I am an Amazon advertiser. Here’s how we used our advertising budget to generate $100 million in revenue in 2021.

  • Five-year-old Hero Cosmetics will hit $100 million in sales in 2021, mostly on Amazon.
  • Aaron Mizrahi leads Hero Cosmetics’ Amazon Advertising Operations in the fierce skin care category.
  • He shared how Amazon advertising budgets are structured and measure success.

This is the sixth in a 10-part series examining Amazon’s booming advertising business. The people driving it, the ripple effect on other companies, and so on.

Hero Cosmetics is no stranger to online customer click wars.

The skincare brand is one of Amazon’s largest advertisers, and Hero Cosmetics has developed an advertising strategy to make their products stand out. 5th year brand birth $100 million in sales in 202190% comes from Amazon and wholesale retailers.

Aaron Mizrahi, Amazon Director of Hero Cosmetics, said Amazon is increasingly a priority for direct consumer brands like himself because of the convenience of shoppers.

“Amazon has a group of customers who like the brand on their website, but want prime shipping, the convenience of being able to return it through Amazon, or have an Amazon gift card,” Mizrahi said. “If there is no brand, there will be other DTC brands on Amazon that can compete or compare.”

Insider talked about how Mizrahi uses ads to break through the site.

Hero Cosmetics spends most of its ad spend on search ads on Amazon

Because skincare is a highly searched category, it is expensive for advertisers to get consumers to see their products. Mizrahi said that most of Hero Cosmetics’ advertising budget goes to Amazon’s most popular format: search ads.

There are two types of search ads: sponsored products and sponsored brands. He said advertising for sponsored products is a major conversion and revenue driver for brands. Non-trademarked brands can use search ads as opposed to Amazon’s sponsored brand ads. This is the easiest and most competitive advertising type for brands to use.

Hero Cosmetics spends a small portion of its advertising budget on Amazon’s demand-side platform, which allows advertisers to purchase ads displayed on publisher websites outside of Amazon.

For established brands like Hero Cosmetics, Mizrahi recommends splitting sponsored ads and DSPs by 80-20. Smaller brands or brands in less competitive categories can afford to spend more on DSPs, he said.

He also encourages brands to be picky about what they advertise on Amazon and promote best sellers over products that may require more customer education, such as product bundles.

“Understand where your customers are, where they are spending the most money,” he said.

Hero Cosmetics Uses Amazon Ads To Increase Recognition

Amazon’s DSP allows advertisers to buy ads on their site as well as other sites.

Mizrahi can use DSP to find Hero Cosmetics’ top five competitors and create a custom audience for shoppers who have viewed or purchased the product in the last 30 days. You can then serve ads designed to build brand awareness.

Mizrahi acknowledges that this approach can result in a lower return on advertising investment because consumers may have already made a purchase. But the hope is that by building brand awareness, the same people can switch when they find similar products in the future.

Measuring the effectiveness of Amazon ads

Mizrahi said advertisers should consider metrics beyond return on ad spend, which measures sales from ads, because they don’t take into account people who buy products without seeing ads. Return on ad spend doesn’t reflect sales from people who click on your ad and then buy your product much later.

Mizrahi checks to see if the ads improve Hero Cosmetics’ product ranking in search results compared to competing products. He also uses an Amazon metric called “new-to-brand” to track ads that drive first-time purchases from brands in over a year. Another metric called “voice share” shows how Hero Cosmetics ranks in the skin care category of search results compared to other brands.

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