When the going gets tough the tough get going. Could Amazon PPC help sustain your business through the Covid-19 pandemic?
In the aftermath of the 2008 recession, ad spending in the U.S. dropped by 13%. But in 2009, Amazon sales grew by 28%.
“This illustrates the opportunity that comes with a downturn,” explains Bobsled Advertising Director Stefan Jordev.
“A lot of brands are running scared. However, if you’ve got a solid Amazon PPC strategy in place, it’s likely a great time to double down.”
In this article Stefan has shared four key reasons why brands should keep investing in Amazon PPC throughout the Covid-19 pandemic, plus some guiding optimization principles that should be upheld throughout the coming months.
Reason #1 - Not Everyone Is Hurting
Many Amazon accounts are currently experiencing tremendous sales growth. More people are staying at home and relying heavily on e-commerce sites, namely Amazon. Data from the Cleveland Research Company suggests that a lot of brands are seeing growth on Amazon, particularly across Food & Consumables.
Image source: Cleveland Research Company
If you’re in a high demand category, competition for quality real estate on the search results page is likely fierce, and an aggressive PPC strategy may be a necessity to keep contenders at bay.
For more insight check out Four Brands That Are Booming On Amazon During The Coronavirus Pandemic on Forbes by Bobsled CEO Kiri Masters.
Reason #2 - The Competition Is Impacted Too, Possibly
More Than You
With many Amazon sellers out of stock, or facing severe logistical problems, now is a great time to improve your organic ranking and product reviews. Unlike some other traffic acquisition methods, Amazon PPC is 100% attributable, allowing you to dial spend up and down in line with demand. This makes scaling on the channel viable for brands of all sizes.
If you’re a brand in a high demand category that has managed to avoid any stock-out issues thus far, there’s every chance you have already seen great results because of competitors temporarily falling out of the race.
“Even brands in categories such as Clothing & Apparel that are currently observing lower demand should be looking for PPC opportunities,” Stefan says.
“Utilizing paid advertising to protect or grow your market share during this uncertain time could result in valuable revenue that will help sustain you through the coming months. The beauty of Amazon PPC is that if demand starts to slide, you can adjust your bids and daily limits at any time, so it pays to be bold now, especially if the competition is pulling back.”
Reason #3 - ‘The Quarantined Consumer’
As Kiri Masters outlined in her recent piece for Forbes The Weird Stuff We’re Buying On Amazon Gives Insight Into ‘The Quarantined Consumer’, Covid-19 has changed the behavior of Amazon shoppers dramatically. Consumers are fluctuating between different emotional phases (survival, embracing quarantine, making the most out of crisis), and each phase comes with different buying patterns.
“Brands in categories such as Toys & Games may need to put their ‘Q4 Hats’ on in respect to Amazon PPC, and spend big to make hay while shoppers are looking for entertainment options during this period of quarantine,” Stefan says. “Also, sellers of niche products with traditionally low traffic will need to get skilled up on Amazon PPC fast if they want to rank well in this time of unprecedented demand.”
In addition, prior to Covid-19, shoppers on Amazon placed a huge premium on fast shipping. But considering the undetermined timeline of the current social distancing guidelines, most shoppers won’t care if their package arrives a few days late, especially if Amazon is the only game left in town.
“Just because your product is Fulfilled by Merchant (FBM), or Amazon’s estimated delivery timeline is longer than usual, doesn’t mean you can take your foot off the gas in respect to Amazon PPC,” Stefan says. “Even if other channels are faltering, there’s a good chance demand for your product catalog on Amazon is still strong.”
Reason #4 - Other Channels Are Suffering
With their deep pockets and highly automated fulfillment network, it’s hard to think of a better company better placed to weather the Covid-19 storm than Amazon.
Image source: Cleveland Research Company
There’s a good chance that you would’ve already noticed other sales channels suffering. According to an internal survey, 37% of Bobsled clients are currently seeing lower demand in DTC or wholesale (store) channels.
Stefan believes that Amazon will be the breadwinning channel for a huge number of brands over the coming months. “If other streams are slowing because of Covid-19, it makes sense to consider re-allocating advertising spend from those channels over to Amazon.
Covid-19 Amazon PPC Optimization Tips
“Although the natural inclination for advertisers is to cut back on advertising during a recession, brands that maintain their ad budget or change their messaging can get a long-lasting boost in sales and market share,” says Stefan.
“So don’t pause or immediately reduce your ad spend - find ways for your budget to work harder instead. Of course each account has specific nuances, but some general principles to follow can be found below.”
- Decrease bids the moment demand tapers off. If you aren’t tracking traffic closely, there’s a good chance you’ll bid too high for several days after demand dies down. The market is fluctuating wildly at the moment, and you need to save all your bidding juice to sustain your account through the Covid-19 marathon.
- Focus on in-stock products, best-sellers and high converting products. Again, this is all about trimming the fat, and putting ROI above all else.
- Focus specifically on Sponsored Product campaigns (these generally have a higher ROAS / lower ACoS). Sponsored Product campaigns are the fundamental drivers of successful PPC accounts. If you get a solid understanding of the basics, this will put you in good stead over the next few months.
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You Can’t Manage What You Can’t Measure
“Perhaps the trickiest part of managing Amazon PPC during Covid-19 is the uncertainty,” Stefan says. “Every small development could have some impact on your paid advertising strategy.”
Therefore, getting clarity on key data points is an absolute necessity for brands selling on Amazon.
“We’re noticing a lot of volatility at the moment,” Stefan says. “Traffic and conversions are being directly influenced by Amazon’s Covid-19 policies and what’s happening in the news. So it’s really important to track all the performance data closely. Now is not the time to set-and-forget. Advertising Managers should be in their accounts every day, fine-tuning performance, ensuring they’re on track for long-term success.”