If you thought they are two different things that work on their own, the answer is NO. Amazon Advertising complements Promotions. So, how do we decide which is the right fit for your business?
Discounts can be a powerful tool because they are time-sensitive and create a sense of urgency. Do not view them as you are undervaluing your product but believe that they are an incredible form of advertising. You also need to understand that a typical Amazon consumer is a very price conscious consumer. We would also recommend studying the top performing products in your sub-category and see how important a component is pricing in the buying decision of the consumers in your sub-category. Once you are convinced discounts can be a great tool, now target the days that you want to run these discounts. It can either be sales days like Black Friday / Cyber Monday, Prime Days or it can be seasonal to get rid of your excess inventory OR can be based on the consumer trends you see from your Brand Analytics dashboard.
If you strategically use the discounts coupled up with the Amazon Advertising, it can super-charge your growth on Amazon. I will now take you through some scenarios that might best suit your scenario.
Let us say, your goal is to only create visibility for your items and ROI is not a concern considering that there is a product-market fit, then you need to just determine your marketing budget. Let us say the budget to be 50 to 60% of your product MSRP with a goal of X unit sales in 3 months, I would recommend that we create Sponsored Product Campaigns with a maximum bid on Top of the search results, Sponsored Brand campaigns with a landing Page of either the new items that you have launched or the Brand Page. Sponsored Display Campaign targeting your competitor ASINs.
Outcome - This type of campaign drives visibility for your products to appear on the first page of the search results for the keywords relevant to your products. Initially, it might be a low ROI but in a long term, if there is a product-market fit, once you convert a good number of reviews through sales, the chances of your item appearing organically on the first page becomes a greater possibility. We can assure you this approach is a proven one for our customers (only if there is a product-market fit).
If the products are appearing on the first or second page based on your historic sales data but if you believe you are losing traction because of lower pricing from your competitors. The best way to get back on track is to create Discount Promotions and go for Sponsored Display Campaigns with 2 to 3% of your monthly sales as a budget to target your competitor product detailed page, so the customers can see that your pricing is better than your competitors.
Outcome - This combination of higher $ on discount promotion and lower spend is advisable only if your items have been reviewed like your competitors. Please note this approach is not advisable for products with low reviews and ratings.
If your product glance views and sales are going in a downward trend only due to lower pricing from your competition which you cannot match due to profitability, you must identify the $ that you would be able to spend per unit. Once you identify the $ per unit, you can split the $ between Discount promotion and Amazon ads. In these scenarios, the best possible split of your budget should be with 70% on Sponsored Products and 30% on Sponsored Display.
Outcome - This drives both visibility for your products against your competitors and gives the best possible ROI due to the split of budget between sales-driven campaigns and visibility-driven campaigns where the discount will also act as an additional driver on your sales.
Blog Post by Giri Prasad, with inputs from Arjun Narayan