In this episode of The Seller’s Edge podcast, Jonathan talks to Max Hofmann and Nadine Schopper from BidX about the advancements they have made in Amazon advertising. Together, they break down how sellers can optimize ad strategies by leveraging the right data, fine-tuning keyword choices, and understanding the intricacies of Amazon’s advertising platform. From the value of long-tail keywords to utilizing AI tools like BidX’s Leia1, Max and Nadine share actionable insights on managing ad spend, targeting effectively, and how to outsmart the competition. Read the full transcript from the episode below.
Episode 22 of The Seller’s Edge – Max, Nadine and Jonathan talk about:
- [00:00] What is BidX and how does it help FBA sellers?
- [01:16] Which dynamic bidding strategy works best
- [03:52] Services that BidX provides
- [04:22] The importance of optimizing listing content
- [08:39] Higher SERP ranking isn’t always best
- [09:46] The impact of PPC on organic ranking
- [10:12] BidX’s “Incrementality Score”
- [13:46] Examples of strong Amazon DSP campaigns
- [15:31] Leveraging audience data for broader purposes
- [16:35] Insights into International marketplaces
- [20:23] Why BidX is superior to other PPC tools
- [23:30] The AMX500 Index
- [24:42] Localizing listings is essential
- [25:25] A cutting-edge AI solution for keywords
- [27:47] Discussing the size of the keyword universe
- [30:15] The opportunities that most sellers are missing
Key Takeaways:
- Optimize Listing Content: Ensure your product listings are consistently optimized to maximize conversions from advertising efforts.
- Continuously Analyze & Iterate: Regularly evaluate and adjust your advertising strategies based on performance metrics for optimal results.
- Leverage AI Tools: Utilize AI tools like Leia1.com to enhance keyword research and streamline campaign structuring.
- Target Diverse Keywords: Incorporate both popular and long-tail keywords in your advertising strategy for improved effectiveness.
- Conduct an Account Audit: Contact BidX for a complimentary audit of your account to uncover ad waste and identify potential growth opportunities.
Full Transcript of Episode:
MAX HOFMANN: Yeah, so dynamic bidding is already quite advanced because like Amazon is offering three different dynamic bidding strategies that advertisers can choose from. It’s like up and down where Amazon is increasing and decreasing bids dynamically based on the conversion rate probability kind of. It is a fixed bid where Amazon is not changing bids in real time and it’s like down only where Amazon is unable to lower the bid in real time if it thinks that this keyword is not going to convert. And it was like a really challenging and difficult choice for the advertisers to make real time bid adjustments, which they obviously can’t. And also third party software providers do not have all the data points from a shopper that is currently visiting the Amazon website and is not able to calculate that conversion rate in level of depth that Amazon is able to. So it came up with that possibility to change the dynamic bidding strategies. And what we did is like we analyzed millions of keywords and the different campaigns that we are running and run a case study on which dynamic bidding strategies should be used which perform best. We can link the case study maybe in the show notes. So it’s like a detailed report, a couple of pages where we go into all the ins and outs of the different strategies and also explain these in a little bit more detail. But the basic idea is in terms of bidding strategy, make use of down only. That was overall like the best that we have seen. So even though the click rate is better with fixed bids, we saw that down only overall had like the best conversion rate and also performed best in terms of RoAS. And in general, this was like the easiest go to recommendation. Up and down. In our opinion, it was for Amazon to make more money and to squeeze a little bit of extra budget out of the advertiser’s budget. So it did not perform best in terms of performance. But if you want to have that visibility, top of search placement, if you launch new products and so on, then it might be beneficial to get that boost in real time that like a third party software or like a manual adjustment would not be possible to provide. But for overall, we recommend to use done only and Bitex itself, it recognizes what bidding strategy is used. So if there are possibilities that bids are also increased with up and down, then it takes into consideration when it makes adjustments that it does not increase the bids like too high because it knows Amazon is able to increase that.
JONATHAN: Nice. I know that you guys have an account services side of the business, so you have people who actually handle the accounts for the sellers. Is there something when a seller comes to you, are there common misconceptions that you’ve found more often than not, that you kind of need to educate sellers on?
NADINE SCHOPPER: Is it specifically on the bidding or is it specific or is it just a broad question?
JONATHAN: Oh, you can answer that broadly. I was thinking about the bidding, but yeah, if you have broader insights, I’d love to hear them.
NADINE SCHOPPER: I feel like a lot of sellers are not focusing on their listings enough. So we have a lot of sellers that come to us and then their ads are all set up, but then the conversion rate is just not good enough. And then we sometimes just have to take a step back and tell them, hey, we first need to revise your listing. We first need to make sure you have all the pictures and videos in place and A+ content and all that stuff to actually have an appealing offer that people want to buy. And then we can focus more on your ads.
MAX HOFMANN: BidX is like 85% technology and 15% services. And most of the services that we do offer at the moment are related to Amazon DSP. So like video and display placements that run mostly off Amazon and also enable brands who are not actively selling on Amazon to make use of the Amazon audiences, for instance, like a car manufacturer or like a credit card company to make use of that. And the API over there is still limited, as it was like back in 2016, kind of for sponsored products. So some tasks need to be done manually, which is like part of this service part. But overall, especially talking about sponsored products, most of the tasks that need to be done are automated by the software and then what is done manually and what is part of the managed service part is like a lot of education and training of team members who are then also using the software and making sure that the strategy that they are like having internally aligns with the whole setup that they do now have in Amazon and in the advertising console.
JONATHAN: I appreciate that. I always hear the content side of it all the time. I feel like that is the number one pain point that agencies alike have with sellers who are just like, they just don’t have the content or their page isn’t optimized in the way that it should be because the conversions are low. And I think sellers do think if they just put money behind it, it will automatically turn into sales without actually having the quality there. So can you share a scenario in which a seller’s bidding strategy wasn’t going well and you kind of came in and turned things around?
MAX HOFMANN: So when talking about bidding strategy, especially like talking about the feature that Amazon is offering we just say, please make yourself down only if you run like a strategic campaign on launch, go with up and down, other than use down only. So that is pretty straightforward. However we have when you look at dynamic bids, but in general bid distribution, we run audits with every customer that is coming on board. In these audits they get an overview on how our keywords used at the moment. Again, Genai is helping us to easily cluster at scale the different focus group that keyword is in. Is it a branded keyword, is it a competitor keyword? Is it just like a generic keyword? So even though there are typos in it and so on, Genai is supporting us in showing distribution about how are currently the ad spends being spent and which bids do we have, where and do these bidding strategies for the different categories align with the goals that the customer has? And if that is not the case, then we are able to initially already adjust all the bidding strategies in general that they do have for the different categories and make sure that it’s aligned with the strategy that they do have internally. But it is also making sure that we are not wasting like 70% of the budget that we do have on branded keywords that do not really generate incremental sales but are just like cannibalizing the organic rankings where they rank already quite high for branded keywords, but making sure that we have a good part of the budget allocated to generic and competitor keywords and ASINs to make use that the advertising is really efficient and that they get additional value out of that. And not just having a sponsor next to one that is organic and ranking like top of search for both.
JONATHAN: Which, I see all of the time, by the way, every day when I’m searching on Amazon, I’m like, oh, there’s their organic placement right next to their sponsor placement. And it’s amazing to me how many sellers actually do that. And it’s amazing to me from having worked, I used to work with an aggregator, so I worked on a number of brands and it’s interesting seeing something where one of the first sponsored placements wasn’t doing so well, but if you were like halfway down the page, you would do better. And it’s just so interesting to me, depending on your product and category that you’re in, that there’d be those nuances to it.
MAX HOFMANN: Agee. 100%.
JONATHAN: Yeah. So I know that you, I know you guys are focusing heavily on the optimizing ad bids, but as far as the organic side of it, I mean, what sort of insights have you seen from those scenarios, yeah.
NADINE SCHOPPER: So, like in the beginning, everybody was just focusing on the ACoS and then at some point there was, the tag was coming in place, too. And that makes total sense. So we see that, like, the ads have direct impact on the, on the organic ranking, too. And it’s just like you sell more, you sell more with the ads. So then you go up in ranking and then you sell more. And we have something in place that we call the PPC flywheel, which kind of tells you that it has an impact on everything and then you can maybe buy your products cheaper because you’re selling more and that kind of stuff. So, like, the ads have a positive impact on the whole ecosystem you are working in. And we at Bitex, we measure the share of boys and we track the organic ranking so that you can see the impact because we had a lot of clients in the beginning, especially when you maybe don’t see a direct improvement on your ACoS, but at the same time you were like more up and ranking and then also sell more. That has a direct impact, which you can see then with the take, with the tar cost. Yeah. We also currently work on an incrementality score, which also should show you the benefits of the ads and how you actually have more, also organic sales with your ads in the end.
JONATHAN: And the share of voice is huge because there’s so many platforms that don’t do it and it’s such a pivotal part of it, especially with the cannibalization piece. When you guys first started, how did it kind of evolve? I’m curious, what was the initial plan or roadmap? And then where did you build that out to the point now that you’re incorporating the incrementality score?
NADINE SCHOPPER: Yeah, I feel like that was really a journey in the beginning. When we started in 2017, Amazon ads were so rudimental, it was just so easy. And then Amazon was coming up with more and more features and they were kind of copying everything that Google Ads were doing. So we kind of knew where we were heading to right from the beginning, but it was a lot of new features. We had to adapt quickly, and we were always building our software around our clients. So we were working together with a lot of agencies, too, who also went, like, knew what they were doing and also what big brands need. And so we were like in very close contact with them. And then we build the software around them and we have a software team that’s like half of our team. They’re just working around everything that Amazon is changing all the time.
MAX HOFMANN: So we just received a small initial funding from some business angels over here from our area. But ever since, we needed to finance all of our development upfront, because if you develop today, you release the feature maybe in six months, in a beta phase, and then publicly in nine months or so, it takes time and you need to pay upfront for all the development resources. We needed to find customers and identify their needs to then also pay for the features. In the early days, it was everything around the customer, around customer needs, a customer obsessed kind of, because if we would have like millions in funding, then we would have maybe locked ourself for two years into a room and built some great features. When released, nobody would be interested in, because, like, nobody would have asked for that. So I think, like, the bootstrapped approach, always, like, if the bootstrapped approach is successful, it kind of is a sign, therefore, that that company really looked for customer needs. And especially in the beginning, we ourselves have been our first customer. And so having the seller background and having a solution that was built to our own needs, that reflected oftentimes with our first sellers, with our first customers, because they understood that we understood what their pain point was, because we were in the same shoes a couple of weeks before, kind of.
JONATHAN: Yeah, I love that approach because I think any other company just tries to do too much. Like if people have too many resources, I think that they just try to do 50,000 things at one time, rather than just do one thing that works and then enhance and innovate and kind of iterate from there. So I really like that insight into it. Amazon DSP offers powerful targeting capabilities. Can you share a case study or an example of where you actually helped a seller achieve their objectives using DSP?
MAX HOFMANN: Yeah. So we also can link a case study that we did for a German company that was founded back in the 19th century, like in 1895. They are called Falke. They are very popular over here in Germany. They also have some different, other brands that are a little bit more popular in other international markets. But for them, it was very challenging to, to get ahead on marketplaces. They are selling in over 70 countries in different retail stores. So they have a very strong physical presence. But they were struggling in the beginning to also reach new and younger customers on ecommerce platforms. That was where Amazon DSP was coming in place. Handy, because with Amazon DSP, you have so much more control in identifying an audience and targeting an audience that is matching your ICP or ideal customer profile for exactly the new group that you want to reach. And when using Amazon DSP, they were able to generate incrementally a couple of hundred thousand within the first six months in additional revenue that was attributed to the DSP campaigns. And you see that if you leverage the power of the Amazon DSP and if you also have the budget, then you can really precisely target the audience that you would like. And you don’t just reach everybody that is shopping on the Amazon website, but you reach people in a certain area where they’re in their CRM, know where most of their customers are coming from. Orlando, what is the demographic, what is the household income of a typical customer? They do have all the information over decades of experience. And leveraging these information then by creating Amazon DSP audiences was very powerful to receive a return on their spend that was way above average of what they were expecting and compared to other DSPs that they were using.
JONATHAN: I love that, especially because it’s an example of incremental sales and I feel like those don’t get discussed enough. I think that there are so many brands that get to the point where they just need incremental sales sales and people are more worried about the broader picture than that. That’s a great one.
MAX HOFMANN: I know in UK they are selling especially like Burlington socks, which is sometimes a little bit more popular.
JONATHAN: Okay, so you work with sellers in the EU, but you also support sellers in the United States. I mean, it’s in any Amazon marketplace, correct?
NADINE SCHOPPER: That is correct.
JONATHAN: And did you start with a single one or did you start with that approach?
NADINE SCHOPPER: We started right from the beginning. We started with all marketplaces because for us it was clear that we would expand to the US too, because it’s just the biggest marketplace for Amazon. So it was clear for us that we would have to go there. And also a lot of sellers in Germany sell in the US. So even when you just want to, even if we would just want to service German clients, we would still have to have all the marketplaces to do our job correctly. So that was kind of a no brainer for us to go to all marketplaces.
MAX HOFMANN: Just to add over here, fun fact, I started selling on Amazon also to finance my semester abroad, which was in China. And when we started with the first version of Bitex, it was actually when we been to China. And the first three weeks we kind of locked ourselves into an apartment at the 38 floor out of nowhere, and just coded like from after waking up to going to bed. And in China you can get everything delivered. So from our morning coffee to lunch to dinner everything got delivered. And like every other day we maybe left the apartment to go to a restaurant outside to have some bright sunlight also. And the reason BidX is red, or was like initially very red, is because in China red is the color of prosperity. And also the first version of our website was in Chinese, English and German. So our idea was that we will dominate globally from beginning on. But we skipped the Chinese website version only a few weeks after because it’s really difficult to get into the Chinese market.
NADINE SCHOPPER: Very different market with very different needs.
JONATHAN: I was going to ask about that. In general, having worked in different marketplaces, is there something in the process of having created and managed customers through Bidx, have you learned or gained some insights into the marketplaces in general or differences between them other than obviously China?
NADINE SCHOPPER: Definitely. Especially now that we are expanding to the US, we were facing a lot of challenges because the culture is so different and then marketing is different. How do you talk to customers? It’s different. Everything’s different. And we came out of our European bubble where we were like all nice and we are not exaggerating, we are always more shy about what we approached or what we achieved so far. And then we came to the US market and we kind of had to be more bold and that was challenging for us, definitely. So we are happy that we have a good US team now and they are doing the job for us because it’s just not part of our personality.
JONATHAN: It’s funny, I feel the reverse about. So I worked in creative, obviously, and when I got to develop creatives for the German market, I felt like I had both hands tied behind my back because everything that I relied on. You love information in Germany, but I feel like that’s not something we are very good at. In the United States is focusing on that component. We love the marketing fluff and making things sparkly.
MAX HOFMANN: Yeah.
NADINE SCHOPPER: In Germany it was all about which features and the tech behind it and all that kind of stuff that people wanted to know. And then in the US, it’s more about feeling, what are the benefits? It just different. So when we came there, we were like, yeah, we have these. In these features, people were like, and what is it? What’s the benefit for me? So that was like we had to adapt there.
JONATHAN: Yeah, they’re like, make us feel things and then we’re on board.
NADINE SCHOPPER: Exactly.
JONATHAN: It’s becoming more and more competitive. The market that you’re in and the services that you’re providing, how do you differentiate yourself or how do you feel like you’ve differentiated yourself?
MAX HOFMANN: Bitx is at the moment still the only global advertising solution for Amazon sellers to automate not only Amazon sponsored products, but also the whole Amazon DSP part. So with BitX, advertisers are receiving a full funnel solution in a self service way to automatically create and optimize not only campaigns on Amazon but also off Amazon. And by having that, it really provides like campaigns and optimization for all the different funnel stages and to different needs that a customer does have, then access to Amazon marketing cloud is complementary with us. Amazon Marketing cloud really funnels all these thousands of metrics that you can access into easy to understand dashboards and also helps you in understanding what incremental value does this campaign drive to my overall business or to my organic rankings and so on. So I think this is really separating us from the competition at the moment that we’ve been Amazon sellers ourselves before, we are like heavily focused on Amazon advertising and go like really, really deep. Also like we have competitors, really big competitors in the states that are nowadays supporting like 15 different marketplaces. They want to find like synergies in running ads across the different marketplaces. They are like having a bottleneck with the weakest marketplace which just start with sponsored products but just with sponsored products. You don’t get very far on Amazon. So you need to go deep to really serve these seven, eight, nine figure sellers on Amazon because only small percentage in improvements are like thousands and thousands of dollars every single month that they save or that they generate. In addition, and we said only if we nailed Amazon advertising then we go beyond, and that is what we did earlier this year with the launch of Walmart. And then again we want to finish Walmart first before we will go again beyond other marketplaces.
JONATHAN: Yeah, that’s great.I love that so much.
MAX HOFMANN: Its really interesting. But many solutions that you find in the US are focused on the US. They have issues with different time zones, they do have issues with different currencies and so on. Since we are not us native but european based, we already need to cover different time zones and currencies in our home market. And then it’s much much easier to have that transferred also to the US and to the Pacific area and also to see the difference at the end. We are mainly optimizing bids and harvest keywords and suggest new keywords that customers should target. But to calculate the bids across the different countries, it’s math. And math is an international language so everybody can understand equations. It doesn’t matter which language you speak natively and also to understand which markets are high cpcs in which markets are low CPCs. We created an index that is called the AMX 500. Maybe we can also link it in the show notes, which provides an overview of the 500 largest advertisers that we do have have in our system. It’s a little bit like S&P 500, the 500 largest corporations publicly listed in the states, to see how’s the performance overall going in the market. How are the benchmark values in terms of conversion rate, fix rate and so on, and compare yourself in am I above average? Am I below average? Where can I expand next to which was very, very well received to show further growth opportunities.
JONATHAN: Very cool. You mentioned keywords and I also sensed your enthusiasm when I mentioned the search pori performance dashboard earlier. So I imagine that you’re as much of a keyword nerd as I am. I think keywords are just fascinating. I think they just reveal a lot about cultures and people in general. And I’m curious, well, one, are you as much of a keyword nerd as I am like that, Max? Or do you just enjoy digging around the search query performance for other, for other reasons?
MAX HOFMANN: Both. And we realized that keywords are not only important for ads finding the most relevant keywords, but they are most relevant for creating your listing. And if you don’t put in local differences and make use of the local differences, you’re missing out. And oftentimes AI can greatly support you there. We always recommend then finally to have a native speaker to have a look at it. However, since we realized that every campaign for sponsored products starts with a list of keywords, that there is still a lack of identifying the most promising keywords and also what match types, what ad products should be used also for that. We just released actually last week a new solution that is called Leia1.com and it is an AI that just needs the ASIN and the marketplace you want to advertise in and then it comes up with a whole campaign structure with the different match types, with the different ads types, and it suggests what should be the generic keywords, what should be your top five keywords to focus on. And that is really taking hours of work that have been needed to be completed with using different solutions. Manually researching query performance report it’s pulling all these different solutions into one single to use interface and where then the result is presented and where later on we can also just transfer the whole structure into the Bitic system and then we will create the whole campaign structure for you. And then it’s done within minutes. That would have done hours or days otherwise.
JONATHAN: That is amazing. What’s the story behind Leia1 as the name of it?
MAX HOFMANN: We are Star wars fans, so we also have a little bit of hoping that it was going to be called Yoda.
NADINE SCHOPPER: And when our wedding cake was coming into the room and Max and I got married, it was the Star Wars music
MAX HOFMANN: The Imperial March.
JONATHAN: So I was the best man at my brother’s wedding, and he had the entire wedding party walk in to the Imperial March.
MAX HOFMANN: That was what I suggested, but my fiance was against that at that time.
JONATHAN: We have to talk to this fiance of yours. There should have been understanding there.
NADINE SCHOPPER: Yeah, next time.
MAX HOFMANN: We love Star wars. If you go to Leia1.com, maybe we can also link that. It’s free to use in the show notes. You see that the eye of Leia is actually a lightsaber. And it’s, of course, also referencing to Princess Leia, which is a human, kind of, not really a Jedi, but who has the force. And that is kind of the AI. And the one is because Leia itself is a little bit like, it’s not a brand kind of. You directly understand. Are you talking about a newborn baby or are you talking about Princess Leia? So Leia1 was our go to. And it also sounds a little bit like, really player one, like the movie, which is like virtual reality and so on. So all these combined, that was like the background of coming up as Leia1.
JONATHAN: I love that. I have two other nerds on this podcast right now with me. This makes me so happy. I don’t often get nerds on the podcast, so I just really feel like I found my people. So thank you for being here and being part of that. Also about keywords. And this is something that I’ve gone on about, and maybe I just sound like a crazy person in the streets that no one wants to talk to because he just sounds completely off base. But from what I understand, and this is my understanding of keywords, and either you can educate me or you can walk down this dark path with me. Not to the dark side, but just a dark path. So Amazon would release their top million searches, their search terms. Sometimes they do like, 2 million. And that was the basis for everyone’s keyword data. I mean, I can’t imagine where we would have gotten data beyond that. Are there other sources for that keyword data that I’m not thinking of? Just to kind of check my math there.
MAX HOFMANN: Ours. The internals that we have. And that is actually like one of the USP’s that we are able to leverage because like we have millions and millions of keywords from all the different countries directly in our system. We know that paid position. We know the organic position, we know what CPC are they actually paying for this paid position. We know, for instance, that an ad can be top of search next to a competitor ad and we know that one is paying only half because the click through rate in the conversion rate is much better. And so the relevancy of that ad is much better. So Amazon puts it up on top of search even though the bid is much lower. And we are able to compare these and make suggestions what advertisers should be focusing on.
JONATHAN: kay, so how many, if in your estimate, how many search terms are there organic, unique search terms are there that people use on Amazon just in one market? We’ll say in the US, if you could guess.
MAX HOFMANN: Yeah, I do have like the amount of search terms that we do have in our system is globally and it’s 358 million. Really? So it’s a lot. Yeah, like many, many, many search terms are being advertised but never received like a single impression.
JONATHAN: Right.
MAX HOFMANN: So most of the keywords actually don’t get like an impression. And then even though it’s a git, like an impression, they don’t get clicked. So there’s actually just a fracture of the keywords that are advertised that are being clicked and then also like a much smaller one that actually converts and provides sales.
JONATHAN: I mean, we only see a small percentage of the keywords that are out there. I don’t think people are focused on those long tail keywords. You’ll have keywords that probably show up are like car phone mount or blue car phone mount will probably show up because it gets like 150 searches per month. But when it’s like blue car phone mount for Honda Civic or something like that, those are those lower rung keywords that maybe only have like 25 searches against them, but across the board those add up to millions of searches. And I’m just surprised that people don’t focus more on those. And I feel like I would love to see what those numbers are behind them. So this is something that I’ve been going on. I sound like a crazy person, but you sounded like another keyword nerd that I could have confided in. So I wanted to.
NADINE SCHOPPER: Yeah. And it’s kind of a shame that a lot of sellers are not focusing also on these keywords because the cost per clicks are so much lower because not a lot of sellers are focusing on these keywords. So it’s a real opportunity that a lot of sellers are missing out.
MAX HOFMANN: And we are also happy to provide, like an Amazon advertising account audit where we fully check the account for free and provide opportunities to grow the account. Things that we see that are going well at the moment. Things that are not going very well at the moment, where advertisers are burning money, and where I happily help advertisers and sellers and brands on Amazon to grow and scale the business.
JONATHAN: Exciting stuff.
NADINE SCHOPPER: It was good to be here. Thank you for having us.
JONATHAN: Yeah, I look forward to more conversations in the future. I’m going to be picking your brains and sending you all sorts of emails. So you’ve invited a vampire into your home, basically, so you’re going to have to deal with that.
MAX HOFMANN: You’re welcome. Sounds fun.
