To thrive and survive in an ever-evolving market, it’s crucial to reflect back on all the lessons learned from 2021 and apply those learnings for a successful 2022. Join us for an in-depth round table discussion with Amazon experts who will discuss topics around the main pillars of Amazon: Operations, Advertising, and Content.
BWG Connect & Orca Pacific invite you to participate in an interactive discussion with your peers.
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Sr. Advertising Manager at Orca Pacific
Tara Lynne is the Senior Advertising Manager at Orca Pacific. She is an experienced SEM practitioner with over 11 years of advertising and account management expertise, working with global retailers and brands across major search, social, and marketplace platforms. Before joining Orca Pacific, Tara was a Senior Digital Marketing Manager for CommerceHub and a Senior PPC Campaign Manager for Epicenter Network.
Sr. Director, Client Data and Resource Management at Orca Pacific
Nate Hogle is the Senior Director of Client Data and Resource Management at Orca Pacific, a full-service Amazon Agency and eCommerce Partner that helps brands achieve success by optimizing every stage of the customer’s journey on Amazon and eCommerce marketplaces. Prior to Orca Pacific, Nate worked in IT administration and operations management at World Lux.
Business Manager at Orca Pacific
Mackenzie Mendoza is a Business Manager at Orca Pacific. As an experienced online marketing professional, Mackenzie is an expert in Amazon marketing, search engine marketing, data feed optimization, and more. Before joining Orca Pacific, he was the Director of eCommerce for True Brands, the National Account Manager on the Amazon team for Newell Brands, and a Senior Online Strategy Consultant for Marketplace Ignition.
Associate Director of Content at Orca Pacific
Leo Raymundo is the Associate Director of Content at Orca Pacific and an Education Mentor at UX Writing Hub. His vast experience in copywriting, content strategy, and UX design allows him to create better experiences for agencies and their customers. At Orca Pacific, he implemented a UX design-centric approach to content development and launched content strategy foundations to optimize brand presence on eCommerce platforms.
Co-Founder & Managing Director at BWG Connect
BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.
What did Amazon’s sales and advertising performance look like in 2021? Are you aspiring to make more money on Amazon in 2022 – but don’t know how?
All you need is to master the customer’s journey on Amazon to achieve success in this eCommerce marketplace. Data shows that Amazon has remained strong and more successful even in trying times – especially in 2021. How can this data help you optimize Amazon in the future? Orca Pacific is bringing Amazon experts to equip you with the right information and help your brand succeed on Amazon in 2022 and beyond.
In this virtual event, Aaron Conant interviews Nate Hogle, Mackenzie Mendoza, Leo Raymundo, and Tara Lynne from Orca Pacific about the holiday sales and advertising performance of Amazon in 2021. They talk about how categories and brands performed in 2021, lessons learned over the past year, and advertising strategies and trends brands should focus on in 2022 to achieve success.
Aaron Conant 0:18
Happy Wednesday, everybody, my name is Aaron Conant, I'm the Co-founder Managing Director at BWG Connect, where networking and knowledge sharing group of 1000s of brands who do exactly that. We network and knowledge share together to stay on top of newest trends, strategies, pain points, whatever it might be that shaping digital as a whole. We're going to host close to 500 educational events this year, virtually and probably close to 100 in person networking events. You can check out our website, if you want to sign up for any of those. We also encourage you if you have any other co-workers or people you know, in this space if they'd ever like to join, don't hesitate to kind of share the information as a whole. We don't sell anything here, we're just a giant networking group.
If you need contacts with other brands, or if you need any recommendations and service providers, we have a short list of those as well. You don't have to do a Google search and kind of wade through it all. We've got a short list of top recommended partners that are recommended from brands in the network as a whole. Couple of housekeeping items as we get started, we're kicking this off at three to four minutes after the hour. And just you know, we're going to wrap this up with three to four minutes to go as well. We'll give you plenty of time to get on to your next meeting without being late.
The other thing is we want this to be as educational and informational as possible. So at any point in time, if you have a question, drop it in the chat, drop it in the Q&A section there where you can always email me email@example.com. We'll get those answers as quickly as we can today, hopefully all of them. The other thing though, is maybe it's an hour after call tomorrow next week, you ever have any questions in a digital space, don't hesitate to reach out to that same email address, we can get you an answer, usually in under a day or so. So never hesitate to reach out. And with that, we're gonna go ahead and kick it off.
A lot of people as we kind of get into the second week of the new year here, just want to kind of a wrap-up what 2021 end up like for Amazon as a whole. We've got some great friends, partners, supporters, the network since the very beginning here over at Orca Pacific. And they're gracious enough to jump on the line today and kind of answer as many questions as we can throw at him across the board. And so we'll do kind of a quick intro there. Nate, I'll kick it over to you. If you want to do a brief intro on yourself in Orca Pacific. That'd be awesome. We then jump to Leo and Tara and Mack as well. They want to jump in quick and the wind kind of get into the Q&A section, sound good?
Nate Hogle 2:31
That sounds great. Thanks, Aaron. Hi, everyone. It's great to meet you. As Aaron said, my name is Nate Hogle. I'm the Senior Director of Client data and resource management at Orca Pacific. I oversee our data capabilities, tooling, and client reporting alongside our software OPNAV, I also manage and oversee a list of our client support teams work in catalog content and advertising spaces. So a little bit about Orca Pacific.
For those who aren't aware of Orca Pacific as a full service Amazon agency based here right in Seattle, two blocks away from the Amazon campus. We encompass all areas of the platform with our client engagements catalog content, operations, advertising, marketing, and overall channel strategy. We've been working in the space for about 13 years. Amazon is our bread and butter we're born right here in Seattle, large majority of our organization is made up of former Amazonians and eCommerce professionals run variety different firms in the area, both from the retailer side, agency side and also some folks on the brand side. So we have kind of a good mix of people from all different points of view within the supplier community. And that makes up our client facing teams and our support teams here at Orca Pacific. With all those experiences, we have a really strong connection with Amazon.
Like I mentioned, we're right down the street from them. But we also have really good working relationships and experiences with a lot of folks in that building. So we're there on a weekly monthly basis, meeting our client's behalf and getting the lay of the land for all things Amazon. So for today's topic, looking back at 2021, I felt it was a pretty wide ranging discussion. And so what I wanted to do was bring some of our best and brightest alongside with me to speak to all different points of Amazon and the brand journey on the platform. So with me today is Mackenzie Mendoza, business manager here are at Orca Pacific. Tara Lynne Ferguson, a senior advertising manager, and then Leo Raymundo, our associate director of content. So those three are joining me today to kind of talk us through all things 2021 Amazon.
Aaron Conant 4:46
Awesome love it. So just a quick reminder for those who have joined, if you have questions along the way drop into the chat, the Q&A, or email them to me firstname.lastname@example.org and we'll get them answered. So if we kind of just jump into it, high level, I want to start there, and I want to start going down some rabbit holes here, what were the key takeaways that you saw on 2021 for Amazon?
What did the data show when you take that step back? There's the fun, hey, I felt this, I felt that. But from the data side, we'd love to hear your thoughts. I think the importance of data and reporting everything is much more people's intent, and now than it was two years ago, and even last year, we'd love to hear your thoughts, like key takeaways, what the data show?
Nate Hogle 5:32
Yeah, certainly. So I think there's a lot to consider here. And Mack and Leo and Tara Lynne, you have insights to after I kind of get my thoughts, I'd love to hear your points of view. But I think from the data standpoint, what we see is that Amazon continued to grow in 2021, quite remarkably. Perhaps also with quite a bit of uncertainty. Like there wasn't 2020, perhaps for different reasons, but ultimately, kind of put it back to the same source, obviously, with the pandemic just kind of confounding a lot of different systems and operations that we operate within eCommerce space, especially on Amazon.
So, pandemic influence supply chain issues were very prevalent across our client base, high rep out of stock numbers, 20%, higher than they were the same year. So dealing with a lot of really striking variance in out of stock numbers really affected how the channel performed and affected a lot of strategies that we had to play out in the space. We did see, regardless of all of those challenges, we did see a lot of growth. I mean, the numbers are up year over year, some categories more than other. I think there's a really robust growth in the grocery and consumable space, I think that is obvious why I think there's just been a greater adoption of grocery delivery and consumable product delivery than in 2021.
That started with the pandemic, now, almost two years ago. So there were big surges in those areas for us across our client base. We also noted from an advertising side, sponsor search is just becoming more and more competitive. I know that's probably a felt experience, a lot of people on this call, but it is more competitive to advertise on the native Amazon sponsored search capabilities. CPCs have gone up drastically in the past 12 months. And that's something we see in the data, again, some categories more than others. But rising CPC is a stagnant inventory available.
Amazon's not or hasn't, to this point, really increased the amount of advertising space on a search results page. So we just have more advertisers competing for the same amount of spaces, which rises cost. So in 2021, without being kind of where the data let us, we have to look at other areas to market our client products.
Aaron Conant 8:05
Yeah, really quick, a question that comes in around that, and I'm going to just elaborate a little bit on it, because there's a careful balance around with supply chain issues. People wanting to dial back some spend, but then at the same time, overall cost was going up. Did you see brand spending more or less on Amazon in 2021 over 2020 as a whole? And the next one is, what do you see then if we look into 2022? Is it just going to keep going up in supply chain? I think there's a lot of feeling by the end of this year is kind of where supply chain starts to figure itself out, unless Q4 throws in a muck again, how should people be budgeting for 2022?
Nate Hogle 8:53
Yeah, it's a really good question. I think I might loop back into this specific topic, because I know he's dealt with this directly with some of his clients. But overall, I think the consideration is, not necessarily do we spend more, but where do we spend more on Amazon? I think the tendency last year, Aaron, is that the costs were rising, not only advertising cost, but it costs across the board, from supply chain and whatnot.
The knee jerk reaction from brands last year was to find any way to reduce those costs. We're going through chargebacks, and we'll look at other areas that we can save on Co-Op and really trying to work that bottom line number while perhaps somewhat ignoring the top line. So, the tendency really is to be on a cost savings spend, or excuse me, a cost savings strategy when really there should be a lot more focus on trying to fulfill and meet the demand that Amazon is craving. Mack, do you have thoughts on that in addition to my opening comments there and any specific cause you can make?
Mackenzie Mendoza 10:04
Sure, the story for 2021 was emphatically brand getting back to being very margin focused. We saw inputs going up across the board, from material inputs to logistical inputs, and this put a ton of strain on brands and brands started getting away from focusing on top line and really looking at their bottom line looking at what can they do. For most 1P brands, I put through one or even more than one cost increase throughout the year, which is certainly not typical. We saw ASP increasing anywhere from five to 10%, across most brands of art. So as inflationary pressures started to push things up, it just became the larger story for 2021.
As stewards of Amazon, I think, a lot of our focus was, as Nate mentioned, on bottom line, so things like chargebacks, things like trying to get reduced shipping costs, things like trying to get increased costs on Amazon, it became a huge part of the narrative of the work that we all collectively did on Amazon. And, I think that we need to get back to focusing on top line, because the demand on Amazon, we're not talking about a department store that has 200 doors, and we kind of know the amount of foot traffic that they'll get. And so margin becomes more important, you got to squeeze every bit of margin onto those doors. Amazon, the demand is still not infinite, but it is massive.
At this point, Amazon services every single portion of the continental US. So to get away from focusing on top line, I think is a mistake. And that's the advice that we're trying to push on a lot of the clients that we're working with at Orca, is that we need to get back focusing on top line. And by focusing on is what are you talking about? What are the initiatives that you're running? How are you spending your time? If you're still focused on all that margin, conversations are still focused on all the bottom line conversation, I think you're really going to miss out the point where Amazon is in its evolution, it's still growing, it's still adding a ton of eyeballs every single day. And, if we don't focus on that now we're going to miss out because Amazon is a relevancy engine.
If you're not focusing on top line, now, you're going to be losing that relevancy down the road. So focusing on top line 2022, is actually setting yourself up for success in 2025, by establishing your real estate on the channel. So getting back to focusing on top line is a key point for us in 2022, as opposed to 2021, when these different margin pressures kind of dominated the conversation, I would say.
Aaron Conant 12:55
Yeah, and how long does it typically take to get through? Because I think, kind of the points a whole as Amazon, it's not always a negative margin, sometimes it is, but it's margin diluted to the rest of the company. And when you look back pre-pandemic, it's three to 5% of the company, nobody's really paying attention. And all of a sudden post, I should say, hopefully we're getting to the end. There's not quite post pandemic yet, but we're almost two years in, like, it's 30%. And now the lower margin is becoming margin dilutive.
It's almost like if you haven't fixed it, you still need to fix that side. But sounds like companies, in a lot of cases, tried to fix that last year. And I love that top line focusing but what if you haven't fixed the bottom line? Are you still actively having those conversations? And what do you say to brands who are saying, hey, I submitted price increases? And I couldn't get them through? Are you actively helping brands push those through?
Mackenzie Mendoza 13:49
We are. I mean, probably every single day I talk to Amazon about price increases. And yes, you tried to push them through systematically, we have a lot of brands moving to a hybrid approach on Amazon, some brands that just Amazon won't give them that 10% increase they need and they can't afford to sell on Amazon through vendor central anymore, well, let's switch them to 3P switch them to an FBA model where they can increase their prices and realize that margin. So it's something that a lot of brands dealt with in 2021, it's something that we're still dealing with, some brands tried to hold out as long as possible hoping that the shipping costs would go down and at some point they just had to give in.
So while we do have that focus on the bottom line quite a bit, it's still, if you can drive 5% growth in top line and do that easier than a 1% growth in margin. You're still going to make more margin dollars at the end of the day growing the top line and that's where I think you have a greater ability to affect things on Amazon.
Aaron Conant 14:58
Yeah, I'd love it. Don't get lost in the weeds of that. I mean, you have to fix the margin. I mean, everybody's concerned about it, but don't let that deter you from focusing on the efforts to grow the top line because if you're not, we found is Amazon is a place where any brand can come in, spend the right amount of money, get the right amount of views and start creating a digitally native brand that starts winning categories.
I think that kind of answers another question that comes in about, what aspect of brands, Amazon business, where people most focused on during 2021, it sounds like supply chain, and then cost increases getting through, and then managing the cost of doing advertising. The next question that comes in is around advertising strategies for 2022. I can say, in the 30 Plus brands that I talked to every week, there's a huge shift that I think you're kind of alluding to, at the beginning around from traditional just sponsored products to or sponsored search to DSP. Is that a trend that you see focusing, and how would you divide up the budget for a brand in 2022?
Tara Lynne 16:07
Yeah I can speak to this. So absolutely 2021 sponsored products becoming more and more competitive. It's still the bread and butter, and absolutely sponsored product is still the majority of budget and most of our brands still have a lot of opportunity to max out sponsored products. But I think for 2022 the sellers and brands that want to get more out of their sponsored products, and advertising overall, are going to be the brands and sellers that are investing in other types of ads, like you mentioned, sponsored display, as well as sponsored brand and more engaging ad types, like sponsored brand video ads, and strategically investing in those types of ads during lead up and ramp time.
I think in 2021, and in past years, it's been really, really easy to kind of create a flat budget, and then potentially just invest a little more during peak periods. In 2022, I see it being a lot more important for brands and sellers to be strategic about investing more during that ramp up and lead in time. So the weeks and even month or two leading up to whether it's Prime Day, or whether it's going to be Cyber Five, or whatever your industry peak period is, it's going to be really important when you're investing in ad types. Really early funnel, sort of ad types like sponsored brand and sponsored display, you're able to get in front of shoppers during their consideration and their discovery phases of buying.
That way, they're already in your funnel to target with those higher ROI ad types like sponsored product during that peak period. So I would say it really as far as the percentage of budgets in investing to the different ad types, a lot of that is really going to depend on what that client's specific goal is. And if they really maxed out sponsored products in 2021, it's going to be really hard to continue to grow if you're just investing in sponsored products in 2022. So I would say starting to take 25 to even 50% of your budget and investing in sponsored display and sponsored brand during the lead up time prior to the peak periods.
Aaron Conant 18:51
Are there new advertising opportunities that are popping up? I like to think of the last 18 months really, DSP has taken over. I know Amazon, that is a huge focus of theirs. They've hired a team of DSP ambassadors to go really promote that across the globe. Are there other things outside of DSP that you guys, they're saying, “Hey, this is on the horizon?” And I guess the other one is who should be using DSP? And did you see the same thing in 2021 where just DSP started to take off?
Tara Lynne 19:26
Yeah, I would say that in 2021, they're making DSP a little more accessible, I would say. But then tying that back in, sponsored display, Amazon rolled out a lot of changes to sponsored display where previously brands that couldn't break into DSP or hadn't been testing DSP are able to start testing with sponsored display to also advertise on and off Amazon and then send traffic back to their Amazon listing pages.
So honestly, all of the changes that they're rolling out and they did roll out in 2021, although it's still in early adoption phases in 2022, it's just giving advertisers more control over that targeting and really starting to kind of drive that customer on their journey like into your brand's funnel, and be able to track where they're at. And then also able to retarget and remarket, which increases loyalty and re-engage those customers and shoppers.
Aaron Conant 20:31
Awesome. Love it. So another question that comes in is around on a category basis. So are there any clear winners or losers? I don't know if losers is the right, which categories performed the best in 2021? Are there any that outperformed others? You know, right now is that time is everything's come in and people are wrapping up all the numbers, and they're telling the story of 2021 to their executive teams. Yeah, there's a lot of comparisons going on. This is why we hit our numbers. This is why we didn't hit our numbers. This is why, hey, you gave us 100% year over year growth, and we hit 80. But the rest of the category did 60. So we outperformed. I think that's where a lot of people's mindsets are. So was every category up? Or were there clear winners and losers in that space?
Nate Hogle 21:22
I can speak to that just at a high level again. We like to bucket our categories in our product groups into kind of three main categories with hardline soft lines and consumables. It just gives us an easy way to kind of speak to the overall landscape at a high level. We did see gains in every one of those three verticals year over year, I would say the fastest growing category was definitely in the consumable space compared to year over year comps were kind of what I led on my initial comments about consumers being more willing to try traditional brick and mortar shopping purchases through Amazon or other eCommerce space, other eCommerce opportunities.
So in that vein, that vertical for us was really the one that is I would say noteworthy from a growth perspective. But we did see growth in her lines and soft lines as well. Just from an entirety to 2021 perspective.
Aaron Conant 22:27
Awesome. And do you see any changes headed forward to 2022? I know, a lot of times budgets aren't quite set just yet. But usually numbers are, what do you see looking forward to the 2022?
Nate Hogle 22:38
Yeah, I think the anticipation again, is that everyone's very bullish on on the platform. And we expect those big returns yet again, I think to to max point, in some of his comments, there's just a ton of demand that remains out there on Amazon. And I think everybody understands that. But the question is how you get it? How do we circumvent our supply chain issues to get proper products to replace former hero ASINs in our catalog?
How do we get those products in front of a wider audience considering DSP, maybe it is considering DSP, as opposed to just sticking with sponsored advertising, really reaching out into those areas for a lot of brands that they haven't played with some of the levers that Amazon offers, and we haven't played with those. We want to have those discussions now to be able to get to that demand. I think it is out there for the brave and the willing. It is not without its challenges, for sure. But I think everyone's quite bullish on the prospects for this year.
Mackenzie Mendoza 23:40
Yeah, this is a Mack jumping in on that. Well, our view is that the Amazon should be up year over year, but the incremental gains will mostly be from Amazon right sizing their in stock level on the channel as a whole and kind of truing up the misses that they had in 2021 as far as they're out of stocks. But as inflation continues to kick in as ASPs continue to rise as there's less government stimulus in the general economy, you could start to see some flowing on year over year items that were in stock the whole time. So in general, we should see gains on Amazon, but a lot of those will be due to truing up the stocking, we will see some headwinds based on inflation.
Aaron Conant 24:27
Yeah, it's interesting to bring up the instock rate because that was a huge issue for a lot of people over the past two years. Not only just supply chain, but I think Q4 actually getting the products into an Amazon facility and we saw this huge, like push to drop shipping on your own. Do you see that continuing or is Amazon going to build 50 new fulfillment centers or do you think this strategy of find yourself a digital age three PL that can do all that dropshipping whether it's merchant fulfilled or seller fulfilled, do you see that still being very active in in 2022?
Mackenzie Mendoza 25:09
Yeah, in the conversations we've been having with Amazon and all of my, now that we're in the new year, we're starting to take on those AVN type discussions and we are getting pushed fairly hard to go towards the dropship or the Amazon directly filament level if you're on the 1P side. So it feels like we're not seeing Amazon say, oh, thank you for doing that now. But now we're going to order in heavy on the 1P out again, and that won't be as big of a part of it. Instead, we're seeing Amazon more or less double down on those requests. Hey, what additional SKUs? Or what additional agents can you offer fourth and direct fulfillment pushing us.
So it does feel like it's becoming a bigger part of Amazon's desire in their broader fulfillment network? And I think this speaks to, as you mentioned, Aaron, people lightening up that 3PL and getting them going.
Now, I'm not saying that Amazon is going to totally back out of 1P and network inventory and start completely relying on certain categories to be in the direct fulfillment program, but you do have to weigh the risks there. I encourage all brands to keep an eye on their in-stock rates, keep an eye on what Amazon is stocking in-network and always be truing that up with Born to Run orders, making sure that you are getting your item into Amazon's FD.
Aaron Conant 26:38
Yes, super interesting. Just reminders we are just halfway through here. If you have any questions, drop into the chat, drop them into the Q&A section there, keep emailing them into me, email@example.com. So you see people then leveraging that to do additional product offerings. I mean, that's one of the issues that I think a lot of people have is, getting a new item launched on Amazon, it's tough, there's no traffic, they don't order enough, it's not in there. A lot of people used to go, hey, we're going to open up a third party, a seller central account and try to go that way, Amazon's clamped down on that, in some cases, do you see people using the merchant fulfilled to launch new products on 1P and 3P, it's a little bit different. But we'd love to hear your thoughts on that as well.
Mackenzie Mendoza 27:24
Sure. We have. And we were seeing that in specific categories where, the real answer that errand is Born to Run program where you can self initiate POS from Amazon on specific products. That was Amazon's answer to their general issue of brands wanting to launch your product and the Amazon system just not ordered into that. You can now initiate those orders through the Born to Run program. What we were seeing though, is that some of the items, even if they're brand new, we're getting dinged for profitability. Some of the items might be getting dinged for hazmat issues, or the board's run program wasn't accepting a lot of variations.
That's where you would want to pivot to merchant fulfilled in order to kind of get that item going. And again, once Amazon sees that some orders are being placed, once you have to review, then you're starting to get those eyeballs on the item and should click over to your standard weekly replenishment orders from Amazon. So Born to Run is your first option there. And then if you can't get an orange run, your second option should be the director of filament or merchant fulfilled route.
Aaron Conant 28:32
So another question just comes in of the q&a section here? Do you have any insight in how the FBA inventory caps are adjusted? Is there any strategy there aside from increased sales velocity? So that was a huge issue for brands, especially when you get into q4 and you're not necessarily giftable? Affects both 1P and FBA, any insight on how FBA inventory caps are adjusted?
Nate Hogle 29:01
That's a really great question that's affected quite a few of our brand partners as well. Unfortunately, answer is obviously all predicated on some algorithm that Amazon has running in the background and obviously sales are going to be the most influential piece of that algorithm. I would say though, other areas to consider would be kind of other operational metrics on those PDPs. So looking for conversion rates and looking for in-stock rates and detail page win rate on 3P, those are factors that will also be considered in that calculus.
So those are other things I would say to consider in that math. But however a lot of times clients will be tempted to try to decide what the math is that goes into those types of calculations. And we've just found this was a really frustrating and fruitless effort. So I think just from a holistic standpoint, looking at those operational numbers, looking at the conversion rates, and it kind of leads us into another area and content, making sure the content of those pages is ready to go.
Make sure they're retail ready, so when you do have that limited inventory on those ASINs, and you spend the ad money to get someone on that detail page, that conversion happens. And I think when you're looking at those FC constraints, you really want to look at the whole picture when it comes to how your products are displayed on Amazon, what the underlying operational metrics are underneath the hood on those products.
Aaron Conant 30:40
You just also found with a lot of brands having that backup, drop shipping capability, where even if you do go out of stock, it doesn't show up that way on Amazon, you can still ship those on your own. We'll probably have six to eight calls on that this year because it's so important not to go out of stock. And I think a lot of cases, their supply chain issues coming overseas and product coming in. That's one side of it, that's starting to figure itself out.
The other one is how do you get the product in there? And do you have enough allocation of space, especially something got to takes off and goes viral and you run out? You want to capitalize on on that momentum by still being able to ship? Which is crazy. Quick question on. And thanks, everybody, for sending in the questions, you can continue to drop into the chat or the Q&A there around kind of a strategy, if you are going out of stock on Amazon, what to do with paid media, this has come up multiple times and conversations I've had as well, what do you do in that situation? Do you dial back advertising? Or do you turn it off?
Nate Hogle 31:45
Yeah, Tara Lynne, I'd be curious your thoughts on this, traditionally speaking, we would definitely want to recommend moving that budget to other areas. There are controls within Amazon advertising and other advertising management platforms that will allow you to little control you from being able to spend on products that are out of stock. But clearly, seeing that out of stock happen a few weeks ahead of time will allow you ample time to shift to other products.
I would say, in a best case scenario, you're going to anticipate that outage just knowing how long it takes to get products into into an FC, you anticipate that outage and you plan your advertising shifts accordingly, I think you definitely want to consider moving that budget to products that will be in stock or are anticipated to be in stock rather than continue to advertise yourself into and out of stock position. Tara Lynne, do any additional thoughts on that?
Tara Lynne 32:41
Yeah, absolutely. No, definitely correct, Nate, but there are ways to make sure that we're planning our campaign strategies, specifically, if there are sell through goals or inventory challenges that we're already aware of, and in order to group our products together, and potentially set up campaigns together, where if one item goes out of stock, but yet there's still a lot of volume and demand on similar searches for that product that potentially one of our number two or number three hero instant could take up that traffic and that way, you could still capture those sales and that sort of ramp up from that campaign.
Aaron Conant 33:31
But you're looking at content, specifically video in 2022.
Leo Raymundo 33:35
Yeah, I think I can take this one Aaron. So yeah, hey, everyone. This is Leo again. Yeah, so I think with video, the key thing I think to keep in mind for a lot of brands is, since we don't have that traditional brick and mortar experience that we would if we were traditionally to go into like Target or WalMart, let's say and pick up that item and look at it, I think we have to think about different ways we can convey a lot of those benefits, and some of those details that you might find, if you otherwise look at that package. So those are things like, kind of showing how it works and showing, kind of the use case of why that product may be good. But I think another really underrated part of it is, making it really short and concise.
A lot of times we see videos where, it's pulled from like a commercial ad or something on the internet. And it does talk about the product, it does talk about the brand, but you don't really get to the point until 30 seconds in. As you're all aware, on Amazon. Typically users have very short attention spans. And so you want to communicate those benefits and convey those things a lot sooner than that, I would say within the first five, 10 seconds because again, that attention span is so short that you really want to maximize the amount of time people spend on those.
And we've seen data that shows that people don't typically spend, again, more than five to 10 seconds on those videos. So the more you can do that, the better off position you'll be to ultimately convert on those detail pages. So, even editing existing videos, or taking videos specifically with those Amazon users in mind is definitely best practice. So, from kind of like a high level, I think does most important thing for brands to consider.
Aaron Conant 35:25
How often are people refreshing content?
Leo Raymundo 35:28
Yeah, again, it really sort of depends on the brand and kind of like their seasonal offerings. Because, of course, if we get into soft Lyons, and we think about things that are been more seasonal, whether it's like summer attire or winter, things like that, then you definitely want to refresh it on that kind of quarterly basis as to kind of the seasons change. In terms of some other categories, I think it just really kind of depends on, one thing that we really look at is what competitors are doing. So if we see that competitors are kind of like shifting one way, we take note of that right away and think about what are some different strategies that we can take to kind of like move ahead of the pack.
So, for seeing competitors doing something like, adding more text to videos or text to images or things like that, then how can we best leverage that kind of strategy to move in sort of either that same direction or moving into another direction where we can again, break a bit ahead of the pack. Ultimately, it is kind of about the Amazon algorithm. So Amazon understands what converts and what doesn't. And so the more eyeballs you have on that, to keep track of where your competitors are ranking, and if they get ahead, you're often in a much better position to understand what you need to do specifically to take advantage of some of those content updates.
Aaron Conant 37:00
Awesome. Another question that comes in just back around the FBA piece. Is it better to keep your FBA cap full? Does Amazon see that as you're requiring more space? Or is it better to leave space for replenishment? If you don't need all that inventory in there?
Nate Hogle 37:17
I would say if you don't need the inventory, definitely, do yourself a favor and leave yourself that extra space for any surges in forecast or spikes in run rate. But, I don't know, the specific situation, the questioner is stuck in, but I know for a lot of clients that we have, the space limitation is so small that they're unfortunately not at position even have that luxury to decide whether they can pick and choose what to load, it's just basically they can get a compilation of key portions of their catalog to represent certain lines of products. And they kind of left to figure out what to do from there.
So that's when some of our earlier comments about sales in-stock rate, and conversion rate, and glance view rate all those things, you'll start to want to take account of and see what products are performing better than others and then adjust accordingly. I think that's going to be your best strategy in a really tough situation or unfortunate, it really isn't just a great answer other than continue to try to improve your inventory score, and just to really keep an eye on the product assortment you have in the FC.
Aaron Conant 38:36
Awesome, love it, and just people can keep dropping questions and awesome. We'll keep getting them answered as a whole. What's the number one thing people should learn from 2021? And then what's the top thing you're kind of advising brands? I mean, you guys are dealing with brands in every category across the board? What do you advise people to be focused on in 2022? I know he said, hey, top line, what is the strategies behind that you're kind of advising the brand you're working with on? So what's the key takeaway from 2021 that people should have? And I don't know, maybe we jump around and everybody has one? And then what should we look forward to in 2022? Because it sounds like you guys are planning for growth again. We'd love to hear your thoughts.
Nate Hogle 39:20
Yeah, I can start. And I think Mack might have an insight there too and Tara Lynne maybe on the advertising side. But I think a real high level, what the focus has become on Amazon is really trying to get your arms around all of your own branded assets and touch points on the platform, and really gaining control of that. And what I mean is trying to maintain consistency among your product detail pages.
So Leo talking about content and some of the things are brands are doing, a lot of that work and towards the end of 2021 and I see this in 2022 is getting consistency across their catalog. Making sure the bullets haven't been consistent cadence across the product set, making sure the branding looks good and that it's consistent. And as the updated logo on colorways and everything is current, really leveraging the brand store, having that one space on Amazon where it's kind of a walled garden, no competitors can come in and advertise against you in that space to really taking stock of that opportunity, folding that in with your brand and consistency on the platform and really just trying to get your arms all around that.
With that also comes leveraging some of the brand protection tools that Amazon provides both in brand registry and transparency. So using those tools to filter out bad actors, filter out maybe some knockoff products or duplications that have cropped up on your catalog set, and really just trying to protect yourself. So there's a lot of that kind of recalibration. And viewing Amazon no longer is just a, which is an archaic way of thinking about at this point, but no loggers seeing it as a set it up once and kind of forget about it pay attention to your detail pages once a year. No longer is that the case. It's really where you have to take stock of everything that you have control over on the platform and devise your strategies around that.
Aaron Conant 41:22
I want to keep going around, I want to get to you, but it's a great question that comes in is what do you see is around organizational design? So how have you seen brands that you're working with change their Amazon organizational structure over the past year? And what does that look like for best in class? It used to just be, you had one person on Amazon over the corner begging for dollars. And it started to take off and work and there's all nice and cute, but then all of a sudden COVID hit and all this money pours in and everybody's trying to hire the next Amazon expert. How has that changed over the past year? I think it's just a great question, I need elaborating a little bit.
Mackenzie Mendoza 42:06
The brands that we are seeing succeeding on Amazon app have really built out their support teams for Amazon. So you'll have kind of your main national account manager that runs kind of the sales end of it, you'll then have a demand planner that supports them with Amazon broken out into its own separate forecasting line, that is key. In order to excel on Amazon, Amazon can't just go into the general online pile for forecast and you want Amazon broken out by the demand planner separately.
Also, that demand planner should be keeping an eyeball on your inventory levels and letting the salesperson know, hey, we're a little behind or Amazon's a little thin on the 10 SKUs this week, can we true those up. So you want someone focused on that. And then the final piece that we've seen people layer on as an analyst, an analyst that is looking at how your products are positioned within the market compared to the competition, how your price points are positioned, where some upsell opportunities might be, where some opportunities might be for additional SKUs within the marketplace.
Those are the two positions that didn't really exist, especially that analyst spot didn't really even exist three or four years ago on most Amazon accounts that we've seen people bring in with high success. So you really kind of see that analyst as the person that's actually driving the business and gaining those incremental sales are the salespersons kind of doing the blocking and tackling of keeping the ship moving forward.
Aaron Conant 42:41
Awesome. I love it. And what are you most excited about for 2022?
Mackenzie Mendoza 43:47
So for me, I think the thing that we need to focus on, I talked about the top line thing and just changing our mindset around how we're viewing Amazon. The other thing that I think people need to focus on in 2022 is just the rising AFPs on the channel and how that impacts demand. I think I've talked about this before on this platform, but the pricing power on Amazon for a brand isn't as significant as it might be on other channels. And I think as inflation pops in and we're seeing prices go up, I think you're going to see demand start to take a hit a little bit on the channel.
I think brands need to be laser focused on where their AFPs are on Amazon. And if they're seeing their demand taking a big hit. Do you want to back off on that a little bit? Do you need to be at $41 or 39.99 really the price point for you to move on the item? And I think the brands that really understand where their pricing is on the channel and really understand what thresholds they cant go above are the brands that are going to win, as we see ÁFPs go up and inflation really take over in 2022.
Aaron Conant 44:59
I agree. I mean, it's like Amazon digital 3.0 now, right? It is. You have 1.0 pre-pandemic, 2.0 at the onset of the past 18 months, and now it's 3.0. Like you're saying the people that they're bringing on to help manage the accounts, the in depth, this strategy and overlapping of everything from the sales and the pricing to the content to the paid media strategy and where you're driving traffic, and where you have inventory or don't have inventory. It's a whole different ball game than it was. So, anyways, we keep going,Tara, thoughts on 2021 like a key takeaway, and then, thoughts for 2022 what you're most excited about?
Tara Lynne 45:44
Yeah, absolutely. 2021 definitely a trend that I think also started in 2020, continues in 2021, where sponsored product is becoming more competitive. So you really, really need to be more strategic about your sponsored product, and advertising strategy holistically in 2022. So really, really excited about, not only looking at more strategic granular campaign structures and strategies, as well as allocating more specifically budget from sponsored product, and then investing into sponsored brand, and newer, exciting ad formats, and more engaging ad formats, like sponsored brand video, as well as sponsored brand ads. You're now able to add custom images.
Just like previously, in sponsored display, we can use custom images, which are more like lifestyle images, really, they're grabbing eyeballs, and they're displaying really prominently on mobile device type, which is really, really important. And it's great inventory space for brands, depending on your content, but so really excited to get to test more with these different ad formats, along with the new audience types that I mentioned earlier, rolling out in sponsored display. The keywords not going anywhere, from an advertising sponsored product perspective, but getting to a target more by audiences is incredibly interesting, and will benefit our brands in 2022.
Aaron Conant 47:28
Awesomely, Leo, I'll kick it over to you as well, thoughts, things from 2021 and then, excited about for 2022?
Leo Raymundo 47:37
Yeah, for sure, I think this is something that definitely grew and had a lot of emphasis on in 2021. But Amazon's kind of shift towards more of almost like social media influencer type of engagement platform where they understand the power of things like lifestyle, and, again, influencer type content. We're seeing that shift, both not only within their platform, but on things pointing people to more things like the brand store, where they know that brands can really customize that experience for their users, because that's what people are looking for.
They're looking for deeper ways to engage with a brand and looking for more touch points, essentially, to like, learn more about the products, learn more about the brand. And just doing the due diligence of going through that to understand and make that purchasing decision a bit more informed. So I'm really excited for that. I think that's definitely just overall the direction Amazon's going and not only 2021, but 2022. So, when I think about content and how that develops at Amazon, it's definitely something that we're looking to take advantage of some of these new features and new rollouts that they've already either launched or they're looking to launch in 2022, as kind of its new point of emphasis.
Aaron Conant 49:02
I love it, and just encourage anybody, you need to follow up, contact Digital Strategy, the team at Orca Pacific is helping a ton of brands in the network, come highly recommended. I would encourage anybody set up time with them after the call, kind of pick their brains as a whole. Nate, there's one more question that pops in here, feel free to jump in there. It's around, how do you monitor third party marketplace sales and in share voice and everything else? Feel free to jump in as we kind of have time for one last question here.
Nate Hogle 49:34
Yeah, I saw that pop in the chat. So I wanted to address that real quick. There's a variety of tools. I'm sure as most people on the call are experienced with Viral Launch Jungle Scout those types. I think those are all great for a directional standpoint, and they can give you a pretty good idea of your space and some of the competition and give you estimates on market share and stuff like that. So those are always great to give you a direction, but we all use internal numbers just across our client base.
So we're able to just take a look at a wide range of different brands in different categories, and can make some comparison and some inferences there. Also, if you have a contact within the Amazon building, depending on your arrangement with Amazon, sometimes we're able to get those numbers from Amazon directly in terms of market share and an overall category size. So encourage if you have a relationship with someone in the building for your account that those are conversations, that contact will give you the most accurate information you seek out. But those are some of the other kind of strategies we employ when we're talking about share voice and the like.
Aaron Conant 50:45
Awesome, last key takeaways we wrap up here. I know you guys are helping a ton of people out across the board of the Amazon App, every vertical encourage anybody you're looking for help in this space, don't hesitate to reach out. They're great friends, partner support is the network and all around it Amazon experts. Nate, like key takeaways, as we kind of wrap it up here.
Nate Hogle 51:05
Yeah, I think the key takeaway is not to take your foot off the gas, I think Mack's considerations on ASP and inflation are well worth consideration and something that needs to be part of your overall strategy on the platform for 2022. But I think it also doesn't need to be something that dissuades brands from participating or shifting more marketing share to the Amazon channel. There's just so much opportunity there. Done well, done right with the right strategic partner, with the right plan in place, you can see really strong results this year on the channel.
Aaron Conant 51:43
Awesome. Love it, and thanks, you guys for being such great supporters of the network as a whole and be so open to jumping on the line here and answering as many questions so we'll get to it over the past hour. With that we're going to wrap it up. Hope everybody has a great Wednesday. If anybody's looking for any help across the board, we don't sell anything here at BWG Connect, we're just a networking and knowledge sharing group but we got a fantastic shortlist of top service providers and that's everything from Amazon to direct consumer to international expansion.
That includes if you have issues with unauthorized resellers or brand protection, market share whatever it might be, don't hesitate to put time in the calendar. We can do a quick run through of who those people are in the Amazon space, obviously the team here at Orca Pacific. With that, we're going to wrap it up. Everybody, take care, stay safe and look forward to having you on a future event. Thanks again everybody. Take care now. We'll see you.