Balancing Ad & Organic Sales on Amazon
Summary
TLDRThe video script discusses a follow-up question from a newsletter on ad sales percentage and its implications for Amazon sellers. It clarifies the difference between business reports and ad data, highlighting the challenges of calculating ad sales on multi-variation listings. The speaker emphasizes the importance of ad sales percentage as a barometer for assessing ad campaign health and provides insights on optimizing ad spend based on sales dependency on ads. The summary also touches on the potential issue of cannibalization of organic sales by ads and the significance of organic ranking in product market fit.
Takeaways
- 📢 The speaker has a newsletter that is exclusive and not published elsewhere, with a link provided in the description to subscribe.
- 💌 The speaker appreciates follow-up responses to the newsletter, which allows for deeper discussions on topics like ad campaign analysis.
- 🔍 There's a distinction between data from business reports and ad data, which is important for understanding the nuances of ad performance and organic sales.
- 🧩 Calculating ad sale percentage on a child item level in multivariation listings can be misleading due to differences in sales attribution between ads and business reports.
- 🔑 Sessions and clicks data do not align perfectly because sessions are counted per shopper within a 24-hour window, while clicks are counted per ad interaction.
- 📈 Ad sale percentage is a critical metric, calculated by dividing total ad sales by total sales, to gauge reliance on ads for driving sales.
- 🚫 High ad sale percentages might indicate a product-market fit issue if not accompanied by strong organic rankings and visibility.
- 🤔 The speaker suggests rolling up ad sale percentages to the parent ASIN level to smooth out discrepancies and get a clearer picture of ad performance.
- 🛒 A high ad sale percentage can affect decisions on ad spend adjustments, as significant decreases in ad spend could impact total sales volume.
- 📊 The ad sale percentage provides context for optimizing total A Cost metrics, helping to strategize incremental adjustments to ad spend.
- 💡 The speaker discusses the potential for ad sales to cannibalize organic sales, suggesting that if organic visibility is high, testing a reduction in ad spend might be warranted.
Q & A
What is the purpose of calculating ad sale percentage in an Amazon ad campaign?
-The ad sale percentage helps you understand how reliant your total sales are on ads. It’s calculated by dividing your ad sales by your total sales. This metric can be crucial in assessing whether your ad strategy is too aggressive, not aggressive enough, or balanced, and how this impacts the overall health of your campaigns.
Why might there be discrepancies between sessions reported in business reports and clicks in ad data?
-Sessions and clicks may not line up because sessions are counted as a single shopper's activity within a 24-hour period, while clicks are counted every time a shopper clicks on an ad. This can result in multiple clicks being recorded for a single session, leading to discrepancies between the two metrics.
How can ad sale percentage be problematic when dealing with multi-variation listings?
-Ad sale percentage can be misleading in multi-variation listings because sales and clicks might not align across variations. For instance, one variation might get all the ad clicks but no sales, leading to a high ad sale percentage, while another variation gets the actual sales. This can distort your understanding of which variation is truly driving sales.
What is the difference between how business reports and ad data attribute sales?
-Business reports attribute sales to the specific product that was purchased, while ad data attributes sales to the last clicked ad, regardless of whether that exact product was purchased. This can lead to differences in how sales are reported between the two data sources, especially in multi-variation listings.
Why is it important to roll up ad data to the parent ASIN level in multi-variation listings?
-Rolling up ad data to the parent ASIN level smooths out the discrepancies that can occur when analyzing individual child ASINs. It provides a more accurate picture of the overall performance of the listing, accounting for all variations rather than focusing on potentially misleading data from a single variation.
How can ad sale percentage inform decisions about ad spend optimization?
-Ad sale percentage can guide decisions on whether to increase, decrease, or maintain ad spend. If a high percentage of sales comes from ads, reducing ad spend too quickly could significantly impact total sales. Conversely, if organic ranking is strong, there might be room to reduce ad spend without hurting sales.
What is meant by 'cannibalizing organic sales' in the context of Amazon ads?
-Cannibalizing organic sales refers to a scenario where an ad is clicked even though the shopper would have made the purchase organically (without the ad). This can lead to ads being credited with sales that would have occurred anyway, inflating the ad's impact and potentially increasing costs unnecessarily.
What should you consider if you have a high ad sale percentage but low organic visibility?
-If you have a high ad sale percentage and low organic visibility, it may indicate a product-market fit issue, meaning that your product struggles with organic ranking and relies heavily on ads for sales. In this case, focusing on improving organic ranking through SEO and other strategies might be necessary.
Why might lowering ad spend not always result in improved profitability?
-Lowering ad spend might not improve profitability if a significant portion of your sales is driven by ads. Reducing ad spend without a strategic approach could lead to a sharp decline in total sales, negatively affecting overall profitability. It's essential to consider the ad sale percentage and how reliant your sales are on ads before making changes.
How can context help in interpreting ad sale percentage and making strategic decisions?
-Context is key in interpreting ad sale percentage. For example, understanding your organic ranking and visibility alongside your ad sale percentage can help determine whether ads are truly necessary for driving sales or if they are merely supplementing organic sales. This broader understanding allows for more informed decisions about ad strategy and spend.
Outlines
📰 Newsletter Follow-Up: Understanding Ad Sales Percentage
The speaker discusses a follow-up question received in response to a newsletter, emphasizing the importance of the newsletter as a unique content source. They delve into the complexities of calculating ad sales percentage on a child item level, especially in multivariation listings, and highlight the potential issues that can arise from discrepancies between business reports and ad data. The speaker clarifies the difference between sessions and clicks in the context of Amazon's ad model and the challenges in assessing the impact of ads on organic sales. The goal is to provide a broader understanding of how ad sale percentage can be used as a metric to evaluate the health and aggressiveness of ad campaigns.
🔍 Deep Dive into Ad Sales Attribution and Multivariation Listings
This paragraph explores the nuances of ad sales attribution, particularly in the context of multivariation listings. The speaker explains how sales can be attributed to different variations of a product in ads versus the actual sales recorded in business reports, which can lead to skewed ad sale percentages. They discuss the 'last click' model of sales attribution and its implications for assessing the performance of different product variations in ads. The speaker suggests rolling up the data to the parent ASIN level to get a more accurate picture of ad performance and to avoid the pitfalls of analyzing at the child ASIN level. The paragraph also touches on the strategic use of ad sale percentage in identifying which product variations perform best in ads.
📉 Utilizing Ad Sale Percentage for Strategic Ad Spend Management
The final paragraph focuses on the practical application of ad sale percentage as a tool for managing ad spend and sales strategy. The speaker illustrates how a high ad sale percentage can indicate a heavy reliance on ads for driving sales, which is crucial for understanding the impact of any changes to ad spend on overall sales volume. They provide an example of a brand that needed to lower its ad spend and total A Cos but had to do so strategically due to the high percentage of sales driven by ads. The paragraph concludes with a discussion on the potential for ad cannibalization of organic sales and the importance of organic ranking and visibility in the context of ad performance and profitability.
Mindmap
Keywords
💡Ad Sale Percentage
💡Multivariation Listing
💡Sessions
💡Clicks
💡Business Reports
💡Sales Attribution
💡Total ACoS
💡Organic Sales
💡Traffic Source Performance
💡Cannibalization
Highlights
The newsletter content is exclusive and not published elsewhere.
Ad sale percentage can provide crucial context when assessing the health of ad campaigns.
Business reports and ad data differences can impact the accuracy of traffic source analysis.
Understanding sessions and clicks: Sessions are unique shoppers within a 24-hour window, while clicks represent every time an ad is clicked.
The last-click model in ads can lead to discrepancies between sessions and clicks, affecting sales attribution.
Calculating ad sale percentage on a child item level in multi-variation listings can be problematic.
Rolling up ad sale data to the parent ASIN level can smooth out discrepancies and provide more accurate insights.
Ad sale percentage helps identify how reliant a product is on ads to drive sales.
Ad sale percentage is calculated by dividing total ad sales by total sales.
A high ad sale percentage could indicate a heavy reliance on ads, which may be an issue for profitability.
Contextualizing ad sale percentage with total ACoS can guide strategic decisions in ad spend reduction.
High ad sale percentage with high organic ranking may suggest potential cannibalization of organic sales.
A combination of high ad sale percentage and poor organic ranking could indicate a product-market fit issue.
The orange color variation in ads performed well, but the black variation had the highest sales in business reports.
Strategic optimization of ad spend is crucial when a brand is highly dependent on ads for sales.
Transcripts
a video to this a follow-up question
that I got in response to a newsletter
that was sent out this uh today Tuesday
uh so if you're unaware by the way we
have a newsletter that goes out I don't
publish this content anywhere else if
you want to get on that list feel free
to use the link down in the description
um but I got this question by the way I
love getting a follow-up responses to
our newsletter it allows me to add
contacts now in all honesty I could have
just created a very short uh email
response to this one however
um I did want to give some context on
different data points between the
business reports as well as the ad data
why calculating uh your organic or your
ad sale percentage on a child item level
if it's a multivariation listing could
be problematic as well as some broader
context as to how we use ad sale
percentage as sort of a barometer when
it comes to assessing the health of your
ad campaigns being if you're being too
aggressive or not aggressive enough
because there's three numbers that we
use sort of as barometers to really
gauge the impact of the ads on the
organic as well as just the total sales
performance okay
so first up I'm going to give some
context on the data differences so
essentially this question I uh one of
the three points in this newsletter was
like analyzing traffic Source
performance and like determining if you
are maybe being too not aggressive
enough in your ads or if you're being
too aggressive with your ads uh ad sell
percentage can definitely add contacts
to that and again I'm going to get that
to that in the end when I talk about
um how we use ad sale percentage in
context because context is key here
um but the question was uh some of the
wording was kind of insinuated that we
had figured out a way to assess
um the actual traffic sources
um meaning not only how much sales is
coming from
um organic versus total sales
but
um how much like the actual traffic is
coming to so I did want to get into the
differences in the data sources being
the business reports and then the
um your ad data and that's going to kind
of flow into the next point on why
calculating ad sale percentage on an
individual child Asin and multivariation
listings is going to kind of be
problematic so when understanding
sessions and understanding clicks please
know that these two numbers are not
going to line up specifically oftentimes
people will go into their account and
they will um sort of like assess or
assess you know the number of clicks
they're getting and they'll look at the
sessions they're like this isn't
possible given the total sales volume
and all of these kind of things
um and then they would be correct
because sessions
are calculated inside of the business
reports as an individual Shopper within
a 24-hour window meaning if one specific
Shopper will navigate to the listing and
visit your page more than once in a
24-hour period that will only be counted
as a single session where in um your
Amazon ads or you're like in a cost per
click model you're charged for every
time a shopper clicks on an ad and it's
possible for a shopper to click on more
than one ad just depending on how things
are going as far as the sales
attribution
um or the ads are calculated it's like a
last click model being like the last ad
that got the click is going to be the
one that's attributing the sale to it
however it could potentially be the same
job we're clicking around a couple times
and that is entirely possible
um and so for that reason your sessions
meaning the traffic
um that is coming to your listing again
one single person within a 24 hour
period is counted as a session and your
clicks are not going to line up that's
just kind of the name of the game
there's not really a really good way to
assess this I'm currently trying to dig
into some data points to see if it's
even possible to assess but really
there's no real honest way to assess it
um that is going to be a hundred percent
accurate okay
now this flows into our second thing on
how calculating ad sale percentage so if
you're not aware ad sale I call AD sale
percentage some people call like the
ratio of ads to organic it's essentially
taking your total sales subtracting your
ad sales and then saying or not
subtracting uh taking your total ad
sales dividing it by your total sales
and that brings you a percentage
what percentage of my total sales are
coming from my ads right and this could
be very helpful because if you're highly
dependent on ad sales to drive you know
total sales for a product that could be
an issue now
um how that calculation Works comes down
to the sales attribution differences for
the ads versus your organic or your
total sales so in your ads whatever
product received the click sponsor
products it could be
um the same product within like say a
listing and sponsored Brands
um it says any products that are
contained with on are sold underneath
that brand name I have a whole video on
um kind of like what's the true a cost
of your sponsor brand ads which by the
way if you have
um licensed products that's going to be
a really really important video for you
to watch but I digress and so
um we get kind of you can see how this
potentially has discrepancies so if a
sale is attributed to say one variation
because it's in the ads and then when
it's in the business reports a business
report is not going to report a sale
that didn't actually happen on a
specific product so in that case what
you can end up doing is have one product
that's getting all the ad sale
attributions and then the other product
is getting all of the uh total sale
attributions the business reports is the
ones that's actually been purchased and
where that can kind of create issues in
multi-variation listings is say one of
them is getting all of the ad sale
attribution but zero of the total sales
volume you're going to see a hundred
percent add sale percentage on there so
it's like oh my gosh 100 of my sales are
coming from ads well essentially there's
like no sales whatsoever so that could
be kind of confusing
um and then in other ways you would say
like oh there's no ad sales on this
product meaning this is not the one
that's getting the click in the ads but
but it's getting all of the sales inside
of the business reports because that's
the one that people are actually
purchasing and so if you're doing it on
this granular level when it comes again
this is only multi-variation listings if
you have a single product listing it's
not going to matter
um so what we will do to kind of
mitigate this is we roll it up to the
parent Nations we essentially look at
all of the spend and all of the uh sales
that are for a parent Asin and then we
kind of can navigate it that way and
that Smooths out the lumps pretty much
you can get some you know really good
numbers now this is not really I know
there's some people who say like oh why
would I not
um you know like the attribution models
are kind of weird I really don't have a
problem with it
because what I've seen uh in the past is
even if we have a bestseller so uh the
example I use all the time is that we
had a multi-variation listing with a
whole bunch of colors that we were
advertising the orange one is the one
that performed phenomenally in the ads
it got the most clicks it got the most
engagement
um we're actually getting lower cost per
clicks because the engagement was so
high but then essentially everyone
bought the black one and if you looked
in the business reports it seems like
the black one was the best performing
variation when we swapped in the ads for
the black one to be the advertised
product it didn't perform as well so you
will end up with times where
um one of the like other color
variations sort of acts like a funnel
and in those cases it makes complete
sense for Amazon to report the sales
that way because it helps you identify
what actually performs best in ads when
it comes to like an ad analysis uh sort
of thing you want to make sure that like
you're actually looking at what's
performing best and so it makes total
sense it's just something that you
should be aware of when it comes to
optimizing
um and calculating this ad sale
attribution okay so that's my little
Spiel on that now the very last thing I
want to talk about is how you can
actually use
um this ad sale percentage number and
what it tells us in context so as I said
before ad sale percentage is simply your
ad sales divided by your total sales
again you can do this on an account
level you can do this on a parent Asian
level you can do this on a child
variation level if you want I would
still recommend doing it on a parent
level in an account like overall account
level
um
and so what this tells you is this tells
you how Reliant you are on ads to drive
sales and this can be highly important
to contextualize things like your a
cause as well as especially your total a
cost metrics so we've had accounts
before where
um we might be like I was Consulting on
some Brands where they were really
looking to optimize
um their total a cosmetrics they really
needed to bring this number down and
while looking at the a cost and the
total a cost in isolation and then
simply looking at the total sales volume
and identifying like we need to bring
this number down in essence all you can
really do from an ads perspective if
you're looking to lower total a cost
numbers is going to be lowering your ad
spent however using the ad sale
percentage gives you context as to how
quickly or how incrementally and slowly
you should be lowering your ad spend so
in this particular case the brain brand
was very adamant that they needed to
lower the ad spend but when looking at
the ad sale percentage 75 to 80 percent
of their total sales were driven through
ads in this case if we significantly
decrease the ad spend more likely than
not we're going to have a significant
decrease on the total sales volume as
well now oftentimes for profitability we
really still have to bring the total a
cost down so I get it it's not that we
have to just say oh well that's the way
it is and there's nothing we can do
about it you definitely need to start
optimizing but again given the context
of the ad sale percentage it's pretty
obvious that we needed to be very very
strategic with where how and when we
were going to start bringing down the
um total ad spend volume now
there is some debate as to whether like
a very high odd sale percentage is going
to mean that you are as it's called
cannibalizing your organic sales meaning
um someone sees you organic and then
sees your ad and then clicks the ad and
then the ad is attributed to the sale
where if you didn't have the ad on the
page they still would have purchased
there's not a really cut and dry answer
to this the one other piece of context
that you can look at is if I have a high
ad sale percentage meaning a lot of my
sales are attributed to my ads and I
have a high total a cost number do I
have good organic ranking so I have very
high organic ranking and very high
organic visibility then it might be
worth testing bringing down my ad spend
maybe again you still want to be
strategic here but it could be that
there's cannibalization happening
however if you have a high total a cost
number and you have a high add steel
percentage number and you don't have a
good organic ranking or good organic or
visibility then it's most likely a
product Market fit issue meaning you're
struggling with rankings and that's why
those numbers add sale percentage total
a costs and consequently profitability
aren't very good so
um again really really think uh this
commenter for following up with this
question I hope this has given you a lot
of context and as always if you want to
be getting these uh exclusive
newsletters and potentially having
follow-up questions of your own uh feel
free to check the description for the
link to sign up for the newsletter
Ver Más Videos Relacionados
How to 2x your Amazon sales
How to Promote Your TikTok Shop with TikTok Ads
Amazon PPC Step by Step Strategy for Beginners in 2022 – Amazon PPC Tutorial 2022 - Part 1
How To Run Facebook Ads [FULL COURSE] | Facebook Ads For Beginners 2024
What is Amazon PPC Campaign & Sponsored Ad Strategy Guide for VA in 2020, Mirza Muhammad Arslan
You're using Facebook DPA Ads COMPLETELY WRONG!
5.0 / 5 (0 votes)