There have been sharp increase in overall Amazon PPC 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. With the continuous increase in new sellers the competition pushed them to run PPC campaign in order to make sales and get more reviews. All-in-all it has lead sellers to learn to optimize and structure Amazon PPC campaigns and avoid wasting money by controlling their campaign properly.
Tips for PPC Optimization
Run PPC 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 optimize your listings and PPC with those.
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 term 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 PPC 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.
When you have learnt how to optimize and structure Amazon PPC campaign then you would not waste money on the irrelevant ads. Find your break-even ACoS and target ACoS to make sure that if you run paid ads campaign your product always stays profitable.