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What Should You Do When Two of Your Brands Compete in the Same Space?

What Should You Do When Two of Your Brands Compete in the Same Space?

Manufacturers often face situations where they have two or more brands that compete in the same space or category. They didn’t just serendipitously fall into this situation, but instead strategically created these House of Brands in order to better address the needs of different shoppers. These needs vary but often come down to quality, value proposition, and price tier (i.e. how much is the shopper willing to pay for a product in that category). In the Brick & Mortar environment, brands/retailers can serve the needs of these various shopper segments by simply placing products from different brands somewhere on the physical shelf. In all but the most limited SKU environments (e.g. Club), the shopper just navigates the shelf until they find the product/brand to their liking. The digital shelf is different – in a complex eCommerce setting, there is always the chance that the shopper simply will not be able to find the right product after endless searching, clicking, and scrolling.

However, brands can attempt to alleviate this shopper point of friction while simultaneously benefitting themselves. The challenge is that search terms are often so vague and ambiguous that it's impossible to surface the product in your portfolio that matches the shopper intent based on the keyword alone. Take the search term ‘dish soap’, for example – this is one of the most popular search terms in the dish care category but the keyword in itself does not tell you whether the shopper is looking for a specific price, scent, size, form, or efficacy. In such cases, it is simple enough to determine which product you should advertise if you only have one brand – you will generally want to lean into your Hero SKU to maximize conversion and drive sales. However, challenges begin to arise when you have multiple brands with various products that fit the same search. Two questions naturally arise: 1) Which brand/products should you promote and prioritize and 2) How do you execute your paid search strategy, particularly avoiding a situation where your brands are competing against each other?

Which Brand/Products Should I Promote?

In answering this, let’s first consider the traditional brick and mortar shopping experience for dish soap. The shopper will browse the household cleaning aisle until they find the dish soap section. The shopper’s gaze fixates on the assortment of bottles in various shapes, sizes, and colors. In store, shoppers have the freedom to start their search anywhere on the shelf.

Brands and retailers have closely studied shopper behavior in-store and arrange their planogram specifically around these behaviors. Our search naturally starts at eye level but we ultimately have the autonomy to decide our own journey. This is the key difference in eCommerce. Shoppers are led into whatever shopping experience the highest bidding advertiser wants to offer and the algorithm decides will maximize a multitude of KPIs, like conversion and profitability. For paid placements, this is your opportunity to surface the exact brand and product that you want for that specific shopper and the search term they enter. Just as brands are meticulous in developing the perfect planogram in brick & mortar settings, brands should also employ similar methodical thinking for their paid search efforts.

When deciding which product to surface first for a generic search term like ‘dish soap,’ factors to consider include brand strategy, organic search ranking, and search placement. Brands with actual planograms already have a head start in determining this – it’s generally the bestselling national SKUs (or the eComm-friendly equivalent pack) that are placed at eye level on the physical shelf. After the priority brand/product has been identified, brands should then look to their Go-To-Market strategy to determine which brands/products to surface next. The general strategies of driving premium and larger sizes are popular and what we generally recommend in order to drive a larger basket size.

Next, should you still promote your hero SKU if it is one of the top organic search results? Maybe, but not always. This is a great opportunity to drive strategic portfolio diversification. If that shopper does not convert on your top SKU organically, what product would you want to convert them on instead? What about a foam dish soap that likely contributes more margin to the retailer and your company? What about a new scent that was recently launched and could use the ratings and reviews boost? Although you will likely face some level of eroded efficiency by not surfacing that hero SKU, we think the upside in incrementality and diversification often offsets these risks over time.

The last layer to consider is the search placement itself. Not all paid placements are created equal – specifically referring to the Top of Search (ToS) vs. Rest of Search (RoS). ToS placements are the paid search ads at the very top of keyword search results while RoS placements are found further down in the search results. Naturally, you can expect more eyeballs and clicks at the ToS, but these highly coveted placements are generally more expensive as brands will apply bid multipliers to prioritize surfacing higher up in search results. This is where you likely want to promote the Rolls-Royce (read: premium) brand or product(s) in your portfolio. You might ask yourself how many customers actually scroll down in the search results and whether it even matters to your brand. The answer is yes – especially on high-search-volume keywords and especially for lower priority brands/products. The latter often have lower price points, which puts additional downwards pressure on efficiency metrics. We will publish a separate article extolling the virtues of a robust search placement strategy but for now, think of the digital shelf as analogous to how shoppers’ eyes travel on the physical shelf. National best sellers and priority brands should surface at the ToS (accomplished via higher bids) while other brands normally located outside the eye-level strike-zone can achieve slightly less visibility at a more efficient cost in RoS placements (accomplished via lower bids on the same keywords).

How Do I Execute My Paid Search Strategy?

We often receive variations of the same question: “if a manufacturer is bidding on the same set of keywords with multiple brands, won’t that just drive up the cost of bids since Amazon Paid Search is an auction-based platform?” This one is easy – it can at times, but a manufacturer can take one simple step to avoid bid-self competition. As long as all the campaigns that contain a keyword or set of keywords live in the same Brand Entity ID, brands in that account will not compete against each other. This means that brands competing in the same space should all live under the same account. If they are currently in separate accounts, you can work with your Amazon contact to tie these disparate accounts together in the backend system, while still maintaining separate external-facing sponsored ads accounts. Anytime Jeff B. offers you a piece of low hanging fruit to improve your business (and for free), take it. This one is a no-brainer.

Take-aways

The physical shelf can often provide helpful guidance on what you should do on the digital shelf. Traditional planograms can be used as a heuristic on which brands and products you should prioritize in paid search for a set of sufficiently ambiguous keywords. Once these decisions are made, bid management will help you accomplish your desired results. Bid higher if you want a product to surface higher in search. Bid lower to increase efficiencies on lower priority brands and products. Reach out to find out how Pacvue’s software can help you tame the Amazon shelf.

Pacvue is ecstatic to be among the first three approved advertising partners working with Kroger to buy product listing ads on Kroger eCommerce sites.
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Pacvue

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