4 Metrics to Consider When Advertising on New Markets

Are you considering launching your US products on a new marketplace? Great choice! Your brand will then have a larger reach and, in return, you will see more sales from new customers. Let’s take a look at Canada as an example with the caveat that these principles can be applied to virtually any marketplace. Canada’s population size is roughly 10% of the United States’, leading most Amazon sellers to expect their total Canadian sales to amount to at least 10% of their US sales.

Other sellers claim that, due to less competition, their sales are actually much higher than 10%, and Canada is quickly becoming a channel of focus. Yes, 10% is a great benchmark to have in year one. You have zero reviews, zero relevancy on the platform, and it’s likely your listings will be far down the search results page of the keywords you want to serve on. However, you can see your products hit page one in the search results and your sales increase the 10% projection very quickly if you choose to advertise. There are 4 important metrics you need to consider when attempting a new marketing strategy: potential search volume, cost, sales, and RoAS (return on ad spend).

1. Search Volume

Amazon keeps their data very secure. They give advertisers insight into what consumers are searching, but brands don’t actually see how many people searched the term and didn’t see their ad or click. Let’s assume that Canada has more search volume for slippers and winter jackets due to the climate. However, we do not have access to the data needed to prove this. Here is what we do know. In Amazon US, there are over 40,000 search results for the term, “coats for women.”

We can infer that there are 40,000 listings for coats. So, if a brand wanted to sell & advertise their coats, there are 40,000 ASINS to compete with. In Amazon CA, however, there are over 100,000 search results for the same term, “coats for women.”

Advertising on Amazon US may be cheaper for a brand that sells coats due to the lower search results and fewer competitors, but the opportunity for increased sales, awareness, and overall success is far greater on Amazon CA. There are so many more options for a consumer on Amazon CA and the fact there are so many competitors on the platform tells us there is increased opportunity there. Now, we expected a higher search volume for coats in Canada. But there are many other keywords that have more search results in Amazon CA compared to Amazon US, such as the following:

KeywordNumber of US Search ResultsNumber of CA Search ResultsBaby Monitor1,00040,000Bomber Jacket6,00080,000Wine Glasses10,00050,000Headlight bulb8,00050,000

There are many searches that do not see large increases across all platforms. Here are a few examples of that.

KeywordNumber of US Search ResultsNumber of CA Search ResultsVitamin D2,0001,000Pre Workout2,000646Ashwagandha3,000595Phone Case100,00060,000

Before pitching Amazon Advertising, be sure to look at the number of current products offered. This can help you determine if there is enough volume to warrant a full funnel ad strategy, or just a few small campaigns to increase organic momentum.

2. Advertising Costs

Amazon is a CPC (cost per click) model. This means you are only paying to advertise if a consumer clicks on the ad. An upside to advertising in Canada, for example, is that, overall, the market is less saturated. Less population in the country and less adapters to the platform make it less saturated. This, in return, leads to cheaper costs per click because less people are bidding on the keywords.

Now, are Canada keywords really cheaper? Here's an example as of July 18, 2023. Here are the cost comparisons of keywords in the US versus CA. (CA dollars are converted into US currency for equal comparison.)

KeywordUSCA (converted into US currency)air purifier$4.65$1.15magnesium glycinate$2.87$1.28vitamin d drops$3.48$1.83superfeet insoles$3.12$1.88

If you're first launching your products in this market, you may see high CPCs in the beginning. This will decrease over time as you show more relevancy on the keywords you're bidding on and you start getting reviews and sales at a faster rate.

3. Advertising Sales

At Pattern, we tend to pitch new advertising initiatives through the lens of projected sales and RoAS (return on ad spend).  With some simple math on the keywords shared above with some of Pattern's internal data about click to conversion rate, here's what the estimated sales and return on ad spend looks like for each market:

KeywordUS CPCClick to ConversionAverage price pointUS Cost of Sale (CPC*clicks)US RoAS (Sale/cost)air purifier$4.6530.30$240.37$140.871.71magnesium glycinate$2.873.92$32.92$11.222.93vitamin d drops$3.483.39$22.51$11.801.91superfeet insoles$3.124.59$54.40$14.343.79

Having accounted for the differences between Amazon US and Amazon CA,  the RoAS numbers come out to the following:

KeywordCA CPCClick to ConversionAverage price pointCA Cost of Sale (CPC*clicks)CA RoAS (Sale/cost)air purifier$1.1570.13246.0080.643.05magnesium glycinate$1.283.6922.654.734.79vitamin d drops$1.832.517.784.563.89superfeet insoles$1.884.5844.028.625.11

4. RoAS

Comparing each RoAS to each other, here's what we get side by side:

KeywordUS RoAS (Sale/cost)CA RoAS (Sale/cost)air purifier1.713.05magnesium glycinate2.934.79vitamin d drops1.913.89superfeet insoles3.795.11

For each keyword listed, the RoAS is higher, indicating there's a larger opportunity for efficient spending in Canada. Overall, with your selling price being higher in Canada and your cost for each click being cheaper, you have the potential to have a higher RoAS. This allows you to have a more efficient campaign, thus allowing your ads to place on "top of search" placement more often. This will increase the potential for more sales on your products and increase your organic page rank.

Advertise on New Marketplaces With Pattern

As a global ecommerce accelerator, Pattern has the internal resources and expertise needed to help bands successfully expand their business to global marketplaces such as Amazon Canada and beyond. Pattern's proprietary advertising data and metrics for all major marketplaces is a game-changer for brands looking to more efficiently use their ad spend. Hoping to more efficiently use your ad spend? Contact us.