Traditional Amazon advertising approaches involve assessing performance by measuring KPIs such as last-touch attributions, ACOS (advertising cost of sales), and ROAS. But as more brands leverage the platform’s advertising network, Amazon has increased costs, rendering these metrics inadequate for quantifying long-term growth in multiple business sectors.
Conversely, incremental advertising methods leverage precise data that you can use to drive cumulative sales and maximize growth on Amazon. How can you apply incrementality to your marketing strategy and use actionable insights to execute a targeted advertising approach?
Many brands limit their growth potential by analyzing exclusively attributed sales and structuring their ad spend around advertising methods with low incrementality rates. For instance, while investing in branded searches and keywords boosts attributed sales, this action is too granular and inhibits organic sales growth. Conversely, focusing on genetic keywords and your brand’s organic ranking elevates overall sales continually.
The most reliable way to analyze sales growth is to experiment with both ads and organic rankings. You can conduct systematic, controlled testing by launching various ad campaigns during specific events like holidays or through promotional deals and evaluate organic rankings separately. By dissecting your insights, you can structure your ad spend budget accordingly.
One of Amazon’s most beneficial ad types is top-of-search placements, which position organically ranked and sponsored products on the first page of search results. Ellie Edwards, Perpetua’s Product Designer, reveals that “Top-of-search ad placements generate around 49% of conversions…from only 2% of impressions on sponsored products overall.” This visibility makes top-of-search the leading driver of sales, so it’s crucial to employ incrementality. However, since both sponsored and organic products exist on the first page, top-of-search mirroring can occur, compromising incremental sales and making it difficult for shoppers to distinguish between two identical products.
How can you reduce top-of-search mirroring to augment incremental sales growth?
Identifying mirroring involves pinpointing instances where your product ranks within the top six organic placements. This allows you to take calculated measures to optimize product position. For instance, you can mitigate sales cannibalization on mirrored products by limiting your keyword bidding to reduce sponsored ad rankings, encouraging shoppers to purchase products by clicking on the top organic placement. Alternatively, exchanging sponsored items for higher-profiting products relevant to your target search terms enhances organic sales.
To promote your products to the top-of-search position, it’s imperative to analyze and select relevant keywords. Joe Rideout, the Co-founder and Chief Product Officer at Perpetua, lists and explains the three criteria for distinguishing search terms, “One would be search volume, so this is a search term that gets a lot of traffic on Amazon. Two is the top-of-search click share. So this is a signal of how much people tend to click on the top few search results versus scrolling around and exploring a lot. And finally, the click-through rate of your products, which is a proxy measure for the relevance of the search term to your products or brand.”
Once you’ve determined ideal keywords and search terms, you must strategically market your products to the top-of-search page. Assessing product incrementality for specific terms requires considering its relevance, competitiveness, and organic rankings. Each ad you test should target shoppers and their most frequently used keywords, and your product reviews, ratings, and prices should match or outperform the competition. Incremental sales increase with organic ratings, so optimizing this rank elevates your products to top-of-search status.
Incrementality plays a crucial role in your advertising approach and can improve product ratings and optimize your ad spend to drive sales growth consistently.