AMC is the Key to Unlocking Customer Lifetime Value
What Is Amazon Marketing Cloud
In a hyper-competitive digital shopping environment where customers are increasingly judicious about their spending decisions and where overall profitability is getting squeezed everywhere from cost of goods to operations, logistics, and cost of traffic, successful brands are more than ever leaning into their data as a competitive advantage.
Rising costs have put more strain on profitability than ever before. Competition is as fierce and sophisticated as it has ever been. More data is available than at any time prior, but brings with it a dizzying level of complexity to make sense of. With all of these dynamics ratcheting up the pressure on advertising performance, how can you be confident that you’re making the best possible decisions to outmaneuver your competitors? With Amazon Marketing Cloud, you have the edge necessary to win.
One of the most powerful and widely accessible tools in a brand’s data suite to extract value from their marketing campaigns is Amazon Marketing Cloud (AMC). The primary value of AMC is that it allows brands to track their shoppers across their digital journey from discovery to conversion with much richer detail than Amazon Advertising campaign reporting and business reports from Seller Central / Vendor Central. AMC unifies shopper behavior signals from Amazon Sponsored Ads (PPC) and Amazon DSP (CPM) to allow an advertiser to extract more actionable insights about the efficacy of their marketing strategy.
Out of the box AMC functionality includes shopper behaviors which Amazon defines as “events”, including but not limited to ad impressions, ad clicks, ad sales, subscribe & save subscriptions, add to wish list, add to gift list, add to registry, and product detail page views. There’s even more available in Amazon’s paid AMC subscription levels, which provide insights about your audiences (Audience Segment Insights) and comprehensive organic behavior data sets (Flexible Shopping Insights). Amazon is also enhancing the available data within AMC all the time; they even recently added offline sales insights for grocery brands via the NCS CPG Insights Stream. What makes AMC even more powerful is a brand’s ability to upload their own 1P data in a privacy safe way to discover customer insights from shopper behavior beyond Amazon.
Who can use AMC?
With AMC getting more buzz in 2024, many brands have been left wondering: 1) if AMC is right for them and 2) if AMC is only for large enterprise brands with massive budgets invested in Amazon Ads. The reality is that any brand advertising on Amazon through Amazon’s DSP qualifies to create an AMC instance. AMC is free to use, with no spend minimum or up front fee. Some advanced features can come with a “subscription” fee, however, a massive opportunity exists for the rest of 2024: Amazon has made their AMC subscription based services free to anyone using AMC.
What can I do with AMC’s Free Features?
While there are many use cases for a brand leveraging AMC, what makes it so powerful is the insights it provides into how shoppers are interacting with your ads and how your online campaigns are performing across different audience segments.
Understand the Customer Journey
For example, a brand can use AMC to better understand the marketing mix combination which was most effective with their shoppers. Specifically, an advertiser can measure the performance difference of shoppers exposed only to DSP ads vs DSP + Sponsored Brands vs DSP + Sponsored Brands + Sponsored Products. Whereas advertisers are limited in the audience insights they can extract when only looking at aggregated advertising metrics (e.g. ACOS, TACOS, ROAS), Amazon Marketing Cloud sheds light onto which combination of ad types produced the highest conversion or rate or new to brand purchases across which audience segments. From there, a brand can make highly informed decisions about where and how to allocate their marketing spend going forward.
Creature Unique Audiences for Use in DSP
AMC allows brands to create custom audiences using just about any type of segmentation parameters they wish, as long as the resulting audience segment has at least 2,000 shoppers. For example, a brand could decide to create an audience segment of shoppers who added one of their products to their cart in the last 30 days but who did not convert. These shoppers present high intent opportunities, as they went all the way from discovery to consideration to add to cart, and just need to be nudged to convert. The creation of this audience segment can then be leveraged in Amazon’s DSP to create a tailored remarketing campaign for that group only.
Create Lookalike Audience
As brands truly look to grow their market share within a category and not just market to a static pool of existing customers, their incrementality is driven by finding new to brand shoppers. One of the most powerful features of Amazon Marketing Cloud is the ability to create lookalike audiences which are made up of browsers whose online shopping behavior most resembles that of the brand’s existing customers. The way this works is that a brand defines a “seed audience” of their highest customer lifetime value (CLTV) customers using the full breadth of signals available in AMC. From this reference audience, AMC will create a lookalike audience segment of prospective customers which share traits to those in the defined seed audience. This is powerful in that it gives brands the ability to reach further up-funnel or across aisle to incrementally new audiences that are most likely to not only convert, but become high value long term customers themselves.
What can I do with the Subscription Based AMC Features?
As mentioned above, Amazon’s subscription based AMC features are free for anyone using AMC for the rest of 2024. The most important distinction to understand between AMC’s basic tier functionality and the subscription based tier is that the default tier only includes ad-attributed data sets (shopper events which are the result of paid advertising campaigns). The subscription based tier provides deeper analytics insights around a brand’s audiences (Audience Segment Insights) and allows for tracking organic (non-paid) shopper events (Flexible Shopping Insights) in addition to the ad-attributed data sets.
Flexible Shopping Insights
The most important component of AMC’s Flexible Shopping Insights is that it allows an advertiser to have a comprehensive understanding of the customer’s journey across both paid ad impressions and organic shopping behavior. Why this matters is that it gives brands the ability to analyze the customer behavior of shoppers who bought from that brand without having interacted with paid media. Typically, less than 50% of a brand’s total sales on Amazon are directly attributed to ads, which makes it critical for a brand to understand how the remaining shoppers ended up converting without ad exposure.
When armed with shopper insights across both paid and organic data sets, a brand can more confidently define the CLTV of their shoppers on Amazon. What CLTV tells a brand is how much a given shopper spends on their products over the course of that customer’s lifetime. Coming full circle, defining the audience segments which have a high CLTV is imperative to creating the DSP lookalike audiences outlined above. From an efficiency standpoint, targeting those high CLTV customers as well as the lookalike audiences of those customers is more likely to result in campaign performance which truly grows the brand.
Another powerful use case for a brand using AMC is the ability to extract deeper insights from the shopper segments which are converting organically. These are shoppers which are driving sales for your business without requiring ads, making them one of the most important cohorts of shoppers you can interact with. This audience is best positioned for cross-selling or up-selling given they are already exhibiting an affinity toward a brand with their organic shopping behavior. They can also be excluded from certain up-funnel awareness campaigns since they are already aware of and have interacted with the brand. Another approach is to reach shoppers specifically who have never seen one of your ads for a given keyword search and serve them ads to measure the performance difference across those audience segments.
Audience Segment Insights
Amazon Audience Segment Insights enhances an advertiser’s ability to generate aggregated and anonymized insights and to create targeted audiences. One of the primary benefits is that it gives brands the ability to better understand the shopping behaviors of their customers beyond their search queries and purchase patterns. For example, using Audience Segment Insights reports, a brand selling insulated water bottles might find that their customers are more likely to be in-market for sports and outdoor products. With this insight, that brand could target a campaign at sports and outdoors category shoppers with the knowledge that those shoppers are more likely to respond to their ads.
How do I Get Started with AMC?
As the Amazon advertising landscape has shifted significantly from being solely a search driven, bottom of the funnel demand conversion engine to being a full-funnel suite of brand building tools to reach shoppers across the internet, brands need to take an audience first approach to meet their shoppers where they are and how they like. To learn more about how AMC can help you grow your brand and expand your pool of shoppers, contact us.
