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The Evolution of Amazon Advertising with AI - 132

The Evolution of Amazon Advertising with AI - 132

Released Wednesday, 27th November 2024
Good episode? Give it some love!
The Evolution of Amazon Advertising with AI - 132

The Evolution of Amazon Advertising with AI - 132

The Evolution of Amazon Advertising with AI - 132

The Evolution of Amazon Advertising with AI - 132

Wednesday, 27th November 2024
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Episode Transcript

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0:01

Hey everyone , thanks for tuning in to D2Z , a

0:03

podcast about using the Gen Z mindset to

0:05

grow your business . I'm Gen Z entrepreneur Brandon

0:07

Amoroso , the former founder of Electric

0:10

and now the co-founder of Scaless

0:12

, and today I'm talking with Julian

0:14

Timings , who's the co-founder and CEO at

0:16

Altron AI e-commerce

0:18

ad automation made easy with

0:20

AI . Thanks for coming on the show . Thanks

0:23

, brandon , excited to be here . Before

0:26

we dive into all

0:28

things advertising , can you give everybody

0:31

a quick background on yourself and how

0:34

you came to founding this business ?

0:37

Sure . So yeah , I'm originally from the UK

0:39

. I have a fairly

0:42

technical background . I

0:44

did a PhD at Cambridge

0:46

University in autonomous

0:49

vehicles a slightly different area

0:51

than what we're discussing today , but

0:53

I think that kind of like is

0:56

a bit of the fundamental grounding , I guess

0:58

, around some of the approaches that we

1:00

take . After that

1:02

I went in , actually worked

1:04

in F1 for a couple of years , a big

1:07

motorsport fan , and

1:09

then then I realized that , uh , you

1:12

know , entrepreneurship , I think , was for me . So

1:14

that was when I kind of founded my first business

1:16

, and again in a bit of a different space

1:18

, it was in the kind of cloud kitchen

1:21

space and

1:23

then after couple of years that

1:25

business got acquired and

1:30

then I went on to start actually an Amazon

1:32

business and I guess this was the first time that

1:34

I touched the world of Amazon and

1:36

I was selling products myself

1:39

on Amazon and feeling

1:41

the pain , I guess , around advertising

1:43

and also realizing the significance of

1:45

how important it is

1:47

to run

1:49

ads and how much Amazon

1:53

themselves index

1:55

that in terms of your performance . So

1:58

, feeling that pain on Amazon regarding

2:01

the ads , I kind of learned on my technical background

2:03

and actually built a solution to

2:05

run Amazon ads

2:08

for my business and it wasn't really

2:10

intended to necessarily be

2:12

a solution for everyone . But

2:15

I shared it with Sean

2:17

, who's now my co-founder at Ultron

2:19

and he was running separately . He

2:22

was running a

2:25

business that he

2:28

was running in the US and shared

2:31

the software with him and it started

2:33

to work really well for his business

2:36

too . And then we started to realize that

2:39

there's a bit more of a broader pain point here

2:41

, that other sellers could benefit

2:43

from this . So that's when we kind of turn the

2:45

software into a , into

2:47

an actual sas product , which we

2:49

could , um , you

2:51

know , approach a little bit differently . I would say

2:53

like we don't come at it from a traditional agency

2:55

point of view . We try to provide

2:58

like a self-service solution where

3:00

, but ultron is the thing doing all the heavy lifting

3:02

and , um

3:04

, yeah , we've been been running it for a couple

3:07

of years now , going really well . Obviously

3:10

, you know , it's underpinned by

3:12

pretty complicated optimization

3:15

and , more recently , you know the move

3:17

forward in AI . We've obviously been incorporating

3:20

those tactics and skills into

3:23

what Autron does . And

3:26

, yeah , that brings us to today .

3:30

What business was your Amazon business

3:32

?

3:33

So this was a product selling

3:36

predominantly eco-friendly

3:39

homework . A bit of a

3:41

random choice , but you find

3:43

the niche and saw the opportunity

3:45

and , yeah , that business

3:47

is still active today but also is used

3:50

somewhat as a testing ground for Autorama

3:52

. We try out all the new stuff and so forth

3:54

. So , yeah

3:56

, I think it was , you

4:00

know , an interesting , interesting

4:02

path . But now we're super focused on

4:04

the Amazon

4:07

store product

4:09

for the sellers and bringers .

4:12

I've heard time and time again of

4:14

companies that are started out of an existing

4:16

company because you're addressing some sort

4:18

of pain point or problem that you have with

4:20

the current business . I think that's

4:23

a model that works really well .

4:27

Yeah , I think , fundamentally right , you've got to address

4:30

the pain point of the customer right , and

4:33

not necessarily just come

4:35

up with an idea of , oh , you think this would work

4:37

. It's about , like , what are the customer's

4:39

needs , like , how can you address them

4:42

? And in our case , right , it's the

4:44

main point . Pain points are around um

4:47

, you know , typically

4:50

you know solopreneurs or

4:52

small smes , you know they don't necessarily

4:54

have the in-house expertise to

4:56

to run ads right and this , um

4:59

, this is where autron can handle that

5:01

. Um , you know they have limited

5:03

time . Again , autron is super

5:05

automated . That was one of the key

5:07

things . It's about setting high-level goals

5:09

and it goes off and does everything . It

5:12

creates all the campaigns , it manages all

5:14

the campaigns , does all the optimization . So

5:16

it gives you back , as a founder

5:20

or entrepreneur , a

5:24

lot of time , which is obviously important

5:26

, and you can put that into other other

5:28

areas of your business . And then

5:30

again , like , and a little bit on the pricing

5:32

side , what we do a little bit different is we try

5:34

to we we're highly

5:37

variable , I guess , which is different to

5:39

typical agencies where there's quite a high upfront

5:41

cost and what we

5:43

do is we start on a really

5:45

modest monthly fee as

5:49

you scale up , then our fees kind

5:51

of go up with your success . So

5:55

this is a little bit different . We try to align ourselves

5:57

as much as possible with success

5:59

and not

6:01

necessarily ad spend , which is typically

6:03

how

6:06

others

6:08

in this space , like charge brands

6:10

and sellers , what are

6:12

some of the biggest changes that you've seen

6:14

in the Amazon ecosystem since

6:17

starting the company to today

6:19

? Yeah , well , I would

6:21

say for sure , there's

6:23

a very strong move towards

6:26

automation and bots

6:28

, right , I think , like , at the end of the day

6:30

, a little quite similar to , to

6:32

some extent , to Google AdWords and the way

6:34

that when it did move in a direction

6:37

and we're seeing Amazon moving in a similar direction , where

6:40

algorithms are the ones that

6:42

are in the auctions a lot of the time , right

6:44

, and these are the you know obviously . You

6:47

know , as an Amazon seller , you

6:49

can manually run your ads , but increasingly

6:51

we're seeing automation . That's

6:53

Autron , that's others as well that are

6:55

in this space . I always like

6:57

to give the analogy towards , like , stock trading

6:59

, right , I think there was a point

7:02

in time where the

7:06

algos kind of took over and

7:08

saw all those opportunities

7:10

and could react instantly to the opportunity

7:12

in the market . And Amazon

7:15

Ads is kind of a little bit similar where obviously

7:17

the bots can be instant

7:19

. They have data flow with

7:21

almost real feedback of of

7:24

what's happening and to

7:26

adjust accordingly . So that's one

7:28

of the major trends that we're seeing right and I

7:30

think , generally speaking , you

7:32

know , in the next couple of years , I think

7:34

it's going to be , you know , 80

7:36

to 90 percent of the

7:39

auctions are going to be um competing

7:42

against other software solutions . I would say

7:44

so that's , I would say , one of the key things

7:46

. And then amazon themselves just

7:48

developing the ads platform right it's . It

7:50

started off relatively rudimentary

7:53

and they're plowing now a lot

7:55

of uh resource into building

7:57

the , the ad platform , up , making

8:00

, um , you

8:03

know , different video , different formats such as

8:05

video , different placements , different

8:08

other kind of like solutions

8:11

to help brands manage their data

8:13

. So a general maturity , I would

8:15

say , of the

8:17

advertising platform is probably

8:20

pretty significant . And then , of course

8:22

, just on the seller side , what we see is , of course

8:24

, increasing competition . Like

8:26

month cpc is cost

8:29

per clicks just on one

8:31

trajectory and that's going up right . So

8:33

you're constantly just fighting and

8:35

that's that's . As more people you know , amazon's

8:37

obviously trying to get more and more sellers

8:40

on board and and they all want to advertise

8:42

and that drives up cost per clicks

8:44

. So you kind of can't stand still

8:46

with the way you're operating your ads

8:49

as well , because it's

8:51

getting increasingly competitive .

8:54

Are there certain types of brands that

8:56

you're seeing work well now versus

8:59

others ?

9:01

um , I think , like um

9:04

, I

9:06

mean one of the kind of like key

9:08

things for being successful is . So

9:10

, I'd say , on the ad side , like there's

9:12

, there's two really important components . Right

9:15

, there's um , there's

9:18

the actual advertising , which is what , what

9:20

autron does , but that that that's very much in

9:23

partnership with , like , the

9:25

listing . If you like the actual

9:27

product , you're selling . Right , so

9:30

you know , because the actual

9:32

product itself is what determines

9:34

ultimately the conversion rate

9:38

for that sale . Right , the advertiser

9:40

can put the

9:42

right buyer on the page , but you've got to have

9:45

competitive products in terms of

9:47

price , reviews , ratings

9:49

. All the imagery used to be top-notch

9:51

. What we see in terms of people that have the most

9:53

success in general are those that still

9:57

have a good product . I think that you can't

9:59

just rely on ads

10:01

and expect an

10:04

average product to become a

10:06

bestseller . So I would say

10:08

, like that's a key factor for success

10:10

. And another

10:12

one is more you know , operationally , I guess

10:14

, like um , just stay

10:16

in stock . Those who can always be in

10:19

stock get rewarded by

10:21

the amazon the algorithm , for

10:23

you know always having , you know , a continuous

10:25

sales velocity and stocking

10:28

. So that's a really , really important

10:30

factor , which is always a struggle

10:32

, I think . Right , because

10:35

Amazon is not a great business for cash flow

10:38

, right ? You lay out a lot of money

10:40

to get inventory and then it takes

10:42

you I don't know a couple of months to get

10:45

that money back , etc . So you

10:47

know that's always a challenge . So , managing cash

10:49

, those who can manage cash flow better and

10:51

therefore like remaining stock and

10:53

time quality products generally

10:56

, are the ones that that um are

10:59

more successful got

11:01

it .

11:02

yeah , it seems like there's certain categories on Amazon

11:04

that are just so unbelievably

11:07

saturated and

11:10

commoditized and not

11:12

a great spot for potentially a newcomer

11:15

to play , but are there still

11:17

some that are out

11:19

there where you would get

11:21

excited about a new business coming to

11:23

market within that particular category ?

11:26

yeah , absolutely like um

11:28

, I think you've there's

11:31

. Of course there's always ones that ride like the

11:33

, the , the trends of the time , right

11:36

, still being able to kind of get

11:38

in early on a , on a , on a

11:40

trend for a product or type of product

11:42

or category is going to

11:45

be meaningful , at least in the short term . But

11:47

you know , there's something

11:50

I want off the top of my head in terms of the great opportunity

11:53

out there right now . But there's

11:55

definitely opportunities

11:58

and products and categories that are

12:02

less saturated and

12:04

are still wide open . In many

12:06

ways , I would say I think

12:09

it goes back to the kind of you

12:13

know how

12:15

you source the product is super important and who

12:17

you're competing against when you source

12:20

it . And obviously , what we see is a general

12:22

shift towards a lot more like manufacturers

12:25

, but based based in China and

12:27

Asia , selling

12:30

to consumers . Right so , like that's on

12:33

certain categories and products that's easier for them

12:36

to do versus not right . So

12:39

most of our business is in the US

12:41

and North America , but we also have size

12:44

one in Europe . Europe's an

12:46

interesting opportunity for Amazon

12:48

because , mainly through regulation

12:50

, it's a little bit more challenging , right , and

12:52

there's some good opportunities there . Obviously

12:55

, there's different languages you have to consider

12:57

. There's all

13:00

these new regulations around

13:04

which many European Amazon

13:06

sellers are struggling with at the moment , called GPSR , which

13:10

is basically highlighting

13:14

providing instruction manuals

13:16

and those sort of things with products

13:18

. So I

13:20

think , if you can get around

13:22

, that's a significant barrier

13:25

for others . And actually if you can get around , that's a significant

13:27

barrier for others and actually

13:30

if you manage to get around that

13:32

or have those things in place on

13:34

your business , then I guess you can have

13:36

good opportunities in those marketplaces

13:39

too . So always worth thinking

13:41

outside of North America too . Europe

13:43

is still a significant opportunity

13:45

as well .

13:47

Got it . Yeah , I think it

13:50

is interesting to see

13:53

sort of the mix between

13:55

sellers that are on Shopify

13:58

versus Amazon , versus both , depending on

14:00

the geographical region that

14:02

they're in , as it seems

14:04

there some some areas

14:06

over index on one more versus

14:09

the other yeah

14:12

, I think that's , that's .

14:13

I mean , it's um , I

14:15

what we what we see at least is

14:17

still like return on ad dollars is still

14:20

pretty strong on amazon versus

14:22

. You know , ultimately with shopify , you're

14:24

, you know you're going to Google or Meta or

14:26

TikTok or something for

14:28

advertising and certainly

14:32

some of those marketplaces are pretty

14:34

developed in terms of income , positive in

14:36

terms of the

14:39

deployment capital , and Amazon

14:41

, you still see good return . That's

14:44

generally what we see . We tend

14:46

to see people that kind of are either all in on Amazon you still see good returns . Generally , what

14:48

we see is we tend to see people that are either all in on Amazon , I guess , or

14:51

just don't know on the platform at all . I

14:55

think there's this idea that with Shopify

14:58

, of course , you

15:01

don't necessarily pay the sales commission . You

15:03

go to Amazon and there's a bunch of other benefits

15:05

, right , but then you

15:07

have to drive the traffic to your site yourself , which

15:10

can be challenging .

15:13

Yeah , the closed ecosystem that Amazon offers

15:16

pays off

15:18

in so many ways whether it's being

15:20

able to have that for the advertising

15:23

side , but also just the trust

15:25

that the customer has when they're already

15:27

on the marketplace , especially if

15:29

you have the reviews , if you have the

15:31

Amazon Prime badge . There's

15:34

a sort of a framework there that people

15:36

are already comfortable with using

15:38

and shopping from , whereas with Shopify

15:41

you're landing on a random website that

15:43

you may have never heard of before and there's

15:46

a higher barrier to purchase

15:48

for that person that you've gotten to your site versus

15:50

if they're already on Amazon , especially depending

15:52

on you know the advertising , you

15:54

know keywords that you're bidding on . If somebody is

15:57

at that sort of last step and

15:59

the intent is already really high , versus

16:01

you're catching them on Facebook or Instagram

16:03

or TikTok and more of a discovery

16:06

phase , it

16:08

makes sense why the conversion rates and the advertising

16:10

would be more effective on Amazon .

16:13

Yeah , I mean we're seeing quite interesting

16:15

people testing it

16:17

out , at least driving

16:19

traffic from Amazon , I mean

16:21

from Shopify , back to

16:23

their store on Amazon just because

16:25

of the conversion rate

16:27

. You know increasing conversion rate they're seeing

16:29

because you know people are just used to buying on Amazon

16:32

and they know they're going to get it super quick

16:34

with Prime and so forth . And

16:36

Amazon loves external traffic by

16:39

reducing those listings right

16:41

from things like Shopify . But then the downside

16:43

is you know you obviously pay the commission

16:46

to Amazon , et cetera , et cetera . You don't necessarily

16:48

get the customer details . So

16:50

it's a it's a tricky one , but I

16:52

think um worth

16:54

testing out those , those different paths

16:57

to to conversion and see what ultimately

16:59

makes sense Going into 2025

17:02

, what are some of the things that you're most excited

17:05

about ?

17:10

no-transcript .

17:31

Yeah , I mean , I think what we're most excited

17:33

we can , you

17:35

know , provide even better return on

17:37

investment by , you know , further

17:42

developing this technology ourselves and incorporating

17:44

some of the new technologies in so that's . You

17:47

know , that's often the number one concern

17:49

for sellers is how do I maximize my ad

17:51

spend , and

17:55

the other area is around um

17:58

, which we're

18:00

trying . We think there's an , there's an opportunity

18:03

and we think this this is where sellers would

18:05

benefit from a system

18:07

where , rather than you're interacting with

18:09

a typical kind of account manager , you're

18:12

actually interacting with an ai

18:14

that is highly informed

18:16

about your account . You

18:19

can have conversations with it around

18:21

if you want you

18:23

know specifics on

18:25

certain

18:28

data or trends , you

18:30

can ask it questions , you can instruct it to

18:32

do things . So this is kind of

18:34

like we see this kind of like personal assistant

18:36

account manager being digitized

18:40

and being highly performant

18:42

and ultimately yielding , you

18:44

know , better results for

18:46

the sellers as well as keeping them more informed

18:48

. So this is an area which

18:51

we're super excited for . This is what we're building

18:53

towards . I think , you know , this

18:55

is kind of agencies

18:57

2.0 in many

19:00

ways , and

19:04

I think , in general , amazon is just always

19:06

churning out also like new tooling

19:08

and new cool things and new ad placements

19:10

and all

19:13

those types of things which I think are

19:15

going to benefit sellers and we hope to be able to think are going to benefit sellers

19:17

and we hope to be able to offer those products to

19:19

sellers too . So

19:23

this is kind of like what we're building towards and what we're excited about in 2025 . In

19:26

terms of the challenges , I

19:31

think I mean , obviously

19:33

we're always just fighting this constant increase

19:36

in CPCs . I think it's getting more

19:38

competitive , so that's just something that's

19:40

part of being in this business

19:42

. I

19:45

would say diversification

19:48

is still quite important . I

19:52

think you

19:54

never want to be too reliant on a single platform , both

19:57

from a seller point of view and also a solutions

19:59

point of view . So this is where I

20:03

think it's always wise to make sure you

20:06

have some diversification of your sales channels

20:09

. Yeah

20:12

, I would say those

20:14

are the main considerations

20:16

. Yeah

20:20

, I would say those are the kind of main

20:22

considerations Overall . If you look at the kind of

20:24

in Amazon in particular , if

20:29

you just look at the quarterly earnings

20:31

and profits and growth , they're

20:34

still on a very positive year-on-year trajectory of like 20% growth , month-on-month

20:36

quarter-on-quarter right , or year-on-year trajectory of like 20% growth , quarter-on-quarter or

20:38

year-on-year quarters . So that just kind

20:40

of means that there's a wave that everyone

20:42

can benefit from , I think , as

20:45

more people adopt the platform and

20:49

ultimately more sales are going through

20:51

it and there's great opportunity . So

20:54

that's very positive , but also you need to

20:56

be so that that's very that's very positive , but also you know you need to be mindful that it's

20:58

like turning into market dominance , like

21:00

it's always a bit

21:02

risky yeah , definitely

21:04

.

21:05

Um , I got one last question for you

21:07

, a little bit less on the actual , like amazon

21:09

platform itself , but more on the on the business

21:12

side of things . How do you think about

21:14

balancing service

21:16

versus software and

21:19

?

21:19

the offering that you're giving your , your

21:21

clients um sure so

21:25

I think our thinking on this has

21:27

changed slightly in the last um

21:29

year or two . I would say

21:31

, um . Initially

21:33

we were like 95%

21:36

software , and I think

21:38

this was this is very good from our business

21:40

point of view in terms of like , you know , generally

21:43

speaking software businesses , you

21:46

know , lower fixed costs and better

21:48

margins and the economics

21:51

of it make a lot of sense and

21:55

we certainly have customers that love that

21:57

, that uh model

21:59

, I guess , the kind of self-service model . But

22:01

what we have seen is that there is a decent

22:04

chunk of people that want , you

22:06

know , closer to a white glove service right

22:09

, and they want to interact

22:12

with a human like and whether

22:14

that's like super robust conversation

22:17

or whether that's just knowing that you know they're

22:19

being taken care of . And

22:21

so we've naturally kind of um

22:23

expanded our offering to be educated

22:25

towards both types of of audience

22:28

. It's still biased towards software

22:30

, but I think there's all you know . You

22:33

know , agencies kind of exist for a reason

22:35

and they're very much like a people's

22:37

business , just as they're less results orientated

22:39

. It seems , as you know , I would say

22:41

, in more kind of like relational relationship

22:44

building and maintaining

22:46

type of business . So

22:49

, yeah , we we of course want

22:51

to want to cater for the different requirements

22:53

, um , but I guess our view

22:56

still on it is that now , with ai

22:58

kind of on the increase and its

23:00

ability to act

23:02

and speak and behave

23:06

with the human means , that we have

23:08

to move back into the software direction

23:10

. Um , but kind of

23:12

mimic that human behavior , I guess . Right

23:15

, and this is this is where we're trying to produce

23:17

a cutting-edge product in

23:19

terms of an AI

23:21

agency , if you like .

23:24

Got it ? No , that makes sense . Well

23:26

, I really appreciate you coming on and sharing

23:28

all of your insights , but before we hop here , can

23:30

you let everyone know where they can

23:32

find you online and connect with you if they want

23:34

to learn more ?

23:36

Cool , yeah , so probably LinkedIn

23:39

is probably the best place . So just hit me

23:41

up JunionTimings on LinkedIn

23:43

and then check out what's it , autronai

23:46

, start a

23:48

chat on there and

23:50

if you're asked to speak to me , I'll

23:52

jump on there and more than happy to jump on a call

23:54

with people and

23:57

answer their questions and guide them through what

24:00

we do and how we can be helpful . That's

24:04

about it .

24:05

Awesome . Well , again , thanks for coming on For everybody

24:07

listening . As always , this is Brandon Amoroso

24:10

. You can find me at brandonamorosocom

24:12

and scalistai . Thanks

24:14

for listening and we'll see you next time .

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