A New Jersey native, Brian Burt spent most of his life in Arizona and Chicago before moving to Austin to launch CANOPY Management. As a lifelong entrepreneur, Brian has founded more than a handful of 7- to 8-figure businesses and is a regular feature in Forbes, Bloomberg, Entrepreneur, Adweek, Digital Commerce 360, CNBC, and more.
As the Founder of the Leading Amazon ‘Done-For-You’ Agency (www.CanopyManagement.com), a five-time 2 Comma Club Award Winner, three-time Amazon Seller Award Recipient, and an Eight Figure Award Winner, Brian is widely recognized as a leading mind & educator to digital marketers, Amazon/e-commerce sellers & entrepreneurs.
M.R. Rangaswami: What’s currently happening in the digital ad market, and how can advertisers make the best of current conditions?
Brian Burt: Ad metrics like CPCs (Cost-Per-Click) are rising quickly across platforms, and a number of factors play a role: First, as the nation opens up, people are spending less time online. Fewer eyeballs mean more competition for each impression, driving up prices. At the same time, people may be less inclined to shop online than they were early in the pandemic. Physical retail has reopened, and consumers with money to spend may have satisfied many of their immediate needs via online shopping during the last 18+ months.
In light of these conditions, advertisers should take stock of their current and planned campaigns and reconsider some fundamentals. Reaching customers online is going to be more expensive for a while, so the first step should be for advertisers to start optimizing for conversion rates lower in their sales funnel.
Secondly, now is the time to optimize their creative. Advertisers that have gotten comfortable with their campaigns should take this opportunity to do new rounds of split testing, explore new imagery, refresh product catalogues and try different pricing and discount strategies.
The deprecation of the third-party cookie and other digital privacy regulations mean that the entire digital ad system is in the midst of a structural shakeup. Companies and brands need to be aware of how this will affect their overall strategy, and advertisers specifically should be closely monitoring the development of privacy-compliant targeting alternatives.
M.R.: Your agency specializes in helping companies sell their goods on Amazon. What should Amazon retailers be thinking about as we head into the holiday season?
Brian: Inventory storage limits will likely be the biggest risk for Amazon sellers in Q4. Amazon’s Inventory Performance Index (IPI) – which measures things like sell-through rate and age of inventory to determine what it costs Amazon to warehouse your inventory – is the primary factor the company uses to calculate sellers’ inventory storage limits.
In order to manage an optimal inventory with Amazon, sellers need to ensure that their sell-through rate is healthy. It’s important not to have inventory at Amazon for more than about 45 days. That means smaller, more frequent shipments to Amazon to keep inventory available.
It’s going to be a challenging holiday season for retailers due to these logistics and supply chain issues. The best thing anybody can do right now is to prepare for the disruption.
M.R.: What do you say to big, well-known brands that hesitate to work with Amazon?
Nike famously refused
to work with Amazon for a long time to avoid relinquishing control of its brand and data, and Amazon has been known to use its dominance in data collection and analytics to develop products that compete with better-known brands on price.
However, Amazon’s market dominance means that the benefits for brands on Amazon far outweigh the potential pitfalls. Consider, for example, Amazon’s conversion rate — the percentage of ad clicks converting to sales — Amazon listings typically boast a 15% conversion rate, and in many cases, much higher.
For many ecommerce sellers, this conversion rate delta represents a performance differentiator that is difficult to argue with. What a brand may lose in margins it will more than makeup for in volume as a simple result of more sales.
M.R. Rangaswami is the Co-Founder of Sandhill.com