Case Study: Product Launch & Promotion in an Ultra Competitive Niche – Part 2

Launching a new product in an ultra competitive niche on Amazon is hard work and requires a well crafted marketing strategy.

Get it wrong, and you can easily wasted a lot of money on product development, inventory, and marketing.

Get it right, and you’ll have added another steady cash flow producer to your product line.

In today’s post, I’m going to share with you part 2 of a case study for our top selling pet product, along with all the nitty gritty details of how we’ve used PPC advertising to get our product to where it is today (if you missed it, you can read part one here).

Before we get into all the details, I do want to set the stage with by saying this: the #1 goal of any PPC campaign is to increase sales velocity and drive down the product’s best seller rank (BSR) so that it will move higher in the organic Amazon search results and drive organic sales. 

Using Amazon PPC to Launch

When we launched our bark collar, thanks to a LOT of competition, we were faced with a steep uphill battle to get traction. If our product was to become a long-term success, we knew that we needed to get it to rank on the top half of page one of Amazon’s organic search results. Not an easy task!

Step one was to create an automated campaign and let Amazon’s algorithm choose which keywords that we should target. The first day the campaign ran was July 8th, 2016 and we spent just $6.20 due to our keeping a small limit on the daily budget.

Between July 8th and July 30th 2016, we received a total of 105 orders from a PPC spend of $1,242.11, which resulted in a loss of $339.80. During this time, our average CPC was $1.49 and our Advertising Cost of Sales (ACOS) was 54.92%.

july-ppc-performance

As you can see in the image below, during this same period, we sold 177 total units, which means that after subtracting the 105 PPC sales we also made 72 organic sales. Of those, 20 were a part of the promotion I wrote about in part one of this case study.

And finally, during this time frame, our product listing had a 22.75% conversion rate (shown as unit session % in the blue box on the right of the image).

bark-collar-stats

In case you are looking at the data above and asking yourself, “what’s the point?”, remember that the goal of the initial advertising is to ‘buy data’, and as we bought data, we uncovered the main keywords that were responsible for conversions.

The secondary goal of the launch phase of our advertising was to increase our Best Seller Rank (BSR), and we did make substantial progress in this regard as well. Our BSR started at around 24,000 in the Pet Supplies category, and by the end of July, it had dropped to just under 15,000 (the reason for the spike in BSR on July 24 is that we ran out of stock for a few days).

shock-collar-initial-bsr

Now that we’d ‘bought some data’ and made some sales, it was time to begin to optimize our advertising on an ongoing basis.

Using Amazon PPC for Ongoing Promotion

When we run advertising campaigns for sustained promotion, we generally run two types of campaigns.

Sales Rank Campaigns: in a sales rank campaign, the goal is to “buy your way to the front of the line.” The way to do this to buy enough sales velocity to get Amazon’s algorithm to rank your product on the first page for your chosen keyword(s). Depending on the level of competition and the number of keywords targeted, achieving a first page ranking can require a significant investment over time.

ROI Campaign: as the name suggests, the goal of the ROI campaign is to produce an immediate ROI on the ad spend. This is generally achieved by “harvesting” appropriate long-tail keywords from the campaigns created during the Launch Project and then creating a bid structure to more precisely target these keywords – ideally at a lower CPC.

In the case of our dog collar, we took a hybrid approach and created a manual campaign where we target a large volume of long-tail keywords, plus from the initial campaign we were able to identify the top converting keywords that we’d ultimately like to achieve an organic ranking for – because if we could, our product would become highly profitable.

Automatic Campaign Results

During this period, we let our automatic campaign run ‘as-is’, and as you can see below, between July 31st and August 18th, 2016, we received a total of 160 orders from a PPC spend of $2,367.15, which resulted in a loss of $911.72. During this time, our average CPC was $1.64 and our Advertising Cost of Sales (ACOS) was 71.08%.

During most of this period, our daily budget varied from $150 to $200 and our default bid ranged from $2.70 to $2.85 per click. As you’ll see later on in this case study, it needed to be higher.

auto-campaign-731to818

Manual Campaign Results

During this same period, we had a small daily budget allocated to our manual campaign. It should have been much higher, but from July 29th to August 15th, I was away on a business trip followed immediately by a vacation for 10 days, so I wasn’t paying as much attention to the manual campaign as I normally would have – which means, the results weren’t much to brag about.

During the period from July 31st and August 18th, 2016, with a daily budget of just $20, we received a total of 8 orders from a PPC spend of $227.96, which resulted in a loss of $172.12. During this time, our average CPC was $1.69 and our Advertising Cost of Sales (ACOS) was 155.17%.

Because of the low bids, most days during this period, we didn’t exhaust our daily budget.

manual-campaign_731to818

As with the previous period, we saw a fair number of organic sales that went along with the sales that were the direct result of our advertising.

As you can see below, total units sold were 230. So if we subtract the 168 units sold from advertising, we can determine that organic sales during this period totaled 62 units.

Total revenue from organic sales + sales from advertising was $3,848.70, with an overall loss of $1,064.87.

shock-collar-stats-segment2

Increasing Bids on Top Keywords

On August 18th, I increased my bid to $3 on about a half dozen of the most important keywords that we wanted to achieve a first page organic ranking for, and as I write this on August 24th, the $3 bids are still active. I also increased the daily budget for this campaign to $50.

So far, as you can see below,the results have been ok. We have received 10 orders.

high-bid-results

Analyzing Our Results To Date

In the last week, we’ve started to see some positive results from our sustained investment in advertising for this product.

Remember, our #1 goal is to achieve an organic ranking on the top half of page one of the Amazon search results, and the key to doing that is to drive down our BSR.

As you can see below, from August 19th to August 22nd, we have received a total of 29 orders from both the manual and automatic campaigns combined with a total PPC spend of $559.84.

Product_Performance_stats

During this same period, our total revenue for this product was $1,135.33 and we sold a total of 67 units. That means that 38 of the orders were from organic sales.

total-collar-sales-aug19-22

Conclusion

I’ve given you a lot of detail here, and hopefully you didn’t get lost in the weeds.

Remember, the goal of PPC advertising on Amazon is to decrease your BSR enough to get your product ranked on the top half of page one of the search results for a given keyword that is relevant to your product.

In other words, the goal of PPC advertising is to invest in decreasing your BSR, which will have the result of increasing your organic sales – which will increase overall profitability.

With that in mind, let’s look at two final charts and draw some conclusions.

As you can see below, since investing in advertising this product, our BSR has steadily declined and it continues to do so. Will we get to the top half of the first page? Yes, I believe we will (and I’ll update this case study accordingly).

final-bsr-stats

To achieve this decrease in BSR (increase in organic sales, we’ve invested a total of $4,042.75 from July 1 to August 22 and generated 293 orders as a result of the ad spend.

ppc-investment-as-of-augg22

In addition to sales from PPC, we have also achieved a fair number of organic sales. As you can see, since embarking on this experiment, we’ve sold 496 units (PPC + organic), generated sales of $8,336.04, and incurred a loss of $1,803.10. Our current BSR can be seen highlighted in blue.

shock-collar-dashboard

What I can’t predict is how much more we’ll need to invest in PPC to achieve our goal of ranking on the top half of page one of the Amazon search results, and as we get closer to that goal, I will continue to provide further updates.

About TLK Sourcing

TLK Sourcing a digital retail agency with significant expertise in the Amazon marketplace and unlike typical marketing agencies who will charge you thousands of dollars in fees, we earn our income by purchasing your products wholesale and then reselling them - thereby ensuring that our interests are 100% aligned with yours.

Discover how to stop unauthorized online sellers from violating your MAP policy

tlkcta

Case Study: Product Launch & Promotion in an Ultra Competitive Niche – Part 1

Launching a new product in an ultra competitive niche on Amazon is hard work and requires a well crafted marketing strategy.

Get it wrong, and you can easily wasted a lot of money on product development, inventory, and marketing.

Get it right, and you’ll have added another steady cash flow producer to your product line.

In today’s post, I’m going to share with you a case study for our top selling pet product, along with all the nitty gritty details of what it’s taken to get our product to where it is today.

Market Research

The key to creating a highly successful product listing on Amazon is to find a product that is already in demand, and understanding demand starts with a study of what is already selling well.

Being as we owned a dog that loved to bark (which drove me nuts), the idea of an anti-bark collar was something that I’d already been considering.

When we first decided that we wanted to create our own electric dog training collar, the very first thing we did was to perform some market research.

Ideally, we were looking for a product that:

  • Had significant existing demand
  • Was relatively easy to manufacture
  • Didn’t have an overwhelming level of competition (as measured by product reviews)
  • Wasn’t seasonal
  • Had a long shelf life

Assess Demand

In the image below are the Amazon search results for the term “bark collar” and as you can see, 8 of the top 17 products are generating at least $40,000 per month in revenue.

bark-collar-report

Based on this report, it was fairly safe to assume that there is plenty of demand for this type of product.

Just as important as demand is breadth of sales. What we like to see are sales that are not concentrated in just the top few listings. Instead, we prefer to see plenty of sales across the top ten search results, and as you can see above, that is precisely the case for this product.

Assess Seasonality

When looking at demand, it’s important to determine if the data you are looking at is showing a seasonal trend.

In our case, we looked at one of our competitor’s products that had a large number of reviews (plenty of reviews is a barometer for product age) and were able to confirm that sales have been relatively steady throughout the year.

bark-collar-seasonality

You will note the graph spikes up in May. A spike up in sales rank like this is generally the result of a vendor running out of stock, so we checked a few other competitors to confirm this spike was limited to this one product, and not the category as a whole. (Note: when sales rank is high, sales are low, so downward trend in the green line is desirable)

Assess Competition

When we assess the level of competition, there are a number of things that we consider, including:

Number of reviews: we like to see at least one of the top 5 listings with under 200 reviews. In this case, two of the top 5 listings are under 200.

bark-collar-reviews

Number of average stars: As important as the number of competitor reviews is the average rating. As you can see, two of the top 5 products are 3.5 stars or less. This is another good barometer for demand because if a product with just 3 stars can still sell well, people must really want/need it.

Number of competitive product listings: The number of total product listings is not nearly as important as the reviews and average rating, but it was something that we considered, just the same.

If there are too few competitors, that could be a sign of a lack of demand or market breadth. If there are too many, achieving a high enough rank in the organic search results could prove to be rather expensive. (There was lots of competition in this case, and we were still able to rank… more on how we did that in part 2.)

Product Launch

Successfully launching a product on Amazon requires that you follow a proven process that consists of:

  1. Creating an optimized product listing
  2. Getting product reviews
  3. Running PPC advertising campaigns

Optimized Product Listing

Creating an optimized product listing is simple to explain, but not as easy to do if you don’t know what you are doing. With that said, there are a few key factors that you must get right.

Keyword Optimized Headline: If you have been thorough in your keyword research, you will know which keyword you should be sure to include in your product headline. In our case, we chose to include the phrase ‘bark collar’ in our product headline because keyword research told us that this phrase is searched for approximately 83,500 times per month on Amazon.

High Quality Images: Amazon lets sellers include up to 9 product images in each product listing, and I strongly recommend you use as many of them as you can. Even more important than the number of images, however, is the quality of your images. Nothing will kill your conversion rate faster than lousy images.

Descriptive Sales Copy: Every product listing allows up to 5 bullet points, plus an additional product description. These are both areas where you want to write for humans, while still doing your best to add in additional keywords that you are targeting.

Keyword Targeting: Within the administrator portion of every product listing, Amazon allows sellers to enter up to 1000 characters for the keywords that they hope to rank for. Filling as many of these 1000 characters with relevant keywords is absolutely critical to the long term increase in sales that you are shooting for.

Getting Product Reviews

Product reviews are the social proof you need to convince buyers that your product is worthy of their attention (and money).

When launching a new product, it’s critical that you run a promotion to generate product reviews. It’s also critical to the health of your seller account that you don’t run afoul of Amazon’s terms of service in the process.

As of late, Amazon has been ultra-vigilant with outright review manipulation and they have gone as far as filing lawsuits against sellers that have taken things too far.

So, what is acceptable, and what is too far, you ask?

At the last conference I attended in August of 2016, one of the speakers was Rachel Greer of Think Cascadia. Rachel is an ex-Amazonian, and she shared that Amazon will let you get away with a small amount of review manipulation for about 3 weeks after you launch your product. She also informed us that Amazon’s own research concluded that anything more than 17 product reviews added no significant lift to conversions.

In other words, in your first three weeks, your goal should be to get 17 reviews via a promotion and then stop.

After these first 3 weeks (and 17-ish reviews), Amazon expects that just 2-3% of purchasers are going to leave a review, so if you continue to bring in a number that is higher than that, you are getting on a radar screen that you don’t want to be on.

So what did we do after getting our first 17-ish reviews? We set up an email auto-responder system that asks every ‘regular’ buyer to leave a review. Using this system, our product, which was launched on May 24, 2016, accumulated a total of 28 customer reviews as of August 23rd, 2016, with an average rating of 4.5 stars.

bark-collar-review-count

Running Advertising Campaigns

Advertising campaigns are a crucial part of both the product launch as well as the ongoing promotion of your product, and when it comes to running campaigns, there are a lot of details to get right.

This blog post is already long enough, so be sure and check out part 2, where I will go into detail on how we used advertising campaigns within the Amazon platform to launch and promote our dog collar on an ongoing basis.

About TLK Sourcing

TLK Sourcing a digital retail agency with significant expertise in the Amazon marketplace and unlike typical marketing agencies who will charge you thousands of dollars in fees, we earn our income by purchasing your products wholesale and then reselling them - thereby ensuring that our interests are 100% aligned with yours.

Discover how to stop unauthorized online sellers from violating your MAP policy

tlkcta