It used to be simple: Selling on Amazon meant you advertised on Amazon. To sell on your direct-to-consumer website, you advertised on the rest of the internet. However, the growth in the number of Amazon sellers and resulting increased competition are pushing up CPCs for Amazon ads, putting pressure on sellers’ margins — and forcing them to explore off-Amazon advertising.
Smart sellers are now developing holistic Amazon marketing strategies that use Amazon’s broad media inventory and off-Amazon advertising channels that were previously the domain of to-website advertising. The result of using off-Amazon channels is an advertising cost of sales (ACoS) measured by cost per action (CPA), which can be lower than with Amazon Sponsored Product Ads. There also are other indirect benefits that can increase your Amazon profitability.
Amazon Attribution opened things up
You’ve always been able to run whatever ads you wanted to drive traffic to your Amazon listings. However, when you did this, you were simply throwing customers into the purchase funnel and hoping they converted. You could track marketing metrics at source such as impressions and CPC, but not conversions. This all made media spending irresponsible.
Then Amazon’s Attribution tool emerged from beta and became available to all brand-registered sellers in the third quarter of 2022. This enables sellers to generate an Amazon tracking code to insert into an off-Amazon advertising link, which then attributes any Amazon sales back to that ad click.
Collating this conversion data with your off-Amazon activity enables advertisers to compare return on ad spend (ROAS) for all channels and develop an omnichannel media strategy.
Benefits of off-Amazon advertising
As an Amazon-only seller, or a seller who sees a small percentage of sales from your DTC website, one of the main reasons for running off-Amazon ads to your Amazon listings is that you can reach a whole new target audience. You can target by interest, search intent, demographics, geography, etc.
If you have a DTC presence it can seem illogical to pay Google and then have to pay Amazon’s transactional fees, but purchase intent is high on Amazon so click-thrus tend to convert highly. Consumers know that a product available on Amazon is going to be competitively priced and likely to be available on Prime which means free and fast delivery, which is a major motivator.
The lesser-known benefit is Amazon’s Brand Referral Bonus (BRB), which is a 10% rebate on the sales price for sales generated from non-Amazon marketing efforts. The BRB is available to brand-registered sellers on any sales you make from tagged links – including your promoted products and any of your products the customer purchases within 14 days after clicking on the tagged link. If you set this rebate against your media costs, it can significantly improve your ROAS and/or enable you to out-bid the competition on Google or wherever you place your media. The BRB also will reduce the impact on your margins of any Amazon deals that you are running.
However, the benefits of driving external traffic to your listing don’t stop with the immediate ROI. As a brand-registered seller driving off-Amazon visitors to your listing, Amazon artificially tweaks its algorithm to give sellers an increased Best Seller Rank (BSR) and increased organic rankings.
These knock-on effects improve organic sales on Amazon and can dramatically increase your profitability and lower your total advertising cost of sale (TACoS ).
Perceived challenges and counter-arguments
In our experience, sellers have been relatively slow to adopt this new technology for a few reasons. Many clients have mentally partitioned their target audiences. That is, Amazon customers versus website customers, while worrying about their to-Amazon activity competing with the ads that drive visitors to their website.
However, with careful planning and an integrated execution, you can ensure that the right channels are being used to promote the right product to the right audience.
Some sellers worry that they will only secure one-off purchases because they don’t own the customer data like they would with a DTC conversion where they would be able to initiate CRM activity. Our Amazon lifetime value calculations demonstrate that as long as the product is good, customers will keep coming back to the brand on Amazon.
Then there is the perception that margins will be lower. Clearly, fees are higher on Amazon than they are on your own DTC website. However, the BRB does help mitigate against that, and conversion rates on Amazon are far higher than on a website. From our experience, it’s 10% to 15% versus 1% to 2%. That makes up for a lot of media spend on wasted clicks.
The limited number of Amazon-only retailers may not have expertise in off-Amazon media. This is perhaps the lowest barrier to overcome because there are agencies that offer marketing services across a range of channels, and if the client understands Amazon PPC, then the principles of Google PPC are the same (even if the execution isn’t).
There really is only one valid concern with driving off-Amazon traffic to your Amazon listing. That involves mobile attribution where tracking links either drop off, or customers are deposited at the Amazon log-in screen. However, there are solutions for this through third-party tools which enable tagging and deep-linking.
Which off-Amazon channels should you monetize?
Google Shopping and Google retargeting, two ecommerce favorites, are not available to Amazon sellers, only Amazon themselves. However, search and display are two great options, and will typically see the greatest returns on ad spend.
Social media represents a great prospecting channel for some brands and allows for rich video content including product demos.
Highly targeted channels like targeted display/DSP, mobile ads and in-app advertising provide great ways to reach specific audiences.
Amazon attribution opens up affiliate marketing to Amazon sellers, which is a no-risk and low-cost channel because you only pay for conversions, and with the BRB, you can offer some really attractive commissions. Currently, there are only a couple of Amazon options available, with Refersion being the market leader.
How to leverage off-Amazon traffic for your Amazon sales
There are five steps to ensure you maximize profitability while monetizing your off-Amazon traffic.
- The selection of which Amazon products you advertise off-Amazon should be based on competitor presence, level of ad competition, category of product, margin/price, FBA vs FBM, stock levels, etc.
- Apply the same marketing strategy you would for ads driving to your website, i.e. match the media to your product by selecting channels that align with your target audience, messaging and content.
- Integrate your activity. For example, separate out keywords so you are not bidding against yourself, and leverage motivators like Prime shipping in your to-Amazon keywords and ad content.
- Make it clear that the ad is driving to Amazon through descriptions, visuals, and destination URLs. This alone will increase ad click-throughs.
- Measure, test, and measure again. Start with a small spend and one or two Amazon listings, and build from there. Calculate comparative ROAS including Amazon fees. At the same time keep track of your BSRs for promoted products and monitor their Amazon organic rankings.
Still in doubt about selling on Amazon? Have no fear. Just review what I’ve written above or, speak with an agency that’s an expert on Amazon.
Sebastian Lyner, better known as Seb, joined Emplicit in March 2022. He brings over two decades of digital marketing experience with clients in just about every vertical. Seb has managed the creation of complex ecommerce platforms and teams running 8-figure omnichannel marketing campaigns but is equally at home helping incubator brands establish and grow. He brings an entrepreneurial outlook having started two agencies and worked in different types of agencies and in consultancy roles.
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