This Issue's TLDR...

• Are you paying for sales when you would otherwise earn those sales organically? I dive deep into the topic of PPC cannibalization.
• A big announcement from two members of the B@A community.
• How to figure out if your Click-Through Rate sucks.

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BEST from Me

A question that I regularly ponder is...Are my Amazon PPC ads winning sales that I would otherwise win organically?

In other words...How much of my PPC spend drives truly incremental sales, and how much is simply cannibalizing my organic sales?

This isn't a novel concept, or one that's unique to Amazon.

It happens across marketplaces with retail media.

Even though it's common, it's really hard to measure, and it's really hard to solve (at best, you can only really optimize / mitigate).

Regardless, I still geek out about it, and I love listening to, and learning from, retail media experts that have probably committed 10,000 hours to thinking about PPC cannibalization.

So, for this week's B@A, I brought in a ringer to share some insights around this topic.

This person is one of a small handful of people in the retail media space that, when they talk, I drop everything and listen.

I'll share who this person is, below the fold. 😉

Without further ado...

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What Exactly *IS* PPC Cannibalization?

Let's say you sell golf balls. When customer searches for "bulk golf balls," your product shows up #1 organically. That's great. That's a lot of organic sales you are raking up.

But you want more sales. You start advertising. You advertise on the keyword "bulk golf balls." And lo! Your ad too shows up on top spot for the same search term.

There is a possibility that a click or a sale that could have come in organically, is now coming through the ad. This is called PPC cannibalization.

How Do You Know If Your Organic Sales Are Being Cannibalized?

PPC cannibalization is not a simple topic. That is why it is not discussed often. Bottom's up, it is hard to figure out if PPC cannibalization is happening because:

• PPC cannibalization is a keyword-product phenomenon. It is impossible to check organic and sponsored ranks for thousands of keywords on which your product might be ranking
• Even if you track organic and sponsored ranks for important keywords, you can never point a finger and say whether a sale was cannibalized by an ad.

Over my 8+ years’ experience in Amazon Advertising, I have developed thumb rules to diagnose PPC cannibalization:

1. Basis spend: PPC cannibalization is not observed for sellers with PPC spend of less than $30K/m. The higher the spend, higher the chances of PPC cannibalization
2. Basis Ad sale / Total sale: PPC cannibalization is not observed for brand owners that don’t have product market fit on Amazon. For brand owners that have product market fit AND more than 50% total sale comes from ads, there are chances of PPC cannibalization. You may be over-advertising on keywords on which you are already ranking high. You can start by further diagnosing your percentage spend on branded keywords (i.e. spend on branded search terms/ total spend)
3. Basis Brand Analytics data: Brand analytics data will show you keywords on which you have high click share organically. If these keywords also tend to be your highest spending keywords, then you might want to check (a) search volumes, (b) competitor click share and of course (c) importance of that keyword, to diagnose PPC cannibalization.

How To Minimize PPC cannibalization

The diagnostics would have given you an idea about how you can solve PPC cannibalization. As straightforward as it may sound, you cannot solve PPC cannibalization in one week. It will take several rounds of incremental experimentation to diagnose and reduce PPC cannibalization. Here are a few steps that will help you in this process:

Step 1 - Investment on branded search terms: PPC cannibalization starts from branded search terms. Highly loyal customer base searches for your products. While you are ranking organically on these search terms, you are forced to advertise on them for the simple reason of “brand defence”. Reducing spend on branded search terms incrementally can help you reduce PPC cannibalization and improve spend efficiency.

How to do it: Two scalable ways of doing this are:

(a) Reducing TOS% bid adjustment on branded search terms (so that your ad continues to show in ROS), and

(b) Dayparting, i.e. reducing bids at specific times of the day.

Step 2 - Investment on search terms with high click share: High spend% on search terms where you are already ranking high, can also lead to PPC cannibalization. In some cases, you may be justified in investing in such search terms as they may be high search volume OR must-win.

How to do it: Two ways of doing it are:

(a) Track top search terms organic and sponsored ranks for a couple of weeks. Any digital shelf tool can help you track this. You can also use Importfromweb chrome extension to track search term ranks. If both ranks are high (i.e. less than 10) then, incrementally reduce bids on such search terms and observe impact on total sales,

(b) Track brand analytics for search terms where you already have high click share. Incrementally reduce bids on these search terms and observe impact on total sales.

Things to note:

(a) Above actions should be taken incrementally. Keenly track if there is any reduction in total sales.

(b) Reducing investment in Branded search terms obviously means increase in ACOS, in the short term.

Is PPC Cannibalization Always A Bad Thing?

Not at all. Another way of looking at PPC cannibalization is "Share of Voice." Some brands deploy strategies to increase share of voice. One of these strategies is running multiple ads on their must-win keywords with high and low TOS bid adjustments. For such brands, PPC cannibalization is not a thing. These are usually market leader brands in their subcategories.

But if you are like most sellers and want to bring about spend efficiencies, then you should be aware about PPC cannibalization.

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FRIENDS OF B@A atom11 Many thanks to Neha Bhuchar of atom11 for contributing to this week's edition of Best@Amazon. If you don't know Neha, she's a fellow Amazon alum and is the founder of atom11, the only Retail-aware PPC automation tool in the market today. If you are in the market for a new better PPC automation tool, reach out to Neha at neha@atom11.co.

BEST from Everyone Else

Best from the B@A Community

I love when B@A community members do BIG THINGS.

And my friends Ian Holme and Phil Hadfield are doing BIG THINGS with their brand, Holme & Hadfield:

Today, they announced that they're doing an equity crowdfunding campaign!

Here's why I love this move so much...

In getting to know these guys, and their brand, the single-most surprising characteristic of Holme & Hadfield is their repeat customer rate. It's crazy high, along with their customer LTV. Which is all super unusual in the category that they're in (men's accessories).

This tells me that they have a highly engaged, and passionate, audience...which is exactly what *true* brands have.

And, by raising equity through a crowdfund, rather than through institutional investors (and, believe me, there were no shortage of investors with interest), they are giving their audience/customers the opportunity to go in deeper, and be a larger part of the Holme & Hadfield story.

Great move, guys, and I personally can't wait to be a part of your journey.

Best from my (WhatsApp) Inbox

In one of the (many) Amazon-related WhatsApp groups that I'm in, a group member recently asked this question:

Such a great question. And, one that I've recently been pondering because...I don't know the answer!

That won't stop me from trying to figure it out but, if any of my brilliant B@A readers have any ideas, I'd love to hear from you.

In exchange, I'm happy to give you a shout-out in this newsletter, a free call with me, or a crisp high five. Whichever you prefer.

I did find this January 2024 ranking of top Amazon influencers, but the methodology and data behind the ranking isn't disclosed, so I assume it's mostly "hand wavy" content marketing.

Best from X

This is an oldie, but a goodie.

Bryan is a true operator, and it's abundantly clear in everything he posts.

Coaches, consultants, agencies...they all do have a role in the Amazon ecosystem and drive value for brand clients.

But, they will never be as intimately familiar with the nuances of Amazon brand ownership and operations, as the actual owner.

Bryan's deep dive into PPC cannibalization (or "incrementality" as he calls it) is well worth a read.

Bryan Porter @jbryanporter As Amazon's #1 drinkware supplier, we'll sell millions of units this year. We’ve spent $10 million on Amazon ads since 2016. However, in March 2022, we dropped our budget to $0. We just finished a $1m test to check assumptions. Here's what happened plus our new strategy: 11:31 AM • Sep 23, 2022 149 Retweets 1024 Likes Read 41 replies

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Best from LinkedIn

As always, the answer to the question below is "it depends."

Or, rather..."it's relative."

Relative to competing ASINs in your niche (and how they perform on different search terms).

How do you know how other ASINs are performing, from an overall CTR perspective though?

So that you can answer the question: "What's a good CTR for my ASIN?"

Well, read on... 👇

Back in February, for Kevin King's Virtual Billion Dollar Seller Summit, I shared this cool (and free!) tool from Pattern (yes, that Pattern).

With Pattern's Digital Shelf tool, you can, at a glance, see how your ASIN stacks up against competition in terms of CTR (and other metrics).

Here's how the output looks for Pickleball Paddles.

Simply take Clicks and divide by Impressions, and you have CTR at the ASIN level for key competitors.

Use the Chrome extension "Instant Data Scraper" to scrape all the data and then quickly do the CTR calculation in Excel.

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Updates to the Amazon Private Label Pathway

No updates this week.

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Back Story on the Amazon Private Label Pathway, ICYMI...

A few months back, I had a small group of coaching clients that were at the same point in their Amazon seller journeys.

I found myself answering the same questions, and pointing them to the same resources, so, in true Amazon fashion, I asked myself "What's the 1-to-Many solution here?" and built a Notion page of helpful resources, which I've called "Amazon Private Label Pathway."

You can get access to it here: https://auxo.gumroad.com/l/amazonpathway (it's free; but if you want to buy me a beer, I won't object)​

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Amazon Questions? Amazon isn't easy. Everyone needs a little help from a friend sometimes. If you ever have a tough Amazon question, I'm only a phone call away. Let's Chat

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