Ep 492: How to Win on Amazon in 2025: Search Volume Declines, Tariff Pressures & Brand Equity | AKNF

Summary

DTC Podcast Episode 492 Summary: How to Win on Amazon in 2025

Release Date: March 21, 2025
Host: DTC Newsletter and Podcast
Guests: Rob and Clifford from AKNF

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Introduction

In Episode 492 of the DTC Podcast, the team delves into strategies for succeeding on Amazon in 2025, addressing challenges such as declining search volumes, tariff pressures, and the critical role of brand equity. Hosts Rob and Clifford engage in an insightful conversation, providing actionable tactics for direct-to-consumer (DTC) ecommerce brands aiming to scale effectively on Amazon's platform.

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Amazon as a Buying Platform

Key Insight:
Amazon is predominantly a buying platform rather than a research hub, meaning users are often ready to make purchases rather than just browsing.

Notable Quote:
Clifford emphasizes, “The really nice thing about Amazon is people are there to buy stuff. It's not really their research platform, it's their buying platform.”
(00:06)

Discussion Points:

• User Intent: Unlike other platforms where users might explore or compare products, Amazon users typically have a clear intent to purchase.
• Implications for Marketing: This purchasing intent necessitates a focus on conversion optimization and effective ad strategies to capture ready-to-buy customers.

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Ad Console Strategies: Profit vs. Ranking Goals

Key Insight:
Managing Amazon ad campaigns requires balancing objectives between immediate profitability and long-term ranking improvements.

Notable Quotes:

• Rob explains, “Depending on the keyword, you kind of have different goals. Sometimes the goal actually isn't profit because the benefit to spending on a ranking term is your improved rank and your improved organic traffic and revenue.”
  (02:38)
• Eric adds, “Making up in volume doesn't work anymore.”
  (04:10)

Discussion Points:

• Dual Objectives: Brands must differentiate between campaigns aimed at generating direct profit and those intended to enhance keyword rankings.
• Long-Term Strategy: Investing in ranking terms can yield indirect revenue through increased organic traffic, albeit sometimes at the expense of short-term profitability.
• Balancing Act: Successful management involves tracking metrics like ad cost of sale (ACoS), search rank, and share of search to ensure sustainable growth.

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Placement Modifiers and Their Optimization

Key Insight:
Optimizing placement modifiers in Amazon ad campaigns is crucial for maximizing ad performance and controlling ad spend.

Notable Quotes:

• Rob notes, “I've been always talking about placement modifiers... sometimes they're just not used at all.”
  (10:26)
• Clifford explains, “Every campaign should probably have some sort of placement modifier on it because you are just going to get different performance for your ads that land on product pages versus the rest of search versus the top of search.”
  (11:39)

Discussion Points:

• Underutilization: Many brands neglect placement modifiers or fail to optimize them, leading to inefficient ad spend.
• Strategic Bidding: Adjusting bids based on ad placement (e.g., top of search vs. product pages) can significantly enhance campaign effectiveness.
• Control and Efficiency: Proper use of placement modifiers prevents wasting money on low-converting placements and ensures ads appear where they are most likely to convert.

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Impact of Tariffs on Ecommerce Brands

Key Insight:
Tariff pressures, especially between the U.S. and Canada, present significant logistical and financial challenges for ecommerce brands operating cross-border.

Notable Quotes:

• Clifford states, “One of the big ones is... tighter inventory controls. They can't as freely ship back and forth because the cost of shipping up is gone.”
  (18:15)
• Rob adds, “Customs brokerage fees are drastically increasing... they can add up really quickly.”
  (19:25)

Discussion Points:

• Increased Costs: Tariffs have led to a flat 25% increase in costs for some brands, affecting both product and packaging expenses.
• Logistical Challenges: Brands can no longer easily transfer inventory between countries without incurring substantial costs, complicating inventory management.
• Customs Fees: Rising customs brokerage fees further inflate operational costs, particularly for smaller shipments.
• Strategic Stocking: Some brands have proactively stocked up inventory before tariff implementations to mitigate ongoing costs, though this requires strong cash flow management.

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Decline in Search Volume and Strategic Responses

Key Insight:
A year-over-year decline in Amazon search volumes necessitates a focus on optimizing listings and enhancing conversion rates to maintain growth.

Notable Quotes:

• Clifford advises, “You now need to dial in your listings... your hero image... your offer.”
  (15:04)
• Eric reflects, “Now is the time that it is incredibly critical.”
  (15:29)

Discussion Points:

• Reduced Demand: Lower search volumes mean fewer potential customers, making each visitor more valuable.
• Enhanced Listings: Improving product listings, including images and descriptions, is essential to convert limited traffic effectively.
• Competitive Edge: With competition intensifying in a smaller customer pool, brands must differentiate through superior presentation and offers.
• Influencer and Creator Marketing: Leveraging external influencers can drive additional traffic and improve click-through and conversion rates.

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The Power of Brand Equity on Amazon

Key Insight:
Strong brand equity can significantly enhance a brand's ranking and sales performance on Amazon, often outperforming competitors despite higher prices or suboptimal listings.

Notable Quotes:

• Clifford illustrates, “Nike still ranked in the top spots because they have such a massive amount of brand equity.”
  (28:07)
• Rob concludes, “Brand equity... drives pure profit and supports organic search rankings.”
  (29:01)

Discussion Points:

• Brand Recognition: Established brands like Nike benefit from high click-through and conversion rates due to their strong reputation.
• Organic Advantage: Brands with substantial off-platform marketing efforts can drive organic traffic on Amazon, enhancing their search rankings and sales.
• Sustainable Growth: Building brand equity through diversified channels (e.g., Meta, TV, influencer marketing) supports long-term success on Amazon by attracting customers organically.
• Competitive Barrier: Newer or lesser-known brands find it challenging to compete against established players with significant brand equity.

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Conclusion and Key Takeaways

In this episode, Rob and Clifford from AKNF provide a comprehensive guide for DTC brands aiming to thrive on Amazon in 2025. Key takeaways include:

• Optimize Ad Strategies: Balance campaigns aimed at direct profit with those enhancing keyword rankings.
• Utilize Placement Modifiers: Fine-tune ad placements to maximize efficiency and control costs.
• Manage Tariff Pressures: Adapt inventory and logistical strategies to mitigate increased costs from tariffs.
• Enhance Listings: Focus on high-quality listings to convert limited traffic effectively amidst declining search volumes.
• Build Brand Equity: Invest in brand-building efforts outside Amazon to drive organic growth and strengthen on-platform performance.

Final Quote:
Clifford emphasizes the enduring impact of brand equity: “Amazon really favors organic search, like organic clicks and buys over ad clicks and buys... that brand equity is just so strong.”
(29:33)

By implementing these strategies, DTC brands can navigate the evolving Amazon landscape, overcoming challenges and leveraging opportunities to achieve sustained growth and profitability.

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Transcript

[Rob]

Amazon standpoint, when you're looking at your ad console, depending on the keyword, you kind of have different goals.

[Clifford]

The really nice thing about Amazon is people are there to buy stuff. It's not really their research platform, it's their buying platform.

[Rob]

Something I've been noticing in like every audit presentation I've done in the last month is I'm always talking about placement modifiers.

[Eric]

Where do placement modifiers have the biggest impact?

[Clifford]

Basically every campaign should probably have some sort of placement modifier on it because.

[Eric]

Talk to me about what you guys are seeing with clients and tariffs, brand.

[Clifford]

Building efforts in general. Even if it means spending more on meta TV ads or whatever other places, influencer marketing actually has a pretty significant effect on your Amazon performance because.

[Eric]

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[Rob]

Oh, this was just a fun thing that popped into my head. That was it was something from your podcast with the CTC founder Blank on his name right now.

[Eric]

Taylor.

[Rob]

Taylor, thank you. He was talking about like incrementality and really looking at like you're a true cap that adds like profit to the business. And I was like, like super valuable. Love that podcast. And I was like, well, how does that apply to Amazon? And from the Amazon standpoint, when you're looking at your ad console, depending on the keyword, you kind of have different goals. And sometimes that goal actually isn't profit because the benefit to spending on a ranking term is actually your improved rank and your improved organic kind of traffic and revenue or so indirectly revenue. But you're spending so much to get it that it's just not at a profitable state. But as long as you're tracking the metrics that say, hey, we are climbing rank, we are getting a larger share of search, a larger share of add to carts and a larger share of purchases, then this will pay off in the long run. As long as you've also done the research that organically ranking on page one for that term is going to generate enough volume to justify your investment in the term. But all that to say the goal of spending is actually not profit, in that case, then you're balancing that with the rest of your ad console, that is spending on terms that the goal is profit, because you may already have rank for that term, so you're actually just trying to spend as little as possible to drive as much profit as possible to still defend your rank. So you just end up looking at your ad console in two different ways depending on the goal for each term, while trying to balance for your overall goal, which of course if it's sustainable, the overall goal is profit of some sort. Unless you're doing like a just grow or die, which we're seeing a lot less of these days.

[Eric]

Yeah, making up in volume doesn't work anymore.

[Rob]

No, not with today's lending climate.

[Eric]

And then so you, you're talking about managing these different goals on the on platform. Are you using an external third party to track this careful or is it just sort of like an eyeball type situation? When you've got these different objectives, you're.

[Rob]

Managing for the tacos in the account because your total ad cost of sale, it tells you whether your account is profitable or not. And then you're looking at the individual campaign and keyword performance and that we're doing manually because we have the way we structure campaigns, it makes that easy to do. We don't need to export a big database of keywords to look at that data. Just our campaigns are segmented in a way that each campaign's got a goal. We know what that goal is based on the value it drives back to the brand. And that value is either going to be a cost number that's profitable or not, depending on the campaign.

[Eric]

When I was in the app game way back in the day, we were trying to build a Clash of Clans competitor game. It was a really interesting project, worked with a bunch of different creatives and developers. They poured millions of dollars into it. Didn't Newsflash end up beating Clash of Clans? But I remember hearing about Clash of Clan strategy, which was they were spending, I think I had heard at the time, over $100 per install on platforms like Meta. They were addicted to it. They had to keep spending that so that they kept enough installs coming into the App Store so that they appeared at the top of the list because they had calculated that they got enough organic from being on that top list. Like, is that a strategy that is predictable enough? You mentioned, like, if you know how much volume you'll get from being on the first page, is that like, how. How does that strategy get planned when it comes to trying to get to that number one spot or within the top three spots, does it always pay off or does sometimes it not.

[Clifford]

It kind of always pays off. Like there's enough search volume, like obviously if it's a well searched enough term, but it kind of always pays off. But it's a really good point that you made, which is the same thing on Amazon, which is it's only the first few spots that matter. Like, as Rob said, you should, you can and should track your progress as you're moving up rankings. Like if you started somewhere in the 80s or hundreds on the second or third page and now you're in the 40s, great. Your organic's probably not going to have moved much, unfortunately, because no one's still finding you in 40 compared to 80. You really have to be like top four, really top three, top two to grab that share of organic sales and really take advantage. Like really get those organic sales. That very much holds true. And it is relatively predictable. Like, as long as you look at what search volume looks like. The really nice thing about Amazon is people are there to buy stuff. Like most people aren't on there, like searching just to browse around and look around. It's not really their research platform, it's their buying platform. Like, they might look and look at reviews and compare, but by the time they're searching it on Amazon. A lot of the time they're already ready to buy. It's not their research time, they're there to purchase.

[Eric]

And it's again we've talked about this a lot but it's when you're spending money on ads, it's more of an investment maybe than on other platforms because you're moving up the rankings and if you're competing for those top slots you're gonna get a lot more organic. I assume. We've done that with a lot of brands. We've taken them from like not ranking and work like what does, what does that look like? What is that? Like how long term of a strategy. You don't have to give a brand but do you have any anecdotes? A brand that had a goal to be in those top three and they were, you know, nowhere near that and we helped get them up there.

[Rob]

It's a, it's a range like because it all depends on, you can affect that through sales velocity and sales velocity can come from both on platform traffic and external traffic. So we had one brand like Top spot organically for their top keyword within three weeks. But that's because like they had a ton of branded volume when they came in. They were doing really well on DTC and they supported us very nicely with a targeted email blast that was like several emails to different segments of their list. So all of that combined with a really smart ad strategy and some very nice looking listings that we built. But I'll say so myself, we were there like within month one and then it was just like a defensive play to hang on to it. Whereas you're going to see a multi month up to a year journey if like you're cold starting into like a massive category. That said the term you're trying to rank on page one for it changes over time because it's not going to be your top keyword on day one. It's going to be something that's longer tail, lower volume, less competitive. You can actually get there first couple months hang on to that, that shifts from ranking to a profitability goal. Now you have profit coming from that term. You use that profit to invest in the next term. So how's that for an answer? That's not really.

[Eric]

Yeah, no, I think it's interesting for sure. That's the first time I've heard and this is this the first example where you had a brand send a bunch of emails to their list. Would they have normally like run to their own D2C store. But in this case, they ran to Amazon to affect this. This impact.

[Rob]

Yeah. So I'm pretty sure, if I remember correctly, that brand did a segment of their list and they had existed for a fairly long time on dtc, so they had a really long tail of their list that hadn't engaged with the brand in the last, like, call it six months or 12 months. Clifford, do you remember exactly? It was something like that.

[Clifford]

Yeah, I think it was. I think it was six months. Yeah, yeah.

[Rob]

So they took a segment of their list that like, hey, these guys haven't bought our site in six months. Let's see if they'll buy on Amazon because we've never given them the option. And they converted quite well. So it was, it was kind of like the, the last little push thing did to engage with the brand again was just like the ease of purchasing through Amazon.

[Eric]

I like that. That's pretty smart. I feel like more brands could do that with. We're talking with Jordan all the time. On the email side. That'd be a really good way to like in, in the lowest friction way, like reactivate a portion of your list. And you already have their emails, which is the big complaint about people buying on Amazon is you don't, you don't get to capture that customer. So if you already have them, it's less detrimental.

[Rob]

Yeah. And sure, they might buy all of their future orders from Amazon now instead, but to your point, you have their email. So if you come up with a new product launch and you don't launch it on Amazon, like new color, new flavor, new like design, whatever, depending on the niche you're in, you could always. They might, you might get them back to site then if they've become now like a, a repeat customer on Amazon.

[Eric]

The next note here, I think is something we've talked about recently is just the placement modifiers you're seeing in audits. When you're looking at brands that not enough brands are using these placement modifiers.

[Rob]

Yeah. If we did go through this recently, we don't need to spend too much time on it. But it's just like something I've been noticing in like every audit presentation I've done in the last, like, month is I'm always talking about placement modifiers. And like, sometimes they're just not used at all. Sometimes they're used, but they're just, they're not optimized. Like, they're just set to like whole amounts, like 50 or 70% versus like actually calculating what's the exact percentage modifier you need you want based on your bid to achieve your target ACOs. So just haven't run into like one instance of them being like fully optimized in an audit. So I figured it'd be fun to mention and bring up again because it does. It's that extra little bit of tweaking that can lead to some really good.

[Eric]

Results and that you want to put those on like your most high converting keywords. Is that right? Like, where do placement modifiers have the biggest impact?

[Clifford]

I'd say basically every campaign should probably have some sort of placement modifier on it because you are just going to get different performance for your ads that land on product pages versus your ads that land in rest of search versus your ads that land on top of search. So you likely want different bids for them. If you don't set up your placement modifiers, you're not bidding differently for those different placements. You're just in. You're in a different auction, but you have the same bid. Which doesn't make any sense from like an actual logical standpoint. You're bidding for higher quality spot, but you're bidding the same amount. That doesn't make any sense. Bid more like it's a better spot. Bid more if it's more valuable. So that's like almost always we'll find that there might be a small top of search modifier, but almost every audit they're all zeros. Which is crazy because that literally means like if your bid set to $2, you're bidding $2 for the placement that's below the fold on someone else's product page, horrible placement. And you're bidding $2 for top of search on your main keyword like that are in that same campaign. That's crazy. Those are not the same placements and those should have different bids.

[Eric]

Definition of Amazon insanity. Both for optimization but also for control. So the control is just so that you don't. You're not wasting your money on low converting placements.

[Rob]

And like, if you want to prevent a campaign from displaying on like product page, for example, you can get your. If you can actually set your bid quite low, but then run a high rest of search high top of search multiplier. So then the actual bid that's going to product page is just never going to display. So you can control that campaign to display in only the placement you want it to. And then it makes your data a bit cleaner when you're like scanning campaigns.

[Eric]

What's Amazon Rufus? I've never heard of this. What is Rufus? Are. Is My AI, My Amazon AI Butler.

[Rob]

Yeah, you're AI shopper, basically. So you can ask Rufus questions about products on your actual like listing pages. There's a little Rufus window that'll you can either ask questions or it'll have some pre populated questions. So this idea actually came from, from one of our clients and on a discussion, the weekly call, he brought it up with the manager on the account and they ended up deciding it was a good idea to implement. So what they're doing is they went through all of their listings and looked at the pre populated Rufus questions, which we're assuming are coming from people who are actually asking those questions. And then we're just doing a listing audit to ensure that the answers that we want customers to, to have to those questions are included in our listing content. And that might be a plus. Content images, some back like, some of the text options, bullets like. And the whole idea here is like how can we feed the AI with the information we want it to give to customers but also just create a good customer experience like if they're asking questions and that information just not on the listing, like how do we make sure it is there? And so really just using it as another data point to influence listing optimization.

[Eric]

Nice. And then we have another note here. Search volume down, question mark, exclamation mark. What's going on with search volume?

[Clifford]

Yeah, so across a few brands it seems like across a lot of categories on the site, it is the first time that I've observed year over year search volume numbers are down, they are lower. People are searching less for a lot of things than they did last year, which of course also means buying less because we are the buying platform. So what to do in time when there is less people searching for your product and you're trying to do good on your year over year numbers, somehow you're trying to be. It's capitalism, baby. Grow every year, always growing. You must grow. How do you grow if there is less people on the site searching for your products? And really unfortunately the best answer I have for it is you kind of just dial in the fundamentals. It's like you now it is more important than ever that your listing sells well and sells as good as possible. You might need to discount a bit more to be more competitive if you haven't in the past, because now competition hasn't gone down. If anything, in most categories competition's gone up a bit. But now you're competing for a smaller pool of customers and you're trying to get that same. If not now Larger. You need a larger share with more competitors of a smaller pool. So you really need to dial in your like listings. You need to dial in like your hero image in a big way. You need to dial in your offer. And it likely means exploring a lot of other things too, like figuring out ways to get influencers or Amazon creators to post about it. The Rufus thing might be a way in like whatever ways that you can drive increased click throughs and increase conversion rates. Now is the time that it is incredibly critical. If search volume is down because you like you are now competing for a smaller pool, the competition is going to heat up.

[Eric]

This is the first time in nearly, nearly two years that the, that in the US consumer spending has fell by like 0.2% in January, I bet in February and in March with all of this tariff uncertainty, there's probably a lot of people sitting on their wallets a little bit more. Right? Interesting. It's like a canary in the coal mine for the big, for the R word that everyone's afraid of happening. Right? It's like maybe we just need to go with this marker once Amazon search volume goes down. That's the true sign of a recession.

[Rob]

Yeah, I've had a couple of conversations with brands recently like, like audits or sales presentations where it's like hey, we're ready to make a move. But like we just, there's some uncertainty. Like our costs just went up by a whole bunch with tariffs. Like we're, we, we gotta figure some stuff out. Like they're just asking for some more time which is gotta be frustrating to deal with.

[Eric]

We've got a positive note on the power of brand equity on the platform. Let's save that for last. But since we're talking about it, like what are like, talk to me about some of the situations that our clients are finding themselves in. We're a Canadian agency so we don't have to charge 25% more just for our services at this point. That hasn't happened actually.

[Clifford]

I don't think anyone's ever asked that.

[Eric]

No, we don't. We're a great deal. We're still a great deal. But talk to me about what you guys are seeing with clients and tariffs.

[Clifford]

One of the big ones is we have a client that sells in Canada and the U.S. they're Canadian based. They ship stuff back and forth between Canada and the US Quite often. And now they have to have way tighter inventory controls. They can't as freely be like, oh, we have 500 extra units of this in Canada. Let's ship it down to the US or we have 300 extra units of this in the US let's ship it up to Canada. They can't do that anymore because the cost of shipping that back and forth is gone. So, like, that's a weird thing you wouldn't think of. It's not just like a flat. All of their costs are up 25% because it's not exactly what happened. Their products are made in the U.S. in the U.S. they're good. Still, when things ship up to Canada, that's harder. But, yeah, there's a flat 25% there. But it also just really brings in a lot of operational challenges on just movement of things that would have been easy before. And now you have this extra step. And not just the percentage, but customs brokers are having a hard time with how much it's moving. And from what I'm hearing, like, it's not just that you're being charged the percentage that you're supposed to. People are getting charged rates on things that aren't supposed to be tariffed but are getting hit by it because it's like a weird category offshoot and not knowing, like, which goods are subject to it or not. And then customs brokerage fees are drastically increasing because now there's, like, there's only so many customs agents that do this. Like, I feel like it's never talked about that, like, someone implements the tariff. Someone's gotta go, like, do the tariff sheet and, like, do the math and do the charges. And yeah, a lot of it's, I'm sure, automated, but there's customs brokerage fees every time, like, customs things are assessed, and those are skyrocketing. They're not a huge chunk of your cost. If you're sending giant amounts of products, it's a relatively small cost. But if you're sending smaller shipments across borders, those customs brokerage fees can add up really quickly. And they're really high.

[Eric]

All my friends are straight up, like, not buying American goods. They're like, they're really taking this elbows up thing to heart. And they're like. And they're sort of like, you know, I brought a. I brought a California cab to dinner the other night, and I was, like, yelled out of the building. I'm like, they've already bought it. It's already on their shelves. It's like, it's, it's. It's a really interesting situation. Are you guys seeing any, like, drops in, you know, I don't know. I guess it's hard to tell on Amazon. But like, are you seeing any? Like, because I don't think Americans notice. Americans aren't going to not buy Canadian. They don't. They don't buy anything Canadian anyways. We're buying a lot of their products. Are you guys seeing any impacts of that kind of thing of like Canadians making different choices?

[Rob]

I don't think in the data yet. Like in my own friend group. And like, funny story about the caps. That reminds me, some buddies came over for dinner the other night and one of them brought a bottle of bourbon. He's like, yeah. Was that the stories? Like, I just, I kind of was like, do you have any bourbon? It was almost like asking for like, contraband is legal.

[Eric]

Yeah, yeah.

[Rob]

And they're like, yeah, we can get it from the back. Just a sec. Like came out with this one bottle. They're like, same thing though. They're like, we've bought and paid for it. We'd rather sell it to you than just sit on it. But it was just funny. I'll say. Clifford's point. Rm seem to like, logistically for brands that do manufacture in China and sell in both Canada and the states, like before they could just bring into one country and then send it, like then to split up inventory. But now it's like, okay, you got to send it. Like, I guess you could send it into Canada and then pay the tariff down or to split your shipments and send it. But all that's just logistical nightmare.

[Eric]

And you're still paying the China tariff in that case. But it's lower than the one then through Canada, I guess.

[Rob]

Yeah. And then some brands, they really stocked up getting inventory into the US before some of this, which was a smart play if the, if your cash flow allowed it. And that just might, might let them ride it out till at least stabilizes. Because like every day we're waiting for a new tweet that's going to tell us what's going to happen.

[Clifford]

Definitely seen a lot of that. Like, and both in our brands are, we manage, but also in our competition, like there is in a couple categories at a time when search volume is down. So kind of a double whammy. Not great. Just a spring up of new competitors. I'm like, where did you come from? Like, who are. Why is there so many, basically no name brands that have popped up in this category. It's like, well, it makes sense. These products are made in China. They were all getting stuff shipped in right before the tariffs hit as fast as they could. So all of these brands now have all of this inventory and they can only sit on it for so long. So it actually is like annoyingly bringing prices down at a time when the brands that we're managing kind of need to raise prices to recover the tariffs. But brands that shipped in stuff before the tariffs and really prep for it and sent in a ton don't want to pay too high of storage fees for too long. So they're actually discounting a little bit more than they would. So there is this very odd dynamic there. And also a big part that people don't think about is even American made goods have a lot of Chinese components. Like that same brand I was talking about. They make their product in the U.S. but it's filled in the U.S. it's made and filled in the U.S. their packaging is from China, so they're paying a tariff even on their American made goods. They're paying a tariff on their packaging cost. So their packaging costs went up 25%. And that's not a. Like there's not a lot of packaging made in America. Like yeah, if you have paper maybe, but plastic packaging, like jars, containers, pouches, a lot of these things aren't really made in America in a very big way. A lot of these are made in China for a lot of brands. So even if things are made in America, supplements are a great example of this, like protein powders and things like that, Capsules and pills, things like that. Beauty products, all of that packaging is made in China. So even though these brands shouldn't be affected because they're made in the U.S. their packaging costs are a decent chunk of their cost of goods. So that went up 25% or 20%, I guess. And again, customs brokerage costs have gone up too, and those have caused just cost to even be more than that regular tariff rate. And if the customs broker screws up or doesn't know the different tariff part, then people are getting hit with double the tariffs they should have. And it's causing like a pretty significant increase in costs that are beyond just what the percentages would say and beyond what you would think it would affect. Like I would even, I would even gamble. I don't know enough about their supply chain. But even those big alcohol brands in the US I would bet they have some component that's not made in the US that is now tariffed. Those same ones that Canadians are boycotting are probably not entirely made in the US So their costs probably went up from some components that they're getting from China.

[Eric]

As if this game wasn't hard enough, we've been through so many wrinkles throughout the years and I guess the feeling is the brands that can weather the storm will be stronger on the other side. I guess that's, that's the that. So it's. So now is the time to batten down the hatches and tighten up your listing. As you say, call Pilot House, no tariff on Pilot House services and help us get you that first page. What's our note here that we want to finish on about brand equity on Amazon and the power of that.

[Clifford]

We talked a lot about the search volume there and that's all demand capture. We talk a lot about this with our clients all the time. What we do on Amazon for 99, 95 to 99% of the time, roughly, we're demand capture. People have to be on the site and they have to be searching. If they're not, we don't really do a lot about that realistically. There's a little bit of prime video stuff, there's a little bit of demand generation, but we're really demand capture the same way that kind of Google is if you don't include YouTube. But there is an entire side of Amazon that's the rankings on a keyword are so drastically affected by brand power. The example we always go to is shoes. There are a million different shoe competitors to Nike on Amazon that are no name, direct ship from China, brands that are selling shoes that look exactly like Nike's. But when Nike throws up their listing, even if their listing looks like garbage, even if it's way more expensive, even if their ads suck, Nike still ranked in the top spots because they have such a massive amount of brand equity that they've built over years and years and years that their click through rate's high, their conversion rate's high and they don't have to do any of those other things now could they? And it would improve them further. Sure. But like that brand building that they've done outside of Amazon for so long has such a power on platform and I don't think we've, I don't think anyone really has a great way to measure it. But brand building efforts in general, even if it means spending more on Meta or TV ads or whatever other places, influencer marketing, TikTok ads, wherever you're building your brand actually has a pretty significant effect on your Amazon performance because if people are searching for your brand not through your brand term, but through your generic term. So if someone comes to Amazon instead of searching for Nike shoes, they search say basketball shoes and then they click on the Nike one because they've heard of Nike. That's a very powerful search. That search, click buy because of the brand is huge. And so if you can make that happen in your own category where someone doesn't come search for you, they search for your generic big keyword but they find and buy you because of what you've built in brand that has massive impacts. Because Amazon really favors organic search, like organic clicks and buys over ad clicks and buys. Like yes, you can buy ranking by being there with your sponsored product, but if you're driving a huge amount of off platform searches into sales, you're going to get a huge ranking increase and a lot of times it can't be overcome by almost anyone else who's spending whatever you want on on platform ads because that brand equity is just so strong.

[Rob]

It really takes the pressure off of your generic like your aggressive ranking campaigns too if that traffic's coming in because it's just pure profit. And then this also relates to like the, what the chubby founder was talking about, about trying to like get away from being totally addicted to that like bottom of funnel, like acquisition and, and kind of like spend up funnel a little bit, start to learn how to do that and what actually works and, and then trying to measure the actual trickle down effect. And Amazon is a great channel to capture that trickle down effect that, that happens when you can start doing that level of brand building.

[Eric]

It reminds me of the tracksuit report that we've talked about a few times on the podcast that they did with TikTok called the awareness Advantage that was specifically about how clicks, like people just clicking on your ad don't have as big of an impact as people being aware of your brand from like another source. So it's like when, when you have actual brand awareness. Yeah, it makes everything better because it makes you be able to compete and win on those generic terms which again which will show Amazon that you're, you know, worthy of being in those slots. So it's funny, this is the DTC podcast, but everything's, everything's full circle now. You've got to have an omnichannel brand. You got to be always on.

[Clifford]

And to put like, I really want to put an example behind that because I feel like we're talking vague like you should do awareness terms and like yeah, of course everyone should do awareness. We don't have unlimited budget but we've had a brand that we've managed for years on Amazon. They were very top seller. They're doing fantastic. One of their Biggest competitors that wasn't on Amazon for a long time joined the platform a few months ago and they're killing us. And their listing is not great. Their products are way more expensive, but they've just had massive meta spend for years. They've built huge brand awareness and their search volume is higher for literally their branded term than the entire category's generic terms. Because they have this huge brand presence and that like power has. I think they're probably making like 5 million a month on just Amazon sales alone without having like. I don't think they even. They don't need to. They might spend a little, but they don't need to spend a dime to get that on their Amazon sales because of just like people are coming and they're searching that generic term and they're searching it for them to find them. Before they weren't there. So we were very happy to capitalize on the fact that they weren't on Amazon and we were like, hey, we're here though. But now they are there and it's brutal. And that like power of that brand and how untapped that was for that brand for so long, like we were taking a lot of those sales for a long time from that brand, from basically a market that they kind of built or at least that they popularized.

[Eric]

Well, any huge brands that are not on Amazon, you should probably be on Amazon.

[Clifford]

Or don't. Or maybe don't. Maybe, maybe.

[Eric]

Or don't. Unless maybe don't.

[Clifford]

Depending on the category.

[Eric]

Depending on the category and whether it's.

[Rob]

Ask us first, Ask us first.

[Eric]

Ask us first, book an audit and then we'll tell you if it's a good idea. Thanks, guys. This was kind of an all over the place podcast, but lots of value as usual. This is a lot of fun.

[Rob]

Awesome. Thank you.

[Eric]

Thanks for listening to today's episode. If you're not getting the DTC newsletter, you can subscribe for free at directtoconsumer co. And if you want to learn more about Pilothouse's all killer no filler services, take off to Pilothouse Co. I'm Eric Dick and this has been the D to C podcast. We'll see you next time.