazon store. We've been we really like this one because if we get them to the store, typically we have a higher units per order, our conversion rate is better, it also gives us the ability to have the customer follow us and then retarget them down the line with maybe new brand new styles that were coming out or new products. So that's one of them on the ad unit. The next one is around sponsored display video. So these are popping up basically all over under the fold. on mobile. These ads can show on and off Amazon, they appear on the product detail pages and within search results. And then you can target different products, categories or audiences. So very cool way to maybe dip into some upper funnel without doing DSP, you very much have control over the cost per click, just one thing to point out is that it does require a different video format than the sponsor brand videos. The next one is that under the pa t campaigns, you now can do sponsored brand videos. So on the left, it's showing you an ad placement that's typically under an organic spot in the product detail product comparison section. Again, another reason it's you know, becoming a paid to play. So you used to have these similar products here and those were organic, those now are paid or some of them are paid and then you can add videos here. Another way that you can use this ad is by putting ads below similar brands on Amazon to the right right so this is a little bit below the fold. And then you can also compare similar items so we can either compare items or we can compare brands. Both of these are below the fold on the desktop version. Some extended just some other examples of these sponsored brands on the PDT side. So highly related brands you can now put in that follow button so I'm focusing on the left corner of the screen here. Really cool again, if they follow you, they see your posts, you can email them for 10 Sometimes you can retarget them, drive, drive traffic to your store. You can also advertise in brands in this category. So those are examples on the right side. And then up above, you can just see what those ads look like as you scroll down. I believe that is actually right up on time. Aaron, that is about all I had. So I don't know if they are do you have any other questions on the ad unit?

Aaron Conant 45:19

No. I mean, I have a couple of my own. But I just also if people have questions, feel free, and feel free to throw them in the chat or in the q&a. And we're going to tackle them. What do you see, I agree completely with your slide around, you know, balancing the whole retail media ecosystem that's out there. And, you know, as people are trying to budget, what that looks like, it's getting more and more complicated. What do you see? Is it still predominantly Amazon? I've seen a lot switch over to Google right now. And then they can play with the Google spend, and whether to send it to Amazon or direct to consumer site. And we'd love to hear your thoughts on that. And then we have a question that comes in about Amazon. So

Nicole Reich 46:08

very complex question. I think it all depends, you know, for brands that don't have a b2c site, obviously, driving conversion on the site doesn't make sense, right. So that's just one scenario that might not be applicable from the way that we are approaching it and how we want to approach it and 2023 Is that look at how your current performances on Amazon and on b2c, right, and then start to develop, like I mentioned, certain KPIs for every bit of where you're targeting the consumer, and then measure the ROI. I think we still see and I would have to check with our director of advertising, but we're still seeing better rollout, just, you know, straight conversion on the Amazon side over the b2c side. But that could be just our portfolio. So I wouldn't be in the best, best situation today to just say, across the board, say, you know, you shouldn't do you know, invest more in Amazon versus Google, I just think that the budgets are coming together, where a lot of times in the past, they were separate, the Amazon budget was maybe on the sales team, and then the marketing budget, or the marketing team handled the Google budget or other retail spend, and I see those coming together. And I think that's going to be a huge benefit this year.

Aaron Conant 47:24

Awesome. And then a question comes in, can you verify where the Amazon sales data came from? And are these global or US sales?

Nicole Reich 47:34

I don't know which slide? That is, it was the expectations for this year? I guess they can go by Aaron, you know, what's what they were talking about way early on, or,

Aaron Conant 47:47

you know, no, misusing if you want to drop it in there. And it might have been just all the overall sales numbers, like where the data where the data came from. I mean, it's probably brands your work. I mean, is it just brands that you're working with, because you have access to 1P 3P as well as your your own brands are selling?

Nicole Reich 48:04

Yep. So the first couple of slides around the performance for Amazon as a whole. That is for all brands, all 1P 3P on amazon.com. So we use a software company called SimilarWeb. They help us with all this market share data, and we've vetted it. It's within 95% accurate when I compared it all to our actuals.

Aaron Conant 48:22

Awesome. I'm right here, I'm sorry, just didn't pop off really quick. The media ad spend the media ad spend slide was that all retail media ad spend, not just Amazon? Correct? Yep.

Nicole Reich 48:42

All retail ad spend. And then the percentage of it was just for the digital. So it was just showing you as the percentage of all retail spent or all ad spend. The percentage that's going to go to digital efforts is increasing year over year.

Aaron Conant 48:59

So then, what do you kind of advising brands you have as a year over year growth number for 2023? Oh, my goodness, that was I know. Right? So I mean, it could be by category. I know it's category adspend? Do they have inventory or not? Are they one p 3P? But is it a range from five to 10? Or is it a range from 10 to 30? Or

Nicole Reich 49:25

so we're doing our forecasting for our brands right now. If we forecast anything under 20%, and I'm speaking very broadly here, I know my client services team, if they hear this, they're gonna want to punch me but if anything less than 20% Doesn't seem very meaningful for us. In general, like we look at all of our brands and average them together q4 For our portfolio grew over 40% year over year. But we also did a phenomenal job of investing in advertising and promotions and some of the more aggressive things that are brands were more open to them, they happen in the past. So according to the overall trends, right? If you just look at Amazon as a whole, if you're growing less than 20%, there's a potential issue. That's what I would say. Okay.

Aaron Conant 50:12

Any other cool new things that are popping up? And just, you know, last minute here, if other people have questions, feel free to drop them in.

Nicole Reich 50:24

Yeah, so when asked for some, early by with prime data, we don't have it today. But it is coming. So I won't be able to share that we're still pulling it together. But we please expect alpha, we're keep an eye out for a blog coming up in the next couple of months around by with prime. And we're also speaking with the by with Primatte prosper this year in March in Vegas.

Aaron Conant 50:48

Awesome. Yeah, that's going to be very, very interesting as a whole. How much people leverage it. I know you have to be on the 3P side right now. Are they going to span it to 1P side, but no, super interesting. So I mean, I don't have any other questions that have popped up here. And we're pretty much right at time. So again, cool, thanks so much for your time today. Thanks for being such great friends, partners, supporters of the network anybody who dialed in if you want a follow up connection, if you need help with Amazon 1P 3P paid media, you know a 3P third party like trusted resale partner, Nicole and the team at retail boom, they pretty much do it all. There's leaders in this space as a whole. It's worth the follow up conversation. Look for an email from me, I'd love to have a conversation with you as well figure out what are the other pain points that are out there. But also if you need any connections across the board, more than happy to make those anything in the digital or retail space. And so with that, I think we're gonna wrap up hope everybody has a fantastic Wednesday everybody take care and stay safe. Thanks again. Alrighty. Let's see