Experience counts for everything in eCommerce. But it's 2021. And if your Amazon strategies didn't work last year, they're not likely to work in the new year.
Amazon advertising cost is on the rise, and you need to make absolutely certain you're seeing key results before committing to full scale PPC campaigns.
You're doing what you can as a seller. You may have implemented a full keyword research strategy. You may have paused slow moving items. You may have invested in additional Amazon ads outside of PPC. And you may even be seeing some traction as a result.
But are you reaching your full potential on Amazon?
Amazon PPC ads aren't simply a “pay to play” option. When used strategically, it can help drive traffic in ways you couldn't imagine. And when used strategically, PPC advertising can actually yield 50 percent more conversions than organic advertising.
If you use PPC strategically. Do it wrong and it can wind up costing you more than what you spent on inventory. Amazon PPC is a constantly changing platform—and so is strategy development. A defining strategy (if such a thing exists!) means that you need to have key elements in place, in addition to tested methodologies.
Here's what to look for to develop an effective Amazon PPC strategy in 2021.
Set the Right Amazon PPC Budget
Sellers frequently jump into PPC advertising without a set budget. But without having monthly limits, they frequently wind up reinvesting in more advertising without seeing any significant conversion rate.
Make no mistake. Amazon ads can be cost prohibitive, no matter whether it's sponsored brand ads, sponsored display ads or sponsored product ads.
Here's a good example of how you might want to to categorize your ad spend budget:
Allocate 65 to 70 percent of your budget to sponsored product ads.
Allocate 20 to 25 percent of your budget to sponsored brand ads.
Allocate roughly 5 percent of your budget to sponsored display ads.
That's simply a good starting point if you're new to Amazon PPC campaigns. Headline search ads, for example, are becoming increasingly popular. However, unless you have a well developed product line, a recognizable brand logo and an established customer base, we'd recommend keeping the above three as a bare minimum when structuring your PPC campaigns.
If you're not certain how much you should be spending on ads, a good rule of thumb is to start off with approximately 5 percent of your total revenue and gradually increase your budget to a maximum of 12 - 15 percent once you start seeing profit.
Focus on Product Readiness
Sellers can sometimes spend hundreds of thousands of dollars on advertising without seeing any ROI whatsoever. Bids and budgets for Amazon PPC ads are climbing higher each day, but sellers with smaller budgets are being virtually edged out.
If your product isn't retail ready, you're not going to see much of a return on your Amazon PPC spending. But what do we mean by retail readiness?
At least 15 Reviews
At least 4 high quality images
A full description with title and price.
Unfortunately, some products are going to do better with PPC than others. And the return just might not be there for smaller niche products. Each product detail needs to be ironed out prior to your campaign. Consider how much you're willing to spend on Amazon PPC and try organic methods if it just isn't working.
Calculate Your ACoS Before Your Campaign
You're never going to know your ROI accurately if you don't calculate your ACoS (advertising cost of sales) prior. And you should take into consideration both the cost it will take you to break even as well as your target ACoS.
Here's a breakdown:
ACoS = Total Amazon ad spending / Total generating revenue
It's simple. If your ACoS is higher than your profit margin, you're losing money. An ACoS lower than your profit margin means you're breaking even. But you need to know your exact profit margin first—which is why your product should be retail ready prior to your campaign.
Keep in mind that you shouldn't be content with simply breaking even. You want to see a significant ROI, so be certain to set a target ACoS for future campaigns.
How to Structure Your Campaign
You're going to get a much clearer insight into your customer base if your Amazon PPC campaign is intelligently structured.
Intelligent structuring of your Amazon PPC campaign is based on four pillars:
Controlling the traffic you're paying for.
Analyzing the success of your campaign for each ad group.
Minimizing excess spending.
Optimizing each of your ad groups.
Every product line will require a different approach to structuring PPC ad groups, which is why we recommend you revisit your campaigns either monthly or quarterly. Keep in mind that Amazon PPC campaign performance will never be static, and seasonal demands will ultimately play a much larger factor in performance than many people imagine.
Here's an example of basic ad group structuring we've found works best for our clients.
Create a separate campaign for each product.
Separate each ad group based on keyword match types (e.g, keyword phrase match, broad match, exact keyword match type.)
Separate the campaigns by strategy (e.g, branded search terms vs non branded campaigns, product targeting vs category targeting.)
For automated campaigns, make a separate campaign for each targeting type (e.g, loose, close, complement and substitute.)
This structure doesn't just optimize your account properly, but can give you insight into each step of the customer journey in depth.
Research Your Competitors to Amplify Your Amazon PPC Campaigns
Looking to take your advertising to the next level? Try developing a PPC advertising strategy based on your competitors.
The goal of competitive keyword research is to extrapolate relevant keyword data. You want to find the best performing keywords from top sellers in your category and start compiling a list, including negative keyword types.
Negative keywords are essentially irrelevant keywords or keywords which receive a high volume of bids but little sales. In both cases, they amount to a wasted ad spend and should be avoided; even if your strategy is to develop an entirely unique keyword pool.
You probably already have a rough idea of which terms to use, but here's a few pointers on how to find the most relevant keywords from your competitors:
Type in your keyword pool and grab the main listings from Amazon using Helium 10 or similar product finders.
Filter for products that are both relevant and top selling. This can take some research on your end, but you'll find it's worth it in the long run.
Cut and paste the main keywords your competitors are using and add them to your campaign in all match types.
There's also a host of reverse ASIN tools you can use to help simplify the process. Whatever method you choose, make certain to monitor your competitors performance at least once a month to ensure only the top performing keywords are included in your keyword pool.
Single Keyword Campaigns
If you're getting a large number of sales from a small group of keywords within your existing ad groups, it's a great time to set up single keyword ad campaigns for them.
A single keyword campaign will allow you to have the most control over bidding and your overall daily spending. Your bidding strategy is dependent on your budget, just keep in mind: the more competitive your bid is, the more effectively you'll be able to estimate just how much you can allocate to future campaigns.
For example, let's assume the majority of your vitamin supplement sales come from the keywords “fish oil” and “Omega 3.” In addition to a high sales volume, you notice these terms have the highest conversion rate and profit margin. You want to develop an aggressive bidding strategy using these terms; and single keyword campaigns are one of the easiest to deploy.
There are two main ways you can implement a single keyword campaign. The first would be to have an overarching campaign with individual keywords in their own sub-campaigns. Alternatively, you could establish a separate ad group for each keyword placed in all three keyword match types: broad, phrase and exact. Here's a current example from our accounts:
We analyzed the search term report and separated single and long tail keywords.
We created separate campaigns based on each keyword.
We divided the campaigns into ad groups based on keyword match types.
Single keywords help you to generate more long tail and short tail keywords, allowing you to see just what terms your customers might be looking for.
Amazon PPC Doesn't Sleep
Amazon PPC may be one of the strongest assets you can hope to have as a seller. But building and maintaining campaigns is an incredibly detailed process. These strategies are some of the easiest and best ways to maximize your campaign's effectiveness.
But they're also the most basic. Amazon is a continuously growing and changing marketplace. And your competitors are constantly utilizing newer, more effective strategies. While these are basic tips, you'll need to adopt more advanced solutions as your sales increase.
Amazon PPC doesn't sleep—and neither should your business.
Looking to maximize your PPC campaigns on Amazon and beyond? We've developed proprietary methods that get proven results. Find out more at Color More Lines.