Amazon sponsored products (Amazon PPC) has now become more of a need rather than a want for sellers on the platform.
But when it comes to paid Amazon PPC campaigns, many are still in the dark on how it actually works, and how to make the most out of it. And this is why we at SellerLift created this article.
Admittedly, yes, we do offer Amazon Sponsored Products campaign management as one of our services. And though this article will give you some insight as to you how an Amazon ad campaign works, and what you should focus on, we won’t be revealing to you our actual methodologies or we’ll be out of business.
We may be nice people, but we’re not a charitable organization.
The best thing we can do though is offer you a FREE 14 day trial.
Anyway, back to the article. Let’s start with….
When Launching A New Product: Prioritize conversion and click-through rates over Advertising Cost of Sales (ACoS)
A common mistake for many sellers is that they get too caught up with their ACoS. And I don’t blame them. ACoS is definitely a huge metric when it comes to determining the performance of an Amazon PPC campaign.
ACoS is mostly used to scale profitability by allowing users to establish and pinpoint their break even ACoS with the initial ACoS that they set.
What they fail to realize though is that conversion and click-through rates are a far superior metric when it comes to evaluating if a campaign is successful or not. And this becomes even more important when it comes to listings that are new and have little to no sales history to speak of.
Business wise, the main point of launching a new product with an Amazon pay per click campaign is not all about profitability, but determining, through conversion and click-through rates if the price of the new listing is desirable enough for buyers in order for it to be profitable.
Do you get my point?
If a listing has a click-through rate bordering around 0.2%, it means that it’s CTR (click through rate) is low, Meaning, its price is definitely not doing much in attracting users to buy the listing.
When this happens, you should reevaluate the listing and adjust its price, main image, title, and even go as far and see if the review it has is affecting buyer sentiments.
Also, low conversion rates can be a tool that indicates buyer disappointment.
If a listing is plagued with neutral or negative reviews, then there’s a huge chance that this is the culprit. But if not, and if said listing is a new one, then what you can do is to check organic listings of the same product and see if they also have the same problem.
A listing with low conversion and click through rate usually suffers from:
- Bad pricing
- Unattractive main image
- Bad listing description
- Unfavorable reviews
When Selecting What Metrics To Use: Actual profits are good! ACoS will just complicate things
Like I said earlier, there is nothing wrong with using ACoS to measure the profitability of an Amazon ad campaign. It just has its limitations.
In the example below, let me show you how ACoS can easily mislead the hell outta you.
For this example, let’s say you have a couple of products (product A and B) in an ad group. Product A has a 10% margin while Product B has 20%. Let;s say that the ACoS of the ad group is at 15%.
Based on this alone, can you say that it is profitable? Well it depends on the volume of sale each product has right?
So if Product B sold out, the ad group would have made a 5% profit since the profit margin is 20% and 15% was used on Amazon product ads, right?
But what if it was Product A that got sold out? This means that the ad group suffered a 5% loss since its profit margin is capped at 10% but 15% was spent on your Amazon PPC advertising campaign.
Do you see the difference?
Your takeaway from all of this is: ACoS only shows you the “average” profitability of your Amazon pay per click campaign.
Now if you are a masochist and still want to continue using ACoS as a profit metric for your Amazon PPC campaigns, then the best advice I have is for you to only use products with identical profit margins… well give or take a few decimal points here and there.
Enough with ACoS though. Let’s move on to keywords.
Straight From An Amazon PPC Company: Amazon automatic campaign is a good keyword tool….. But we’re better. =)
Ask any SEO specialist and they would tell you that the foundation of any pay per click campaign, be it on Amazon or Google, are keywords.
But if you think that finding the right keywords to use for your sponsored ads is a cakewalk, then you are mistaken. Every keyword used in an Amazon ad campaign entails hours of research by a competent PPC manager or company.
About now, I guess you’re thinking that this section is a bit contradicting as i’m suggesting that you use an tool that automatically gives you keywords right? Well not really.
You see, Amazon in itself is a search engine. And just like any search engine, it’s database is filled with keywords tied to a specific search result. So basically, Amazon is giving you what it thinks is the best keyword(s) associated with your product.
By running the the automatic campaign for at least 2 to 4 weeks, it will tell you what keywords will perform best in terms of impressions, CTR’s and sales for your product.
On the flip-side, and if you want a more thorough and customized keyword analysis for your products, then having a dedicated PPC manager doing keyword research for you is the far superior way of doing things.
If you want to experience the difference for yourself, then make use of Amazon’s automatic keyword tool, and then sign up for our Amazon sponsored products FREE 14 day trial and compare the two.
Amazon Advertising Strategy: Using Amazon PPC now will get you better organic results in the future
Another thing you should understand about amazon PPC advertising is that it has a direct effect on organic rankings as well. And no, I’m not referring to how amazon product ads can easily overtake organic ones on Amazon’s search results. Rather, it has something to do with sales.
One of the ranking factors that Amazon’s consider is sales. The higher the sales a listing have, the better Amazon will rank it organically for its corresponding keyword.
And when you employ paid advertising on Amazon for any of your listing, you are not only boosting its sales potential but also how it will organically appear in the future, regardless if its PPC campaign has ended.
To end, I know that this article may have opened up a whole new set of questions for those of you that are green when it comes to Amazon sponsored products (Amazon PPC). You didn’t expect to learn everything in just one article right?
And regardless of how much you think of me as someone who is knowledgeable in this subject ( if you do so, thank you) my knowledge pales in comparison to the people behind our PPC department.
My point being, successfully navigating the intricacies of Amazon PPC is something that doesn’t happen overnight. It takes years of success and failures for a person to claim that he/she is indeed an expert.
So if you want to experience what it is like to have a team of highly experienced PPC analysts doing an Amazon sponsored products campaign for you, then do yourself a favor and sign up for our FREE 14 day trial.
As always, have a great day, and see you next time!