7 Amazon PPC Mistakes to Avoid in Details

Amazon Advertising gets more sophisticated in each passing year. Because of this sophistication, it is important that you continue to stick with the best Amazon PPC practices, and make sure to know which Amazon PPC Mistakes to Avoid.

There are a lot of articles out there on how to start on Amazon PPC or some specific tactics. Rarely, an article will touch on the Amazon PPC fundamentals and mistakes to avoid because discussing these require actual Amazon PPC experience.

At SellerMetrics, we pride ourselves in having an actual Amazon PPC experience, and without further ado, here are the 7 Amazon PPC Mistakes to Avoid:

Mistake #1 – Not Naming your Campaign in a Structured Way

An Amazon PPC mistake that is never discussed much, but is disproportionally important is how you plan to name your PPC campaigns.

This is not something that many new Amazon sellers tend to think about when they first use Amazon PPC. The disorganization of a poorly structured campaign will creep up when the 4th or 5th products are launched.

The resulting disorganization of the campaigns will cause paralysis, as you cannot attribute the campaign either by strategy, Amazon advertising type, and product type.

Example of a poorly named and planned Amazon PPC campaigns

What you need to show in your Amazon PPC campaign naming structure:

1. Advertising Type (Sponsored Products, Sponsored Brands, or Sponsored Display)
2. Targeting Type (Auto or Manual)
3. Keywords or Product Targeting (KW and PAT for short)
4. Product (Using ASIN, SKU, or Short Description)
5. Strategy (Launch, Mature, by Match Type etc)

Below is how your Amazon PPC campaign naming convention should look

{Advertising Type} – {Targeting Type} – {Keywords or Product Targeting}- {Product} – {Strategy}

For example, if the campaign is a sponsored product, manual, ASIN: B07PY7GLKV, and the product just launched. Then the campaign name should be:

SP – Manual – KW – B07PY7GLKV(Moon Lamp) – Launch

By naming your campaign like the above, you can stay organized and pinpoint the exact type of campaigns you want to optimize.

Mistake #2 -Too Many or Too Few Keywords in the Ad Group

Amazon PPC ad groups allow for up to 1000 keywords, but does that mean you need to use all 1000 keywords slots? If not, then what is the right amount?

Let start with the issue of targeting too few keywords. If you are targeting 5 keywords or fewer, then there is a big chance you are leaving money on the table. With such a limited set of keywords, your scaling potential will be capped. There are exceptions, of course, like if you create a single keyword isolation campaign, but by and large, you want to be bidding on more than 10 keywords to be efficient.

On the otherhand if you bid on too many keywords, you will run into what I called a “whack a mole” issue.

What is the “Whack a Mole” issue?

As the advertiser, you will set a daily budget on the campaign level. This daily budget will filter down to all ad groups, then to the targets (keywords or products). For example, If the advertiser is targeting 1000 keywords under an ad group, there is probably not enough daily budget to be allocated between ALL keywords. What Amazon will do is to allocate the budget to only 100 of the 1000 keywords.

As you optimize this first set of 100 keywords, the budget might be then allocated to the next set of 100 keywords, and then you would need to optimize for that. This cycle can potentially mean that it will take you a full 10 months to optimize this ad group completely. Basically, you wack a set of 100 keywords, then you have to wack the next set, on and on it goes, and your campaign can never get fully optimized on a timely basis.

So what’s the solution to this Amazon PPC mistake?

Limit the number of keywords or product targets in an ad group to 100 at most

As a well-informed Amazon seller, you will limit yourself to 100 keywords and ensure your campaign will get optimized within a reasonable timeframe.

Mistake #3 – Not Monitoring Period over Period Performance

The world of paid advertising is always in a fluid state, and Amazon PPC is no different. You pay to win a keyword auction, which will be different in 1 to 6 months.

Therefore, it is important to track your CPC (cost per click) across periods, as it gives you the market price for winning the keyword. Seeing the CPC trend can give you an idea of the keyword’s market competitiveness and decide on the keyword when it is no longer profitable.

Another metric to monitor is period over period orders. A key question to ask is how many orders has this keyword generated during this period versus in the past? Is it generating less order because you are over-optimizing and your ads are now showing on page 2 vs page 1?

Mistake #4 – Not using CPC in your Bid Adjustment Calculation

This next one might be quite controversial. That is using the “CPC” (Cost per Click) as the baseline for your bid adjustment instead of the Bid. There is actually quite a bit of information out there that recommends using the “Bid,” but I have never seen any good justification for it.

Why do we need to use CPC to make our bid adjustments?

Quite simply, the CPC is the price of getting that click on your ad for that keyword. If your Bid is far lower than the recent CPC, then you will be underbidding the market. Thus, by using CPC for your bid adjustment, you are reflecting the market price with your bid.

If you are using the “Bid” for your adjustments, you can run into situations where your new bids will not affect the ACoS. This is because even though you have made your adjustments, your bid is still much higher or lower than the CPC.

We will be using the below sample data.

Target ACoS	ACoS	Bid	CPC	New Bid
25%	50%	$1.50	$0.50	$0.75

In the above scenario, to get ACoS to the target ACoS, you should make your bid adjustments 50% lower. If you use the bid as the adjustment, even at 50% lower, the new bid at $0.75 will still be higher than your CPC. Since the new bid is higher than the CPC, this new bid will not bring the ACoS down to the target of 25% ACoS, rending this bid adjustment ineffective.

So the correct bid adjustment formula should be the following:

New Bid = (Target ACoS/ACoS) * CPC¹

¹ It should be last 30 days date range CPC with -3 days as the range starting point

Mistake #5 – Selecting the Wrong Timeframe

In a perfect Amazon PPC scenario:

1. A buyer clicks on an ad
2. Makes an order right away
3. Order will be attributed to the target right away on Amazon PPC.

Unfortunately, the above is not a realistic scenario of how Amazon PPC works. Amazon PPC can attribute the spend and clicks data right away, but sales and order data will always lag.

So why does the order/sales data lag? It can be any of the below reasons:

1. The customer did not purchase right away after clicking on the ad
2. The order was return by the customer
3. Amazon Advertising requires at least 3 days (72hours) for sales data to be attributed to a click

For us to smoothen out the data from any of the 3 above scenarios, the best time frame to use is a 30-day date range, adjusted for the 3 days sales attribute delay.

If today is Dec 12, 2020, we should pick Nov 9 to Dec 9, 2020, as the right date range for any Amazon PPC optimization analysis.

A much more detailed article about selecting the right Amazon PPC date range here.

Mistake #6 – Not Optimizing Your Product Listing

You also need to make sure that your product listing is properly optimized. An invisible metric in Amazon PPC is relevancy and, in turn, the conversion rate. So you have to make your listing straddles the line between having a complete set of keywords and a listing copy that will convince the buyer’s emotional states.

Not only does the text need to be optimized, the images as well. It also has been known that adding a video to the listing also increases the conversion rate.

Having your listing optimized is your first step in the positive feedback loop that generates higher conversion, lower CPC, and lower ACoS.

Mistake #7 – Not Enough Profit Margins

The last and final Amazon PPC mistake that I will mention is simply not having enough profit margins to have a successful Amazon PPC campaign. This situation occurs when an Amazon seller sells a product for less than $15 or less in a very competitive niche (think cellphone case).

In a competitive niche, the CPC to price ratio will normally be so high that acheiving a reasonable ACoS may not be possible.

Even though a product has a good conversion rate of 20%, if the product sells for $10 with an average CPC of $1.50, you would need to generate at least 5 clicks to get a sale.

The 5 clicks multiplied by $1.50 is $7.50, so you need to spend $7.50 for each sale (Cost per Acquisition). The best you can hope for is an ACoS of 75% ($7.50/$10). 75% is a very high ACoS.

So a really poor scenario above with an unrealistic ACoS target will just set you up for PPC failure. It is best to re-evaluate a product with a high CPC to price ratio before proceeding with an Amazon PPC campaign.

How can you research the market CPC before selling? Quite simply, you can click through the creation of an Amazon PPC campaign, select manual targeting. On the area where you enter your keywords, add the keywords you want to bid for, and the suggested bid price for the keywords will be shown.

By getting the suggested bid estimate, you can evaluate whether your ACoS is reasonable given a conversion rate.

Est ACoS = ( [10 – (Conversion Rate) * 10] * Average Suggested Bid) / Price of Product

Conclusion