The Growing Need for an AMS Algorithm

Amazon Marketing Services Time BombSorry to disappoint, but this isn’t about Google; it’s about Amazon and their Marketing Services ad platform. It’s about the soon-to-be-dire need of an algorithmic solution to the overly simplistic method of “highest bid wins”. As marketer who has been using the AMS platform since its inception, I can only describe what is happening as nothing short (and with wonderful, if not fanciful, hyperbole) as a nuclear arms race of bidding. As more and more vendors discover and turn to AMS, the bidding war will only become more caustic, blatant, and expensive. It’s a time bomb with short fuse.

For those yet familiar with Amazon Marketing Services, let’s start with a quick synopsis.

What is AMS (Amazon Marketing Services)?

In a nutshell, it’s Amazon’s paid search platform for Amazon vendors to increase their product visibility and product sales by bidding on keyword terms, relevant categorical products, or consumer affinity interests. Amazon provides vendors three ad types to choose from:

Amazon Marketing Services Ad Types

Every single ad type is CPC-driven. As Amazon states in their FAQs:

Amazon Marketing Services uses a cost-per-click, auction-based pricing model. You set the bid which is the maximum cost you are willing to pay when a shopper clicks an ad. If your ad is eligible to appear in a shopper’s search, your ad will compete in a real-time auction. The more competitive your bid is, the more likely you are to win the auction.

If your ad wins the auction and the shopper clicks on the ad, then you will be charged $0.01 more than the next highest bidder.

And, that’s the whole show: bid “competitively”, get the impression, win the click. It’s that simple. Assuming you did your Amazon consumer journey homework, found the terms, all the marketer/vendor has to do is set a bid. Waa-lah: success.

There’s a lot be desired from the world’s #1 online retailer. Namely, how about a way to reward vendors/marketers who build great content on your site? Or, reward AMS accounts that dominate in their specific categories: earn consistent, high CTRs and convert sales.

What Google AdWords Gets 100% Right

What Google got right, and continues to get right, is applying a Quality Score algorithm to advertisers’ ads. Taking into account several factors directly related to the consumer experience with paid search like:

  • Keyword Term Relevance to Ad Group
  • Landing Page Quality – is the destination relevant and provide a solid consumer experience
  • Ad Text Relevance – in relation to the term bid on
  • Ad + Keyword Term Performance Click-Thru-Rate (CTR)
  • Past Account Performance (Account, Campaign, Ad Group levels)

Granted, it doesn’t stop extremely high bids in competitive categories or competitive niches, but allows those marketers and advertisers that put together the complete package with a solid bid, relevant, tightly stitched Ad Groups, and good CTRs the ability to earn better position and cheaper clicks.

This is precisely what Amazon Marketing Services needs to implement. A system of checks and balances.

An AMS Algorithm Could Strengthen The Entire Ecosystem

The AMS algorithm wouldn’t have to completely mime Quality Score, but it would have to take a few elements into account in order to swerve off the bidding war track:

  • ASIN/Product Detail Page Content
  • Campaign Keyword Groupings
  • Ad CTRs

Not only would focusing on these elements keep the Money Train full-speed ahead, but it would strengthen Amazon’s entire ecosystem.

ASIN/Product Detail Page Content

Amazon strongly encourages vendors to build robust, unique product content. Amazon certainly isn’t frowning on SEO services that optimize product pages. After all, is there any doubt that when you’re searching for a specific product category or product in the web-at-large (i.e. Google, Bing, etc.), Amazon seems to show up on the first page?

Here’s Amazon’s chance to reward vendors that have been building great product content over the last few years, and encourage those vendors that slap up their content to build better content: make your ASIN/product detail page that you’re driving consumers to count.

If the vendor’s landing page is authoritative and relevant to the term the ad is bidding on, it should get a boost by either lower the CPC and/or increasing the impression rate over competitors bidding on the same term. When other vendors realize they forking over a full CPC bid, while their competitors aren’t, content quality across the board will get better.

Campaign Keyword Groupings

This is a bit more difficult as the structure of AMS is inherently different from a Bing Ads or Google AdWords campaign structure. There are no ad groups in AMS, making it a bit more difficult to actuate and incorporate this as a algorithmic metric.

That said, Amazon should reward tighter, more neatly stitched together campaigns that target relevant keyword terms. These campaigns are always going to outperform campaigns that incorporate disparate, tertiary terms that are slushed together with target terms. For example, if the campaign is targeting “jeans”, but also targets “socks” or “running shoes” because they’re high volume terms in clothing category, the overall campaign is going to have a lower CTR and conversion rate than one that focused variations of jeans.

Ad CTRs

AMS is already calculating this metric for each campaign (in that they keep track of impressions and clicks of each campaign). They simply need to put it to use. If your ad has great click-thru-rate because you took the time to craft a great message and targeted appropriately, you should be rewarded with a CPC price-break. Here too, this will help vendors/advertisers step up their marketing game across the board: build better ads.

Building an AMS Algorithm Sooner Than Later

Nothing has reached critical mass yet. But, in the last year, I’ve seen a marked uptick in cost-per-click. The secret is out: use AMS instead of wasting your budget (and time) with AMG and see even better results. Marketers/Vendors/Advertisers will put up with the skyrocketing costs for a while. But, sooner or later, the disgruntled whispers will start, the CPCs will start to become astronomical for single click in a subcategory; the heavy hitters will throw down the gauntlet, will raise the stakes, willing to pay in the double and triple-digits for a click, boxing out the smaller players. Some advertisers leave, etc., etc.

Maybe that’s Amazon’s plan? I would guess it isn’t, but if they aren’t working on a solution to what will inevitably become the problem in the near-future, they have a mess on their hands.