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“.
Earlier this month, Guthy-Renker joined 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 below.
Guthy-Renker: Why Brands Are Increasing Ad Spend
In 2017, Amazon Q4 drove a whopping $60.5 billion in revenue (up from $43.7 billion the year prior).
But why are brands spending so much more on advertising this year vs. last year?
According to Guthy-Renker, three major factors played a role in the significant jump:
Reason 1. There’s an increasing number of sellers.
It’s common sense – the more sellers on the Marketplace, the more competition. This increase in competition means there’s an increase in the number of businesses going after the same keywords & ad space.
“Even if you didn’t expand your holiday plans and essentially ran the same deals as last year – that same ad, with the same ad grouping & ad placement cost you a lot more in 2017 than it did in 2016,” Manual said.
Reason 2. Marketplace saturation within a confined platform.
If you think of a traditional brick and mortar, there’s only a given amount of shelf space available in-store. As new products enter the market, stores will gradually retired older products and replace them with new products on their shelf.
But because Amazon is a function of the internet, hundreds of new sellers can join the site without having to kick off any older sellers. This leaves the impression that there is endless shelf space, which is theoretically true.
The problem is consumer browse behavior hasn’t changed much. So while there’s a 1,000 additional pages of products to choose from, when you search for a keyword like “anti-aging serum” the majority of shoppers still won’t search for products beyond the first page.
“In fact, almost 100% of all sales are garnered within the first 3 pages. This would be like a brick and mortar adding 50 floors of products to their current structure, without building an elevator for consumers to reach them. Nobody is going to climb up 50 flights of stairs to look at your product, when there’s a comparable product on the first floor,” Manual said.
3. Increased Marketplace-specific consumers.
There are now over 100 million Amazon Prime members. Prime Members are incredibly savvy, and they know how to compare value propositions across products at a high level. As a result, Marketers have to create robust campaigns and spend more ad dollars – just to get noticed.
“[As a test] at Guthy-Renker we ran the same deals in 2017 that we ran in 2016. The result? Performance was poorer (if not flat) compared to the newly introduced deals that we launched on the platform that year. Without a doubt, consumers expect more out of your deals, because they can comparatively shop in one click,” Manual said.
Amazon Trends for Luxe Beauty in Q4 2018
Later in the presentation, McLaughlin & Manual discussed some of the emerging trends currently shaping the Amazon Marketplace, specifically for Luxe Beauty.
Trend 1: Take Note of Increased Competition
“In the category of Beauty, Amazon saw 192% growth in Beauty (as a whole) and 57% growth in Luxury Beauty growth (YoY). Which is just incredible to think about considering Luxe Beauty started with only 24 Vendors a couple years ago.”
– Nancy-Lee McLaughlin, Marketplace Channel Manager at CPC Strategy said.
As competition on the marketplace continues to grow, CPC Strategy works with brands like Guthy-Renker to target specific groups of shoppers including:
Targeting Current Customers:
Current customers are typically searching for a specific brand name organically, so they tend to have a low ACoS.
Pro-Tip: Implementing defensive advertising campaigns (such as Headline Search Ads, now called Sponsored Brands) is a great way to defend the top of the SERP on branded search terms and keep competitors off your detail pages.
Targeting Your Competitor’s Customers:
Although your competitor’s customers are not loyal to your brand – they do show behavior that implies they are likely to purchase products that are similar to yours. For example, someone who buys Luxe Beauty products is likely to spend a higher price point than someone who purchases lower-end beauty products.
Although a competitor’s customer might initially have a higher ACoS (70-120%+) once these customers are in your funnel – you can leverage remarketing tactic to drastically lower future ACoS on their repeat purchases.
Pro-tip: To target your competitor’s customers, run Product Display ads on comparable products with a lower star rating (or a slightly higher price point). When a customer is searching for a competitor’s product if they see your ad (a 5-star product) next to a 3-star product (or more expensive product), this might encourage them to click & purchase your product instead.
Targeting Potential Customers:
These customers typically use non-branded searches (hence the higher CPCs). But there’s still a lot of opportunity to convert these customers & here’s why:
Brand creative is critical when targeting new potential customers. Implementing Enhanced Brand Content (EBC) or A+ Content on your detail pages can help to educate the consumer on the value of your product and improve the likelihood they will convert.
“Exercise everything that is in your control. That might sound like an over-simplified statement, but as an Amazon Vendor, there’s very few operational aspects that you have in your control. There are a few opportunities that go hand in hand – including Amazon Creative & AMS. Make sure you’re optimizing your detail pages not only for the A9, but to differentiate yourself from your competitors,” Manual said.
Trend 2: Leverage Full-Funnel Amazon Marketing
One big takeaway from the presentation is don’t ignore your Display Avertising options.
“We recommend you round out your bottom of the funnel and then start to think about how you can access and generate new interest via AMG,” McLaughlin said.
We call this the “Amazon Flywheel”; where everything you do across the Amazon Marketplace has an impact on your other investments.
For Example: You can’t expect to scale your ROI with advertising (Paid Media) if your product detail page isn’t optimized for conversion (Owned Media), which in turn will affect your organic search ranking and product purchases if you’re not converting customers (Earned Media) – Everything on Amazon is interconnected.
The Amazon ecosystem for ads & premium services can be pretty confusing. Not only are pre-existing offers such as Sponsored Products ads always morphing, new options are added every day.
In our recent guide, we provide an update of the latest promotional options for vendors so you can take full advantage of the ones that matter to your business.
Trend 3: Plan ASIN Exclusives for Holiday Shoppers
So how can you differentiate your products during Q4?
As seen in the example from Guthy-Renker below, creating a specific ASIN or group of ASIN variations for your holiday campaign is one way to capitalize on Q4.
However, this will require negotiating with your manufacturer, which isn’t an option for all brands.
According to McLaughlin, ramping up your holiday catalog can be as simple as adding a ribbon to your product’s packaging or establishing holiday bundles of existing products.
Items (like the products featured below) make great stocking stuffers, which can further grow your incremental sales:
Keep in mind, adding a holiday ASIN doesn’t necessarily cannibalize your Hero ASIN.
“On average, we see about a 40% growth in those holiday POs by adding in a holiday ASIN. So for your brand – that additional 40% could be worth it,” McLaughlin said.
If this seems like too much effort, there are alternative ways to participate in the holiday spirit.
You can also update your product images with new holiday features, or designate a specific holiday theme for your Amazon Store, complete with holiday banners & discounts.
Here’s a list of additional holiday opportunities to explore this Q4:
Holiday Checklist Opportunities for Brands Selling on Amazon:
- Warehouse Capabilities – Can you create a special holiday product?
- Stocking Stuffers & Giftable ASINS – Are you taking advantage of all possible incremental sales with these items?
- Leverage Advertising & Cross-Selling – Are you leveraging all opportunities in AMS, AMG, and more?
- Holiday themed Amazon – Are you using Store creative to communicate the holiday message?
- Holiday Hero Image – Have you updated product detail pages with holiday themes images / overlays?
Want to learn more about how to prepare for Q4? Email [email protected]