There have been sharp increase in overall Amazon ads spending in the fourth quarter of 2016. Average cost of the winning bid went up by almost 20% and one of the major reasons was Amazon’s ban on incentivized reviews. Since 70% of sales tend to happen on the first page it has also quadrupled the appearance of Amazon sponsored products. With the continuous increase in new sellers the competition pushed them to run Amazon ad campaign in order to make more sales and get Amazon reviews. All-in-all it has lead sellers to learn Amazon PPC management to optimize and structure ad campaigns and avoid wasting money by controlling their campaign properly.
Amazon Sponsored Products
Before diving into the details of the Amazon PPC management and optimization lets step back and see what are the Amazon sponsored products?
when you enter the marketplace and type in “bath linen” in the Amazon search bar and hit ‘Enter’. You’ll see thousands of results of different bath items and a few of the top items are the basically the ads also known as Amazon sponsored products.
Amazon sponsored products is the best way to get the much needed exposure and initial sales for a new product on the marketplace. If you are planning to launch a new product or enter another marketplace of Amazon then this could be your best option to start generating sales.
Launching Amazon Ads Campaign
To better strategize your campaign we’ll quickly take a look on launching of Amazon ads.
New sellers should take start with automatic campaign as it let you understand how Amazon’s algorithm looks at your listing. It will scan title, bullets, description and back end search terms. Now automatic campaign will let you identify if the ads are actually shown for those keywords you’ve used to optimize your listing or not. Another important benefit is that you will get to find new keywords for your listing which you would never find with manual campaign. This is because of the algorithm designed to maximize clicks. Set up about $10 of daily budget and start with low bidding from $0.25 which you may gradually increase over time.
Now is the time to use the top converting keywords that you found through an automatic ppc campaign. Optimize your listing with these keywords and also run manual campaign. Give it a good daily budget of around $20 and bid on the keywords a bit higher than the automatic campaign. Let the campaign run for few weeks to see which keywords are converting most and generating sales.
It all doesn’t stop here that you set up the campaign and just wait for the results. Next step is the Amazon PPC management where you continuously make changes to fine tune the keywords. Generate search terms report every other day or so. See what works best from the search terms report and then use it to optimize both listing and Amazon advertising campaign. Make sure that you are monitoring all the changes on daily basis to get the maximum ROI.
Some new sellers find it hard to manage it all by themselves, in such a case they can always consider outsourcing. You can hire Amazon PPC management virtual assistant from Upwork or Fiverr who can fully manage the campaign for you. You will not only save time for other important business tasks but also avoid the risk of wasting money by running poor Amazon ads yourself.
Tips for Amazon PPC Optimization
Take a look at three simple and basic Amazon PPC optimization tips to juice the maximum profit from your ad dollars.
Run Amazon Ads on long tail keywords
Bidding on long tail keywords have become lucrative due to increase in competition and bid prices for the primary keywords almost in every category. Its not only low cost but also deliver high conversion rate.
These type of keywords are similar to phrases and are specific searches by the users. Long tail keywords represent the most interested users and therefore conversion rate is high. To find such keywords, first thing to do is checking the search terms report of automatic campaign and finding the keywords with high conversion rate at low impressions. You can use those to optimize manual ad campaigns. To further broaden your keywords list you can use our Amazon Keywords Research tool to generate relevant keywords and to optimize your listings and PPC.
Remove unprofitable keywords
As you know CPC cost is increasing across all the categories that’s why we recommend you to remove unprofitable keywords. You can find all unprofitable keywords by using search terms report of the automatic PPC campaign. Immediately remove all the keywords with high CTR (click-through-rate) but low conversion rate. Because these keywords are costing you money on click but not bringing any revenue.
You may use negative keywords to remove low performing keywords which are just generating traffic on your listings without any sales. Usually such keywords are not relevant to the listings and they will not convert visitors into your customers.
Maintaining product profitability
To run a successful Amazon ads campaign your main objective is to maintain the profitability of the product. With this in mind, you need to define the net profit margin you want to make after spending on ad.
For example, if a product is generating $200 with an ad of $50 your ACoS (Advertising Cost of Sales) will be 50 ÷ 200 = 25%. Now you need to figure out your break-even ACoS and target ACoS in order to keep the campaign profitable.
Break-even ACoS is equal to your profit margin and you won’t incur a loss as long as your ad spends are less than the profit margin. In the above example, if your profit margin is 40% which is equal to break-even ACoS and If you don’t spend over 40% on PPC promotion, there’s no loss. And if you want to maintain a profit ratio of about 15% then you should spend no more than 25% on ads to maintain desired profitability.
Now you might understand the importance of Amazon PPC optimization and have also learnt how to optimize and structure Amazon PPC campaign. Now you would not waste money on the irrelevant ads. Find your break-even ACoS and target ACoS to make sure that if you run Amazon ad campaign your product always stays profitable.
In the end, track rankings with the help of Amazon keyword tool to see how ads are impacting your keyword rankings. You can further work on to improve the rank on target keywords. It will also help you to track rankings of your competitors and stay updated with their activities. Take a 10-days free trial while you can and see how it can help you in keyword research and rank tracking.