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Understanding the Amazon Flywheel Concept
The Amazon marketplace is often called a Flywheel. As sales velocity increases, your organic visibility improves (in search and BSR rankings), leading to more sales. However, building momentum on this flywheel can be challenging.
When you start selling on Amazon, you likely won't get organic sales initially because Amazon lacks signals that people want to buy your product. As a result, your product won't be placed in a highly visible spot on the results page, as Amazon prioritizes listings that are more likely to generate purchases.
Because of this, you need to create momentum on the proverbial Flywheel.
Leveraging Advertising to Build Momentum
The best way to manufacture this momentum is with advertising.
You need to signal to Amazon that people want to buy your product, and advertising—specifically Sponsored Ads—is the fastest and most scalable way to drive traffic to your product page. By launching Sponsored Products and Sponsored Brand campaigns, your products can gain impressions, clicks, and ultimately conversions. As you accumulate more conversions, you'll receive more reviews, your Best Seller Rank will improve, and most importantly:
1️⃣ Your product will appear higher in the organic search rankings
2️⃣ Your ACoS will become more sustainable over time
Advertising, therefore, creates a snowball effect, increasing not only your attributed sales but also your organic sales. Over time, your advertising spend becomes less of a cost burden and more of a sustainable growth driver for your Amazon strategy.
Measuring and Analyzing Flywheel Effects
Understanding the impact of the Flywheel can be challenging, but ThinkAd offers powerful analytics tools to help you measure its effects:
1️⃣ Total Sales Analytics: Visualize the relationship between Organic and Attributed sales and how they work together to drive an increase in your Total Sales.
2️⃣ Cost-Per-Click (CPC) Trends: As Amazon recognizes that people want to buy your products based on specific keywords, you'll notice that your CPC (Cost Per Click) decreases over time.
If you want your products to gain momentum in the Flywheel, be aggressive with your advertising strategy in the short term, and you’ll reap the rewards in the long run.
🚨 However, be sure to closely monitor your Conversion Rate (CVR). Pushing traffic to low-converting keywords can result in Amazon lowering your search ranking and increasing your CPC, which can hurt your overall performance.
Article last updated September 2024. If you find this information to be out of date, please contact [email protected].