DTC 110: 📦 Amazon & the magic bid formula
May 21, 2023
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Wednesday, November 24, 2021

Twitter never ceases to amaze us…

If you’re new to DTC, welcome! You’re in good company with fellow newcomers from Dreamfarm, Fresh Life Floral, Pact Coffee, Estas, Wake Water, CookingPal, and KatKin. 👋

In this newsletter you’ll find: 👇

✅ Amazon bid optimization tips.

🏆 Winning with subscription.

⚡️ Supply chain, NFTs, and the world's best checkout experience with Bolt’s Ian Leslie.

Read till the end to learn more about DTC Scale School! 😎

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Bid optimization is the key to hitting your target ACoS.

But what the heck is ACoS?

It’s the Advertising Cost of Sales. This is how much you spend on advertising for every dollar of revenue you make.

At a keyword level, ACOS can be calculated instead by taking your cost per click, and revenue per click - which gives better insight into which direction to move your bid to achieve your desired CPC, and thus desired ACOS.

Wondering how to figure out what you should be bidding?

Use AdBadger’s magic bid formula 🪄 Target ACoS * RPC = your CPC bid

Ex. If your target ACoS is 30% and your revenue per click is $1.00, your bid would be $0.30.

Your bid would be $0.30 regardless if you got ten clicks, one hundred clicks, or a million clicks.

Let the bid optimization begin!

Top Bidding Don’ts:

🙅‍♂️ Using the same bid on all keywords regardless of their expected value (set and forget doesn’t work here, folks).

🙅‍♂️ Not matching keyword bids to their expected value.

🙅‍♂️ Bidding aggressively on keywords to match the expected value but basing your bid on incorrect math.

Notice a theme here? You have to take into account the expected value of each keyword.

Drill down into the keyword and determine how much you expect to generate in revenue based on your previous history.

Top Bidding Dos:

👍 You need to be organized and systematic – Know what days you’re going to optimize (keep it the same every week) and have your optimization process down to a tee.

👍 Make multiple small changes frequently – Multiple small changes done at frequent intervals will show superior results to massive singular changes.

Each change you make to a bid will change which shoppers your product is being shown to. This means every small bid change will likely affect all of your campaigns’ metrics, including CPC and RPC.

This is how small incremental changes can lead to big results – each change gets you more data at each bid point, ultimately drilling down to an optimal bid.

Always keep in mind any changes that are happening on the listing side of things.

Do you have a sale or deal running? How seasonal is this product? Do you have a lot more reviews now that could help conversion rate? Have you changed your listing's creative or added a video?

Any changes to the product page make bid optimization even tougher! Although you should always be striving to make your product page better, of course.

When you’re launching a brand new campaign, you should be optimizing your bid daily for a week. Start low, then inch your spending up over the week.

Here are some guidelines for your minimum bid optimization frequency:

  • For small accounts ($0–5K/month ad spend) update every bid twice monthly, minimum.
  • Medium accounts ($5–25/month ad spend) should update every bid weekly.
  • Large accounts ($25–75k/month ad spend) should update every bid at least twice a week.
  • If you’re spending over $75k/month, you need daily optimization to keep up with your data.

If ya got any questions reach out to the Pilothouse Amazon team – they’re beasts.


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Thinking of building a subscription program in 2022? We got ya covered.

Our tips for success. 👇

Types of subscription offers

You can get creative with how you build your subscription program, but there are three main types brands use today.

1. Replenishment program: For consumable products like food and cosmetics, happy customers will need to restock their items. With a replenishment program, customers don’t have to stress about remembering to re-order.

Instead, ship their products on a regular cadence, such as monthly, every 3 months, or every 6 months.

2. Curation Box programs: Think Fab Fit Fun or Hello Fresh. These are monthly boxes with curated items based on a customer’s preferences.

The products switch every month, keeping the subscription fun and surprising.

3. Access programs: Similar to memberships, access programs are when customers pay a fee to use services, enter private communities, get merch, hear about products first, or get free shipping. It’s giving customers exclusive access to community-level perks.

You can use a mix-and-match solution by offering more than one of these types to subscribers.

Tips for subscription success: 👇

1) Master your messaging

What unique value does your subscription give customers? Why do they love your product? Why did they subscribe?

Understanding your customers and how your product fits into their lives will help you master the messaging to promote your subscription program. Use this messaging consistently on subscription landing pages, emails, and any other promotional assets.

You can collect this information by asking customers through post-purchase surveys.

Here’s an example from Better Way Health, which even has a video on the subscription landing page about the perks of the program:

2) Give value other than discounts

Many subscription programs tend to offer the standard "subscribe and save."

While this is helpful to customers, it doesn’t give them a ton of value aside from not having to remember to restock their items.

To give customers a good reason to stay subscribed, find other value-adds for your subscription program.

For one, you can invite customers to programs, communities, and exclusive events.

Or you could give subscribers bonus discounts, free swag or tester products, first access to new product launches, or free shipping.

Aisha Chottani, the founder of Drink Moment, told us how she gives subscribers unique value:

"Customers who subscribe are happier in the long-term – they get moved into a different flow as we know they have committed to us. We love all our customers but have special rewards and discounts for our subscription customers. It ends up being a virtuous loop."

3) Always notify customers about payments, shipments, and updates

One of the worst feelings you can give subscribers is making them feel like they’ve been duped into having to continue paying into your program.

This can happen when you:

  1. Don’t communicate enough about your subscription, like when customers are about to be charged again or when their products shipped.
  2. Make it really difficult for people to unsubscribe.

"Auto-renewing a subscription without notifying the customer has become an unfortunate norm—particularly in software and services—and we’ve seen that some consumer goods companies have followed suit despite having to ship a physical object.

Avoiding unwanted surprises (and the ensuing returns or poor reviews) should be a top priority for those considering subscriptions," said Caroline Buck, co-founder of Petaluma.

Let customers know when their renewal is coming up, and for the sake of all the stressed-out subscribers in the world, email them to confirm their canceled subscription.

Canada Craft Club has a good example here:


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4) Design a killer customer experience

Building off the communication tip… Just like any online shopping experience, your subscription program should be easy to manage.

If people want to change their subscription type, ask questions, and delay one shipment, let them do it by emailing your team, messaging them via live chat, or even sending a text.

"Focus on designing a digital experience that your customers will find friendly and considerate rather than one engineered to force their hand to subscribe or remain a subscriber," said Caroline Buck.

5) Let customers test your product before they subscribe

For a lot of consumable products, customers want to test them before they sign up for a subscription program. Petaluma, a sustainable dog food brand, handles this well.

According to Caroline Buck, "Dog food is a product that many folks want to try before they buy, and we added a free sample program to help our prospective customers evaluate Petaluma before making the jump to a subscription."

6) Build a landing page to highlight the benefits

Sharing a "subscribe and save" option on your PDPs is one good way to show you have a subscription program, but we suggest creating a landing page that shares all of the benefits, how to subscribe, and general info about your program.

Make sure this page is shown somewhere in your navigation and in your footer. You can also call it out on PDPs.

Check out Amora Coffee and how subscriptions are called out in the main nav bar.

They even offer subscribers their first coffee bag for only $1.

7) Target the right audience

The truth is, subscriptions aren’t for every customer. First-time purchasers aren’t always going to return, so sending them an email that promotes your subscription program isn’t the best use of your time.

Instead, focus on those customers who have made three or more purchases at your store.

Why three?

One purchase doesn’t tell you if a customer loved your product. Two purchases suggest the customer did like it enough to reorder, but the third purchase is a strong signal that the customer is going to continue reordering, and that a subscription program suits their needs.

Also, Aisha Chottani suggests learning your customer’s needs before offering a subscription:

"The most important thing is to understand your customer and their needs. Once you do that, you can design a program that suits those. Beyond that, be prepared to pivot and iterate."

8) Survey cancellations

When someone cancels their subscription, immediately follow up to find out why. It might not have anything to do with your actual products and more so to do with your communication or process.

In any situation, customer feedback can help you improve your brand experience.

Send a survey to customers who cancel, asking key questions like

  1. What was your reason for canceling your subscription?
  2. How can we improve our subscription experience?
  3. What did you like about our subscription program?
  4. What didn’t you like about our subscription program?

Questions like these help you peek inside a customer’s thoughts and discover ways you can improve.

9) Educate customers

Getting a customer to subscribe is one thing, but getting them to stay subscribed requires a strategy of its own.

And the best way to do that is to continue educating the customer about why they need your product.

Set up targeted SMS and email flows to engage with subscribers to share product values, educational tips, entertaining content, and more.

"For Petaluma, we know one of the main value propositions is that customers do not want to run out of dog food.

We can focus on that message by sending text message reminders when their bag may be running low or proactively suggesting a different order cadence or bag size if the customer is running out more quickly than anticipated.

These notifications are all subscription nudges, but they are rooted in providing a clear value to our customers," said Caroline Buck.

10) Give subscribed customers loyalty in return

For customers to continue seeing your value and stay loyal, you have to give loyalty back.

Remember, people who subscribe are the most important customers for your LTV and retention, so consider how you can continue nurturing your relationship every month.


🎧 This week on the pod, we chatted with Ian Leslie, previous CMO at Industry West, who has since moved to Senior Director of Retail Advocacy at Bolt.

Bolt is a technology company on a mission to democratize commerce—making buying easy, trusted, and consistent for shoppers. The world’s first checkout experience platform, Bolt offers a lightning-fast, one-click checkout and connects millions of shoppers to retailers through a unified, cross-brand network.

Our convo with Leslie was unique, spanning the gamut from BF/CM to NFTs to baseball cards.

‍The Takeaways: 👇

📦 BFCM & Supply Chain Issues:

Most marketers are aware of the huge supply chain issues plaguing businesses globally right now. Many brands may even be experiencing shortages, unable to fulfill orders at the scale they’re used to.

However, we can’t assume the general shopper is in the loop...

"The general public is probably not as aware of [supply chain issues] as we think they are."

🔊 This means that communication with customers will be the key to succeeding this holiday season.

"The companies that are most transparent and deal with it best are going to win."

If your inventory is looking slim for BFCM, instead of running a huge sale, two options you could consider include:

  • Pushing gift cards
  • Offering "buy now receive later"

However, Leslie believes the success of companies will ultimately depend on the level of Customer Service they can offer shoppers.

In other words, treat your CS teams with extra love and care in the upcoming weeks. ❤️

🔮 The state of the industry and the future of what’s to come.

During our convo with Leslie, we also talked about:

  • Key lessons from Leslie’s five years at Industry West.
  • The future of fast checkouts.
  • Baseball cards, NFTs, and big news about Adobe.
  • Real Talk about the coming (and already here) supply chain crunch.

And much more.

👉 Listen to the full convo with Ian Leslie here!


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🔥 The 2021 Ultimate Black Friday DTC Deals List.

✈️ DTC Briefing: Forerunner’s Nicole Johnson on how the consumer psyche has evolved

📕 TikTok publishes new guide for SMBs looking to get started in the app.

🎼 Spotify rolls out podcast ads via self-serve Spotify Ad Studio in the US.

🌏 TikTok Shares Insights Into Some of the Top Brand/Creator Partnerships

🦾 Meta’s sci-fi haptic glove prototype lets you feel VR objects using air pockets.

🛍 Facebook: The new era of shopping is hybrid.


⚡️ Real Talk On The Supply Chain Crunch, Word's Best Checkout Experience, and the Future of NFTs with Bolt’s Ian Leslie.

👟 Vessi’s CEO Tony Yu’s Q4 Lead Generation Brilliance (40K+ New Leads In 24 Hours With THIS Contest Strategy).

🤵‍♂️ 3X to 10X ROAS and Managing Your Customer Lifecycle with Suit Shop'sKristen Jones.

🧲 Wildstorming the Beauty Space – Glamnetic's Head of Growth Margaret Fortner Returns!

Don’t forget to rate the DTC Podcast on Apple (⭐️⭐️⭐️⭐️⭐️)

DTC Newsletter is written by Thomas Schreiber, Sadie Evans, Tina Donati, Kelsey Hess, and Rebecca Knight.

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