In this episode Lazar and Brent are talking about how Corona affected Amazon advertising and what should you do to improve your numbers in this crazy situation
In this episode Lazar and Brent talk about PPC trends during the corona period and how can you recover your ad account and revenue after a global pandemic like this. What if your stock levels are low or sales has dropped? Which strategies should you implement if something similar happens? Listen to the first episode of Wild PPC Bunch podcast and find out all the answers! Also, be sure to check out this blog post about how coronavirus affected the Amazon marketplace:
Lazar: (00:00)
Hey guys, welcome to the Wild PPC Bunch podcast. My name is Lazar and I’m a PPC nerd. I have over 10 years of experience in online advertising. And currently I’m the owner of the growing Amazon advertising agency called Sellers Alley.
Brent: (00:14)
And I’m Brent, the owner of AMZ Pathfinder. I started this company five years ago and we’ve been working in online advertising since 2013.
Lazar: (00:21)
Every week we will spend around 30 minutes covering one topic and it will get nerdy I promise. We’ll prepare a topic, covering everything from PPC basics, in-depth strategy and current trends.
Brent: (00:32)
One thing’s for sure you won’t be for our insights, tactics and ideas straight from two experienced agency owners. So strap in for the ride and enjoy.
Lazar: (00:50)
Alright. It’s Lazar from Sellers Alley and..
Brent: (00:53)
Brent from AMZ Pathfinder. Hello.
Lazar: (00:56)
Yeah, it’s it’s our first time. So guys like don’t get harsh and everything like. So, um, today we wanted to talk about Amazon PPC after corona. And is it already after corona or is it still during corona time? So..
Brent: (01:15)
I don’t know. That’s a good question because I feel like the, the assumption would be, uh, by saying that like, it’s it’s over, but you know, it’s not necessarily over, but we have seen the roller coaster that’s happened in March, April and now into mid May when we’re recording this. So, more flare ups in the future potentially, you know, more countries affected potentially, but we’re, we’re going to talk about what we’ve seen so far, I guess. So the, the bulk of it so far.
Lazar: (01:41)
Yeah, yeah. And since kind of all of the countries are closed and like you are in your own bubble in your own country, you don’t have a feeling of what’s going in other countries. Like, um, Brent, your clients are mostly in Europe. Like if somebody doesn’t know, and my clients are mostly in the US so we kind of have different perspectives on this topic. So we’ve prepared a couple of questions and like a couple of like top topics about corona and all of this. So maybe we can go through all of it and like discuss what’s, what going on. So the first one, yeah. So the first one is like, what, what really happened? Brent’s like, what, what did you feel like that changed? Like, what’s the first thing that happened that you realize that corona is there.
Brent: (02:31)
So I think I realized it personally, you know, when it starts to affect your own life, right? This is the kind of selfish human condition, right? Like, oh, now this is real. And, uh, no, I was in Prague for that event, for the PPC. Well, not PPC congress, sorry. One of his, one of his many events he’s always throwing. Um, and this was, you know, European sellers, Amazon sellers were there. Yeah. You were there too, right?
Lazar: (02:54)
Yeah.
Brent: (02:56)
And, um, that’s when things got real, right. We all had flee back to our countries. I remember you and Jada had to stay on for a couple of days longer between the weekend, but that’s the same time when I look back in the data that I see that things really started to change in both the US and the European, uh, markets, specifically the European ones first, because they were afflicted first. And then that’s how things kind of spread to the US eventually. Right. Um, so I would say mid, mid March, and then kind of like the next week after that was when things really hit the US.
Lazar: (03:27)
Yeah. Literally that, and like, when you, when you look first countries that were hit, like Italy and Spain, uh, those markets to be honest are the smallest one when it comes to Amazon. And when it comes to Amazon PPC we don’t get a lot of accounts that are really big in those markets. Most of them are like side markets, like a backup plan for every seller in Europe or in the US.
Brent: (03:51)
Or just a growth channel, let’s longer term. You know, we have a lot of clients that are planting their flags there, uh, with, with an eye towards like two to three year timeline. Maybe a few clients that have medium-sized, you know, maybe even edging into like larger accounts, but yeah, not like the biggest ones for sure. And I would agree Spain, Italy are the smallest, and I think Italy, it wasn’t super noticeable. Um, really, I don’t really have much in the data that says that Italy really stood out. Uh, but there was, I think, a spike in orders, uh, you know, an increase, but it’s so small because the marketplace is not that big. It was hard to tell.
Lazar: (04:25)
Yeah, definitely that that’s the main issue. Like the market is not big and you cannot see the difference. Like first thing that we saw in US, everything went crazy and like, in all of all possible directions from some guys having Christmas everyday, to other guys with like locking their businesses. Like one of the first things, like what we realize happened, like huge drop and like, literally from going pretty well. And one week we had like 50% of what was happening in the account. And after that, like, bam, everything down, like one of the worst accounts had like numbers down for like 90% or something and that’s absolutely crazy.
Brent: (05:09)
Yeah. I would say we had a quarter of clients that suffered, uh, in, in like a real way that actually had some like noticeable sales decrease, or maybe you’re in categories that are not at all conducive to people being like, hold up at home. Um, and so, yeah, 20, 25% of them suffered. Yeah. Some of them to the point where they put a big freeze on spend, not entirely because we really discourage clients from, from doing that like a hundred percent stopping ad spend, but stopping it in a large, a large way, like really, really cutting it down big time.
Lazar: (05:38)
Yeah. And like on the other hand, when you look like what happened positive for some guys, like first guys that I feel like that saw positive stuff, where guys that were selling supplements.
Brent: (05:52)
Right. Yeah.
Lazar: (05:53)
People wanted to protect and like, they want to lose their immunity and everything. And what, the moment when, when quarantine started, when people started locking themselves in their houses, like whole bunch of new categories emerged like a good sellers. I, I didn’t know what, what did you see with your accounts? But like, we had like a yoga stuff or do it yourself or craftsmanship, or like literally that kind of products started selling like crazy. We could see like, uh, increase for four or five times in sales during, during like the biggest lockdown.
Brent: (06:32)
Well, I think there was an initial shock, right? So I’m looking at some data right in front of me here. So like the week of March 8th, March 15th is when we really saw the difference between the two. The first thing was the drop in impressions. And I have a theory about this. I espoused on another podcasts with someone, but basically Amazon changed the rules of the game. You know, they made a lot of ad positions, you know, altered or disappeared entirely. So therefore, you know, the number of impressions that was available, the ad inventory shrunk a lot. And we still to this day, you know, if I look at the impressions from that early March, late February to now, we still haven’t recovered in total impressions, which makes suggest to me that, uh, despite the lower cost per click, which we also saw for the last couple of weeks now going on two months, um, the actual number of ad slots is much lower. Therefore, our click through rate is far higher, but it’s not because we suddenly became the world’s best geniuses, like writing ad copy and all of our client’s products. Uh, you know, we’re the most amazing products in the category. So the click through rate doubled it’s because Amazon removes a lot of the search positions. I’m sorry, ad positions on the product page and the, um, those in like rest of search. I heard they modified those as well. I ran this by a couple of people. They seem to agree. Um, I don’t know if you noticed the same thing Lazar..
Lazar: (07:51)
I completely agree with you. One of the things that I saw that happened, like, you know, frequently bought together section on product listing page, it was gone.
Brent: (07:57)
Right, right. It’s turned it into like books, books or something. Right. Wasn’t it like buy a book? Like, I don’t want a book. I want to, I want a shoe that’s related to the shoe I’m trying to buy, you know.
Lazar: (08:08)
For couple of weeks Amazon tried really hard to slow down sales and shipment. And they, they had like 30 day shipment in time and so on. But I like it, like in real life, it never was 30 days. Like most of the time it was like seven to 10 days, but they wanted to, um, slow down sales, basically. That was the first thing that happened. And one of the first thing that happened as well, they started increasing like how many people they’re hiring. So they first hired 100,000 people. And in the next batch they hired, 75,000 people..
Brent: (08:43)
Right. Yeah. That was my memory. It was a hundred and , yeah, just shy of 200,000, which they’ve probably even increased since then. I haven’t kept up on the yeah. Amazing. That was just US alone. Right. That those numbers specific to US.
Lazar: (08:56)
Yeah, literally, it’s, it’s a huge number, but like they did the really good stuff. Like what I saw today, like in one of the newspapers, I saw that, um, Jeff is going to be the first guy to hit trillion in like six, six years or something. I think this time helped a lot to him for that.
Brent: (09:18)
Yeah. I mean, basically look at it this way. This is how I’ve positioned it to my team is like, we, we unexpectedly for a lot of clients, came across a quarter four or like a Christmas level sales and like 30, 35% of clients you know, I’m just looking at that a lot. We had, we had a fat middle clients that like, you know, didn’t really go either way, which is actually good, considering all the craziness and maybe they just had some issues with fulfillment, warehousing, FBM, which I’m sure we’ll, we’ll talk about just next year. But, um, yeah, a lot of clients had this huge unexpected Christmas and March slash April and Amazon as a company became responsible in the US at least. And, you know, parts of Europe too, UK, for fulfilling like a large portion of the population’s needs. Now that people are either too scared to go outside or at risk, uh, or just obeying, you know, the government orders to do so, whatever the case may be it falls on the delivery people. And, you know, you could argue the people that are just equally as vulnerable, who were working for Amazon doing delivery, uh, to like take this immense, immensely infrastructure burden on. And Amazon, like for the first time ever, you really saw the cracks in the system, like the machine started to grown, you know, it was like under the weight of the, what, what we’ve done, you know, as a society. Uh, so I think e-commerce wins in general. That’s that much is clear. Yeah. Amazon has made some drastic changes.
Lazar: (10:41)
You can literally see that e-commerce is like completely not even future, it’s today. And like other stuff, or like having troubles with, with, uh, situations like corona. But like, on the other hand, there is whole bunch of, uh, uh, different people that are working on a whole bunch of different stuff like police officers or healthcare system, like they’re super important. And like, of course, nobody’s talking about people that are doing deliveries and Amazon is doing a lot of deliveries at this time. And like, Amazon is getting out of this super strong and way, way stronger than anybody I think, expected.They had some hiccups, but everything is working fine. But for the sellers, what I can see that happened for..Smaller sellers were affected more because like, when you are a big seller, you’re not a startup anymore. You’re the guy that wants to create system and that wants to be sure that everything is working properly in every situation and has enough people to work on different stuff. And if one thing is not working, they’re going to try another one or so on. But obviously because they’re bigger, they’re not like most of them are not corporations, so it’s not super slow to make changes. They’re still flexible enough to, to make changes. So when, when they saw that, um, one of the things that happened like restocking, that was a huge one. It’s still a huge one. Well, like you could see a whole bunch of groups, like people saying like, Oh, there’s a trick. Like if you open, um, page, like twice, you’re able to add like two times 50 units of the product and you’re like, okay, do that. That’s not going to work like in the long run.
Brent: (12:25)
Try this one weird trick, Jeff Bezos hates him. Yeah. Like, uh, And I agree with that restocking. So that comes from two angles. So, uh, you know, one of the questions we have done here in our, on our ideas for this is like, who are the winners and losers? And I think one thing we talked about is who are the winners people who do have infrastructure, like you mentioned, who are maybe medium to small sized businesses, they’ve got a team, but they’re agile enough. Like you said, to really be nimble and say, all right, well, we can see there’s going to be a problem with warehouses. Let’s get FBM sorted out or some other kind of fulfillment method. And I think if we had to put someone in the winner’s category, it would be those that didn’t rely entirely on Amazon to do everything for them. And they had some kind of channel or fulfillment methods set up alternatively, and that allowed them to pivot into that because we saw clients that, you know, seamlessly, you know, almost like a ballet dancer, you know, gracefully moved from FBA, Oh, FBM. Now, here we are over here. And sales continued. And then Amazon, I think has accordingly like rewarded people for that because, um, you know, I’ve talked to people at Amazon through this and they say, yeah, we’re encouraging our sellers to like try other things besides FBA, which is not something they’ve said, no to my memory before.
Lazar: (13:34)
Yeah. Like one of the first things that you learned about Amazon like years ago is like, be FBA. Don’t be FBM. Cause you’re giving some fee to Amazon and you’re going to show up higher on like organic search position or Amazon is going to like boost you a bit more just because the percentage that they’re getting. But now like it’s for the first time when you hear that Amazon is like helping people to become FBM. And like, in our case, as an agency, we see like maybe 25 or 30% of sellers that switched and they didn’t leave FBA, don’t get me wrong. They just have option number two now…
Brent: (14:17)
I think the blended model was the more successful one, actually, you know? So maybe your high volume ones, you do FBA, but then FBM, you have ready to go in case those go out and you can switch it over. Or if there’s another situation with a warehouse, for instance, here in France, we’re recording this mid-May, but just like as a time capsule, but just for example, some of the warehouses, if not, all of them are closed right now during a court order. So I ordered something from Amazon, um, France and I received it from Germany. Um, so, you know, that’s a, that’s another workaround, I guess.
Lazar: (14:50)
Yeah. So, Mmm, okay. When it comes to FBM whole bunch of people ask like, should we create new campaigns? Or should we like add new ad groups or whatever. what we did for example. And I’m pretty sure that you can agree on this one. What we did is when, when sellers created new ASIN’s or created FBM, we added ASIN’s to the current campaigns basically to the same ad groups where they’re FBA products were. So those campaigns had traction because like, if they started everything from scratch, um, they, they would need like three, four weeks, at least to get some traction and history in those campaigns. So like, for those that don’t know, like, why do you need history and traction campaign? Basically, if you create something new and like create the campaign with, um, whatever keyword targeting or like whichever targeting, um, they’re not going to Amazon is not going to help you to, to get whole bunch of clicks or everything just because you are willing to spend a lot of money on it. But the thing is they want to compare your performance to others. They want to see what’s going to be your click through rate, comparing to others. What’s your conversion rate going to be comparing to others in your niche. And depending on that, you’re going to, um, get maybe a better CPC as well. So like, if you’re compare, like if you, like, if Brent and me had like the same product selling and we have different amount of reviews, different amount of sales, and we both had the same campaign with the same keywords and like I had a new one and he held the old one he’s would probably have like, and better CPC overall.
Brent: (16:37)
Yeah. So expected conversion rate, you know, CPC people, I think are often, this is getting pretty in the weeds, but you know, there’s a whole system that goes into determining ad rank, right. It’s not just like, well, I’m Lazar I got 10 bucks and I’m going to pay 10 bucks for this. It’s really like, okay, well, what’s going to sell, uh, what’s the history for this keyword tied to this ASIN. You know theories about, uh, quality score on Amazon, which we can’t see unlike Google ads and other ad platforms, but it definitely exists, you know, it’s part of the ad rank, uh, consideration and yeah, it’s a valid point. We did the same thing. So, you know, if, if someone’s got FBM, we switch out the skews and then problem solved. It’s the same ASIN. So yeah, it’s all tied to that same product. And the thing I think is more dangerous than switching out a skew because I assume things are gonna run pretty, pretty same, uh, after, after you do that, but like changing a price. You know, usually when someone changes the price drastically in one direction, that’s the thing that’s going to have a big impact on conversion rate and ACoS. And those things are tied to, you know, what a lot of clients, uh, keep and hold as like KPIs. So your price goes up a lot. Well, there’s keywords that suddenly worked, you know, a week ago are no longer going to convert at the same level. And similarly, if you have a much lower, well, you know, the conversion rate might be great, but your ACoS is going to be in, in, in pain because now your average order values dropped. So it’s a two way street, for sure.
Lazar: (18:03)
Yeah. It’s, it’s really hard to balance between everything. Like, just like with stock amount. Like you’re limited with the units that you’re able to sell. And some of the sellers decided to stop PPC. The others decided to keep it the same. Literally the others decided to decrease bids. What did you do on your end?
Brent: (18:27)
Yeah, I think more than anything we had, um, clients asking us, what are you doing? And then we had us at the same time messaging certain clients and saying, we’re doing this. So it was like a double edged, uh, communication. And I did put it out in our newsletter too. Like, Hey, this is something we’re thinking about. And looking at, we expect this to impact us pretty soon. And then it did, you know, I was trying to write a little bit about mindset too. Um, but you know, ultimately we’re an agency that’s trying to deliver value based on a couple of different accesses. And one of those is like, we can do a better job at ads. Uh, so here’s what we’re here to do. And as an agency, just like you, we can see across many accounts and many marketplaces, uh, in our, in our instance with the EU. So we can see trends before they happen, other places before they hit the rest of the markets. So we can anticipate reasonably like, here’s what we should do. And for many clients, that was a question of altering bids because now the conversion rates were different. You know, a lot more people are on Amazon. The click through rate was higher, which is a bit deceptive because as we mentioned, the ad inventory has changed, but the conversion rates and I do have data on this, you know, uh, actually I could read you off real quick. Um, yeah, so typically we run, you know, closer to 10 and a half, 10% overall conversion rate. But in that March period that started dropping to 9.7 9.35 8.4 8.1. It’s holding at about 8.1 last couple of weeks, but we’re still suffering. The conversion rate is still down slightly. Um, you know, the coronavirus is not over as we kind of talked about. This started the episode, the big, the big panic period is, but Mmm. Conversion rate is still still down. So that means that bids have to go down with it, right? Those two things move in tandem. If you want to maintain the same, it costs levels and kind of, uh, you know, money in money out situation. So that was our approach.
Lazar: (20:17)
Well, I completely agree with you on that. We had one interesting situation with a client that was making almost a quarter of a million a week and during corona he dropped to like 50K and our main target for him was to keep real ACoS or blended ACoS or TACoS, depending who you ask, how they call it. Its’ basically spend as a percent of the overall revenue. Yeah. So, our goal was to it under 10%. Like that’s the main goal as a, as an agency to do that. He literally told us, like, we don’t care about anything else we want real ACoS down. And that’s it. So when he started experiencing that huge drop, it’s not like that we did anything wrong with the account or anything, just like the amount of impressions and the amount of people interested in the product, uh, like, it dropped. So what, what we try to do, uh, first we tried, like we needed to reach out to client and tell him like, okay, you have a problem at this point. Are you willing? Like since he had a lot of stock, so we could bid more comparing to like, we could, we shouldn’t go passive in that situation, we should try to get as much as possible. So what we did basically there, we had conversation with clients and we increased spend to be honest. And that was like the main thing, what we did. And we monitored if PPC sales were increasing, comparing to organic sales. , well, I know that you guys in AMZ Pathfinder and us as well are monitoring revenue from PPC versus organic. So like you, you always aim to be at around 35%, like that’s something pretty healthy. Um, like what we did, we tried to increase spend and keep that number at around 35 since he already was around that number. So unfortunately organic didn’t fall up, but what, what we suggested to client to do some other stuff apart from PPC and add some, some extra stuff like working with newsletters or some social stuff. So when organic increased, we had basically that real ACoS or blended ACoS back on track.
Brent: (22:42)
Yeah. Blended is something that a lot of our, I would say larger clients are really concerned with too. Um, and rightfully so, I think that, it’s a really important metric to track. And, you know, we have some control over, over that, but there are factors like a pandemic or seasonality that are going to affect it, uh, in a very big way. That’s out of our control. So 10%, yeah. That’s, that’s reasonable. But if someone sales dropped by 75, 80%, yeah. That’s going to really hurt your ability to spend, unless that you’re able to convince them to take some other measures to do it. Mmm. We also have clients that, because Amazon was so jammed up, they had a lot more sales come through their, uh, websites. And so some of them shifted from like, uh, you know, one third of the sales, uh, on their websites to half or even two thirds of some cases, things switched over and some of them are still feeling the strength of that. Now, you know, that’s still, that’s still ongoing. Um, so talk about, you know, diversification, which is another maybe angle of like who are the winners and losers. I think people are more diversified, you know, eggs, eggs in multiple baskets. Right? Yeah.
Lazar: (23:51)
Literally I completely agree with you. So yeah. Well, the idea for this podcast was like for each episode to be about 25 minutes and we’re almost done, Brent, do you want to talk more about corona or should we wrap it up and continue in some other episodes about other stuff?
Brent: (24:07)
Well, how about this? I mean, what are the next steps? This is maybe the last thing to touch on. What are the next steps for, for now? Like what are you advising clients to? What are you guys doing? I mean, I’m curious, this is also the reason I’m asking, what are you guys doing right now for, uh, you know, clients? How are things holding an do you have any accounts that stopped spending? And because we, we, I think we did maybe one or two, but …
Lazar: (24:30)
Like zero spent?
Brent: (24:31)
Yeah. Like really stopped, like put the brakes on entirely, which I think is, um, you know, a bit less common.
Lazar: (24:37)
Yeah. We didn’t have anybody that like, stopped everything just because they were afraid that they’re going to lose some ranking there. But overall, like that’s interesting thing. I didn’t know that somebody like completely turned off everything.
Brent: (24:52)
I should probably ask our operations person, but I think we have one or two that probably paused entirely. Um, and you know, my mind, the only reason to do that would be if you have such a poor conversion rate, that no longer makes sense to advertise, or you just have no more stock to sell. And it could have been for the second reason, because if someone had issues with getting things out of China, you know, in the initial COVID situation, they’re in the early part of the year slash end of last year. And then they also were constrained with sending products in, that’s a really deadly combination for your inventory levels. And if you didn’t have that FBM lined up, like we talked about, that could be pretty bad, you know? So that could be a good reason to stop spending, but mostly it’s been clients pausing and slashing spend because of inventory and because of conversion rates. Yeah. And some of them have gone on pause with us too. So…
Lazar: (25:42)
I’m a bit old school for that. I prefer decreasing bids to like, two cents and keeping, keeping it that way until you’re almost out of stock. And when you’re with like a couple of units, you just close the listing. So it’s kinda old school methods and how not to lose BSR that much. And like, not to be punished by Amazon when you’re out of stock, because like, this is a situation when it’s not your fault that you are out of stock kinda..
Brent: (26:10)
Yeah. So do you recommend that to your clients that they close the listing or, or, uh, you know, alter it when the stock runs up? Cause that’s one of these other Amazon chestnuts, you know, everyone’s always, everyone’s always talking about that one.
Lazar: (26:21)
Well, it’s always a thing, like they’re always positive and negative sides and nothing is like completely proven. Like with Amazon, the main thing is like Amazon never comes in front of people and tell us like, okay, this works, this doesn’t work and you should do this or you shouldn’t do this. So you should figure it out on your own, in different situations what happened. Like these, these lessons are pretty expensive. Like when you’re out of stock, like try not to be in that situation when you have a chance. But what we suggest clients to do at this point is like, if you’re almost out of stock, try to optimize spend as much as possible because sales are going to happen this or another way. Um, like what you want to do is, you want to keep your PPC for like cross targeting ASIN’s, like for defending your products, like 100% sure for that rather than to have some other showing up on your product? Uh, I would definitely show up as, as much as possible if, if I have product in stock, but if, if I’m running out of stock, I would try to optimize everything. And yeah, one of the things that I always remember is that for Sponsored Brand ads, like in the past, everybody was like, okay, they create the ad and it pause automatically when you’re out of stock, but now it works and now it can show only your logo. So double-check headline search ads or Sponsored Brand ads , and make sure that they’re not wasting money just to show your logo. I’m sure that most of you guys have a really cool logo, but there is smarter way to spend money.
Brent: (28:04)
Yeah. Yeah. I hear that. We can do an episode on those at some point too.
Lazar: (28:09)
Yeah, definitely. We should. Okay. I think we’re good for today. It’s a solid one for our first one.
Brent: (28:15)
Well, sounds good.
Lazar: (28:16)
Yeah, guys. So on our website, you have an option to send us a message or email. Please do, please do, if you have some questions or you want us to discuss some specific topic and any kind of feedback is something that we highly recommend. Yeah. And that’s it for today and.
Brent: (28:34)
We would appreciate it. Sure.
Lazar: (28:35)
Yeah.
Brent: (28:35)
All right. Thank you.
Lazar: (28:36)
Thank you. Bye.