Can both luxury and mass-market beauty brands be successful on Amazon? A market that is usually a race to the bottom?
In our free webinar, Megan MacDonald, Tinuiti’s Senior Marketplace Channel Analyst, explained what it takes for beauty brands to thrive in an environment like Amazon.
The Amazon Challenge
Calling the Amazon marketplace “competitive” is an understatement. According to research, health and beauty will be Amazon’s third fastest-growing category this year, which will represent nearly half of all online health and beauty commerce.
All that attention translates into some pretty unique industry challenges, like higher than average CPC (cost per click) and ACOS (advertising cost of sale) rates. This is because there are a large number of new brands coming into the industry that are fighting for the same limited amount of search terms.
However, this doesn’t mean that brands shouldn’t advertise. On the contrary! According to Megan, brands should actually be investing in all possible brand types that Amazon offers, both within the self-serve PPC and the managed DSP ads.
Remember when I mentioned brands fighting for the same keywords? That strata also exists for mass-market versus luxury beauty brands–brands that would ordinarily have different target customers.
Users on Amazon’s platform are primarily price-motivated, which makes it more difficult for luxury beauty brands to complete–especially when they’re listed side-by-side with much cheaper mass-produced items.
So how can your beauty brand stand out from the throng? How can you grow despite the cutthroat competition?
Just follow Megan’s advice! Starting with:
1. Invest in all ad types
Don’t just settle for one type of ad when planning out your campaigns. If you want your brand to have maximum coverage, you need to invest in all ad types that Amazon makes available for you. This will increase your coverage along all stages of the buying funnel.
You should pay particular attention to DSP ads. Fewer brands are investing into DSP because of the higher price and the need for an ad rep, so there is less competition in this space for new brands who are just launching their products.
2. Prioritize must-win keywords
Create separate lists of keywords that you consider to be “must-win.” These lists are divided by whether or not they are branded or non-branded.
Non-branded keywords are more competitive because more people are searching for them, and because people using these terms are looking for a brand they might not yet be loyal to, and so would be easier to sway. As a result, non-branded keywords will have a higher CPC and ACOS.
Branded keywords, on the other hand, are narrower but with a higher purchase intent since they are searching for you specifically.
Must-win keywords should always have a higher bid budget than other keyword lists.
3. Defensive advertising
Defensive advertising is an excellent way to protect your mass beauty product listings from getting usurped by other brands. Certain types of ads are better for this than others.
For example, Sponsored brand ads have a 50-character limit that you can use to tell more of a story and be more visible. Defensive PDAs also use more ad copy and benefit you in the same manner.
Defensive advertising should be one of your campaign priorities. Only start targeting competitors after you’ve successfully defended yours.
4. Target competitors
You can steal market share from your competitors by targeting a competitor’s branded keywords. Product Display Ads (PDAs) are the best ad type for this tactic. You can target competing products that have a lower star rating with a higher price point as an extra competitive advantage. If the customer sees that product side by side with yours, there is a greater chance they will click on your ad instead.
You can also use Display Ad Re-targeting to capture customers who have recently viewed your competitor’s product. This will encourage them to consider more options (i.e. your product) and hopefully sway the decision in your favor.
Keep in mind that targeting competitors in this manner is expensive and will result in a higher ACOS (70 – 120% more) and is ideally suited for mass beauty products.
These aren’t the only insights that Megan shared. She also shared other insights drawn from a successful campaign she managed with Tinuiti.
Watch the full webinar to learn more.
Beauty Brand Amazon Success Story: Guthy Renker
Guthy-Renker is one of the world’s largest and most respected direct marketing companies.
Co-Founders and Co-Chairmen Bill Guthy and Greg Renker founded the company in 1988, and since the brand has discovered and developed dozens of high-quality consumer products in the beauty, skincare, entertainment and wellness categories including the world’s best-selling acne treatment, “Proactiv Solution“.
Guthy-Renker joined Tinuiti (formerly CPC Strategy) at AdDiego to discuss the top emerging trends for beauty brands on the Amazon Marketplace, as well as actionable strategies to capitalize on a busy holiday season.
“We wanted to partner today for this presentation because we believe it’s always more actionable and insightful when you not only speak to the emerging trends but present a live case study of a brand (like Guthy-Renker) who is currently working through these opportunities and challenges.”
– Courtney Manual, Marketing Manager at Guthy-Renker
Didn’t get a chance to attend the presentation? We’ve got a full recap here.
Beauty Brand Amazon Success Story: Laura Geller
Laura Geller has developed and marketed dozens of high-quality, luxury makeup products that are found in major beauty retail stores worldwide, and now directly to consumers via Amazon.
We originally looked at the opportunity to sell on Amazon Luxury Beauty for brand gating because we knew there was demand there and we also wanted to use brand gating to remove unauthorized sellers and control our own brand experience.
Pamela Hemzi, VP of Ecommerce and Digital at Laura Geller
In 2017, Hemzi launched Laura Geller’s luxury beauty operation on Amazon because there were already sales being made by third-party sellers using Laura Geller’s name.
“Amazon UK actually approached our brand in 2016 and said, ‘Do you know that Laura Geller products are making an X amount of dollars on Amazon UK?’ Of course, I wasn’t aware of other distributors making that many sales off of our products on Amazon at the time. So our team did their due diligence and decided that we wanted to launch on Amazon UK in January 2017 first.”
Hemzi notes that after seeing rapid success on Amazon UK, they decided to expand to meet shopper demand in the North American market.
Of course, breaking into any beauty market on Amazon is no easy task. Hemzi knew that to cut through the noise and show up for top placements for important search terms, Laura Geller would need to implement a sponsored ads strategy.
“After we launched on Amazon UK, we launched on Amazon US six months later. It was led by one person, self-taught, spending about $3,000 on AMS over a seven-month period.”
If you want to learn more about Laura Geller’s launch on Amazon, check out our full interview here.