[2:54] Happy to have you here. So for the folks who maybe don’t know who you are, let’s start there. Who are you? And what do you do?
- Loaded question. Jason Magee, I’m a Senior Director of Sales and business development at Teikametrics. My job is to help make sure that our brands and retailers are scaling on the most valuable marketplaces, predominantly Amazon. That’s obviously why we’re here talking today. So that’s what we do.
[03:20] All right, and we’re going to dive into exactly that topic, how brands are scaling on Amazon because I’ve yet to meet a brand that didn’t want to grow. So let’s start off with the thing that always gets the audience’s attention. An Incredible result of some kind that one of your customers has achieved, following either using your software or following your advice, or whatever. But let’s get to the result.
- Yes, well, I think one very good example is NutriBullet. I want to use this example because one, a lot of folks recognize the name. But the other thing too is, although they’re pretty large company, the strategies that we’ve adopted for them transcend the size of a client. So NutriBullet came to us in a pretty unique situation where they are recognized for a number of very key terms, but they really wanted to focus on his incrementality, which means if I’m investing my money in advertising, is it moving the needle on top line sales, number one. Number two, if I were to stop advertising, would I still see those same sales, or if I’m advertising, am I winning new customers that I would not have won otherwise?
So when we took over the relationship, and we were managing this for them, once we started with understanding their goals in a rebuild of their campaign structure, the results are incredible. I mean, we saw a 25% increase in top line sales over, I believe, was the six month period. But at the same time, what we also did is we decreased their ad spend by 15.1%. And we improve their ACoS by reducing it by 26%. So, overall, year over year, their total sales grew 134%. So what you’re seeing there is they have your cake and eat it too. How can you accelerate top line sales?
How can you not necessarily have to spend more money to do that? And can you actually improve my efficiency? In this case, can you improve ACoS? So we are able to essentially do all those things, through our managed service, and most importantly, our technology, who handles the bidding and a lot of the things that humans aren’t very good at doing.
[5:46] All right, so obviously, that is a fantastic result. And in the remainder of this episode, we are going to do our very best to unpack the things that you guys did to help them get there. So, I’m going to pretend like I’m the ignorant guy who doesn’t know anything about anything. And then we’re going to just go through this interview, and you’re going to shine the light on the areas where it needs to be shined. So first question, should I just start advertising right away? Is that the first thing that you guys did for them? Or what’s the groundwork look like?
- If you like burning money, advertise right away. No, I think the thing that’s interesting about Amazon, and beyond this particular example, is advertising doesn’t sit in a silo. You’re going to have advertising sitting in the middle, the price of your products. Are they retail ready? Do you have good reviews, etc.? And what’s your inventory level of those products? So what you really need to do in this business is to understand the nuts and bolts that lead you to driving a good advertising strategy.
So number one, you want to understand what are the most important business metrics, such as top line sales, profitability at a company level, as well as advertising performance. Another metric we get is TACOS, which is Total Advertising Costs of Sales, which means take your ad spend into total revenue, not just your ad revenue, to understand over the course of time, “is my ad spend moving the needle on top line revenue?” So number one is understanding business metrics. Number two, is understanding product metrics down to the skew level. What is your profitability pre and post advertising? To understand what you’re sort of break even ACoS RoAS is.
But then you need to look at what the goal of your product is based on where it is in its lifecycle. Is this a product that’s in a brand-new launch that you really don’t have a lot of sales history? Is this something that has some history you’re trying to grow it? Or is this something that’s been your cash cow, and it’s in profitability mode? Then the last thing you need to figure out is how do folks buy your products? They can buy a product, either by looking up a brand name, that brand name can be your brand or a competitor’s name, the behavior is different. And then maybe folks aren’t looking for a brand or looking for a spec on a product. I just want men’s running shoe size five, as an example, very small feet.
But those are all the inputs you need to understand those data points before we even try and dictate what a good advertising strategy is. Long winded answer Trent, but hopefully that makes some sense.
[8:32] I so wish I had a tiny feet joke right now. That segue is so good.
- I know, exactly too much time focusing on top line sales instead of shoe size.
[8:46] All right. So I think you told me in our pre interview that in addition to once you’ve done the things that you’ve discussed, the tactic that you’re going to jump into next is listing optimization. Is that right?
[9:04] Okay, let’s assume that not everybody knows exactly what listing optimization is, high level and if there’s any important takeaways or gotchas, be sure to highlight those.
- Yes, I think a couple things. Think about listing optimization. Like if you’re walking into a physical store, and you see a product on a shelf. When you think about and like, how does that product resonate with you? Does it make you want to buy it?
Now, when you look at online with Amazon, that’s a mixture of the title of the product. When I read the title, does it jump out at me as a product that I need or worth me clicking on? Once I click on that product, I also want to look at the images. Do I have good images that highlight what the product actually looks like? A wise person once told me I should be able to make an entire buying decision on a product on images alone, especially as we’re living in a more mobile world, can I go and look and scroll through all the images? Can I see the product in its entirety?
[10:12] So what are some best—because images it’s a rather vague term, it’s not just a picture of the product. So describe best practices for images because they are so incredibly powerful on mobile.
- Well, number one best practice is you need—on Amazon, for instance, you have to have a white background and has to be a high res image that you actually can see the product and it’s not muffled at all. Once they click on that first image, start looking at other ones, you want to start looking at things that accentuate features of that product, like an infographic overlay that has maybe a water bottle, but it actually calls out what the water bottle is made of. So you can see “Oh, this is an alloy that’s going to retain heat.” You want to see a lifestyle image, which is, “Oh, there’s a man or a lady hiking in the woods, and they have it clipped to their backpack.” I now can make an association with that like, “Oh okay, I get it, for the outdoor enthusiasts.” And then another one is video, like within the slots for an image, you actually can put a video as well.
So within that, I don’t want to put a number on it, because they may change, let’s call it the seven or eight slots on Amazon that you can fill up with images and video. Does it actually highlight every side or a component of the product, so I can see the product? Does it actually describe the product with me? Like if it’s an electronic device, like an Apple charger, like which models it is associated with? Is there other images that just get my attention as a consumer looking for a product? So you’re right, Trent, it’s not just the actual image of the product, it’s everything that goes into being as close as you can to see, feel, smell it, are you telling that story through the images as well?
[12:10] I’ve even seen companies promoting related products in the images, so they want you to buy product B and product A. So in the images for product A and in the images for product B, they’re also showing the other product to show you how well they go together.
- Absolutely. And then one other thing there is like, it’s a whole idea about creating a brand on a channel like Amazon. It’s better than it’s ever been to do that. But not even in the images—when you think about advertising, a product display page or a PDP has numerous ad spots there too. It’s a great opportunity to cross reference and promote a complimentary item as well. If you sell the Keurig, you want to sell the coffee with it, as an example. So there’s just a lot more that goes into it than just that.
[13:04] Okay. So once listing optimization is complete, which is titled bullet points, images, enhanced brand content, so you got your shiny image, your shiny listing, and it’s raring to go. What are you going to do next?
- So just to highlight that point, in my opinion, there’s nothing more important than actually having a product listing be optimized. But once it’s optimized, it’s a tree falling down in the woods, right? Nobody’s there to see whether it makes a sound, how do you make sure that people hear that sound?
Number one most powerful way to do that is advertising. Advertising on marketplaces like Amazon is arguably the most powerful direct response weapon ever devised. So the way you should think about this is like, the most fundamental way to advertise is through sponsored product advertising. This is something that is search based, which is if I go into Amazon, and I’m going to type in keywords, I want to make sure my product shows up for consumers searching those keywords. You want to run sponsored product advertising for that as a minimum baseline. That way, you can leverage the power of advertising to get your product promoted, even if it doesn’t rank that well organically.
So most fundamental step is to run sponsored product advertising, which is going to be a blend of automatic and manual campaigns. We can get into that as well. But yes, advertising is the enemy to play the game or the toll to get on the sales highway on Amazon.
[14:44] All right. So we talked a little bit in our pre interview about—you said understand the inputs and then segment your campaigns based upon various stages of the buyer journey or the funnel. Can you talk a little bit more about that?
- Yes, there are a couple ways to think about this. Number one, I mentioned shopper segmentation earlier, which means… Let’s just use an example that I am Yeti, Yeti mugs, Yeti coolers as an example. If I’m trying to buy a Yeti tumbler, what I’m going to do is I’m going to buy a tumbler, I’m either going to look up a brand name like Yeti tumbler, or I’m going to say, Arctic tumbler, a competitor. So those are searches using brand terms. So you need to carve out how you show up if somebody’s searching your own brand name, if your Yeti in this case. We also want to strategically latch on to other competitors, and conquest them on their own term. So if I’m Yeti, I might want to bid on Arctic mugs as an example. And then the third is generic. I, as a consumer might not care of the brand, I just want to know is it going to keep my coffee hot, as an example, or my coffee cold.
So you have brand, your own branded terms, competitive terms, and generic terms. You need to have a strategy for each of them. And the reason why this is important; for your own brand, you do not want to over invest on your own branded terms, because you can easily cannibalize your organic sales by paying for that placement when you are probably going to get the sale otherwise. Your cost per click for those keywords should be the lowest of the three. And your conversion rate should be the best because they’re already looking to buy your brand. You should also have the best ACoS on that.
On the opposite end, If I’m Yeti, and I’m trying to conquest against Arctic, I know somebody’s already deep in somebody else’s buyer journey. I should be comfortable spending more money having a higher ACoS understand that it’s going to be more costly for me to do that. If I get that sale for competitors’ term that is absolutely incremental to my business. I would not have gotten that sale outside of advertising. So higher cost per click, higher ACoS, lower RoAS by design.
And then somewhere in the middle is generic terms. Sort of medium level incrementality, you might be able to get the sale without advertising, probably not. But you also don’t want to be so aggressive on that, where it doesn’t help you hit your overarching goals of ACoS, TACoS, etc. So it’s really important you think about as a consumer, how they’re going to search for your products. So that’s number one is segmented out by how shoppers search for products.
[17:44] There’s a lot of mistakes that can be made with advertising. And in Episode No. 334, we talk a lot about that, as well as some as Amazon’s newer marketing and advertising tools. My question for you Jason, is if you had to pinpoint the single biggest mistake that you see brands making with advertising, what would that be?
- I think it’s going into advertising without taking into account your margin and your goals. So you can answer the contextual question such as: what is a good ACoS? Or a good RoAS? What is my goal of spending this dollar on advertising? It’s going in there treating advertising as if it’s its own silo that has nothing to do with your inventory or your product margin, etc. Because everything becomes contextual.
If you don’t know your margins, is it 20% ACoS good? If you don’t know where a product is in its lifecycle, if it’s brand new, or if it’s one that’s been around a long time, how could you effectively advertise if you don’t understand the context? So I think it’s, that’s what it comes down to is not understanding the context in those inputs as we went through that make advertising determine what metrics are good or not.
[19:10] So the company, you work for Teikametrics, it is software for advertising, but you’re more than just an ad platform. We talked a little bit about this Flywheel 2.0 thing. And if you ask me to describe it, I couldn’t. So I’m going to ask you to describe it. What is this Flywheel thing all about?
- Well, we’re hiring, so maybe figure to describe it, not that you’d want to get out of your own software gig. But so think about it this way. If you look at the evolution of Teikametrics, we were one of Amazon’s first API partners, and built back in the day when advertising first came out. We built something that was very ad focused. But what we realized when we released our first iteration of Flywheel, which is just what I said, you need to understand the context of your margin and your goals at that product.
Well as we grow up as a company, and we have access to more data and the markets more mature, we look at this as, “Okay, what are all the cons—what are the different data points you need to be able, not only to advertise successfully, but understand if you’re running a good business or not?”
So with Flywheel, we’re not only bringing in the advertising component in the app, the ability to understand your metrics down to the skew level, we’re now incorporating inventory in there, so you know how much inventory on hand. You understand the forecasted demand for your products using AI and machine learning in our data set. So if you know how much product you have on hand, what is sellable, what’s not sellable, whether you’re in excess of inventory, if you’re low, and what your inventory turns on, what your return on inventory is, that goes beyond advertising. That’s retail at its finest, understanding how I move product in the digital space of Amazon in this case.
The other thing that’s really interesting that we’re releasing with Flywheel 2.0 is the ability to understand market intelligence. What is your brand coverage of search? What is your share of voice for your own branded terms? For your competitor terms? And generic terms to know, “Hey, where should I place my next dollar? What products should I be moving?”
And then lastly, preferred financing. We understand emerging brands, like capital is key. You need to be able to fund your business. You’d be able to—but our approach is, yes, you can go and find bits and pieces of this everywhere. We know the average seller has between 10 to 14 different tools that’s connected on their MWS API and Amazon, they don’t talk to each other. So if you have all these reference points, and they all talk to each other, you have the connections made for you to know exactly what you should be doing with that.
I’ve said this before, I’ll say it again, data—people would like to say data is oil. I think data is sort of unrefined oil that’s still in the ground. You can’t pull it out of the ground and actually refine it to make it useful. In other words, if this data doesn’t talk to each other and lead to actions you should be taking, then it’s not useful at all. So that’s exactly what we’re doing here.
So imagine a marketplace optimization platform that ties in advertising, profitability, business metrics, inventory, market intelligence into one, and those systems talk to each other, that’s what Flywheel 2.0 is. And that’s what we’ve learned from our clients that they need. That’s what we’ve been building here, and we’ve been releasing it in an iterative approach.
[22:53] So what we’re going to do, because, talking about the ins and outs of the software, and how to actually use it to get all these kinds of results is not normally the type of thing that I would go into in a podcast episode. So we are actually going to be doing a live stream webinar on February the 11th. And Jason is going to be doing a screen share. And we’re going to be taking questions. And he’s going to be showing how to do all of these things, like for example, bid management, which is going to be to try and do that manually, is probably ridiculously complicated. So if you’d like to get registered for that, just go to flowster.app/teikametrics, and that’s spelled T-E-I-K-A-metrics, so flowster—I didn’t like really see that one?
- You did, and you actually got our name, right. I know we were talking about before, like “Jason, 70% chance I still mess it up,” but you nailed it.
[23:55] I used to call it Tikka metrics for years. That’s the backstory on that little inside joke.
- Everybody does. But you know what? A) for everybody does care “teika” means market price in Japanese. So it’s market price metrics. One quick thing on that is Alistair MacLean, former CEO, was one of the first third party sellers on Amazon back in 2003. And he was so cliché, went to Harvard, ran track at Harvard, was at a track meet in Tokyo. Realized that the coaches of the Japanese teams were taking BMI, body mass index measurements before and after a race. He’s like, “If somebody is that calculated with how they treat their body, why don’t we apply that method to that methodology and those processes to business,” which is Teikametrics.
[24:44] So again, to get registered, go to flowster.app/teikametrics. The event will be held on February the 11th. If you’re listening to this after February the 11th, there’ll be a recording at that same URL, so you will not miss out on the learning opportunities. And Jason is going to do a deep dive on how to use this very powerful software to get the kinds of results that we talked about early in this episode.
So before we wrap up today, Jason, anything else that we should have talked about that isn’t really super software specific that you want to add before we wrap up the episode?
- Yes, I think what’s really important is that every company is obviously in different stages of life, different funding, every product is different in terms of their goals, etc. I think one of the things that’s really important for us as a company to be able to deliver the value is understanding what our client of ours goals, what are your goals? Not always at a company level, but each individual product. like what are you trying to achieve? And what levers do you have to pull to be able to drive those changes? So that’s how you scale profitably is knowing that.
So I know that what separates companies that really make it, Trent, and ones that don’t is, do you want to share the metrics? And what do you say, do you have SLPS, do you have repeatable, scalable processes that you know this is how you run the play? It’s so incredibly important, that’s why I was so excited to speak with you because that’s literally how you built the business. And I’m very fond of that because it’s boring and true, if you just do it right.
[26:46] And thank you for reminding me because I would have been remiss if I neglect or forgot to mention this. So we, in conjunction with Teikametrics, we here at Flowster have developed a number, I think there’s 6 or 8, 7, 8, 9 premade standard operating procedures for using their software to get the most out of it. And if you’d like to check these out, they are actually a part of our Amazon Seller Playbook. And you can get it free, that’s basically a body, a large collection of standard operating procedures for a brand that wants to operate their own Amazon Seller Central account. And you can check that out by just going to flowster.app/ASP, short for Amazon Seller Playbook and you can get yourself a free 30 day trial. And you’ll be able to check out those Teikametrics—see I almost said it there—Teikametrics Standard Operating Procedures.
So even if you can’t make the live stream, I would strongly encourage if you are someone that is running your own Amazon Seller Central account and you want to scale and you want to make it easier to delegate work to your team or maybe even use virtual assistants to delegate to which can be obviously a very cost effective strategy, make sure you check out the Amazon Seller Playbook as well.
All right, Jason, thank you so much for making some time. This is like my third podcast I’ve recorded today, so my voice is officially shut. I appreciate you being on the show.
- Yes, well, thank you for what you do. I love it. It’s certainly changing lives. So I appreciate it, Trent. Thanks.
[28:23] All right, guys, so that’s it for this episode. If you enjoyed the episode, and you haven’t already done so, I would really give you a tip of the hat if you would take a moment and like, rate, and review the show on your favorite podcast listening app. It does have a huge impact on the show because it tweaks the algorithm and gets the show more exposure to more listeners. And again, I can’t thank you enough. If you would take a moment to do that.
To get to the show notes for today’s episode, go to bright ideas.co/351. And we’ll see you in the next episode soon. Take care. Bye Bye.