Advertisers on Amazon need to balance typical digital advertising key performance indicators, such as click-through rates, cost-per-click and conversion rates, with Amazon’s preferred performance metrics, which include profitability and customer experience. To win on Amazon, you have to put yourself in Amazon’s shoes and focus intently on the customer experience.

Megan Harbold, head of ecommerce consulting group, Kenshoo

Megan Harbold, head of ecommerce consulting group, Kenshoo

Amazon Advertising presents a unique opportunity very few retailers truly understand how to leverage. To succeed, you must embrace Amazon’s nuances, know the potential pitfalls, and leverage its full potential to drive business goals beyond typical digital advertising key performance indicators, or KPIs. Just don’t expect to hurriedly launch a few campaigns prior to Prime Day and expect much success.

Many companies are not currently structured to provide the right level of holistic strategic support for Amazon, and it’s well worth taking the necessary steps to get prepared first. Those that do so will reap the rewards, and those that don’t will see marginal results.

Align advertising strategy to Amazon’s relentless customer focus.

Amazon leads the evolution of consumer shopping behavior, continues to shift technology and advertising norms, and creates new rules for advertisers to follow. Brands will need to make fundamental organizational changes quickly, because traditional operational structures are not optimal for today’s Amazon opportunity and the future of business.

Amazon’s unique marketplace

Anyone interested in leveraging Amazon Advertising should recognize how entirely integrated the once-disparate functions within an organization need to be in order to be successful with Amazon.

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Amazon is a complex marketplace. If you focus too much on one aspect of it, it can lead you to think about it in the wrong way and thus approach it incorrectly.

A good analogy for this is the ancient parable of the blind men and the elephant. Each touches a different part of the elephant and imagines something different. The first man touches the trunk, “This being is like a thick snake.” Another person, whose hand was upon its leg, said, “The elephant is a pillar.”

In some regards, Amazon is a retail channel. In other ways, it’s a product discovery and review site or a streaming service for video, music, and audio books. It can be considered a direct response marketing channel but also a branding channel. It is a global distribution channel, a logistical machine, a software developer, and a leading cloud services operator. It’s also a major advertising publisher and Emmy-winning content creator.

The truth is, Amazon is all of these things combined. It’s an elephant…not a snake, tree, or wall. The individual parts are just parts. Amazon is a holistic marketplace where businesses can accomplish multiple goals.

Advertisers need a unique set of KPIs

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Amazon’s biggest market advantage is its customer data, but that doesn’t automatically translate into an advantage for advertisers. Advertisers on Amazon need to balance typical digital advertising KPIs, such as click through rates (CTR), cost-per-click (CPC) and conversion rates, with Amazon’s preferred performance metrics, which include profitability and customer experience.

Profitability is key for all advertisers, but with Amazon, you have to keep its profitability in mind too. Amazon’s algorithms are vigilantly at work 24/7 to manage profitability. By maximizing profitability—even in tiny incremental lifts—at scale across its entire marketplace, Amazon has built an incredibly efficient retail machine and one of the most valuable businesses in history.

Rewards await sellers that keep prices low, keep shipping times minimal, earn great reviews, and of course, provide Amazon with the most profitable return. Brands that don’t play this game correctly can find themselves out in the cold, denied the ability to advertise or even have their products shown. Ineligibility can happen swiftly and without warning, making it hard to pace properly to budget and creating a severely negative lost sales opportunity.

Understanding this complex, algorithmically driven world is difficult for most organizations, and that’s why a multidisciplinary approach is needed. You have to think like Amazon and put yourself in its shoes with a myopic focus on the customer experience. As a result, goals and objectives must align with budgets across departments (sales, marketing, operations) to function within Amazon’s way of working to keep the customer experience at the highest level.

How to align with Amazon

Amazon succeeds because of its primary focus on the consumer, which is hammered home in Amazon’s original mission statement: “To be Earth’s most customer-centric company.”

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The advertiser will never be the most important audience to Amazon. Amazon has become so successful because of its undeterred focus on consumers and their experiences across all of these solutions. This lens means that even small resellers enjoy the same level of support and access as large, established brands.

Four steps advertisers should take to begin posturing for success:

  1. Define and align organizational structure
  2. Align advertising strategy to Amazon’s relentless customer focus
  3. Ensure agile decision making
  4. Meet profitability expectations

In my next article, I’ll offer specifics on how to accomplish all four steps.

Kenshoo is a provider of digital advertising technology.

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