Last updated on December 14th, 2022
Written by Ken Zhou
It’s a literal jungle out there. Amazon’s growing 2.5 million seller population doesn’t make it any easier for sellers, old and new, to make a buck in the market. Users looking to start will have to plan out a comprehensive strategy to outsmart the competition and get significant sales. One way to do this is to get your product where it’s easily seen using Amazon product ads. This is achievable through conducting PPC campaigns, an in-house advertising solution for sellers.
Amazon offers three ad types: Amazon Sponsored Products Ads, Amazon Headline Search Ads, and Amazon Product Display Ads, with the former being the most common to third-party sellers. This article will break down Amazon sponsored products ads for you.
Pay-Per-Click is an advertising tool provided by Amazon to its sellers to engage and expand their customer base. This tool gives novice sellers a shot at an initial spike in sales to get their business going. PPC campaigns offer a cost-friendly way to conduct your ad campaigns because you pay only when a customer clicks on the ad.
With more and more people hopping into Amazon to ‘window shop”, it’s crucial to get your products on prominent areas of the website and be the first of your competition to do so. Otherwise, you can say goodbye to massive profit potential. According to Statista, 2019 saw Amazon’s net sales soaring as high as 280.05 billion.
While Amazon’s sponsored product ads certainly get your brand out there, it can prove quite troublesome if used impulsively—draining your resources and leaving you stumped on what went wrong. It has to be optimal and efficient to get you positive results, high conversion rates, and actual sales. Unless you opt to outsource this to a digital marketing agency to streamline the process, coming up with an ad strategy is a necessary step before planning how to launch your product on Amazon. Here are a few ways poor Amazon sponsored ads management could be hurting your business.
Setting an entire year’s budget for ad spend and hoping for the best can prove to be a disastrous choice. Your business’ success relies on persistently subscribing to the best practices in conducting PPC campaigns day in and day out, so your ad spends need to rake in some actual sales. Otherwise, it’s just nipping away at your revenue.
Amazon has an expansive array of data available to sellers, which they can use to determine the progress and health of an ad campaign. It’s essential to know these metrics by heart before creating your own Amazon PPC strategy.
This measures the number of times a customer clicked on your ad. This data is important as Amazon charges on a Pay-Per-Click system.
Impressions count the number of times an ad was shown to a customer. This tells you how many times a potential customer had the opportunity to click on your ad. Impressions are a key metric because it gives you a quick view on (1) how well your ads are performing and (2) how visible you are to the market.
This shows you the number of actual clicks from those impressions. CTR measures how successful you are in reaching your target audience.
A low CTR could mean your ad isn’t targeted at the right audience, or your keywords aren’t relevant or persuasive enough to get them to click. It’s especially helpful in gauging the success of the keywords you’re bidding for. Better keywords = More clicks.
CTR = Clicks/Impressions
CPC is how much you’re paying Amazon every time a customer clicks on your ad. Pricing depends on factors like your product, competitors, and the keywords you’ve selected. Depending on the product category, CPCs typically cost from $0.02 to $3.00. It pays to monitor how your CPC because those clicks add up fast, eating away at your ROI.
CPC = Ad spend/Clicks
Return on Ad Spend tracks your conversion rate, the number of clickers turned buyers from an advertisement. If your campaigns aren’t bringing enough customers, your conversion rates and ROAS will most likely be lower.
Most sellers aim for a 4:1 ratio – 4 dollars in revenue to 1 dollar in ad costs though most would agree that a 2:1 ratio would be more achievable.
ACoS measures the ratio of your ad spend to actual sales. As a general rule, you want your ACoS to be around 15 to 20 percent. This ensures you’re maximizing profits from your ad spends.
There’s more than one way to peel an orange when it comes to structuring and maximizing your campaign strategy, and for novice sellers, it could be more of a trial-and-error process. That being said, there are some general mistakes you can steer clear of to avoid blowing your budget.
Inconsistent and ill-planned campaigns tend to attract irrelevant clicks, racking up your CPC without actual conversions. Here are a few tips to attract the right attention to your ads:
Keywords are the lifeblood of effective SEO strategies that will get you a spot on the first page. Selecting the right keywords for a specific campaign can spell the difference between winning or not.
There are two ways to go about this: Manual or Automatic targeting type campaigns.
One nifty tip would be to initially run an automatic type for a short time, days to weeks, on a relatively expendable budget. This way, Amazon chooses the keywords for you and enables you to do a post-analysis on what keywords result in a good conversion rate. This test run allows you to pick the most profitable keywords you can use for your manual campaigns, saving you loads of money and time.
It also helps to remember to narrow down your keyword match types to broad, phrase, and exact—each with its strong points depending on the seller’s case.
Your ad will appear whenever a customer’s query includes all of your chosen keywords. This is helpful when aiming to serve a wide span of customers. Initially, you’d want to avoid this as it tends to be saturated with more competitive and established brands.
Ex. Black Shoes
The customer will also see your ad when your exact keywords are enclosed in a phrase. This optimizes the listing further by displaying the ad to a smaller yet more discerning set of customers.
Ex. Men’s Black Shoes
These keywords are most relevant to your product, targeting a highly specific market niche. While this may not attract remarkable volume, it will effectively target your desired audience, leading to a higher probability of sales.
Ex. Men’s Snakeskin Black Shoes
Ad costs can be a real traitor if we’re talking about business resources, which is why a well-planned and reasonable budget is so important.
No matter how optimized our ads may be, there’s always some downtime when it comes to growing your customer base. You have to be able to adjust your finances quickly according to your capability. When an ad isn’t performing well, you also have to cut your losses and rethink your strategy. Hoping and praying won’t cut it.
Nobody’s going to make millions right off the bat. With all that said, you’re still going to have to put it out there, and the cash flow needs to be consistent. It all boils down to shelling out a budget based on reliable metrics and data you can scale and build upon.
You also have to make sure your ad budget is aligned with factors like keyword cost, campaign duration, or target type to avoid any unexpected cut-offs or interruptions in the campaign.
If you want to keep your sales rhythm going, you need to consistently be up to date with Amazon’s changes. Amazon’s algorithm, A10, is giving more and more weight to consumer behavior, seller authority, and organic sales and less from its internal-ad driven campaign, PPC.
It’s news like these that keep sellers on their feet and could prove fatal if ignored.
To survive this jungle, sellers must be ready to adapt to the dynamic environment of Amazon.
A prominent and rising tactic to counter these algorithms has been to diversify ad spend by concentrating on other options like off-Amazon campaigns. This includes social media and landing pages that aim to bring interested and high-potential customers back to your listing.
If you’re a one-man team, focusing on even a single aspect of an online business can be quite exhausting. It takes a village to get through an ever-changing Amazon, and sometimes delays in adjustment can cost you everything.
That’s why it pays to outsource some aspects of your business to a reliable and experienced Amazon advertising agency. Doing this empowers you to focus on growing your product and oversee key operations while experts handle Amazon sponsored ads management, ensuring your products reach the right people.
It takes grit to make it as a seller on Amazon, but the rewards are well worth the risk. Your Amazon product ads are just one chip of the block you need to grow your business. As long as you’re willing to work hard and smart, you’ll go a long way. For more information on how to boost your business with effective and profitable marketing solutions, please contact us at [email protected].
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