How Are Young Brands on Amazon Coping During COVID-19?

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Over the past weeks, some retail brands have been experiencing huge spikes in sales because of the surge in demand for online shopping. Well-positioned brands may still remain relevant among loyal shoppers. But, how are young brands on Amazon coping during the COVID-19 pandemic?

The Drawback of Traditional Amazon Ad Strategies

It is common practice for brands to pay up for advertising to secure placement on the first page of Amazon search results. Securing placement is done through an auction-type bidding format. The brands with the best at strategies and best budget allocations are guaranteed to win. 

This pay-to-play operation has been proven effective. But with the so-called Covid-19 “new normal”, landing on that first page has become a lot trickier. Brands are forced to make high-risk decisions to balance inventory.

Another drawback to traditional ad spending is it is not always possible to increase bids or campaign budgets are not always possible when shopper traffic suddenly spikes. This is because advertising budgets are set far in advance.

So, when panic-buying escalated in March, leading brands were left paralyzed in that period of the quarter: the end of many brands’ ad budget cycle. 

Here we see how the pandemic gave smaller challenger brands the opportunity to gain traction in the Amazon Marketplace. Here’s how the new kids on the block broke away from the pack and got the opportunity of a lifetime. 

The New Ninja Strategy: Investing in Paid Search Advertising  

John Denny, VP for eCommerce and Digital Marketing at CAVU Ventures, says that the new ninja strategy is to look for the top brands who are currently out of stock, and then go after that position with paid search advertising placements. 

Brands that have a solid Amazon PPC strategy (Pay-per-click) in place during this Covid-19 pandemic is likely a great time to double down. 

Cleveland Research Company recently published a study on how consumers are moving to purchasing online even more as they are stuck at home.

The study reveals that consumers are planning to increase online purchases (20%), making 49% of their purchases online over the next 30 days. The results also show that there is a 41% increase in consumers planning to use delivery to the home for their groceries, benefiting platforms like Instacart, Shipt, and Amazon Fresh. This shift is happening across all consumer categories, particularly grocery categories. 

This means emerging brands that are in a high demand category like food, consumables, and hardlines, make sure they have an aggressive PPC strategy. Since Amazon PPC is 100% attributable, brands can dial spend up and down in line with demand. If, however, demand starts to slide, the bids and daily limits can be adjusted any time. 

For start up companies, it pays to be bold now especially that the competition is pulling back.

Taking Advantage of Low Ad Costs 

During pre-COVID, start-up brands on Amazon had trouble gaining exposure in their product categories because ad costs were too high to pan out. But during COVID, major competitors started going out of stock and stopped advertising in the category. This was the dream ticket of Amazon’s new players. 

Young Amazon brands who reacted fast turned uncertainty into their ally. They shifted media spend to take advantage of low ad costs.This agility led to an explosion of shopper interest in their categories. 

Organic listings and share-of-voice increased which will be beneficial in the long-term even when major competitors are back in stock. 

Shifting Budgets to Online Channels 

Instead of spending on field marketing, sampling or other promotional activities, young companies shifted their budgets to online channels. This is how challenger brands are making gains that they would usually make in 2-3 years in a matter of a couple of weeks as Denny explains. Bigger brands are not quick to see this shift as an opportunity. And even if they did, getting approval is difficult.

Leveraging Video on Amazon

According to Amazon Advertising, 87% of all US digital viewers today are using OTT devices to watch billions of hours of video content every month. Because of this, young brands found running Over the Top (OTT) video ads for their categories very efficient. It has been a great way for them to reach audiences at scale creating brand awareness.

Start-ups leveraged video on Amazon and they continue to do an awesome job at it. As their videos are shown programmatically on Amazon Prime Video and Fire Tablets, brands have seen significant returns even when comparing it to search, where Cost-per-Clicks (CPCs) tend to be high amidst the competition. 

The Covid-10 New Normal: Coronavirus-Centered Content for the Quarantined Consumer 

The global health crisis brought about catastrophic blows killing nearly 100,000 people across the globe. Nonessential retailers have no other choice but to close. Millions of people have lost their jobs and many others haven’t left their homes in 3 months.

Jason Bagley, executive creative director at ad agency Wieden+Kennedy Portland, says that people are looking for truth, authenticity and human connection from brands more than ever. 

Nielsen’s data shows that they watch about 60% more content than usual while people are in quarantine. The socially distant life of the Covid-10 pandemic consumers actually welcome coronavirus-centered content. 

The last thing quarantined consumers need right now is to see pretentious and fabricated marketing strategies.

Most people are hanging in a thread and are barely getting by when it comes to their mental health. Everyone needs to take a break. This sentiment affected how brands create ad content. 

But how do brands create content that earn positive responses for likability and relatability? 

Brands Should Know Who They Are to Connect and Be Authentic 

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Emerging brands who know who they really are are able to respond to the Covid-19 pandemic valuably by creating content that is authentic and truthful to what is currently happening while equally being truthful to what their brand stands for. These are key determiners to having content that connects. 

Ikea hit a home run with their “I Stay Home” campaign that celebrates homes and encourages people to see their abodes from a new perspective. Hershey’s chocolate as social distancing advocates, invite their consumers to “spread love from a distance”

Guinness released their St. Patrick’s Day video message “Don’t worry, we’ll march again” about canceling celebrations given prioritizing health and safety. It had such a strong impact that Ace Metrix research found that the ad increased purchase intent of 7 out of 10 beer drinkers. 

Ford ran ads that offer financial relief programs to give assistance to customers affected by the pandemic.

Motor City released the “When the Motor Stops” video by Doner ad agency. It featured the empty streets of Detroit as the narrator says, “Here, we don’t stop in the name of fear. Here, we stop in the name of love.”  

Positive Brand Communications 

Content is still king even if a lot has changed since the outbreak. Brands do their part to bring the industry together by providing guidance, education, support and comfort. Positive brand communications bring in new opportunities. So to communicate in positive, beneficial and responsible ways, industries should ask the following questions: 

  1. What are people looking for? 
  2. How are people adjusting to quarantine life?
  3. What do they need to understand the changing environment?
  4. How can my brand provide comfort or assistance?  
  5. What do people need to know to cope during these difficult times?

Answering these questions truthfully allows brands to create coronavirus-pegged ads that have impact, value and relevance to a brand’s target audience. It is important to contribute to improving things while maintaining critical customer connections during this pandemic. 

Innovative Content Creation 

Content creators of brands continue to find innovative ways to contribute while still having health and safety guidelines in mind. Some practical things they do in the production process are:

  1. livestream-capture performances
  2. crowd-sourcing of filmmakers
  3. remotely-operated small shoots
  4. artist talks from their home studios
  5. standups recorded via Zoom or other video platforms
  6. remote audio taping
  7. splicing pre-taped, animated, or miscellaneous content into a single piece
  8. and of course, the simple yet ingenious way of capturing footage of deserted streets – a makeshift camera rig for a car 

As new brands have a lot of creative juices flowing, the ultimate goal is to use the power of communications for social good, especially in times like now. The Covid-19 lockdown pioneered these totally original forms of production and execution. 

Amazon Reigns Supreme

The COVID-19 crisis has strengthened the footholds of retail giants with Amazon having the most to gain. With millions of people staying at home, Amazon has become a lifeline for essentials rather than a convenience. And as long as new brands get creative with new business approaches, coping in the Covid-19 pandemic will bring in their biggest revenue. 

Additiona read: The Future of Grocery Shopping after Coronavirus

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