Everything marketers need to know about hiring an agency to grow their business on Amazon
This article was originally published by Business Insider on January 21 2021. The full article written by Lauren Johnson can be viewed here.
6 min read
The world of Amazon is in a permanent state of flux, but one thing remains constant for the brands that sell and advertise on it: Amazon is unlike any other company they work with. Companies that are used to wholesaling their goods to established, predictable and streamlined retailers in a “set and forget” way are in for a rude shock.
Those that treat it like any other sales channel (or advertising platform, streaming network, logistics business, consumer electronics maker; the list goes on) soon find themselves dealing with an ever-growing list of challenges, while their better-prepared competitors win their customers and sales.
It’s no surprise, therefore, that many brands enlist the help of an agency to help them navigate Amazon’s unique challenges, seek out opportunities, and transform Amazon into a truly profitable channel. From niche, boutique outfits that focus on specific areas of Amazon to giant advertising holding companies, there’s no shortage of agencies out there, so how do you know which one’s right for your brand?
Of course this article could be seen as self-serving but that’s not the intention. All too often we hear from brands that say “Amazon doesn’t work” whereas they, and their agency partner, were simply ill-equipped to drive success because they didn’t understand the plethora of synchronous specialist skillsets required.
Simply put, when making a decision on the right partner for you, you need to understand what each does, and learn to understand the difference between what they’ll tell you and what their true capabilities are. Our guide to the questions to ask a prospective agency will help you do exactly that.
Question 1:
Does your team understand Amazon retail or do you just focus on advertising?
What the agency will say:
Yes. We know everything, from inventory, pricing, 3rd parties and brand registry to stores, A+ content, and beyond.
The Truth:
Knowing the basics of retail operations just doesn’t cut it anymore. Understanding the foundations of selling on Amazon is important, but the most effective agencies work across all areas of Amazon. The relationship between retail and media is absolutely key (retail operations impact media performance and vice-versa), and surprisingly few agencies are capable of understanding and exploiting this. They’re just not designed to.
Large media agencies will tout their weight of ad spend and experience across Google and Facebook coupled with digital media expertise, but won’t have the first clue about retail operations, pricing elasticity, shipping plans, brand registry and supply chain. Niche Amazon agencies, on the other hand, will be laser-focused on specific areas rather than seeing the whole picture. Your agency should also have a clear connection with Amazon; ask the agency about their relationships with key people across different areas of the company.
What to ask next: Can you give me some before and after examples of your content, and some references from Amazon attesting to your retail capabilities? Can you confirm that all team members have achieved all Amazon certifications?
Question 2:
What kind of tools do you use to get an edge on Amazon?
What They’ll Say:
We have a variety of tools that we use to drive sales and optimize performance. We prefer tools that integrate with Amazon as well as other platforms such as Google and Facebook.
The Truth:
Using the right technology is crucial; it can typically increase return on investment by more than 25%. Amazon doesn’t make it easy to use its tools but there are ways around that – namely, using third party tools. Right now there are dozens of tools available – including PacVue and Perpetua for search optimization, Sellics for retail analytics and SellerLabs for review optimization and analysis – so how do you know which ones to use? The answer is that your agency should be able to find the right tools for your brand and your needs. Some agencies may even have their own tools – at Podean, for example, we’ve developed the world’s first Amazon-specific channel- and tactic-planning tool, Journey, and a unique profitability tool and framework called PROPHET.
When your agency suggests that a tool that works for Google will work for Amazon they’re leading you down the wrong path. Many independent reviews have confirmed that Amazon’s specificity warrants specialist technology.
What to ask next: Can we have a video call where your team takes me through your tools and how you use them?
Question 3:
Does your agency have demonstrable experience and capabilities in every area?
What They’ll Say:
We’ve delivered results for numerous clients, and have many years’ experience under our belts. We have a few shiny video case studies we can show you.
The Truth:
Succeeding on Amazon means optimizing absolutely everything from supply chain and operations to media and creative content. Your agency should have across-the-board capabilities, and be able to provide you with client references that support these claims. An Amazon agency’s team should consist of specialists and partners across the full spectrum of Amazon, not just specialists in one particular area or niche, and be able to speak to and work with people at all levels in an organization, from C-suite down. The right agency shouldn’t be afraid to challenge the way your organization thinks about and accommodates Amazon – after all, as we said at the beginning, Amazon is truly a different beast.
What to ask next: Do you have all capabilities (retail operations, content/creative, search, DSP, analytics) in one team and under one P&L? This avoids the agency “fighting” behind the scenes about the right strategy for you, and prioritizing tasks that make them the highest revenue/profit on your fees. What exactly were you responsible within those case studies?
Question 4:
Do you have the bandwidth and time?
What They’ll Say:
Of course. We have the time, the tools and the tech. You’ll be our number one priority.
The Truth:
Multinational agency groups are structured by ‘swimlanes’ versus offering complete solutions. They’ll tell you that you’re a priority, but you won’t actually be one – especially because the remuneration is not on the level of big global brands and your needs are more complex and time consuming. You’ll be competing for attention, focus, P&L statements, and be subject to siloed measures of performance. Your agency should be flexible, committed to you, and work as a true extension of your team. The best agencies are global, too, with boots on the ground in different Amazon markets (Podean has local teams in North America, Europe, Australia and Middle East) to offer the ability to support a global Amazon presence – either now or in the future.
What to ask next: Can I meet the retail, media and account leads who will be working on my business day-to-day?
Question 5:
Do you have any questions for me about my business?
What They’ll Say:
Nope, I think we’re good to get started here. We’ll send you a proposal as soon as we can.
The Truth:
Choosing an Amazon partner agency is like interviewing for a job – both parties want to see if they’re an ideal fit for one another. If your agency isn’t inquisitive, how are they going to know the ins and outs of your business? Your agency shouldn’t be striving to tell you exactly what you want to hear, but rather to come to you with tough questions and, in doing so, deliver meaningful results. One of the things we tell prospective clients is that, in the process of creating and delivering their Amazon strategy, we’re going to tell them things they don’t want to hear. A good Amazon agency knows they’re entering a partnership, and that succeeding on Amazon is hard work, demanding and requires an appetite to change. They’ll want to know that you’re as committed to Amazon as you want them to be to you and your business.
What to ask next: How can we make sure the team structure and remuneration aligns us to drive growth?
Question 6:
How will you gauge my brand’s success on Amazon?
What they’ll say:
We look at sales revenue, ROAS and ACOS. If sales are growing, and ROAS and ACOS are optimized, you’ll be on the right track. Actually our clients received a much lower ACOS when we took them over (look at this chart…)
The Truth:
Amazon and Amazon agencies have taught brands to focus religiously on sales, and advertising metrics like ROAS and ACOS. But sales doesn’t equal profit, and many brands – despite having high sales volumes and exemplary ROAS/ACOS – struggle to make Amazon a profitable channel. A really good Amazon agency will focus on profitability, by drilling down into every aspect of your brand’s presence on Amazon and extracting every last drop of profit with rigorous analysis and optimization. There’s no single route to profitability on Amazon – many workflows contribute, from your supply chain to your sales model – and the right agency should be able to identify areas for improvement and set your brand on a course for Amazon success. Which, as we say, means profit – not total sales or ROAS.
What to ask next: How can you ensure my Amazon sales are incremental and not just coming from other channels at an effective lower margin to me? What are the key profit drivers on Amazon for my business, and can you prioritize them across every touch/failure point?
Choosing an agency is a big decision and one that will have a significant impact on your sales on Amazon. But also remember Amazon is an ingrained part of the consumer shopping journey (reviews, comparisons, prices) so your Amazon presence impacts your reputation and sales across other retailers.
It’s very easy for agencies to bluff their way through some simple questions so it’s important to dive deep and truly interrogate their capabilities.
Rest assured that a media-focused agency isn’t the right one for you. Advertising drives a mere fraction of your sales and profits compared to the critical retail, operations and content capabilities needed to be successful on Amazon.
Business Insider Identifies Podean As A Leading Amazon Agency
Business Insider Identifies Podean As A Leading Amazon Agency
Paying an agency on sales sounds like a good idea. 13 reasons why it isn’t.
How your Amazon agency is remunerated will determine your level of control and long term profitability on Amazon
