The right mix of online advertising and pricing discounts can make all the difference when competing against rivals for customers’ attention, writes Arjun Narayan, the founder and CEO of Salesduo.

ArjunNarayan-Salesduo

Arjun Narayan

According to Business of Apps, “Amazon is by far the largest store in the world, with nearly 200 million customers accessing its website each month” — so  it’s only natural to want your product to be displayed in front of all of these potential customers. To give your business a fighting chance, Amazon offers Advertising and Promotions that you can offer to future customers. So how do you decide which is the right fit for your business?

If your rivals' lower prices are causing you to lose customers — even if your items rank first or second in search results — it's time to explore your options.

Because they are time-sensitive and foster a sense of urgency, discounts may be an effective tactic. Offering discounts or promotions is not a way to cheapen your goods; instead, consider them a great advertisement! We recommend discounting the best-selling items in your subcategory to see how crucial pricing is to your customers’ purchasing decisions in that market. The next step is determining which days you want to provide them. To get rid of your surplus inventory, discounting  may be seasonal, on sale days like Black Friday and Cyber Monday, Prime Days, or it may be based on consumer patterns you find on your Brand Analytics dashboard.

Your Amazon business may develop significantly if you utilize discounts wisely in conjunction with Amazon Advertising. Here are some examples to help illustrate this:

The First Scenario

Determine your marketing budget if, for example, your primary objective is to increase brand awareness for your products, and return on investment is unimportant because there is a good fit between the two. Then create Sponsored Product Campaigns with a maximum bid on the top of the search results and Sponsored Brand campaigns with a landing page of either the new products you have launched or the Brand Page. Let’s say the budget is 50% to 60% of your product’s MSRP, with a goal of X units sold in three months. In addition, you can run a Sponsored Display Campaign focusing on the ASINs of your rivals.

advertisement

The result: This kind of advertising strategy increases your items’ visibility so that they appear on the top page of the search results for the relevant keywords. If there is a product-market fit, it may have a modest ROI initially. Still, over time, as you convert a significant number of reviews into sales, your chances of having your product appear naturally on the first page increase.

The Second Scenario

If your rivals’ lower prices are causing you to lose customers — even if your items rank first or second in search results — it’s time to explore your options. The best way to get back on track is to launch Discount Promotions and use Sponsored Display Campaigns with a budget of 2% to 3% of your monthly sales to target the product detail pages of your rivals. This will allow customers to see that your pricing is more advantageous than your rivals’.

The result: If your products have received similar reviews to those of your rivals’ products in conjunction with a greater discount offer, a lower expenditure is recommended. (This approach is not recommended for products with low reviews and ratings.)

The Third Scenario

It is essential to determine the amount of money you could spend on each unit if your product sales and glance views are trending downward due to reduced prices from your competitors, which you cannot match owing to profitability. Once you know how much advertising for each unit costs, you may divide that amount between Amazon advertisements and discount promotions.

advertisement

The ideal budget allocation in these cases would be to spend 70% on sponsored products and 30% on sponsored displays.

The result: With budgeting split between campaigns that increase sales and campaigns that enhance product visibility, a discount can also act as an additional sales driver. With 75% of sellers on Amazon using at least one type of pay-per-click (PPC) advertising, this discount strategy improves both the visibility of your products compared to those of your competitors and provides the best ROI.

Arjun Narayan is the founder and CEO of Salesduo, an automated multichannel commerce platform that assists companies with Amazon account management, Amazon advertising, Amazon SEO and brand pages, and Amazon EDI and shortage claims.

Favorite

advertisement