020: Abe Chomali's Blueprint for Navigating the Evolution of eCommerce Advertising and Mastering Amazon's Landscape

Speaker 1: 0:00

Welcome everyone to the brand fortress HQ podcast. I'm your host, john Stogen. Today I'm excited to have Abe Chimale, the founder of XP strategies, with us. Abe knows advertising. He's been working in advertising and selling products online and, quite frankly, before online even existed, for over 30 years, with Amazon, walmart, his own website and really helping other people drive billions of dollars in sales through his company, xp strategies. Uh, and really what they do is they're a proud Amazon verified partner. Um, that really helps loving clients grow. So with that, abe, thank you for being on the podcast and welcome.

Speaker 2: 0:36

Hey, john, thanks for having me. I uh, I love that introduction. I should have you for all the places I go. Warm me up.

Speaker 1: 0:45

Absolutely so. I know that you know you've been in the space for a long time. We've chatted a little bit before we hit record and in previous um kind of meetings and that type of stuff. Uh, for folks that maybe aren't familiar with you, um can give a little bit of your backgrounds and how you got into Um really just selling in general and then into specifically selling online and on Amazon sure.

Speaker 2: 1:08

So Whenever I do the about me thing, I always hesitate and I'm not sure how far back to go. Um, for those of you who see the video, I do have a white beard which sort of gives a little bit of it away. But um. So I started selling in 1991 and yes, 1991, which is over 30 years ago. At this point, we I originally started selling things with actual old school mail order. We would advertise products in the back of magazines. We'd have like a list of products and a phone number across the top Call us and we'll send a thing to you wherever you're at. We'd have phones and handwritten notepads and we would take the orders and process them and ship them all over the country. Um, we did that for a bunch of years until, of course, the internet came out. Once the internet came out, we started selling in the way we saw the trends going. We started out in 1999 with yahoo stores, which was the first real place to sell. Yahoo stores developed into our own website and were driven by google advertising and driven by price comparison websites, and About 10 years later, things shifted to ebay and then to amazon. Since 2008 or nine, I was selling on amazon. We drove an enormous amount of business. Um, I ended up exiting my company in 2018 and starting the agency. And? Um, it was an opportunity for me to focus on the part of running a business that I like best always when I ran my businesses my two areas of expertise and focus was the marketing, the advertising and customer service. I hated customer service. It ate my soul, it gave me all sorts of health problems, even though I was good at it, and the ability to Focus on the part that I liked, where I take an action and it turns into sales and results. That that was very nice. So, 2018, I focused full time on the agency end of things and helping sellers. I had always done it informally, but I realized that there was an interesting opportunity to do it in an organized way. I turned it into an agency where I work with brands to help them grow, and we've been doing it for about six years now, if my math is right.

Speaker 1: 3:32

Very nice Yep.

Speaker 2: 3:33

Yes, so we work with a good amount of sellers. We work with all sizes of sellers, and one of the things I love the most is really Strategizing different situations that come up, strategizing for Shifts in the marketplace, for shifts in tools, for shifts in the way things work, and making adjustments that keep the wheels turning.

Speaker 1: 3:55

So, yeah, it's definitely a thing I love doing up until now so and I'm glad you brought up that, talking about shifts, because I think this is one of the things that Um is so valuable and I'm curious what that journeys look like for you in the sense of you talk about you know, starting out in 1991 and when it was. You know catalogs and phone numbers. Then we've got the internets and then you know ebay to amazon and through that transition, I feel like um, you know, every Couple of months on amazon, you, there's something new that comes out and everybody feels like, hey, this is the new thing and it's changing everything. Um, I'm curious, from your perspective, are there anything, anything that you can remember as far as what pushed you towards that kind of new thing and balancing out, hey, developing your business where it's at, versus, you know, that new shiny object that became amazon and this, you know, big opportunity.

Speaker 2: 4:51

So it's funny because my answer is going to be never. Um, my, my, my, uh. My theory or my World view when it comes to advertising is um has two layers to it. Number one is Um, keep doing the fundamental things effectively, like, really, really effectively. Cross your eyes, dot your t's. Vice versa, make sure you're doing all the foundational things that bring traffic to your product page. The other thing is, there will always be new things being introduced to the mix and they will always be promoted as a game changer. 97% of the time they are not game changers. Much of the time, day one a new feature is a mess. And when I'm working with someone else's money, um, unless the person says, hey, we've dedicated a piece of our budget to experiments. Most people are careful about their profits and margins, and when we want to spend ad dollars effectively, I generally prefer to wait At least a little bit of time until there's more information on how a thing is working. So when a new ad type comes out, I'll be aware of it. I will experiment with those few people that Are happy to experiment, but I won't immediately dive in and be on the bandwagon that this is the thing that changes the world.

Speaker 1: 6:21

Yeah, and I think that's a good approach. I mean, right now I can just think of two examples of that. You know, amazon sponsored tv, which just rolled out and is fairly new, and, and I think what's interesting about that is is there's, you know, large brands that have large spend, seem like they're seeing, you know, some good results out of that, but depending on where you're at and how big your brand is, it may or may not be a good fit for you. Um, and then the other one that'd be curious to get your thoughts on is, um, geotargeting with sponsored display that amazon just unlocked.

Speaker 2: 6:53

So geotargeting is super interesting. For those who don't understand what geotargeting and sponsored display is, um, one of amazon's ad types is sponsored display. It typically doesn't work the way keywords work. You pick your audiences and you pick some other features and amazon will show an ad to a group of people, as opposed to showing an ad to somebody doing a specific kind of search. So regular ads. We search for, you know, clean X napkins, or we'll search for a garlic peeler, or it'll be a search based result that gets shown. Sponsored display shows to an audience. So people who Are kitchen owners or who amazon knows cook a lot, or people who have just moved is a big one, so they typically show to audiences. Now, when you're showing to audiences, you want your audience to be as tight as possible. So amazon uh, like you were saying, amazon has introduced geotargeting which allows us to run ads to states or regions or zip codes if we want to. Now it definitely seems interesting. It definitely seems like it has a lot of potential, but it's also something which has to be implemented thoughtfully. So we're still figuring out the best use cases. Some are super obvious. So, for example, if people are selling flip-flops in the winter, there is still a number of people buying flip-flops every single month of the year. But we will try to be intelligent and look for the states of the united states which are in warmer places. Florida is more likely to sell flip-flops or bathing suits than minnesota, so we'll try to be thoughtful about that. Some clients have already a lot of data about states that sell better. So I have some clients who are very strong with product registrations. They sell products which have actual, real warranties and because of that they do need the buyers to register their products and they get addresses so they can analyze that data and they'll actually tell me, abe, just so you know the rust belt, which is, you know, a certain group of states that fit in, that we actually have a significant percentage of buyers there, more than their populations would suggest. You know, if a certain state is 4% of America's population, but 10% of their sales go to that state, for some reason they are outperforming other states. So they came to me and they said, hey, we've got these nine states that we actually seem to do really well in. Let's target those additionally with this type of ad and we'll implement ads to try and lean on that. So it's interesting. It's also the thoughtfulness and the thinking and the ideas definitely require some creativity to put into play.

Speaker 1: 9:49

Yeah, and that makes a lot of sense For listeners who are interested in that. We did talk with Eddie Wheeler about geo targeting actually even before this piece from sponsor display came out, and there is a lot of interesting things there. But, like you said, I think it has to be the right use case. So in that particular case, we were also talking about kind of what you were mentioning, which is, hey, if you have a state that's maybe outperforming or should be performing better, looking at how you're ranking in that specific area. Because you know, I think for a lot of people they think that you know, if you use a tool like helium 10, which is a great tool you see a rank and you're like, okay, well, it says that ranked number seventh. Well, that doesn't necessarily mean that you are ranked number seven in California and New York. Those ranks could be completely different based on availability of your inventory, how well it converts and a number of other factors that Amazon sometimes shows us what those are and sometimes they don't. So that's the other piece that I think makes this geo targeting really interesting is that kind of adds another layer to potential strategies for Amazon.

Speaker 2: 10:58

Yeah, it's definitely true. It's definitely there's a lot to consider. So when you talk about inventory levels, it's funny because I actually don't like to advertise based on inventory levels. Inventory levels to me suggest a functional issue to address, not an advertising thing. So when somebody's inventory is heavy in New York and low in Ohio, it means they're not sending in enough inventory. It's not that we should lean on New York, so I would prefer to see that they're working towards fully optimizing their inventory across Amazon's distribution network as opposed to leaning into a situation which is likely temporary as they spread their inventory over time.

Speaker 1: 11:42

So that's actually a good question. Do you have any recommendations for brands that might see themselves in that situation where they're like hey, you know, I'm FBA, I have what I think is a good amount of inventory, but I see that a big bulk of it is either on the East Coast or West Coast. But I have sales in, like you said, ohio, somewhere in the Midwest, but Amazon's just not putting a lot of inventory in that particular distribution center.

Speaker 2: 12:13

It's messy. There isn't a real way to force Amazon to hold inventory in a spot, but what we generally see is Amazon knows how much product you sell and your inventory health will be factored on your inventory levels and if inventory is not enough for everywhere, they will tighten it up with the spots that do sell more. So New York will have more than Ohio, for example. The key is just to be sending in more goods and to have you know to keep steering the system towards knowing that you have strong inventory positions both in your warehouses and that Amazon and it should even out over time.

Speaker 1: 12:55

Yeah, and what would you say or what would you recommend as far as if you have one kind of rule, a thumb for what is quote unquote, enough inventory, because I know, you know, obviously brands would love to run with just a couple weeks of inventory. When you start looking at, you know cash flow cycles and that type of stuff, but at the same time, the reality of it is that your product can show as in stock but if it's not going to deliver for five to seven days, it can take your conversion rate because Amazon shoppers the expectation there is that they want to get that product in one or two days.

Speaker 2: 13:30

So the Amazon is changing something and I don't know if this has come up before, but starting in a few weeks, amazon is going to start charging low inventory fees and which Amazon requires you to have, I think, either 28 or 30 days worth of inventory for every parent ASIN, and they evaluated based on last 30 day sales and last 90 day sales. So if you don't have that much inventory, they start tacking a fee onto every single unit sold. They want to force and steer you towards having adequate inventory levels. Keeping that in mind, my recommendation is 45 days of inventory minimum. Once you get to 45, that is your alert to send in more goods so that you have two weeks before it hits that 30 day level With the amount of inventory you're sending in should be 60 days worth and then you'll be. Essentially, until it gets checked in and until it goes in, inventory will be at anywhere from 65 days or so you know. Once current inventory gets added to the 60 days you sent in, you'll be a little bit over 60 at some point. 70 days of inventory. It rolls back down to 45 and then you replenish and that's your generally sweet spot of inventory management. Okay.

Speaker 1: 14:53

Yeah, and I think that's really important. Really, the takeaway I want people to take from that is that the impact that it has on your conversion rate, because I think that that gets lost in this conversation of if you don't have enough inventory, if you're shorting Amazon and inventory, like I said. You know I think everybody's seen it where they have a product that they're interested in buying it, but if they can't get into five to seven days and there's a competitor they can get it to them tomorrow, they're going to buy that competitor's product.

Speaker 2: 15:21

Not only will they buy that competitor's product, amazon knows this, and Amazon is going to display that product better, organically. So it ties in in both ways.

Speaker 1: 15:31

Yeah, yeah. And I think there's just so many good things that come out of having healthy inventory and a lot of struggles that come out of not having healthy inventory, because I mean especially I mean if you run out of inventory, that's. The other thing too is I've definitely seen Amazon put ads right above your listings and say, hey, we don't know when this is going to be back in stock. But here's your competitor. You should go buy a product from there.

Speaker 2: 15:51

right at the top of your listing, oh yeah, it's listen, Amazon wants to make a sale where, whatever point the shopper is that in their purchasing journey, where whatever page they happen to be on, Amazon wants to turn that into a sale and a transaction. And they will do it in ways that make you uncomfortable but in the end, if you understand their goal, you sort of can't blame them for that. It's on you.

Speaker 1: 16:18

Yeah, 100% and understanding you know what's required to play in that sandbox and you know having a. You know having a good inventory management system and having those logistics ironed out is just a part of winning at that game Exactly. It's funny people talk about good management systems.

Speaker 2: 16:38

But back when I was selling, inventory management used to be as simple as pulling a sheet every Monday morning to see which SKUs were running low and then handing those over to the shipping department to replenish. Simple as that, Monday morning was Monday morning was review. We've got four more days during the week to get all that inventory out. Rinse and repeat next Monday. Yeah Well, I think that's. You know, sometimes we make things a little bit more complicated than they need to be.

Speaker 1: 17:07

And you know, in the case of Amazon, yeah, it can be a little bit difficult to hit exactly 45 days, but usually you have a pretty good idea of what your sell through is how long it takes you to get that product manufactured and shipped and all that type of stuff. And then you know, build in some buffer because things are going to happen and if you do that 80 to 90% of the time you'll probably be okay.

Speaker 2: 17:34

Yeah, it's interesting because Amazon, more and more, is requiring sellers to run their business like a business. And what do I mean by that? Obviously, every business has a business. What do I mean by that? Obviously, everybody is incorporated or whatever. But what I mean is that when you're in business like really in business you inventory is a part of what you take care of. Inventory levels, ordering, replenishment, all of that is a real functional part of the business, whereas somebody who comes to Amazon may be with an idea of let's try it out, or, oh, I'll sell things that I can get easily or things that I have in my garage. When you have that mindset, you don't have the systems in place for replenishment, you don't have the systems in place for inventory management, and that used to be okay. More and more, it is table stakes that you have to have all your ducks in a row.

Speaker 1: 18:33

Yeah, absolutely Well, and kind of, you know, transitioning off of that. So when we look at ads specifically, you know, I feel like that a very similar transition is happening, where it used to be that you could just have, you know, pretty basic campaign set up with sponsor product ads and running auto campaigns in order to sell your product, and now advertising is getting a lot more complicated. We talked about a little bit with just you know, kind of the geo targeting. But I also want to come back to you know something that you were talking about as far as before we hit record, as far as the context of what keywords you know you target and how you think about that from the customer's perspective. Can you share a little bit of that concept and you know your thoughts on that?

Speaker 2: 19:18

Sure. So there's a concept that has come out it's not really that revolutionary but it is sort of eyeopening to think about which is understanding what the shopper thinks. Of course, it's a very basic concept to think like the shopper does, but the way that I'm framing it here is there are two ways that shoppers look for things. In one situation, they are looking for a specific product, a specific brand of product, a specific product, a specific size and color. So they might be looking for you know, I'm a very big like Diet Coke drinker they might come to Amazon and say I want a Diet Coke, 12 ounce can, 24 pack. They type it in that is the thing they want and in a situation like that, the shopper is looking for the thing and the responsibility of people selling Diet Coke is to make sure that that interest turns into a sale. The responsibility is to prevent any different product from stealing the sale away from you. Simple, it's a thing where you're trying to fit your product to what the shopper is looking for, defensively. The other way that people search is when they are unsure of the exact product but generally know the kind of thing they want. So in this case of Diet Coke, somebody might come to Amazon and say I'm looking for Diet Cola. They haven't chosen a brand, it's not clear what size they want, it's not clear how much they want to purchase, but they're looking for diet soda. In that case, we are trying to do a different thing with marketing. We are trying to convince the shopper to purchase our thing instead of similar options. You are not the thing that matches exactly. You are one of a few things that might match exactly. You need to tailor your advertising to push out the competition in a different way. Knowing that those are two different types of intent leads us to advertising which is split. One is brand defense, one is capturing the intent, the other one is acquiring shoppers who might not know about you already. Each type of advertising has a whole bunch of details attached to them, but they need to be treated differently. So with brand defense, you might be okay with spending a lot per click, knowing that your conversion rate will be high. You might spend $5 a click, but know that one out of every two clicks is going to turn into a sale. With other types of ads, even if you spend 40 cents a click, it might take 20 clicks to make a sale. You can't spend the same four or $5 a click. So if we adjust our strategies to understand what we're trying to accomplish, that leads to looking at the results differently for each type. It leads to managing our budgets differently for each type. It leads to defining success differently for our brand and so I definitely, from my own perspective, understand and agree with that.

Speaker 1: 22:26

I was curious so I have heard this from brands from time to time, not too often anymore is why should I spend a bunch of money on my branded terms? If somebody's coming again, if they're coming to look for Diet Coke, then they're going to find my product should be high on the organic search results, and isn't that good enough?

Speaker 2: 22:50

The short answer is simply no. It's not good enough because Amazon will display many advertisements to the shopper before they get to any organic result and any shopper who is 95% committed to you, 85% committed to you, 70% committed to you, is open for being stolen away. The shopper that's 100% committed will stroll and search for the thing that is you. Anybody who's not fully committed is open to being taken away. The way to show it and I have this conversation more than a few times every month in which a brand coming to me will say I'm not sure why our brand is not doing as well as we used to in the past. I'm not sure why we're not getting traction on Amazon. And the first thing I'll do is I'll search for the brand, I'll open up a shared tab on our screen and zoom and I'll say let's look for your brand. And as soon as I do the search for the brand this just happened yesterday as soon as you do the search for the brand, the entire page does not have their product. On the page, the banner across the top is a competitor. The first four items out of five are competitor products. They're not spending a dollar on branded. So when I show it to them and I say this is what a person sees first on their screen to make a purchase, when we know statistics show that two thirds of sales happen with the things shown on the first row of products. So if we know that two thirds of the sales happen, how can you expect anything else besides sales going to some of these other people? All of them and we looked at the competitors all of them were knockoffs of the main brand. All of them were good enough and all of them were selling the product for less because they're competitors of a main brand. So when the first thing you see is four or five or seven acceptable alternatives and you have to hunt for the actual product, you're going to lose sales. Of course you have your brand loyalists, and that should still be much of your sales. But all of the traffic of people with the intent to buy your product you're not getting all of that traffic turning into shoppers of yours.

Speaker 1: 25:14

Yeah and I think that's an important point to bring home is that when people think about brand defense, they're like, well, those are all sales I would have gotten anyway. But the reality of it is is there's a range where people might be 50% loyal, they might be 65% loyal, they might be 90% loyal. But especially if you have a competitor where they have a very similar product that and, being quite frank, the overseas competitors that have really ramped up the last couple of years I can almost guarantee that every product out there in every brand, has an overseas equivalent that's willing to sell that product for less. Now, whether that product is good or has other compromises a whole other discussion. But for a portion of your customers that may have been loyal to your brand, they're willing to buy that product for 20% less and have that gamble, especially on Amazon, where they know if they don't like it, they just return it within 30 days.

Speaker 2: 26:08

Yeah, I mean the idea is simple and it becomes very clear visually. And I point out one other thing. You know I use this Diet Coke example all the time because it's the. You know I drink Diet Coke all day and there's inevitably a can right in front of me to lift up in front of the camera. But I say listen, if you search for Diet Coke, if you search for Oreos, if you search for any major CPG product from the supermarket, you will see that these brands are paying for ads to fill the top of the page. And I can tell you now 0% of shoppers are going to buy a different brand if they're type typing Diet Coke. They're not buying Arsicolo, they're not buying Pepsi. It's like poison to their taste buds. But Coca Cola is still paying for the ads on top of the page. Why? Coca Cola knows brand reinforcement is vital to long term business. These people don't waste money. They have a finely tuned machine with profit and loss departments that have absolutely evaluated the prices of those clicks against sales. They're not interested in wasting money anywhere and if they are spending the money to fill the top of the page, you're not smarter than them. Make sure you're, make sure you're present.

Speaker 1: 27:21

Yeah Well, and I mean the other thing that comes to my mind too, is that you can talk about Diet Coke. That has, I mean, I don't know how long Diet Coke has been around it's been at least three or four decades at this point but I mean they've spent you know decades building up that brand loyalty and knowing what that brand is. Whether you like it or not, you know what Diet Coke is, and the reality is is that you know a lot of the brands on Amazon. If you're not that big player, you probably don't have a super recognizable brand name, and so you probably need to be even more aggressive about defending your brand than you know a company that has a product like Diet Coke. That's just everywhere.

Speaker 2: 28:02

Right, it's as simple as that. But the other thing to realize is, although you do have to invest to be there, because almost all of the people that click on it will end up buying, your overall cost is not going to. It shouldn't be that high. It shouldn't be that expensive to hold those clients, those shoppers, to you. So don't worry too much about what it's going to cost you.

Speaker 1: 28:30

And that back to what you were talking about, because your conversion rate should be really high, in the sense of you know, if your conversion rate for your branded terms are the same as your conversion rate for your non branded terms, there's probably something wrong.

Speaker 2: 28:44

Yeah, or something very right, because everybody is buying your non branded terms.

Speaker 1: 28:48

That's true, yes.

Speaker 2: 28:49

But one way or another, it's definitely an anomaly and there should be a large difference in conversion rates between branded and non branded, and that brings down costs, simple as that.

Speaker 1: 29:02

So, for those branded, to get a little bit more tactical, what does your favorite approach look like for that? Is it sponsored products? Is it the you know sponsor brands to have? So you have some imagery to go and creative to go behind. It is a combination. How do you think about being effective with branded terms?

Speaker 2: 29:24

So my goal is simple remove the possibility of somebody buying a different product. Simple as that. And the way we do that is with clean messaging across the top of the page. We like a sponsored brand ad across the top which is going to have a nice image, reinforcing people being happy with their choice of your brand. Then we want to fill that up with sponsored product ads giving them possibly a few related choices. We want that really to be the clean thing they see across the top of the page. Ideally it's going to be further reinforced by the top full row being that on brand line of products. So the shopper, the first thing they see when they do the search is going to be all of your product and then, even as they start to roll down the page, it's still going to be the product that they see. It should be really as simple and straightforward as that. It doesn't. You know, I was saying earlier that we try to do the foundational things and we try not to be too complicated. Keep that message clean, keep it in front of the shopper.

Speaker 1: 30:31

Yeah, and I think you know a couple of things that come into my mind there. The first is that, for those sponsored product ads, it's amazing how many people that I talk to who are not Amazon sellers and not, you know, in Amazon marketing every day, that quite frankly have no idea that those are ads. There's a tiny little sponsored box down there and the vast majority of them never see it. So as far as they're concerned, you know, you know, with those sponsored product ad placements, they think that that's just the organic placement of that product.

Speaker 2: 31:00

They don't know that Amazon ads exist and they are surprised that there is such a thing. I can tell you. As we go throughout my life I meet people that say hey, what do you do? I say I manage Amazon advertising. They and I have to explain the concept. I have to explain that things are sold by people besides Amazon and brands will pay to be in a good visual spot and I help manage that. And all of a sudden they're looking at their Amazon app like differently. They never realized they have a prime account, they've spent enormous amounts, they buy everything on Amazon. They don't realize that lots of the things they purchase are sponsored product ads.

Speaker 1: 31:43

Yeah, I was gonna say it, just it still blows me away when I talk to somebody and we start talking about, you know, selling on Amazon and Amazon ads, that the your average person has no idea that those are ads and I think you know, for people that are looking at that every day, selling Amazon or market on Amazon, we forget what it looks like. Back to what you were talking about earlier what does it look like from the customer's perspective?

Speaker 2: 32:11

Yeah, 100%. The customer doesn't know they're looking for a thing. They're. They're expecting that the first things shown to them are Amazon's best options that Amazon has decided on already and they don't have any idea that somebody else could be there. And if something else is there, they think the shopper thinks that Amazon has decided that that's a good option for them to purchase after the search. We have to understand that and we have to adjust our marketing within that space. Listen, there are so many examples throughout our regular life of marketing and reinforced marketing. There are people who go to their supermarket every single week of the year, 52 times. They go to the supermarket and even a few times for events and when things run low, that supermarket is still printing flyers. That supermarket is still doing things to keep the supermarket in front of the shopper's brain. People have to reinforce their brands in front of shoppers.

Speaker 1: 33:17

Well, and that goes back to what you were saying earlier which is those, you know, those brands that have staying power. They're investing, you know, whether it be in the supermarket or on Amazon. They're investing in being in those shoppers or in those flyers, because they know it's not enough to just have your product on the shelf and it's not enough to just be in that flyer once a year or, you know, two or three times. Then be done, Like it really comes down to having staying power, because it's not going to be, you know, the first, second or third time that somebody sees it. It's probably going to be the fix. You know fifth, sixth, seventh, maybe eighth time that somebody sees that ad and sees your product before they go, oh yeah, now I need that. And here's the product that I know is going to solve my problem.

Speaker 2: 33:58

Yeah, there is a saying I don't know how much data is behind it, but there is a saying that the shopper has to see us think seven times before they're ready to make the purchase, and our job as marketers is to fill the first six times as cheaply as possible. So, that's it. Fill the get that awareness as inexpensively as possible during the first six times. So when they're ready to buy, they are buying.

Speaker 1: 34:25

Yeah, and I like that, Because the other thing is is that and this is just my opinion you might feel differently is I feel like up until a couple of years ago, we were really spoiled when it came to Amazon ads. As far as you know, if you had a halfway decent product and a sponsored product ad targeted at a keyword that was in the ballpark of what customers were interested in, you know, your cost per click was low enough to where you could get away with just kind of having okay strategy when it came in okay campaigns when it came to ads.

Speaker 2: 34:57

Yeah, I mean years ago, the alternative to okay strategy was no strategy, so that was what we were up against with our okay strategies. Now it's so much more sophisticated that okay strategy is. It's still better than zero strategy. But there is a lot of people with good strategy that you have to that you're going to be up against. There are a lot of people with big marketing budgets that we're going to be up against. There are a lot of people who have more money than brains who we are up against, and they are all. We might be annoyed. We might call them people who have more money than brains, but their money is being accepted and spent. You know we're recording this right after the Super Bowl and you know I'm not. I'm not sure what the lifetime is of either the this episode or of the Super Bowl commercials, but there was a whole bunch of commercials for Temu and they might not be here in two years, but they're absolutely creating awareness for their products in that time.

Speaker 1: 36:05

Yeah, and I mean they are influencing the landscape, whether we like it or not, especially, you know, I think, for products that are trying to compete on price on Amazon. You know, if I can get that same product for 20 or 30% of the price from Temu, there's a lot of people that will take that gamble.

Speaker 2: 36:24

Yeah, I guess you didn't watch the commercials because they told us how to pronounce it.

Speaker 1: 36:28

Oh, I saw one of their commercials, but I didn't.

Speaker 2: 36:34

I don't remember that portion of it. Yeah, the song is like I'm not going to sing it, but they basically say that it's Temu in the in the in the commercial. I'm still practicing how to say it right. So I learned within the last few weeks that it's pronounced Xi'en and it's pronounced Temu, which is not the way I pronounced either of those brand names. Okay, yeah, like I always call the shine and many people call the shine, but it's actually pronounced Xi'en and same thing with Temu.

Speaker 1: 37:06

Okay, I wonder, it's probably my Midwestern accent that makes it want to be a hardy.

Speaker 2: 37:11

but that's okay, it's the way we read it as Americans. But yeah, there are always people with more money than brains. There are always people with massive budgets. Temu spent 20 over $20 million on advertising and they are still negative on every transaction that they fulfill. So all they did was create a whole bunch of more money, losing sales. It wasn't a thing generated to design to create profits, and it is part of the landscape that Amazon has to deal with as a competitor. I don't know that Amazon even considers them a competitor just yet, but Amazon is definitely aware of their investments and how they need to position themselves going forward.

Speaker 1: 38:00

Yeah, it'll be interesting to see how it influences the landscape. I think probably the thing that sellers and should probably be paying a little bit more attention to you and kind of getting back to this concept you're talking about for branded terms and what customers are shopping for, what is your take on this kind of new generation and maybe it's something new, maybe it's not it's just being spun in that way of more of intent for base shopping, as far as people aren't searching for necessarily size 6 dress or size 12 shoes they're looking for hey, I'm looking for a pair of shoes because I'm going to a wedding or whatever it happens to be. That's more contextual. What are you seeing anything on that front?

Speaker 2: 38:52

I might be misunderstanding the question, but there have always been multiple ways to search for things. So one way of selling and one way of generating attention to your product is interruption marketing. So somebody is on TikTok, they're scrolling through cat videos and all of a sudden somebody shoves an ad in their face for a product. They weren't looking for a thing to buy, they were not in shopping mode and all of a sudden they're being forced to change from laughing to shopping. That's one type of advertising. If you have enough people looking at the non-shopping ads, you will get traction for the shopping ads. So that's one. It's an interruption in your shopping process. The other type of ads is, or the other type of marketing is people are looking for a thing Now. Sometimes people will look for specific products. Sometimes people will look based on situations Like you described. Somebody says I have a wedding coming up and I'm looking for a dress for it. I think at this point shoppers are still trained to translate the sentence into a search, so they're not writing a sentence Amazon, I have a wedding on Tuesday. Tell me what would be nice to wear. They're not doing that yet. They know to search for little black dress with sequence signs for, or whatever size you might be. So they already know to translate the sentence in their head or they know to translate the need into a search query. People still know how to shop that way. People are still trained to shop that way. Ai is going to steer us gradually towards those sentences, but the AI results have to be good. Amazon just changed their backend to allow for 500 characters of backend information. It used to be 250. My thinking is that by allowing sellers and allowing brands to use a longer and longer group of unrelated words or a longer and longer group of words which are situational, it's going to train the AI to be able to answer questions like what gift do I get from my girlfriend? If I forgot Valentine's Day, you'll be able to tell the AI. The AI has more information from the backend and it'll be able to give better and better answers. When you were very restricted in what you could do, you're only able to say heart, necklace, thread, sequence, 16-inch chain. You have to use the most descriptive words first to match with the shoppers who know how to use searches. When you're able to do girlfriend and late and problem and make up and apologize. Once you're able to add those words all into the backend. The AI learns better what you are situationally and it'll be able to answer those questions. I don't think the questions are being asked enough yet. It'll come with time. Amazon and Google and every place where you can shop are going to spend a lot of time telling people ask us a question, don't just type a search. The more people are told to ask questions and the more people get good answers to the questions, the more that'll happen that way.

Speaker 1: 42:20

I think that it just goes back to what you were talking about before, which is these things are starting now, but it's probably going to take a while before we really start to see those have an impact, especially when we talk about Amazon's AI. Laugh, as that accelerates. Last fall and they were really pushing Amazon. When you put up a new listing, it's going to write your title for you and it's going to write all your bullets and all this type of stuff. It will do that for you, but the quality definitely leaves a lot to be desired. I see a lot of improvement that Amazon needs to make before they're ready for even something close to chat GPT, at least on the commercial side, for what they're showing people searching for products on Amazon Right.

Speaker 2: 43:06

Yeah, exactly, there is a goal and there is an objective. We're not there yet. It's actually possible that this might end up being a generational thing. If all of America knows how to search and is trained to search based on search queries, it might take the next generation, who never knew a different way, to start asking questions. It might take telling 14-year-olds and 15-year-olds, as they start to have their own money you guys can ask questions. We already know everybody else is just going to use search queries. Yeah.

Speaker 1: 43:42

I think that's a good point too. You're talking about retraining a large portion of the American consumer, which is a huge task and happens slowly over time.

Speaker 2: 43:55

We already see that training audiences is very hard. Training people to change their behavior is very, very hard. The simple example in America is live shopping. Live shopping has not taken off here, despite enormous investments and enormous resources poured into it. It has not taken off like it has in China. Why is it take off in China? Because in China they are much newer at being consumers. If consumers in China have only had this disposable money in the last five or eight years, live shopping was shown to them right when they learned to shop. It became the thing they do here. We've been purchasing for 20 years. All of the people with money have been purchasing for long amounts of time and they're not used to live shopping. It's not taking off even despite the resources being poured into it. I do see it as being a generational thing.

Speaker 1: 44:53

I think that's a good point of hey, this is something that's coming down the probably going to happen at some point, but probably not in the near future that we can see very easily Pulling it back in to things that, based on the present and what we see right now, what is maybe one tip that you would give to brands that are in that area where they're six or seven figures, they're looking to grow? Is there a tip that you would give to them out there?

Speaker 2: 45:24

The number one tip that I have these days is dip your toe into every marketplace. What we're seeing is it used to be Amazon and everyone else. There was no second place. Now, very often we're seeing that it is possible for SKUs to take off. It's still Amazon and everyone else. But if you have a little bit of your toe, a little bit of your investment into every marketplace, they are making up more and more of the sales picture than ever before. The wild card is TikTok. One thing which is different from TikTok to every other marketing platform, every other sales platform, is that it is possible for a few dollars of marketing to give you an enormous amount of sales. What do I mean? On Amazon, you generally cannot get more than one sale for any individual click. That's it. Maybe if you have subscribed and saved, maybe if the person buys three units, but you are generally limited to one click leading to one sale. You might be. If you count in organic. One click might be worth two or three sales over time because you have the ratio of one or two of 30 to 50% of your sales being advertising versus organic. That's fine. Tiktok is the one place where a video or a piece of ad can take off and turn into one video, launches at 9 PM, right as you're going to sleep, and you wake up in the morning and four containers worth of goods have been sold just from that. It happens. Of course it's not reproducible, it's not reliable, but it is possible to happen. It's the only place where that can happen. You need to be there and you need. It's either a 2% chance or 0% chance. If you're not there, 0% chance. If you are there, 2% chance. Be where those things could happen.

Speaker 1: 47:26

Yeah, and sometimes it's better to be lucky than good, and sometimes you do get lucky and be the beneficiary that well. I appreciate all the conversations today. For folks that are interested in learning more about you, Where's a good place for them to go?

Speaker 2: 47:43

Number one place is generally on social media. I'm on LinkedIn and Facebook and Instagram all the socials. You can just look for me by my name and I show up. The other thing that you can do is, as I mentioned earlier. I do like to help brands and I love discussing advertising and marketing and I'm always interested in helping brands grow. What I do is what's called a free audit. If you want me to review your account, if you want me to review your brand, if you want to have a general discussion about where your brand could go, you can come to my website, which is XP Strategy. There are buttons for free audits. Fill that out. I'm happy to see what we can do to help you grow.

Speaker 1: 48:24

Fantastic. Well, abe, thank you so much for being on the podcast and giving a lot of insight for folks that are thinking about how to protect their brand and then also how to roll the dice on TikTok, if that platform is a good fit for them and maybe be part of that 2%.

Speaker 2: 48:40

Yeah, man, it's been a pleasure. Thank you for watching this.