Seller’s Concern
“We want a fast and sustained growth. We’ve run numerous promotions to boost our product, but we aren’t seeing a sustained growth as sales drop very quickly once the promotion is over.”
Discounts are an indispensable part of operating on Amazon. However, frequent discounts can weaken brand power in the long term and do not significantly contribute to attracting new customers, which is crucial for the growth of products. In the case of LG H&H, ads that can increase the baseline sales of the product were needed.
Relationship Between Promotions and Advertising
Promotions and advertising serve to increase two different metrics. Promotions are specialized in increasing the conversion rate. On the other hand, advertising is focused on acquiring “new” and “right” customers. This means the key metric of advertisement is twofold: one is to improve the impression and the product’s level of presence within the market, and the second is to increase the ad conversion rate by pinpointing the right customers.
LG Optapex Solution
1) Differential Bidding Based on Conversion Rates by Keyword
LG Optapex accurately analyzes keywords that contributes to purchases through conversion rate trend analysis. Using metrics such as impression, clicks, and ad sales, it predicts the conversion rate of each keyword for up to 7 days.
Based on this analysis, LG Optapex categorizes keywords that do and don’t contribute to sales. Then applies higher bids to keywords that are predicted to have higher Ad CVR, thereby maximizing ad spend to keywords that drive sales. Through this process, LG Optapex was able to drive 124.7% increase in ad sales.
2) Budget Allocation Focused on Products with High Purchase Conversion Potential
Purchase conversion rates vary by product due to several factors such as product characteristics, seasonality, and price. LG Optapex comprehensively analyzes data such as organic performance, advertising, inventory, and rankings to allocate more budget to products that generate the highest conversions at any given time. Conversely, products with lower conversion rates receive less budget. This process helps each product achieve its maximum potential with minimal cost.
LG Optapex was able to detect products that have increasing CVR trends. If a positive performance trend was observed, the system immediately increased the budget to maximize sales opportunities.
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3) Establishing Steady New Customers Influx by Maximizing Product Exposure
When increasing the purchase volume of products, it is crucial to maximize the number of impressions. LG Optapex takes this aspect in consideration, and it aims to maximize impressions from keyword harvesting stage.
When LG Optapex harvest new keyword, it picks out keywords that have high potential to drive sales in long term. This means LG Optapex may pick out keywords that may not have ad conversion in short term as long as its impression and click is sufficient.
In the case of LG H&H, LG Optapex was able to pick out 198 new keywords. 95 keywords from the new 198 keywords did not have any ad conversion in past 30 days. However, these keywords were able to generate significant ad sales over the period of two months, and was able to increase the total ad sales by 40.5%. At the same time, the new keywords were able secure an additional 38.5% additional impression.
Results
The Seller was able to see a 129.5% increase in total sales, 124.7% increase in ad sales after applying LG Optapex. More importantly, the seller was able to achieve a steady growth even after running promotions through the optimization.
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