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Last updated on June 5th, 2023
Written by Himanshi Raj
You don't need to be an Amazon PPC expert to know that you can lose profit from your sponsored ads, especially if you don’t monitor the performance of your campaigns against your PPC costs. The infamous "set it and forget it" mindset won't help you dominate the marketplace. It is crucial to regularly optimize your Amazon PPC campaigns to achieve your advertising goals.
In this article, we will discuss how to lower the advertising budget by optimizing your Amazon PPC advertising campaigns, and talk about other Amazon PPC metrics you must consider to boost the performance of your ads.
The first thing that comes into your mind when talking about advertising budget is the Amazon CPC (cost-per-click). It is the amount Amazon charges every time someone clicks on your sponsored ad. CPC also determines how competitive the keywords are.
Remember that Amazon PPC advertising runs on an auction-based system. Don't expect that you will pay the exact amount you've entered in the bid field. Say, for example, you bid $2, and then someone bid $4, your CPC would only be $2.01.
As a general rule of thumb, the lower CPC, the higher ROI, according to Amazon PPC experts. Moreover, the average or standard Amazon CPC is $0.71. Does this mean you should set a bid lower than the average CPC to achieve better results?
Wait up! There are several factors to consider before lowering your Amazon CPC, such as monitoring other Amazon PPC metrics, as explained below:
You must watch out when:
The impressions are too low because it means you're getting outbid or using the wrong keywords.
You must watch out when:
The number of clicks are high, but the sales are low, or the listing receives a few clicks, but the impressions are high.
CTR = Total Clicks / Total Impressions
You must watch out when:
The CTR is low, which means your Amazon PPC advertising campaign is not engaging.
You must watch out when:
You have a lower than average Total Spend, which means your ad is not visible enough.
You must watch out when:
You have low overall sales. It could be due to your poorly made ads and product listings.
ACoS = Total Spend / Overall Sales
You must watch out when:
Your ACoS is too high, because it means you're spending too much advertising budget.
Conversion Rate = Total No. of Orders / Total No. of Visits
You must watch out when:
It is low because it implies that your product listing is unsatisfactory or no one wants to buy your product.
See? Amazon CPC shouldn't get all the love and attention. There are other metrics you must monitor as they also impact your sales and product ranking.
But if your main goal is to save money, one of the metrics you should monitor is the ACoS.
One out of three advertisers is moving their ad spend from Google and Facebook to Amazon, as stated by Forbes. This is both good and bad news for an Amazon PPC expert.
Apparently, the good news is their job is more in-demand than ever. On the other hand, the bad news is the competition in the marketplace is greater than before. Thus, it may result in a higher Amazon CPC since you're competing for the best placement for your ad against the millions of advertisers in the marketplace.
So here's the scenario: if your CPC is higher, then your Total Spend skyrockets, too. And if the competition is fiercer now, it may affect your Overall Sales. All things considered, it may lead to a higher ACoS, which you don't want to happen.
Don't worry; we've got you. Here are a few tips to lower your ACoS:
You can do this by adding negative keywords to your Amazon PPC advertising campaigns. For existing campaigns, you can get negative keywords from your auto-targeting campaign's search term query report. You may then add them to a campaign with low conversions.
If you haven't launched any, create keywords that are irrelevant to your ASINs. For example, "blue girls’ pants" may be changed to "red boys’ pants" or "blue men's slacks."
Start by bidding on keywords with low Sales and high Total Spend. Find those ads with low Conversion Rate and Sales even with a high number of clicks. Resolve this by making your price competitive and optimizing the product listing. For newly launched campaigns with high Impressions but low Clicks, tweak your title and image to have a better CTR.
Okay, that came out from nowhere, but let us explain.
Amazon brand guidelines were created for advertisers who want to use Amazon's official logo, trademarks, and other brand elements. It contains specific instructions on how an Amazon PPC advertising campaign must look like when Amazon’s official brand logo is added. Moreover, it also states that you should secure written permission from Amazon before using any of their brand assets.
Besides protecting the I.P. (intellectual property) of Amazon, the Amazon brand guidelines put restrictions on ads so customers won't misinterpret them. Here are some of the guidelines:
How can it affect your ACoS? As we've mentioned in the first item on the list above, a confused customer may either leave your page or give you negative reviews. Thus, resulting in lower Sales and Conversion Rate, which directly affects your ACoS. Amazon may also take down your ad and listing, or worse, remove your selling privileges.
Amazon PPC advertising campaigns are not fully dependent on Amazon CPC alone. You should take into account other important metrics to make your PPC ads more visible and more appealing to customers. One of the metrics you must continuously check is the ACoS. A low ACoS means that your ads are doing well in sales, CTRs, and conversion rates.
You may apply the tips above or hire an Amazon PPC expert, who is not only experienced in managing campaigns but is also well-versed in Amazon brand guidelines and other rules that you must follow to have a successful online shopping business.
Are you in dire need of an Amazon PPC expert? You’ve come to the right place! Seller Interactive has experienced Amazon consultants willing to help you with creating an Amazon PPC advertising strategy. Email us at [email protected] or [email protected] today.
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