Amazon Vendor Negotiation Q&A - Week 2 with Tom Jakab

Absolutely. Hi everybody, my name is Tom Jacob, a director here at Accenture in our Commerce division under Accenture Song, leading digital growth strategies for brands across Amazon and other channels. My background comes from 10 years of experience on platform side at Amazon, where I worked in consumer electronics similar to Andrew, worked at brand side for about 4 to 5 years, and now have been in the consulting agency space for about the last 3 years helping brands grow on Amazon. So glad to be here. Thanks for having me, Andrew.

Yeah, no problem. Thank you for taking the time. I'm always excited to have folks like you join us because you bring that exact triple threat blend of experience, right? You were at Amazon and then you were at the brand side and now you're at an agency consultancy helping others basically with a blend of that experience, I imagine.

Right, exactly.

Fantastic. Well, I still see people joining us, but in, in a desire to get as much value from you as we possibly can, I am going to jump straight into questions. We've got a whole lot. Going on. Let's see. So Tom's focal areas of expertise include a lot of strategic areas, but one of the ones that jumped out to me is that he is— he understands SVS and AVS as a program investment. And one of the first questions we got today was about SVS. They are a 1P vendor in the baby category at a rate of— and they have an SVS for 1% of net receipts. Year to date, that's been about a little over $200K. And they're trying to understand how do they evaluate if that's valuable or not and can they bring that down?

Great question. So when I was in consumer electronics at Amazon, I actually was part of the SVS program, and I think this is a point of contention seeing it from all sides of a very steep investment, whether that be a straight payment or a percent, um, for brands to invest in SVS support. What are you truly getting from SVS support? I think My approach now, seeing it from a brand side and from an agency consulting perspective, is what is the value add that these SVS headcounts are truly bringing? When you sign on as a percentage, obviously that percentage is going to continue to grow, and at $200K, that is quite steep already for hopefully the support that you're getting that is valuable. But that's going to continue to grow as your business grows. A lot of what I've seen is potential trade-off for a straight payment, but What I would recommend doing personally is bringing to AVN what is the value that you've actually gotten through SVS and trying to quantify that. What are the major levers that the SVS has proposed to you in the past year for growth? How did they execute on those and how did that bring incrementality to your business on Amazon? If they were very executional, which I've seen a very broad spectrum of SVS that are very intermediary or really great and has all the internal connects and has a good relationship with VMs, in-stock management, marketing SMEs, etc. Trying to quantify what they did for your business. Were they pulling levers? Were they helping you cut tickets and do mundane tasks? Did they help with deal funding during marquee periods like we're coming up into T12 or whatever we're calling it nowadays? What value did they actually bring? What new initiatives and propositions on Amazon and value did they bring to your business and trying to quantify that. If you're trying to step out of a percentage, I would try to again quantify what they did for your business this year. And then there's also different tiers, I believe, of service now with AVS. They change every year, but obviously SVS also has additional support in India from their RBS team helping support tickets and things like that. Is there any of the work that the SVS has done that you can take on internally or with agency support that you might already have? What are those things that are mundane tasks that you can take off of their plate that you're paying an SVS to do that you can do yourself or automate internally? And what is the true value add that that SVS is bringing? Try to quantify that. Ultimately trying to change that percentage to a straight payment in my eyes. That way at least you know what you're paying for. You're adding dollars to the value they've brought in. You're keeping consistency year over year. Um, also year-end reviews with SVS, whether that be with their manager or with the VM in general. How are they performing on your account? How big is their book of business? Prying at those questions. How much support am I actually getting from paying this percentage? And what additional support am I going to get if I have to stick to a percentage? Uh, long-winded answer, obviously, but happy to like divulge on any of that. Andrew, not sure if you have a specific take on any of that either.

I'm smiling and nodding to most of what you're saying because like you, Tom, my first role at Amazon was in SVS. And so I have the experience of being in that role and then also on the other side of it and managing them and so forth and so on. I agree with pretty much everything Tom said. And the things that I'll call out here first is what Tom said about pulling out the levers they proposed, how did they execute and how did that bring incrementality? Thinking about those specific programs and proposals, not not just giving them credit for unblocking tickets and whatnot, because your VM is always going to push that first. Like, hey, this is a kind of a— they won't say it, but it's a pay-to-play thing. Like, your VM is not going to pay attention to anybody that doesn't have an SVS, yada yada yada. That might all be true to some degree or another, but that's not enough. Like, hold them to the fire for that incrementality. Um, don't just let them get credit for mundane tasks. And then to Tom's point about moving to straight payment instead of accrual, I think that's a really, really powerful one, because when you're on an accrual and a percentage of COGS, then it's assumed that every year, if your business grows, Amazon gets more money automatically from you. Uh, and they love that. Of course they do. But if you're on a straight payment for, you know, say $200, $250K for this year and your business grows 60% year over year, now Amazon doesn't automatically get that additional co-op funding from you. They have to ask for it and they theoretically have to justify it with incremental delivery. The last thing I'll say is that, um, just from a sheer cash perspective, I don't have perfect visibility into what people are paying for SVS and AVS, but I will say that $200K $1K overall, uh, is not atrocious. Um, it's on the lower side. And so your ability to get it lower than that might be pretty tricky unless you are, uh, you have been doing a lot of proof of performance and you have some levers there to say, look, we just didn't get ROI this year. If you want us to continue, try something else. Uh, we had a good follow-up question here. Uh, and this is a good reminder to everybody. If you want to ask follow-ups or anonymous Q&As, use the Q&A tool here and we can answer that live for you. So, uh, this one just came in. What should our relationship with our SVS's manager be?

Absolutely, great question. And I see a lot of brands unfortunately under-indexing their SVS's manager. Um, I'll see them pop in on QBRs here and there, but I think at least a monthly sync, depending on how quick or how often you're meeting with your SVS, which obviously should be at least weekly, and being in touch throughout the week. I think having their manager sit in at least monthly on these conversations to understand what are those growth levers they're actually driving and what is the strategy that they're driving. That's one of the big pitches. Again, as Andrew mentioned, is VMs want brands off their plate from asking for mundane tasks, but SVS is also pitched as a very strategic initiative to help brands grow. They're building decks out for the year. What are the top 3 initiatives in partnership with the brand and how do we execute on those? How did we perform? Obviously, at least a QBR. How are we tracking to at least these top 3 metrics or initiatives to help our brand grow on Amazon within the year? I personally recommend having them in at least monthly check-ins, making sure they're sitting in, that their SVS is driving value, they're coming prepared. How can they help support and escalate ultimately? To Andrew Hamada's point as well, a little bit earlier we were talking about escalation points where SVS does have certain escalation points. but it's very much so dependent on the relationships they have internally. If they don't have those channels or avenues to escalate certain things from in-stock management to VM to marketing or advertising, whatever it might be, their manager is the next point because that SVS being able to escalate through a VM to Andrew's point again is, is they're going to be pretty hands-off and say, you guys go figure that out. I'm focused on my P&L. So my take would be try and involve them as much as possible. I'm not sure if you'll get them once a month, but at least QBRs and making sure you're tracking to those plans that those SVSs have created in partnership with you.

Yeah, exactly. Ask for monthly, be willing to accept quarterly, but yeah, plus one to everything else there, Tom. All right. Continuing on the, the theme here of newness to AVN, We had somebody ask, it's their first time leading AVN, even though they've got 10+ years of leading Amazon Marketing and Ads as a 1P vendor. And so they are familiar with Amazon, but they haven't been directly in the line of fire in the AVN season. So what tips do we have for that person going through AVN specifically for the first time?

Get ready for some fun. That's awesome that you've been able to watch from the sidelines for so long. I think really the biggest high-level, 10,000-foot view is come prepared. Um, from my perspective, I see a lot of people come ill-prepared. They don't know the business, what's happened in the last year internally, knowing your business and what you're trying to drive for the coming year. What are those different accruals and AVN agreements that you currently have where you're either looking for reductions or where you're not performing well or you're overperforming? Knowing your business better than your VM inside and out on Amazon, whether that's, you know, connecting with whoever you replaced at the company, getting all the background that you need. Be early to AVN as well. Don't wait for them to approach you, gather your data, right? Be well prepared. I see all too many people wait. If you're not a Tier 1 brand or vendor within the category for your VM, you won't get approached until Q1, sometimes even early Q2. We've seen these drag out for so long, and then you're at the bottom of the list and you have less negotiation power. Um, so again, like, where are we today? Where do we want to head next? Know the operations inside out of your business. Know the current state of the business and all the accruals within AVN. What are you looking to achieve and having a stance on all of this? Um, and then ultimately hearing out, you know, what the VM needs and not responding too quickly without knowing your data and understanding that business very, very deeply based on what it is they're coming and looking for from the brand in 2026. I know that's pretty high level, but again, like, that's my 10,000-foot view. And one of the biggest things I recommend and that I see fall through the cracks all too often is just ill preparation. Andrew Hamada.

Yeah, 100%. Selfishly, because I do make software that helps with AVN preparation, I am 100% aligned in, in our universe at Reason Automation. We think of AVN prep as being a tripod for success. One is the data and the analysis, and whether you're using a tool like ours or doing it manually or using somebody else, it's super, super critical to Tom's point for you to understand not only what you agreed to last year, but then how was actual performance against those agreements, whether it was your PO confirmation rates, commitments, PPM agreements, sales growth commitments from you or from Amazon. Check all of those things, like understand what happened and come to the table prepared. The second is knowledge of your own business. So you have data and preparation, but then you have your own business expertise. And so you mentioned you've been in this, managing Amazon for 10+ years. That's an advantage compared to somebody who's going to be net new because ultimately Amazon doesn't know your business like you do. Third-party experts like me and Tom don't know your business like you do. We just can't. We can't possibly know it. So you are a critical input to that. And then the third is Amazon knowledge and expertise. That's a big part of why we host these sessions is to give you the opportunity to fill those gaps. But if you have not yet done so, we also strongly recommend that you engage in one of the more general, like, what's going on with AVM this year type webinars. You'll see a lot of them happen throughout this quarter and the next quarter. They tend to be more one-to-many presentations about the current state of things. But they also tend to be very, very informative about just general Amazon positioning, what they care about, etc. You'll probably see these hosted by folks like Martin Hoiberg at Consulters or Andrea Lee, etc. Lots of familiar names. But if you're looking for a recommendation on those, just let me know and I'm happy to connect you with someone. And of course, once you've gone through that initial step and if you still have additional questions, come back to our weekly office hours. Our experts here are willing to help out.

Absolutely.

All right. Continuing on the AVS trend, I'm glad people are tapping into Tom's expertise. What are some outside-of-the-box asks we should get AVS commitment for? We never have seen strategic information from AVS in the last 3 years. Ooh, so many things, Tom.

I'm sorry to hear that. 3 years is a long time to go out without strategy. I think it's really understanding what are those growth levers that you're looking for to drive your business forward. A lot of what I see is SVS won't bring these big out-of-the-box ideas or, you know, more ambiguous ideas to a vendor's plate. What do you personally think you need help with? Is it an operational problem? Is it marketing levers? Is there things that you're seeing happening in certain categories that you might not have access to? Is there a new brand store layout that you can build together with Amazon, for example? How can you be the first to market to build that for your category? So it really depends on what part of your business you're, you're looking to grow or where you feel that you are struggling or not getting support from SVS. It is going to have to be part of a more partnership approach where you're going to need to get their buy-in along with their manager. Again, I think this is where we go back to what Andrew and I were discussing earlier with a question that came in with bringing in that SVS's manager, holding them accountable to what you're paying them for, right? You're a strategic vendor service. Account manager, and if you're not bringing strategy to the account, then why are we paying for you? There are so many different things, and depending on what category you live in, I'd probably have a specific take on what you could do in a certain category to ask throughout an SVS. But, you know, there's constantly beta features, there's constantly things from a marketing perspective where they should be able to enroll you. We'll probably talk about Prime Day, Prime Big Deal Days, Q4. How can they get you additional placements and be more strategic with how you're showing up within the category? How can they fix operational alignment? How can they fix your PDPs for you? So many different things to optimize for Rufus now and whatever else that might be coming from Amazon on a quarterly basis. How are they helping you think strategically about what's next on Amazon in the coming the coming year, the coming 3 years, and how can you be on the forefront of that?

Real quick, Tom, they clarified they're in the apparel category. Anything specific for apparel?

I don't work too much in apparel, honestly, but I think there's constantly beta features that are coming out, making sure you have A+ Premium content across your pages and everything's fully optimized, helping you with that assortment, especially within apparel. There's so many SKUs. What's actually driving your business versus what's seasonal versus what are trailing SKUs and how do we focus on helping convert or bring to the forefront of the apparel category from a marketing, marketing and merchandising perspective, your brand, because it is a very deep category with a very high count in SKUs. How are they helping you differentiate your brand versus the thousands and thousands of other apparel brands that are out there.

Yeah, the only one I'd add for apparel is category level insights in general. The one thing that brands and especially brand sales leaders really look for is like relative market share, share of voice, etc. And there are so many tools of ways of approximating that. One thing that you can always ask your AVS for, they might say no, but you can always ask, is more data and more insights. There is a ridiculous open-ended inconsistent additional amount of data that is available through your SVS and AVS. For example, I have, we have customers who get weekly review reports from their SVSs and AVSs. And then I have other clients who have asked for this and their, their VM laughed at them in their face. There doesn't seem to be any consistency, but that's the kind of thing you can ask for. Benchmarking reports position, like helping you understand where you sit relative to your peers on a metric can be very, very helpful as well. Some categories are more comfortable releasing that information than others are, etc. And then finally, to Tom's point about the size of your catalog and the importance of variations in apparel, you're probably seeing, like most brands are, Amazon break and change variations a lot automatically. I've seen a lot of apparel brands get get help from their AVS and SVS managing that at least a little bit better, either through better reporting change, a commitment to help them fix things as they break when Amazon automates it, or even just a report. So something to help there.

100%.

All right. Oh, you can tell we're on the right track because we're getting lots of follow-up questions. Let's keep going. How can AVS and SVS support new product rollouts?

Yeah, so there's a lot of different merchandising initiatives. I've seen new product launch packages. This again is something that we'll talk about here with exclusivity and new product launches in general. As you think about your coming year with, with AVN and what you're planning to do as a brand on Amazon and more holistically omnichannel as well, if you have a big new product launch that you're, you're putting a big bet on or you think is going to do very well, or you're expanding into a new category. What are those different initiatives that SVS can help support and how can you bring in some additional merchandising through your ABN negotiations to support that? You're obviously going to want Vine credits, you're going to want A+ Premium Content, you want to be fully optimized, but there's also new product launch packages that'll put you on the forefront of, let's say, a subcategory page, for example, featured within the category page? Are there any display ads that Amazon can do as part of their merchandising dollars and fulfillment to get you more visibility? And then ultimately commitments, buy commitments, depending on are you entering a white space within the category? Again, you know your category probably better than Andrew Hamada and I do, your VM does, for example. Are you entering a white space of of what your competitors don't currently offer. How is that going to help Amazon grow their category and ultimately hit their P&L and their category growth and visibility from a VM level? So if you're bringing new things to the, the table, there's unlimited amounts of merchandising you can ask for for free, but then also commitments from initial buy-ins, right? A lot of brands will be pushed to Born to Run. Born to Run is very wonky. Sometimes it'll only allow you to do minimal buy-ins if that's where they're pushing you, make sure that you're opening up those commitment levels and units so that you're getting in heightened amounts of inventory to make a big splash and launch on Amazon with a new product launch. Or again, using those levers from SVS and VM, how do I bring in an ISM, which in stock manager, right, to place that manual buy and get those initial commitments to help support a fully optimized and ready product launch. So I know that was kind of multifaceted, but there is different amounts of triggers. And when you're approaching a new product launch on Amazon, making sure, you know, you have all of your internals ready. How are you supporting a new product launch as well? Are you going to be pushing email marketing, etc., from the brand side and pushing visibility to Amazon? But again, what are those levers Amazon can help pull for you, which especially with an AVN, a lot of that is incremental free merchandising that you can push for if you know what you need to ask for.

I really want to double-click on Tom's last point there, and I also want to just mentally punish myself for saying double-click out loud. I said I wasn't going to do that, but here we are. The last point that you mentioned, Tom, I'm going to restate it as show Amazon how you are helping the product launch and be successful. These are things that you might already be planning on doing or committing to in like a general media campaign and omnichannel marketing and advertising, etc. Position it as contingent with Amazon and get something, claim value for what you're, for what you're doing there. And it often makes the case very, very clear and easy for Amazon to do incremental things. Tom mentioned to get them to do a buying commitment, loop in the ISM to do a manual buy. Well, that gets a lot easier if you say, hey, we're planning on doing a national ad campaign for this product. And, uh, you know, all of our other retailers are probably going to buy in. It would make a whole lot of sense for you to buy in so that when they go out of stock, everybody goes to Amazon and you have the best price. Uh, and so suddenly your category's response is going to be very, very different. So I really love that last piece of it. We already have a follow-up. If you do have a product that is entering a white space, as you phrased it, Tom, how do you frame it and what should you ask for in addition to visibility or reach placements? Is there things like influencers, live, co-funding, bigger buy-ins, etc.?

Yeah, absolutely. I think all 4 of those points you mentioned at the end, they're incremental ads for a new product launch. I think again, knowing that product and knowing that white space coming from a brand side, how am I disrupting the category? How am I going to be growing category visibility by bringing new product to market? What is your forecast for how this is going to perform on Amazon and what kind of, again, national media spend and attention are you putting towards this? How big of an initiative is this for the brand? How is this disrupting the category? And then here's all the levers we're putting behind it, understanding everything that you're doing, but making again to Andrew's point Amazon support contingent or your support contingent on Amazon supporting that and getting their buy-in, right? I've seen it go both ways where brands present a white space product to a VM versus going to a VM and asking what is the white space that you're seeing on your side? And again, you are the professional in the space. You know your brand better than anyone. You know the category, you know your competitors. This is how I'm going to be disrupting. Here's my forecast. Here's what we're putting into, willing to put into place for it. How are we going to drive value out on Amazon to help this grow your P&L and your overall category? But yes, I think some of those things you mentioned, like influencers, seeing a lot of attention around that. Amazon Live, for example. I'm sure there's more merchandising opportunities that I'm just not thinking of the top of my head because they're constantly being released or changed or deprecated or beta stages. But again, that's where your SVS should be fully on top of what's coming down the pipeline, what's working well from an impressions perspective, what have you seen within your category work well for other brands. Asking those pinpointed questions. And ultimately, I think what Andrew mentioned earlier too, like how does this tie back to category averages, benchmarking in general, but having your perspective and I think really pushing that forecasting and a bigger buy-in commitment with we've seen success with this product and this is how this product is going to disrupt in this white space. We're looking for a 6-month buy commitment or whatever it might be from an ISM. Here's how we plan to go to market. Here's the additional levers we need from you. And then ultimately, I think internally too, just having that backup plan if things don't go to plan, right? What is your exit strategy? I think a lot of people tend to be a little blind to that in case you get a big commitment with Amazon, knowing that from your brand perspective and your go-to-market strategy, all the levers you can pull on Amazon. But ultimately, if it's not disrupting and you're not selling through an initial buy commitment or whatever it might be, What are those steps that you're taking that you already kind of have in the back of your mind to, for contingency purposes ultimately, right?

Yeah, 100%. The last thing I'll add on to Tom's answer is you listed a long series of ideas like influencers, live, co-funding, getting a bigger buy-in, etc., etc. And on one hand, yes, you should ask, you know, your AVS and your VM-specific advice about what they recommend and what they see be successful in a product launch context. But this is also your opportunity to test asking for literally anything. I think the spirit behind the question is like, what's safe to ask for? What's reasonable to ask for? And honestly, there's no real answer to that. You know, unless it makes you laugh out loud when you write the email, like it's probably fine. The worst Amazon can do is say, Oh, that's, that's completely out of sync with the value that you're providing here. And then, you know, you know, for the future and you can tune your future asks the same way. It's also important to get this input on a regular basis because the weird thing about AVN negotiation is that in theory, a dollar is a dollar and a dollar in co-op that goes away and appears in a damage allowance or freight allowance shouldn't make a difference. And yet But some years it does. And part of the fun goal of every AVN is figuring out, are there areas where a dollar is worth more or less than a dollar to your vendor management and category leadership team this year? Maybe they have a cash flow goal that they need to hit after years of really significant growth or vice versa. But asking those kinds of questions and proposing ideas and being willing to get shot down is a really, really good research tool. All right, so many more questions that I'm going to keep us going. Tom, is it possible as a vendor to negotiate A+ Premium into co-op or any other portion of your agreements? They've pushed on everything, but nothing seems to be working. Any advice for them?

Sorry, could you repeat the question just so I'm clear on— you're needing A+ Premium, or sorry, could you just repeat it so I'm clear?

Yeah, it sounds like they are looking to add A+ Premium and get credit for it in their co-op, their existing co-op agreements or accruals or what have you.

You should definitely be able to push towards co-op depending on what category, what kind of catalog you're in. I always push vendors for free A+ Premium. If you're already paying for it, definitely push for it as part of co-op. Co-op in general, but if you are looking to get A+ Premium, there's so many different ways that you can get this handed out like candy from Amazon, in my opinion, especially if, you know, you're driving your top 10 SKUs and you have a conversion problem. How am I helping that conversion problem? Looking for credits from Amazon that will hit that co-op or just free credits in general to implement A+ Premium to that conversion rate and that growth within the brand. Um, I don't know if I'm answering that correctly because I'm still a little confused on whether you guys need A+ Premium or you're just trying to get it to roll up under Co-op.

But it sounds like they already have it, they're paying cash, and they're trying to get it to roll up.

Yeah, I think you could definitely roll it up under Co-op, but understand what that percentage would look like if you're doing a straight payment right now. So knowing the data behind it, but ultimately you should be able to get that to roll up into co-op. Yes.

And to kind of connect this to our earlier conversation about AVS and what you can get strategically there, something that your AVS should be able to get for you is a relative performance of your product conversion rates. Amazon will never share, you know, actual category benchmarks and your competitors' conversion rates ever, ever, but they should be able to tell you like, are you doing better or worse than the category average? Average, et cetera. And they should be able to tell you that at a little more granular level, maybe not on a per ASIN basis, but just in general, like, are there sections of your selection where you're doing better or worse? And then to Tom's point, use that data to help Amazon understand that giving you more Premium A+ is actually in their favor because it helps print more money off of their existing traffic. It's not about you. It's not like, hey, these products already do really well and we just want them to be really good billboards for Best Buy and Target shoppers, which is what every VM fears. Instead, it is, look, Amazon, like this is an Amazon-specific problem. We think that there's huge amount more money and opportunity to unlock specifically by optimizing our existing detail pages for Amazon sales. And I think that that conversation might change a little.

I think one thing just to add really quickly on there too, I don't think it lives within Vendor Central anymore, but I have SVSs that pull this information for us. Is that IDQ score, item detail page quality score? It kind of seems like a term of the past, but what's the rating of your product detail page on Amazon? Are you fully optimized from product imagery to bullet points to the item description to A+ to A+ Premium Content? Getting that data from your SVS, that's something they should be able to pull. If you're sitting at 80%, how do I optimize to be better and help that conversion rate? A+ Premium is going to be a huge one if you're fully optimized already at the top of the product detail page. So understanding any metrics that they might have for you to pull in and how these incremental initiatives like A+ Premium can help build that conversion, even if it's you measuring your own conversion on A/B testing or before and after, and then trying to get some of those blinded studies or kind of baselines of whatever your SVS is willing to provide against the category. Love it.

But how should we think about quote-unquote marketing packages? And Tom, I'm, I'm looking forward to your answer on this, but as a former head of marketing for a retail category, I need to answer this first. So I, I led the programs that design the merchandising packages that you buy, and I can tell you very, very, very directly exactly what they are and aren't worth. Um, the first rule of marketing packages is don't think of them as ROI-accretive investments. They're not performance marketing at all. And if anybody is telling you that they should be treated that way, that person is lying to you gently and for their own benefit. Uh, marketing packages from Amazon's perspective are co-op sponges. They exist to justify incremental asks around co-op accruals and to make make saying yes to them more palatable. So the way for you, brand, to think about marketing packages strategically is to look at what Amazon is expecting from you in improved profitability for your catalog, whether that's through the PPM lens, the contribution profit lens, or whatever it is, and think about where that money needs to come from and think about what your actual ability to push back on that is. If you're not, if you know that you're able to negotiate away most of their increase because you have relative power, you know that you've had successful negotiations in in the past that do this, et cetera, great, push back. Don't go for any increases. You know, we have clients that Amazon asks for a 6-point increase year over year on net PPM. They push back down to like 35 bps. Great. That should always be your first path. However, if for whatever reason, you know, that, or you strongly suspect that your ability to negotiate, for example, that 6-point increase is going to look more like 3 points or 2 points, then that's when you should think about marketing packages as getting something for that increase. It's not going to unlock anything phenomenal, but it can be an interesting way to get just additional things from Amazon and commitments that may or may not be important to you and your leadership team. This is a great time to figure out whether there are stakeholders on your side that get really jazzed by seeing your brand's name on specific pages of Amazon sites. Does your brand marketing, your global brand marketing team have any like reasons or insights there, etc., etc.? But really thinking about it from that brand exposure side. And making Amazon feel good and making your leadership feel good or better about signing a larger check next year. Tom, anything to add there?

Honestly, you hit the nail on the head. I was going to touch on especially just the performance marketing aspect of things. And really, it's, it's the biggest question you can go back to your VM and with Amazon with is how is this driving ROI for me and my brand? It's— they're all awareness plays. They're huge co-op portions and there's so many free marketing levers that you can get from Amazon through other negotiation aspects in AVN that a lot of these are awareness plays. And I love your line too on just, you know, is someone in your C-suite super excited to see your brand name at the top of a brand store, a homepage or whatever it might be? But how is that actually driving value add outside of brand awareness? Those are the questions you need to ask Amazon. On because they won't have a good answer for you.

Nope. Last thing I'll touch on there is because we get a lot of questions about co-op versus retail media and PPC investments, and we could probably do an entire week of sessions just on that. But while we're on this subject, something to understand is that the marketing packages in general and co-op expenses in general should be thought of as less performative than PPC. If you were going to take $100,000 and spend it in your existing PPC strategy versus dropping it on a Prime Day sponsorship, the PPC strategy is going to outperform every single time and it won't even be close. So if you're focused on that kind of performance-based ROI, you're always going to grit your teeth at spending money on co-op. Uh, and you can either live with that battle and that tension, or you can try to find ways to justify it, not only to yourselves, but internally, or even to push back on Amazon a little it. 100%. All right, one more question here in the chat. Uh, how best to approach asking for co-funding for deals? Uh, they've heard other categories and other brands do this, but they have never been able to.

I think it goes back to a few things that we've touched on. What's the incremental value add that you're going to bring to the table if there's going to be co-funding from Amazon and from you? Making sure you're extremely dialed in on your data and your net PPM. How often are you on deal? Is this during a marquee deal period? Is it during a seasonal period? Is it an evergreen period? Knowing the funding that you're bringing to the table versus what you're asking Amazon to fund. And then what are those additional levers that you're going to be bringing to the table to bring awareness to the category or to the deal? So we talked about like a lot about national media and PR and whatever else it might be. Obviously Amazon is not going to do split funding regularly. I've never seen that. There's certain times where they will, and again, it's part of the broader AVN discussions in general. But coming prepared with data and understanding your business and all the margins that are impacting yours and Amazon's business and what are those incremental values that you're bringing from a split funding perspective. Again, this could be one of those things where we talk about like a new product launch as well. If we're coming to market and we're doing a slight promo, how is Amazon bringing value with co-funding for whether that's a coupon or a best deal or a placement or whatever it might be, having some sort of leverage on your side rather than coming in dry and just asking them to fund. There's usually what we've seen success from is people have a value-add as to why, and they have, um, their net PPM extremely dialed in on a SKU-to-SKU basis, really, from their relationship with Amazon.

Yeah, and then just to touch on that last piece around PPM, because we are talking about negotiations, uh, it's important to remember that even if you get Amazon to co-fund a deal, that ultimately that's going to reflect in your profitability, whether it's the product level, PPM, category level, or your entire account. And so it's not like you can win a negotiation on getting Amazon to do split funding that isn't going to come around and show up somewhere else for you. All you've done is potentially move that conversation into a different context. So if you're struggling really hard to get Amazon to focus on split funding, maybe that isn't going to be the avenue for you. It could be that, you know, getting a lot sharper about AVN packaging those requests into a larger ask with broader context when it's the season could be more successful than actually getting Amazon to do split funding on any individual promotional plan. All right, let's see, we've got another one on retail media. Since I did mention we've got a lot, let's keep going. Someone asks, we need to increase our advertising budget or spend in order to grand grow our brand via reach, new shopper acquisition, share growth, etc. To do that, they want to decrease co-op accruals in order to reallocate ads to dollars, or dollars to ads.

Um, yeah, great question. We see this come up quite a bit. Obviously, um, a lot of what we've been talking about, um, Amazon VMs own their own P&L. They do not talk to the ads team, right? They have their own best interests at heart, depending on your relationship with your AE at Amazon and obviously with your VM, how can you kind of pit the two against each other? Data, data, data. We've said this so many times, like, what am I actually getting out of my co-op dollars versus how am I performing in PPC that has all the data to back it? Are we bringing in new-to-brand customers? How are we growing category visibility with PPC in general? What's that trade-off, right? If I'm asking for a reduction, I also need to bring to the table how I'm going to grow not only my brand's top line, but also the category's visibility in general to help build that story for the VM more broadly. Asking for a straight swap is probably almost always never going to work again because is reduction in co-op, like that goes straight to the P&L for the VM versus an AE and spending more with them. How you can use that AE is building that story though. What's the incremental percentage or dollar amount that you'd be investing in advertising? How do you plan to do that? Is it through DSP that you hadn't invested in before? Is it more brand awareness to again help build that category growth or help drive traffic in general to to your product detail pages and build that top-line growth, which will ultimately impact that VMs category. Have those data points of this is what we expect to achieve with the additional PPC spend versus spending it in co-op. Propose a pilot. I want to do a 3-month, 6-month pilot. If I take 1 to 2% out of my co-op and put it towards PPC, here's the results expect to achieve. Here's the benchmarks that we've set together. If we hit those, I want to continue to spend this percentage toward PPC. It'll be a difficult conversation, but that's the big piece of it from, from my aspect is what Andrew just talked about as well. You're going to get that data, you're going to get the conversion, the awareness, the building of your brand through PPC versus co-op related agreements and understanding what did you pay for in co-op didn't realize value for you as a brand within the past year that you're hoping to achieve in the coming year.

Yep, this is ultimately going to be the most, one of the most tense topics for every brand every year as PPC continues to grow, as PPM expectations grow alongside it, and as Amazon continues to silo those P&Ls. To Tom's point, such thing as a clean answer here. And every, every time we get this question, our answers are going to be some flavor of it depends because it really truly does. But the sort of the culmination of the things we've been talking about today, this is the— again, to Tom's point, the best time to talk about performance and the relative ROI of those investments because Amazon Ads has tons of data. They've got all the performance data. It's incredibly easy for them to show you in extremely deep detail the results that you're expecting in the language that your marketing and GTM teams expect and understand, etc. They can help you build that story with your VM. You don't even have to tell them that that's what they're doing. Just help, just pitch them as though, you know, you pitch your ads team as though you need help understanding the relative benefit of your existing ads investment in order to potentially unlock more. Then use that story to prepare for AVN because everything that they're giving you there is something that you can ask for in parallel from the VM side and that they're not gonna be able to give you. It's not gonna solve anything, but it again increases the tension and increases or, and makes more visible the disparity between those two programs and makes it a lot harder for Amazon to say, well, no, it actually just makes sense for you to give us the co-op because it doesn't. Finally, I really, really love Tom's idea about making it a time limit and proposing a pilot I gotta say, Tom, in however many months or years of doing this, that's the first time I've heard that idea. So that's super, super interesting to me. The idea of making it just for a couple of months or a few months and moving a small percentage or even just for a limited selection with clear expectations of what the outcomes are as a test helps you build proof and legitimacy, not only for this case, but for every future time you ask to do this. And frankly, you might learn something, both you and Amazon.

We are good.

All right. We are at time. Tom, I want to thank you very much for joining us today and committing all of your effort. Thank you very much, everybody who attended. We will share some follow-ups later on. You'll be able to access this meeting recording and some notes. If you have more follow-up questions, please do submit them via the Typeform. And then, of course, if you want to hear more from Tom, You should check out Accenture Song, the consultancy through which you can actually work with Tom and his team. If you have more follow-up questions for Tom, you can check out this link in chat or follow up with him on LinkedIn or with me directly. If you submit additional questions, we'll try to answer them next week.

Thanks so much for having me, Andrew.

All right. Take care, everybody. Be well.