Understanding VCPM Campaigns
Before we get started, let's make sure we understand what VCPM is and how to use this type of ad.
In Sponsored Display, Amazon offers three different bid optimization types: optimize for reach, page visits, and conversions. Depending on the bidding strategy you select, Amazon will show your ad to customers based on the stage they are at in their shopping journey.
When looking at the advertising funnel, reach corresponds to brand awareness, page visits will be for consideration, and finally, conversions will be at the bottom of the funnel where customers are ready to purchase.
When we look at the cost type of each ad, optimizing for page visits and conversions is click-based (CPC), while optimizing for reach is based on cost per 1000 viewable impressions (VCPM). For the rest of this article, we will refer to this bidding strategy as VCPM.
When using VCPM campaigns, you will be charged when your ad is anywhere on the page; the customer does not need to click your ad or even interact with it. This is the biggest difference from all the other ad types that we're used to on Amazon. VCPM campaigns were originally a part of DPS, which is entirely based on a CPM (cost per mille/1000 impressions) model. Amazon then brought this bidding style to Sponsored Display making it available to all sellers.
What is a Viewable Impression?
Now, let's see what a viewable impression really means for this specific ad type. A viewable impression is when you see only half of an ad for just 1 second. That's what is counted as an impression for VCPM campaigns. Looking at the image below, this ad would be counted as an impression.
VCPM Pros & Cons
Now let’s just take a quick look at the pros and cons of VCMP campaigns. We’re not trying to bash DPS or VCMP campaigns, but we do want to discuss the pros and cons so that we are not fooled by data.
Just looking at the pros side of things, VCPM campaigns can give us a broad upper funnel reach. These ads will be shown on and off the Amazon platform, meaning they can be seen on blogs and other websites as well as on Amazon. As this ad type follows customers around while they browse the internet, it can help us attract new-to-brand (NTB) customers, as well as create brand recognition by staying top of mind. These two concepts are part of the foundation of digital marketing, but if you're just starting out, those ad dollars might be better spent elsewhere.
On the cons side of VCPM campaigns, we will have very loose targeting, think roadside billboards. Some customers may glance at our ad, but how much our ad will register is unclear depending on where it shows up. When we're paying for impressions and not clicks, on a busy page with a lot of things going on, our ad could be entirely missed. In order to really see what kind of impact this ad type has, we need very large data sets to be able to make an informed decision on how effective this targeting really is. VCPM also tends to be expensive compared to CPC types. Finally, we have cannibalization, our real topic for today.
How Cannibalization Happens
Let's say there is a customer who is interested in our garlic press and has visited our product detail page. Then Amazon shows them a VCPM ad right at the end of their journey when they're about to hit the buy now button. At this point, if the customer is seeing your ad anywhere on the page, even if the ad is only half showing in the bottom corner, Amazon will use what's called a last-touch attribution model. A series of ads could have driven the customer to your product detail page, but the VCPM campaign will cannibalize that sale at the very last stage of the customer journey.
When sellers look at their VCPM performance, it can be easy to get excited. Looking at the image below, seeing a 3.6% ACoS with this many orders is a ridiculously good-performing campaign. Almost too good to be true.
So how do VCPM campaigns perform so well if they’re designed for top-of-funnel reach and awareness? The answer is that they are stealing organic sales. Because of the last touch attribution model, these ads get all of the credit, without doing any of the work. Amazon refers to this sale as an “assisted sale” because your ad is blocking another competitor from showing up and potentially stealing a sale. This is true, but if the ad is designed for upper funnel awareness, why should the ad deserve the credit?
Find Your True ACoS
Here’s how you can find out if it is happening to you. Amazon has released a new metric for VCPM campaigns called click-based orders. This metric gives us clarity to see if a customer was actually interested enough in our ad to click on it.
So where do we find this click-based orders metric? Go to the measurement and reporting section in the advertising console, and create a sponsored display campaigns report.
Once you download and have the report open, create a filter on the viewable impressions column filtering, out 0 impressions. This filter will leave you with only VCPM campaigns.
The two columns we want to compare are column T, which is showing our 14-day total orders, and column AB which shows our 14-day click-based orders. When we compare our click-based orders to our total orders, all of a sudden these numbers are nothing to get excited about. We manually calculated the numbers, and as you can see in the picture below our ACoS went from 9.6% to 337.31%. This shows only a small portion of the orders actually came from clicking our ad.
UPDATE: Amazon has added click-based orders ACoS in column Y, which will show us our true click-based orders ACoS. The manual calculation above is no longer necessary.
After seeing the true results from click-based orders, we paused all VCPM campaigns for our clients. The results were immediate - for one client, pausing these campaigns reduced their TACoS from 8.5% to 4.9% without a drop in sales. This indicates that VCPM campaigns were adding to their ad spend without contributing much to their sales.
Although VCMP campaigns can still be a useful method for reaching customers at the top of the funnel and building brand awareness, it's crucial to understand their potential downsides like loose targeting, high-cost potential, and most importantly the risk of cannibalizing organic sales. If you are going to use VCPM campaigns, make sure to use the Sponsored Display Campaign report and review it regularly to make better-informed decisions.
Ritu Java, CEO of PPC Ninja joins Danny McMillian and the Seller Sessions podcast to talk about VCPM campaigns
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