Being profitable on Amazon: The case of a gaming giant

Introduction

Selling on Amazon can be an obstacle course. Amazon advertising is a crucial lever for visibility and sales. However, overdependence can be detrimental to profitability. This article explores the strategic transformation of a leader in the gaming industry, who managed to balance visibility, sales volume, and profitability despite an initial strong dependence on Amazon advertising. Its objective: to be profitable on Amazon.

Initial situation and problem

The customer, a major player in the game, depended heavily on Amazon advertising. In fact, it represented 75% of its sales. This strategy had a negative impact on profitability, despite a high turnover. In other words, he had a very high TACOS. The aim was to reduce this dependence while increasing profitability and maintaining sales volume.

Our advice:

To understand how to be profitable on Amazon, it is crucial to accurately measure your dependence on advertising and its impact on sales and margins. Analyze advertising costs and identify areas where you could reduce spending without compromising visibility. This initial assessment provides a solid foundation for reshaping your advertising strategy.

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The Strategy put in place

The transformation started with a thorough audit of existing campaigns to identify the most effective keywords and ads. A revision of the product sheets has been undertaken to improve the conversion rate. In addition, we have reduced its number of targeting in order to target the most relevant keywords. Diversifying the types of Amazon ads, mixing Sponsored Products, Brands, and Display, on the same targeting, was a key pivot. This made it possible to reduce advertising dependence while increasing visibility. We'll see the results in detail in the next section.

Our advice:

Once the initial situation has been assessed, the next step is to thoroughly audit your conversion as well as your advertising campaigns. Identify the best performing keywords and ads, and eliminate or improve the ones that underperform. At the same time, optimize your product sheets to ensure that they are convincing and correctly indexed, which will increase their visibility and attractiveness. Diversifying the types of advertising is also crucial. Don't rely solely on one type of advertising, but strategically combine Sponsored Products, Brands, and Display. This approach reduces risks and improves the overall visibility of your products.

After implementing these changes, it is critical to monitor results on an ongoing basis. Observe the evolution of the share of advertising in the marketing budget and its impact on profitability. Be ready to adjust your strategy based on results and market developments. Analyzing sales, traffic, and conversion data is crucial for understanding the effectiveness of your advertising strategies and for making informed decisions.

Learn to control your campaigns with our dedicated article.

The results

The results were remarkable: the share of Amazon advertising in overall sales was reduced from 75% to 40%, with significantly improved profitability thanks to a more efficient use of the advertising budget. The strategy not only reduced dependence on Amazon advertising, but also significantly improved profitability. This case illustrates the importance of a targeted and diversified approach in advertising on Amazon.

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In conclusion

This case study highlights the importance of a targeted and diversified approach in advertising on Amazon. To maximize profitability on this dynamic platform, businesses need to constantly assess and adjust their advertising strategy. By adopting an analytical and flexible approach, it is possible to transform advertising challenges into opportunities for growth and profitability.

At SkyVision, we create a tailor-made strategy for you. If you want to know more, do not hesitate to contact us.

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