Podcast transcript
Introduction
Hi, and welcome to our final episode of Marketplace Masters for the year 2023 brought to you by MerchantSpring, the ultimate destination for marketplace analytics.
Paul Sonneveld
I'm your host, Paul Sonneveld and we're embarking on a journey to really unravel the intricacies and distinctions that vendors must keep in mind to orchestrate advertising campaigns on the Amazon platform.
Joining us today is a distinguished expert in the field, Cagan Aceter. Allow me to introduce him properly. So Cagan is the founder of Margad, and I hope I'm saying that correctly, a marketplace solutions agency created by former Amazonians, tailored to amplify your Amazon business to really customized strategies.
Now, Cagan boasts an impressive track record with over eight years of industry experience, including a noteworthy four years spent within the corridors of Amazon itself. And during his tenure, he served as a social ads marketing lead for four different marketplaces as well. We've seen budgets excluding 10 million dollars in countries such as Turkey, Netherlands, Sweden, and Poland. So we're absolutely honored to have you on the show today, Cagan, and welcome.
Cagan Aceter
Hi, Paul. Thank you very much for the amazing introduction. Thanks for having me today.
Paul Sonneveld
I'm glad I know it's been a busy time for many of us. So I appreciate you taking the time. We're all a little bit tired and weary. I know you're not only been driving sales for your clients, but you're also doing a lot of business expansion and you've been traveling a lot. So I appreciate you taking the time to talk to us.
Cagan Aceter
Of course. My pleasure.
Paul Sonneveld
And, you know, I love what you're saying before. About this show today is really going to focus on some of the intricacies and tactics, right?
Because the overarching banner is always, while advertising is the same platform between vendors and sellers. So what's the difference? And I cheekily sort of posted that on LinkedIn today, but, there are subtle differences, really important differences. So let's really sort of get into those. So to start off, let me just throw a question at you here. What are some of the distinctive challenges that vendors face in their Amazon advertising efforts. And how can they navigate these challenges effectively?
Cagan Aceter
I guess for me, there are like four points which are very important for vendors. The first one is you don't have the price control. So, as you know, like price is a direct effect on the conversion and Amazon is a price follower. So Amazon will define the price on the vendors. So this is one challenge and it can be also some very positive thing for some of the vendors. And the second one is the attribution window. So for sellers, it's seven days, but for vendors, it's 14 days. So it can sometimes mess up your reporting if you are working in a very fast environment.
And third one for me is the unit economics. I mean, due to the cost prices, sometimes you cannot have enough margin to advertise. Amazon is going to ask for funding from you if they are not profitable. So it is, it is very hard to balance this out for sellers it’s easier, I would say, because you will define the prices. And, the fourth one is a very hard issue, is the dormant account. That's what we called. So for example, if you have a vendor account and you didn't take care of this for a couple of years, and you get back to business and want to get things going.
But it is super hard to, get that advertising account, active. So, yeah, I would say this, these four points would be the main challenge for the vendors.
Paul Sonneveld
Yeah. Some really good, points there. Particularly around the I didn't realize the attribution window was different for vendors. And of course, the price. The pricing is something we don't think about, but it has such a massive impact on conversion. So a great shot out there. So, you know, when you work with your clients, what sort of advanced advertising tactics that specifically take to vendors, that you talk to them about, you know, things that significantly enhance their performance on Amazon, what do you put in that sort of basket?
Cagan Aceter
Yeah, for us, actually it requires a little bit technical resources, but, I would say two points are very important. Regarding it's conversion, that's heavily connected to the advertising. The first one is the prices, as I mentioned before, and the second one is the delivery promises now.
So nobody wants to wait for the product to arrive. And how it's connected to the advertising. If the delivery promises are extended, maybe like I need to explain what delivery promise is like on the product detail page, the customers are saying, then they are going to achieve that specific product off after their purchase and how it's important is like if the delivery problems got extended, if Amazon says to customers, like your product will arrive in 30 days, then nobody's going to buy this, right? But, still there will be traffic on this product. So, it is super important. And how we are leveraging this on the vendors, I would say for the price, Amazon is defining right? Amazon doing the price matching. By the way, as an extra information, Amazon does the price matching three times a day on a random hours to eliminate any kind of fraudulent issues or fraud issues.
And for the delivery promises, it can change a lot. Usually, people think that Delivery Promise doesn't change after they get inventory in stock, etc. nut the reality is, for example, you are low on inventory for vendors I'm talking about. And if you are some sort of open POs, open purchase orders, Delivery Promise can extend huge time. So Amazon is going to assume that, okay, I will run out of inventory. But I have an open PO somehow I'm going to get this products. But, I'm going to deliver these to the customers in a more extended timeline and it can extend, in a very extended timeline. So, I would say this will kill your conversion also. So we can divide this into two points such as like defensive and offensive aspects.
From defensive point of view, if you notice a price drop on your products, you might want to increase your advertising spent. So, as anticipating higher conversions, in theory, this should not affect your profit margins. Which will be like contrary to what happens in the seller model, because on the seller, you are going to eat out from, from your margin.
And, for this one, it is a rare situation, but, sometimes, Amazon is going to drop the prices, then you will boost on the spend to double down on it. And for the extended delivery promise. If you see like extended delivery promise on their own products, you need to cut down the spend, right? So, because if you drive traffic to those agents, it's not going to convert and it will create inefficiency on their Ads. So if you notice that, I mean, we usually track these via some sort of scraper tools, but, you can do this manually for your hero reasons. And if you notice this, you need to cut down the spend.
For the offensive side, we are going to do this for the competitors, or we are going to track the competitive prices, competitive like vendor races. So, if we see a price increase on the competitor, we are going to do the product targeting in a more aggressive way because we assume that after they increase the prices, their conversion going to down. And in terms of deliver promise, same, like if it's extended for the competitors, we are going to take all of their slots, advertising slots. So we are going to increase the spend on the product targeting. Yeah. I guess, that's all, that's all regarding to some tailored tactics. So it can be.
Paul Sonneveld
No, look, I think this is super interesting because really what you're saying is there are some indicators that will leading indicators as to whether your conversion for yourself is going to go up or down or that of your competitor, and therefore, knowing that that's going to happen, how do you adjust your strategy and how do you play into that? Yeah, that's very, very interesting. Certainly I hadn't thought about it that way. So, you know, thank you for sharing that with me particularly your how you contrast like offensive versus defensive. Love that.
Now, I know a lot of vendors don't really spend that much time in Vendor Central. You know, t doesn't have a good reputation despite getting a little bit of a cosmetic facelift recently. But, how should vendors strategically leverage Vendor Central to optimize their campaigns on Amazon and maybe more permanently, more pertinent, are there any often overlooked features that can be particularly beneficial?
Cagan Aceter
I'm fond of Seller Central if you are compared these two, but in terms of the functionality, I would say if you are playing on an emerging marketplace by emerging marketplace, I'm talking about like Sweden, Poland, Turkey, Netherlands, the marketing package, which are like very bad reputation amongst the major marketplaces because they don't work very well.
But if you are in an emerging marketplace, it works like miracles. So I would, really suggest to benefit from the marketing package. Sometimes for new launch marketplaces that functionality is not available on the Vendor Central. But if you are in touch with your vendor manager, you can use that easily because like he ideas coming from that, like in the new launch marketplaces. Amazon search, we're not going to work very well. So people are going to through the category page, the browse notes, and those marketing packets going to create visibility on the category page for you.
And the second point is like the new launch marketplaces, it is heavily vendor dominant. So, what you expect for like a major marketplace is I would say like maybe like 30 to 40 percent of vendor sales, but in an emerging marketplace, it can go up to 80 to 90 percent share of voice for the vendors. So they dominate the sales in the first year or like first one, two years.
And, second one would be, well, actually like the business discounts. It's pretty same with the Seller Central. It will be funded by you, but it has a huge effect to increase the like average order value and the conversion for the business customers. If your products are suitable for this, you should definitely leverage and one like small insight on this, also if you have AVS, like if you are using Amazon vendor services, you can request the industry specific breakdown of your customers.
Paul Sonneveld
So, I just want to pause you because it sounds like a really important nugget. I just want to sort of. Can you explain that a little bit more? It seems like a little nugget there.
Cagan Aceter
Sure. So, for example, if you are selling like toilet rolls and like 50% of your sales are coming from business customers. And if you have like an AVS account, you can talk with your brand specialist and request them to send the full breakdown list at the industrial level.
Which sectors from our customers are coming. So in the list, you will see that, okay, education, then you will see like, restaurants. I don't know, like those specific industries and it will give you a very, very good insight that then you can extrapolate those audiences in your D2C or like in your other areas.
Paul Sonneveld
I understand. Thank you. Were there other things you wanted to mention around Vendor Central? You're happy to throw in the next, shall I throw in the next question?
Cagan Aceter
For the positive things, I guess that's all. But for the misses, I can say like, it's missing search query performance report, which is like a very useful tool for sellers and, also, the second one would be like brand tailored promotions, which are working very well for some of our clients. But for this one, brand-tailored promotions can be a bit covered under like marketing development funds. It's a co-op term like Amazon is taking a certain percentage from you to do some marketing activities. And I was only sending those automated emails, but there is no guarantee that your brand will be covered. So yeah, I would say like those two points are missing.
Paul Sonneveld
Yeah. Spot on in terms of the search query performance report. So we've been talking advertising and there's, as soon as we talk advertising, we talk metrics. It's a very metrics-driven game. So in the context of this conversation, what key metrics should vendors really prioritize when measuring the success of their Amazon advertising campaigns? And, what is the role of analytics in sort of refining and optimizing campaign and advertising strategies?
Cagan Aceter
I guess the one most important thing is what we called is vendor ACOS. And also vendor TACOS. So, like on the Ad console, the ACOS number that you see is calculated based on the sellout. So sellout means that Amazon is selling those products to the end customers. So we need to calculate this based on the selling. So, we need to get the Ad spend divided into total PCOGS of that advertise products, this will give us the Vendor ACOS.
And if you get like total Ad Spend divided into total sales it will give us the vendor TACOS. So I would say this is the most important metric for the advertising for vendors. And I suggest to break down this on the product level. Because each product has like different margins, so it will be beneficial for our users.
Paul Sonneveld
Yeah. So can I want to ask a follow-up question on it because this I get this question a lot. I'm always. Debating with my customers. I've been the customers how to calculate TACOS and we currently do it in two different ways. But your advice here is to do Ad Spend over the value of the purchase orders. So you're talking sell in. I just wanted to make sure I understood that as opposed to you're not talking like ship COGS, you know, sell out point of view. You're talking selling right? Purchase order values?
Cagan Aceter
It will be approximately the same. So, shipped COGS can work also, but, they shouldn't take into consideration ordered product sales, OPS, what we call it, which will be like gross sales off the seller side.
Paul Sonneveld
Yeah.
Cagan Aceter
So they can take into shipped COGS or like PCOGS.
Paul Sonneveld
Yeah. Because so my only follow up question that was sent, sorry, I'm going a little bit deep, but I'm doing this out of my own agenda here. If you're using selling there, I mean selling data can be pretty lumpy, right? In terms of purchase orders placed and. So in my experience, it never makes sense to look at, like, what was the TACOS for the week on a particular product?
Because you may have had, you may be spending money because there's inventory in Amazon, but maybe there's no purchase order. So, you know, clearly it makes sense to take a look at a sort of a longer period for a particular product. I mean, what's the timeframe that you look at in terms of making sure it's representative?
Cagan Aceter
I mean, like in that sense, like using a proxy would really beneficial. So to calculate that, vendor ACOS, you can take like the average, figures for each product, then you can calculate. So, but I got your point, for example, you paid for the POs and they are not sold out, but what's the connection with the advertising, right? So, in that sense, shipped COGS would make more sense and to like understand the margin by taking the average PCOGS building makes sense to calculate the unit economics.
Paul Sonneveld
Yeah, I appreciate that. It's my experience, all different measures have slightly different benefits and drawbacks. But I guess it's about defining the one that's going to give you the best insight to make the right decisions going forward.
Cagan Aceter
Yeah.
Paul Sonneveld
Great. Okay, well, let's talk about kind of some real world examples here. Can you provide me a bit of a glimpse into, maybe some case studies or client experiences, how have you worked with them? What has been some of the learnings along the journey and any sort of nuggets or tips that some of the vendors that tuning into this, this episode can glean from you.
Cagan Aceter
Sure, sure. Actually, this may not be applicable for all the vendors, but if you're a category leader, sometimes you need to expand your own market, like, so you are the best seller in the category and you want to still boost your sales. Amazon prioritize vendor agents in external advertising, like Google shopping methods. Snapchat, TikTok, which is again, like, as I mentioned, it's not related to MDF, like market development funds.
And the thing is that you don't have any control on this. So what we need to do is, I'm talking about like for one of our clients, what we did is you need to increase the traffic, right? So you need to expand the market, for the off Amazon. So, you can use sponsored display or DSP, or you can use Amazon attribution and drive traffic from Google Ads or Meta Ads. So, if you like combine those like three, growth leverages, what we've seen is like we're, seen like a significant increase on the top line figures.
So I would suggest that if you are stuck at some point, you need to push it via those growth levels in order to extend your market. And at this point, I guess, so minimum viable go to option would be like sponsored display. If you don't have like DSP or like you don't have allocated budget. So I would say like use the sponsored display to extend your market.
Paul Sonneveld
Would you say, because before you drew the distinction between sort of emerging Amazon markets and really mature Amazon markets, is this something that is more applicable to one or the other perhaps? Or, you know, does this work the same for both?
Cagan Aceter
I'm for the emerging one. Those advances will not going to be in place. So, for example, like in emerging marketplaces, like after the Ads are launched, like as the product itself, the, sponsored Ads launch, it is not working pretty well. For example, If you're on a major marketplace, and if you are selling, let's say, like martini glasses and if you advertise on the very unrelevant keywords, Amazon will not going to give you visibility.
In the first study, it will test and after it doesn't convert, then you won’t come to get any sort of visibility.
But in the emerging marketplaces, you can infuse to every keyword possible. So and the bids are very low, so it won't work pretty well. So you can dominate the whole search for advertising on an emerging marketplace. And I don't think you need to expand the market on an emerging marketplace, so it will be a bit like, taking your point. So if, for example, the certain is launched and you need to get your base up, you need to get your reviews, get your velocity, then, like, after Amazon expands, you're going to benefit from this. So, usually that's how it works.
Paul Sonneveld
Yeah, that makes sense. Now you've worked with lots of Amazon vendors, both when your current business, but also whilst you're at Amazon. You know, and if you think about all your experiences and you look at the vendors who did really well, great success and those that didn't. You know, what did you observe in terms of traits and strategies or how to behave or how to think? What did you see? Obviously, we're most interested in the traits of successful vendors.
Cagan Aceter
Yeah.
Paul Sonneveld
How would you summarize?
Cagan Aceter
I mean, I would summarize the ones who approach the business cases with a playbook wins. So, but the ones who have no plan, they cannot win. I would say like, I observed like four main pillars. For the business cases, the first one is like the business as usual. So you need to keep the sales up or keep the sales at a certain level, right? So under that scenario, under that business case, you need to have a plan for advertising for like all over business strategy. This is one pillar.
And the second one is if you want to increase your market share, you need to have a different plan. A third one is like, it is very important. This is for the event periods. So you cannot act as you are in a like business as usual period for a Black Friday period or like or a prime day. So you need to have a tailored strategy for the event periods. And the last one Paul would be is a new selection launch. I guess if you are launching a new product, new ASIN, you need a very specific strategy, very specific budget and advertising roadmap in order to be successful for that.
Paul Sonneveld
That makes sense. So those were, I just want to make sure that I got them business as usual, increase your market share, event periods and new selection launches. Really sort of having a playbook around those. That's very interesting where we should maybe do a separate episode on that all together. I think we can probably build that out.
Cagan Aceter
Yeah.
Paul Sonneveld
We are running out of time. We'll look at the clock. So we're, I just want to sort of hold in the last one or two questions here. You know, it's a few weeks before Christmas and I'm sure some of us, particularly those in the southern hemisphere are going to disappear for a bit longer than those in the northern hemisphere working a little bit harder.
But any things that vendors can do now between now and Christmas, if there's anything, I mean, I know some of this is a long game and our sales are set and we can't do much, but on advertising, arguably we can tweak and do some things. Any final tips on actual steps that Vendors can implement like for Christmas to see some improvements in terms of ROI?
Cagan Aceter
I mean, this is the very quick fix for this, but, I would say just one thing, if they are selling high ASP products, like, with higher prices, I would say, boost their budget on the retargeting. And because that's the period that customers will going to buy those products. Yeah, but besides that, it's a very, short-term tactic.
Paul Sonneveld
Sometimes, well, there's not much time left between now and Christmas, so there you go.
*(Both laugh)*
Cagan Aceter
Yeah.
Paul Sonneveld
Awesome. Look, I think to wrap up, let me just ask you a final question, which is, how would you kind of any other sort of summary or broad statements you have this sort of one thing you want participants to sort of take away from this webinar, and apply going forward, particularly in 2024, what challenge would you leave with our audience?
Cagan Aceter
I mean, for the vendor business, I would suggest them to approach this holistically because it's not only Amazon game, it's completely dependent on the other marketplace prices like Amazon's profitability factors. So they should be aware of the potential risks and they should be tracking their key metrics. They shouldn't like approach advertising as a separate module. They should always keep in mind that everything is connected.
Paul Sonneveld
That's, I know we've spoken. It's very useful because we've been very deep into tactics and specific strategies. But thank you for just pulling us back up and make sure that we don't lose sight of the bigger picture. I think very, very important. That's great. Well, thank you so much for your time again. I really appreciate it.
Thank you for just sharing some of your knowledge and nuggets and your generosity in doing so. Now there might be people like tuning in live or watching, or listening, afterwards, and there may be interested in getting in touch with you to explore some of your services or tap into your expertise. What's the best way for people to get hold of you.
Cagan Aceter
They can reach out to me or my team members from LinkedIn. So we are very active on LinkedIn not in terms of posting or anything, but we are are online and always connecting.
*(both laugh)*
Paul Sonneveld
We're always scrolling. Yeah. Yeah Just the dms. Yeah. Okay. Excellent. Yeah, just you know again, you'll see him connected to this event. So you'll be able to text him and message him. And I think for everyone who's signed up via LinkedIn event, you'll be able to message him directly as well. So I encourage you to do that.
Great. Well, thank you, Cagan. Thank you so much for coming on the last episode of 2023. It's been a pretty big year, but it's great to finish off with such a great topic and such a great guest speaker. So thank you so much. And I look forward to doing doing another episode with you in 2024. Thank you.
Cagan Aceter
Of course. My pleasure. Thanks, Paul. See you.
Paul Sonneveld
All right, everyone. That is it for today's episode and the last episode of Marketplace Masters for 2023. Thank you for tuning in, watching or listening, and becoming more familiar with some of the specific tactics you could implement as a vendor when it comes to advertising, they're not, as you heard before, it's not necessarily the same. There are specific things you can do as a vendor.
So now if you're hungry for more insights and you want to lift your game in terms of being an Amazon vendor manager, don't forget to check out our video on demand library on our website for a treasure trove of insights, just had to merchantspring.io. And of course, if you are aiming to streamline your analytics to gain sharper insights, reach out to us on me on LinkedIn or via our website, discover how MerchantSpring can help you as an Amazon vendor, and get a better handle on your metrics and performance.
Lastly, I am all ears for what you'd like to hear next. I'm in the process of building out our Amazon vendor podcast program for 2024. So if you've got a great topic in mind, a great guest speaker, or you have a burning question, please send me a message. I'd love to get your input. Until next time. Keep thriving, keep innovating, and I look forward to catching up with you in 2024. Thanks for listening. Take care.
