Amazon PPC Advertising
I hosted Ritu Jave, CEO of PPC Ninja to talk about Amazon PPC Advertising. This 2 episode webinar provides a good overview and understanding of Amazon Advertising.
Amazon PPC Advertising 101 (Part 1 of 2):
Amazon PPC Advertising 101 (Part 2 of 2):
Having spent many thousands of dollars on other PPC courses and software, plus hundreds of hours managing my Amazon advertising campaigns using Amazon's campaign manager and bulk files (spreadsheets), I am over the moon to have found PPC Ninja.
It is the most powerful, yet simple to use Amazon advertising software I know of, and has helped me reduce my ACOS and increase profits much more effectively than my previous software that costs 6x more (I'm on the Grow Ninja annual plan that's works out to just $69.30 per month and has helped me cut ad costs by $5000 per month!).
Plus it has excellent support, with CEO Ritu Java conducting free masterminds and Zoom meetings for users.
PPC Ninja is my #1 choice for Amazon PPC optimization software and what I personally use.
It is the most powerful, yet simple to use Amazon advertising software I know of, and has helped me reduce my ACOS and increase profits much more effectively than my previous software that costs 6x more (I'm on the Grow Ninja annual plan that's works out to just $69.30 per month and has helped me cut ad costs by $5000 per month!).
Plus it has excellent support, with CEO Ritu Java conducting free masterminds and Zoom meetings for users.
PPC Ninja is my #1 choice for Amazon PPC optimization software and what I personally use.
You can find more about PPC Ninja's tools, free 6 week mastermind, and other Amazon advertising tips at PPC Ninja.
Before You Start Advertising on Amazon...
Before you start running Amazon PPC ads, make sure that you have optimized your listings for relevant impressions, clicks, and conversions.
The Big Picture: At all times, you are trying to grow the 3 steps of your sales funnel.
Those steps are: > Impressions > Clicks > Conversions.
1. Impressions:
The main function of Amazon Ads is to maximize impressions..., then hope that it leads to clicks and conversions.
Optimizing for keywords in your listing and running an effective Amazon ad strategy go hand in hand to maximize impressions.
These are like 2 wings on a plane and each affects the other. Let me explain.
Firstly, Amazon automatic keyword campaigns depend on the algorithm reading the keywords in your listing to "automatically" figure out what keywords to target. Therefore your listings need to be optimized for as many relevant keyword terms as possible in order to maximize the effectiveness of your automatic close and loose match keyword campaigns.
Furthermore, if you run manual campaigns and use Amazon's suggested keyword targets, these suggested keywords are also derived by the algorithm from the keywords in your listing.
So Amazon's auto campaigns and suggested keywords for manual campaigns are only as good as the keywords you have researched and included in your listings. If you are poorly keyword optimized, then your ads will miss out on opportunities for impressions.
I run a pretty extensive ad campaign strategy as part of a FULL FUNNEL approach as discussed in the videos above.
2. Clicks:
The following areas impact on whether shoppers who see your ad (impressions), decide to click to find out more.
Therefore you want to:
a) Have an attractive pricing strategy, especially at the start, to mitigate the lack of social proof when you have zero or very few reviews and ratings.
b) Get social proof asap. Vine doesn't always perform as well as expected, but it is generally good option that can be used if you are Amazon Brand Registered.
3. Conversions:
Once shoppers have clicked through to your product detail page, your price, listing content (copywriting, images, video, A+, etc.), social proof, and leaks in your funnel (competing product ads on your page) will affect your conversion rate.
Lots of new sellers who run Amazon Ads for their first new product struggle with poor results. They experience high advertising cost with low sales (conversions).
To maximize your conversion rate, here are some key areas to optimize for:
a) Optimize Content for Conversions - Make sure your text and graphic content is crafted to appeal to the customer avatar for your product. Compose the title, bullet points, description, images, videos, and A+ Content well so that it identifies with the customer's needs and wants; and provides solutions they are searching for.
b) Pricing - Have an effective pricing strategy. Have a "List Price" and a slightly lower "Your price" (the selling price on Amazon). Then setup a Sale price, coupon, or Prime Exclusive Discount. My preference is to use a Prime Exclusive Discount (PED.
However if it is close to a major sales event such as Prime Day or Black Friday, Cyber Monday, I would use a coupon for the period before the event, and setup a PED for the event (at least 20% PED discount or more). Reason to use coupon pre-event is because Amazon special event promos have a requirement for price after PED to be at least 10% lower than the reference price (the List Price or Was Price, which is the 90 day median price paid by customers) AND be lower than the lowest price for the listing in past 30 days.
For example, if you run a 20% off sale price or PED within 30 days before Prime Day or Black Friday-Cyber Monday (BFCM), your Prime Day of BFCM PED will have to be 20% below the price that was already discounted by 20% (which will eat into profits). But using a coupon does NOT affect the reference price or lowest price, because the mechanics of coupon is the system considers the discount to be subsidised (paid) by the seller, so the reference and lowest price isn't affected.
c) Reviews and Ratings - Get good social proof asap. Use Vine and Amazon's in-built request for review button (found in Manage Orders). Of course, make sure you have a good quality product to minimze negative reviews!
Keep in mind that with a lack of social proof, your conversion rate will be relatively low, and resulting in higher ACoS. It's something you have to bear in mind and tolerate while building up social proof. Having just a handful of 4.5 to 5 star ratings should start see your conversion rate start to improve, and 10 to 20 ratings/reviews with at least 4.5 stars or higher is a typical tipping point.
The Big Picture: At all times, you are trying to grow the 3 steps of your sales funnel.
Those steps are: > Impressions > Clicks > Conversions.
1. Impressions:
The main function of Amazon Ads is to maximize impressions..., then hope that it leads to clicks and conversions.
Optimizing for keywords in your listing and running an effective Amazon ad strategy go hand in hand to maximize impressions.
These are like 2 wings on a plane and each affects the other. Let me explain.
Firstly, Amazon automatic keyword campaigns depend on the algorithm reading the keywords in your listing to "automatically" figure out what keywords to target. Therefore your listings need to be optimized for as many relevant keyword terms as possible in order to maximize the effectiveness of your automatic close and loose match keyword campaigns.
Furthermore, if you run manual campaigns and use Amazon's suggested keyword targets, these suggested keywords are also derived by the algorithm from the keywords in your listing.
So Amazon's auto campaigns and suggested keywords for manual campaigns are only as good as the keywords you have researched and included in your listings. If you are poorly keyword optimized, then your ads will miss out on opportunities for impressions.
I run a pretty extensive ad campaign strategy as part of a FULL FUNNEL approach as discussed in the videos above.
2. Clicks:
The following areas impact on whether shoppers who see your ad (impressions), decide to click to find out more.
- Main image
- Pricing strategy (List price, Your price, Sale price, a Coupon, or Prime Exclusive Discount, or other promotion)
- Social proof (reviews and ratings) will affect you click through rate.
- Badges (such as Amazon's Choice for a particular keyword term, or promo badges such as Coupons and Prime Exclusive Discounts)
Therefore you want to:
a) Have an attractive pricing strategy, especially at the start, to mitigate the lack of social proof when you have zero or very few reviews and ratings.
b) Get social proof asap. Vine doesn't always perform as well as expected, but it is generally good option that can be used if you are Amazon Brand Registered.
3. Conversions:
Once shoppers have clicked through to your product detail page, your price, listing content (copywriting, images, video, A+, etc.), social proof, and leaks in your funnel (competing product ads on your page) will affect your conversion rate.
Lots of new sellers who run Amazon Ads for their first new product struggle with poor results. They experience high advertising cost with low sales (conversions).
To maximize your conversion rate, here are some key areas to optimize for:
a) Optimize Content for Conversions - Make sure your text and graphic content is crafted to appeal to the customer avatar for your product. Compose the title, bullet points, description, images, videos, and A+ Content well so that it identifies with the customer's needs and wants; and provides solutions they are searching for.
b) Pricing - Have an effective pricing strategy. Have a "List Price" and a slightly lower "Your price" (the selling price on Amazon). Then setup a Sale price, coupon, or Prime Exclusive Discount. My preference is to use a Prime Exclusive Discount (PED.
However if it is close to a major sales event such as Prime Day or Black Friday, Cyber Monday, I would use a coupon for the period before the event, and setup a PED for the event (at least 20% PED discount or more). Reason to use coupon pre-event is because Amazon special event promos have a requirement for price after PED to be at least 10% lower than the reference price (the List Price or Was Price, which is the 90 day median price paid by customers) AND be lower than the lowest price for the listing in past 30 days.
For example, if you run a 20% off sale price or PED within 30 days before Prime Day or Black Friday-Cyber Monday (BFCM), your Prime Day of BFCM PED will have to be 20% below the price that was already discounted by 20% (which will eat into profits). But using a coupon does NOT affect the reference price or lowest price, because the mechanics of coupon is the system considers the discount to be subsidised (paid) by the seller, so the reference and lowest price isn't affected.
c) Reviews and Ratings - Get good social proof asap. Use Vine and Amazon's in-built request for review button (found in Manage Orders). Of course, make sure you have a good quality product to minimze negative reviews!
Keep in mind that with a lack of social proof, your conversion rate will be relatively low, and resulting in higher ACoS. It's something you have to bear in mind and tolerate while building up social proof. Having just a handful of 4.5 to 5 star ratings should start see your conversion rate start to improve, and 10 to 20 ratings/reviews with at least 4.5 stars or higher is a typical tipping point.
Now that you understand the foundations that should be laid, let's proceed to the actual Amazon Advertising Campaigns.
Amazon Advertising Campaign Types
There are several types of Amazon Advertising Campaigns. These are:
Sponsored Products are used most often as this advertising campaign type is available to all sellers on the Professional Selling plan, while Sponsored Brands and Sponsored Display are more advanced ad types that are only available with Amazon Brand Registry.
- Sponsored Products
- Sponsored Brands
- Sponsored Display
Sponsored Products are used most often as this advertising campaign type is available to all sellers on the Professional Selling plan, while Sponsored Brands and Sponsored Display are more advanced ad types that are only available with Amazon Brand Registry.
Sponsored Products is where you run Pay-Per-Click (PPC) advertisements to promote your product(s) to Amazon shoppers searching with keywords related to your product, or viewing a relevant product category or other similar products on Amazon.
Under Sponsored Products, you can create campaigns with automatic or manual targeting:
Under Sponsored Products, you can create campaigns with automatic or manual targeting:
For Automatic Targeting Campaigns, there are 4 ad targeting types:
a) Close match
b) Loose match
c) Complements
d) Substitutes
Close and Loose match targets mainly target keywords. Complements and Substitutes always target other products.
For Manual Targeting Campaigns, you can target KEYWORDS or PRODUCTS.
Keyword targeting ads bid to run when a customer searches a keyword phrase that is related to keywords in your product copywriting (for automatic campaigns) and the keyword terms you specify (for manual campaigns). The keyword phrases customers type are known as search terms.
Product targeting ads bid to run on other product's detail pages when a customer is looking at a related product.
For manual keyword targeting, you can:
a) Close match
b) Loose match
c) Complements
d) Substitutes
Close and Loose match targets mainly target keywords. Complements and Substitutes always target other products.
- Example of a complements: If you sell a bedsheet set, your ad shows up on the product page of a quilt that a customer is looking at.
- Example of a substitutes: Your bedsheet set shows up as an ad when a customer is on the product page of another bedsheet set.
For Manual Targeting Campaigns, you can target KEYWORDS or PRODUCTS.
Keyword targeting ads bid to run when a customer searches a keyword phrase that is related to keywords in your product copywriting (for automatic campaigns) and the keyword terms you specify (for manual campaigns). The keyword phrases customers type are known as search terms.
Product targeting ads bid to run on other product's detail pages when a customer is looking at a related product.
For manual keyword targeting, you can:
- Use Amazon's suggested keywords.
- Enter a list of our own keywords.
- Set the match type targeting for the above keywords to Broad, Phrase, and/or Exact match.
- Set the bid for each keyword and match type.
- Categories - this means your ads can run on any listing within the selected categories. This is good for a wide funnel to potentially discover product target that convert well.
- Products - you specify the ASINs you want to target, so your ad can run on their product detail pages. This is especially effective if you target weaker competitor listings, such as those with a higher price, poorer review ratings, etc., where customers seeing your ad and comparing with the product they are looking at might decide to buy yours. Another strategy for this is to target your own listings, if you have related products. By occupying more advertising spots on your product detail pages, you minimize the opportunities for customers to see and be distracted by competitors products - in other words you plug the leaks inherent in the Amazon funnel.
The infographic below shows the campaigns I usually start with.
Notes:
- Campaign Structure: One Ad group per campaign.
- Naming Structure: Have a naming system for quick identification, such as <SKU>-<Match Type>-<Bid Type> Examples: GarlicPress1-Close-H, GarlicPress1-Exact, etc.
- H, M, L are short for High, Median, Low - these figures are the Amazon bid range and suggested bid. If you do no want to have so many automatic campaigns, you can streamline to your preference such as:
- Only have an M bid at the suggested bid, or having just 2 bid points instead of 3. How aggressive or not you are wiling to be, will determine your bid strategy. For example, if you want to minimise costs then bid only at the suggested bid and/or low end of the bid range.
- Reduce the auto targeting match type diversification by grouping close and loose together, and substitutes and complements together, as these are essentially keyword targeting and product targeting respectively.
Advertising Strategy
Why have so many campaigns per listing?
Most sellers simply have 1 giant auto campaign and 1 giant manual campaign. This has major disadvantages and is missing opportunities to optimise advertising:
Most sellers simply have 1 giant auto campaign and 1 giant manual campaign. This has major disadvantages and is missing opportunities to optimise advertising:
- Lack of granularity - a lot of time is wasted figuring out what is working or not working.
- Better control of advertising spend - you can immediately see which campaigns are performing well or poorly, and therefore quickly take action to adjust specific campaigns such as by changing the daily budget, bids, bid placements, etc. This allows you to have a scalpel approach to manage your ads with great precision, rather than a carpet bombing approach which will have lots of collateral damage.
- The keywords with the highest search volume and highest competition (highest bids), will use up the majority of the daily budget. The result is only this limited number of targets gets all the exposure, with a relatively high cost-per-click (CPC). By splitting your ad campaigns out, you give the lower hanging fruit (longer tail, lower search volume, lower competition, and therefore lower CPC) opportunities for exposure.
- Maximising exposure - by having multiple advertising campaigns, your listing shows up more often in more places. This leads to a wider funnel. While maximising your product's exposure, the concurrent effect is to also minimise competitor's exposure, because every sponsored ad spot you occupy means customers see your product instead of another product.
ACOS
Advertising Cost of Sales (ACOS) is the most important metric when it comes to managing most (but not all) PPC campaigns.
What is ACOS?
ACOS is the simply the amount spent on advertising divided by the amount of sales from the advertising, measured as a percentage.
For example, if you spend $20 on ads, and it results in $100 of sales, then 20/100 = 0.2 = 20% ACOS.
Having a Target ACOS is essential to managing your bid amounts. I have seen many sellers who do not understand what ACOS is and how to analyze and use it to adjust their bidding. Some of these sellers have over 400% ACOS! 400% ACOS means they are spending $4 for every $1 of advertised sales! Unless this is a specific ranking campaign for a very important, highly competitive keyword, it would not be sustainable in most cases.
What Target ACOS should you set?
The Target ACOS varies from product to product. It also can vary from time to time.
In the initial launch phase, my Target ACOS is typically equal to my gross profit margin. So if my product has a 30% gross profit margin (Sales price minus COGS, Amazon referral and FBA fees), then my initial Target ACOS is 30%. Excluding any returns, if I keep ACOS at around 30%, then my advertised sales are breaking even, or essentially free. The net effect is positive, because I am gaining "rank juice" as the sales attributed to the advertised keyword targets is helping the algorithm understand what it should rank me for. As long as I convert well for these targets, my listings will start to gain better sponsored (advertised) and organic placements, which will then lead to more impressions and more potential clicks and conversions.
By having a target ACOS, I have a target to aim for, and this informs my bid adjustments as data accumulates. For example if a particular auto campaign or specific targets in a manual campaign have ACOS above or below my Target ACOS, once there is data sufficiency, I can start to increase or decrease the bids to get closer to my Target ACOS.
Over time, once the listing is established, I then look to slowly decrease the Target ACOS. For example, this week I adjusted my Target ACOS down by 1% for most of my established listings. I do this bit by bit, as big changes can result in undesirable consequences, such as severely reduced impressions.
What is ACOS?
ACOS is the simply the amount spent on advertising divided by the amount of sales from the advertising, measured as a percentage.
For example, if you spend $20 on ads, and it results in $100 of sales, then 20/100 = 0.2 = 20% ACOS.
Having a Target ACOS is essential to managing your bid amounts. I have seen many sellers who do not understand what ACOS is and how to analyze and use it to adjust their bidding. Some of these sellers have over 400% ACOS! 400% ACOS means they are spending $4 for every $1 of advertised sales! Unless this is a specific ranking campaign for a very important, highly competitive keyword, it would not be sustainable in most cases.
What Target ACOS should you set?
The Target ACOS varies from product to product. It also can vary from time to time.
In the initial launch phase, my Target ACOS is typically equal to my gross profit margin. So if my product has a 30% gross profit margin (Sales price minus COGS, Amazon referral and FBA fees), then my initial Target ACOS is 30%. Excluding any returns, if I keep ACOS at around 30%, then my advertised sales are breaking even, or essentially free. The net effect is positive, because I am gaining "rank juice" as the sales attributed to the advertised keyword targets is helping the algorithm understand what it should rank me for. As long as I convert well for these targets, my listings will start to gain better sponsored (advertised) and organic placements, which will then lead to more impressions and more potential clicks and conversions.
By having a target ACOS, I have a target to aim for, and this informs my bid adjustments as data accumulates. For example if a particular auto campaign or specific targets in a manual campaign have ACOS above or below my Target ACOS, once there is data sufficiency, I can start to increase or decrease the bids to get closer to my Target ACOS.
Over time, once the listing is established, I then look to slowly decrease the Target ACOS. For example, this week I adjusted my Target ACOS down by 1% for most of my established listings. I do this bit by bit, as big changes can result in undesirable consequences, such as severely reduced impressions.
Negative Targeting
How is negative targeting useful?
Negative targeting is particularly useful for automatic campaigns because you cannot pick the keywords or products targeted by the automatic ad algorithm. However by using negative targeting, you can specify keywords or products to be omitted from automatic campaign targeting.
Negative targeting is not essential for manual campaigns because you can simply stop (pause or archive) specific keyword or product targets in manual campaigns.
After running ad campaigns for 2 weeks or more, I like to check on their performance. This can be done a few ways:
To tune my ad campaigns in Seller Central, I look for the following:
Negative Keyword targeting has been available for years, but Amazon just added Negative Product targeting on 30th July 2020 (see the screenshot below)! Before that, there was no way to stop automatic ad campaigns from targeting products that had many clicks but poor sales.
Negative targeting is particularly useful for automatic campaigns because you cannot pick the keywords or products targeted by the automatic ad algorithm. However by using negative targeting, you can specify keywords or products to be omitted from automatic campaign targeting.
Negative targeting is not essential for manual campaigns because you can simply stop (pause or archive) specific keyword or product targets in manual campaigns.
After running ad campaigns for 2 weeks or more, I like to check on their performance. This can be done a few ways:
- Online using the Amazon Advertising Console (suitable if you are jus starting out with 1 or a handful of listings).
- Downloading the Search Term report for the last 14 to 60 days as a spreadsheet.
- Using a 3rd party Amazon Ad software (I use PPC Ninja, which helps save time and money compared to the 2 options above once you have more than 1 or 2 products with around 20 campaigns each).
To tune my ad campaigns in Seller Central, I look for the following:
- Campaigns with high ACOS and campaigns with no ACOS because there are clicks and spend but zero sales. I prioritise dealing with campaigns with high spend, no ACOS (but with clicks and spend), then ACOS from highest to lowest.
- Within each campaign, identify the customer search terms and product targets (ASINs) with ≥8 clicks and no sales (if the listing is new with no reviews, then give it more leeway, perhaps ≥12 to 15 clicks with 0 sales before taking action as the conversion rate will generally be lower relative to social proof). For automatic campaigns, find these by clicking on Campaign (Name link) > Ad Group (Name link) > Search terms (in the left menu bar), then sort by the table header for Clicks or Spend (click twice on the table header to sort by descending, highest to lowest).
- For manual campaigns, if I feel these poorly converting targets are important/relevant and want to keep advertising, then I might reduce the bid by 10%-25% so the ads are kept running but at a lower cost-per-click.
- For automatic campaigns, you cannot adjust bids for specific keywords or products.
- For automatic campaign targets that have poor conversion (≥8 to 12 clicks with no sales, or ACOS that is too high), such as irrelevant keywords, irrelevant products, or competing substitutes that are too strong (lower price than you, more reviews), these can be added to negative targeting so that no more money is wasted on ads that result in non-converting clicks.
Negative Keyword targeting has been available for years, but Amazon just added Negative Product targeting on 30th July 2020 (see the screenshot below)! Before that, there was no way to stop automatic ad campaigns from targeting products that had many clicks but poor sales.
Jul 30, 2020: Negative product targeting is finally available for Amazon PPC campaigns!
By adding negative keyword and negative products to advertising campaigns, you can stop ads targeting keyword phrases and products that cost a lot of money (many clicks), but do not convert well (low or no sales). This will help control your ad campaigns to achieve lower ACOS and therefore better return on investment (ROI). That means more profitable sales!
More about Amazon Advertising... I've often been asked about Amazon advertising, for help to understand it, advertising software recommendations, etc.. While I am part of a very advanced Amazon PPC course (some course members say it's like a PhD in Amazon PPC ads), I do not think it is suitable for the majority of sellers as it is very spreadsheet intensive and requires a lot of work with Excel files for bulk uploads. Most people would be lost by the first 2 hours out of the 40+ hours of video to grasp the spreadsheet sorting, formulas and processes.
The main help I do provide with Amazon Ads is as part of training program, particularly during the 1-to-1 sessions because that's when it is most productive to help setup ad campaigns and analyze ad reports, by working with live listings so actual campaigns can be launched and subsequently analyzed and tweaked. I run training in small groups from time to time and more info can be found at my Amazon Seller Live Training page.
The main help I do provide with Amazon Ads is as part of training program, particularly during the 1-to-1 sessions because that's when it is most productive to help setup ad campaigns and analyze ad reports, by working with live listings so actual campaigns can be launched and subsequently analyzed and tweaked. I run training in small groups from time to time and more info can be found at my Amazon Seller Live Training page.