4 April 2023
AI Tools Amazon FBA Sellers Can Use Right Now
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Now that your Sponsored Product campaigns are up and running. Clicks and sales are coming in, but when you scroll to the right and see the ACoS % figure it makes you sick to your stomach 😱. But to the reader of this article, fear not, and be glad that you have found this article.
In this article, we will detail 6 very specific and actionable steps to optimize for your Amazon PPC Advertising. But before we list the 6 steps in detail we need to discuss a few things beforehand:
If you want to maximize the visibility and sales of the products you offer in Amazon, using Amazon’s PPC can help you achieve your goals. Here are some of the benefits of using Amazon PPC:
While the use of PPC may be easy and convenient, finding the right keywords and formulating the best strategy can be challenging. Of course, you would want to get your money’s worth in your ad campaign, and you can achieve this by using the right structure for your Amazon PPC campaign, proper Amazon PPC keyword optimization, and strategic bidding.
There are a few things to consider in PPC optimization. One of them is bulk optimization which allows strategies to be performed across multiple campaigns and ads all at the same time. You can combine campaigns, adjust filter settings, and find keywords that are working and not working.
For manual campaigns, raising or lowering bids for keywords can be aligned with a strategy to determine which can be best used on phrase/exact match campaigns. There’s also a feature for negative keywords which allows you to eliminate keywords associated with the product that does not convert to sales.
The PPC model allows you to win ad placements on product listings and search results. Amazon PPC involves bidding on keywords relevant to your products to win those placements.
Also, there are settings available that can help you determine the results of your sponsored products. If you are competing against a competitive product the key differentiation for sponsored placements is the keyword bids. A competitive product is a product around the same price, features, and number of reviews as yours. If everything is equal, the one with the highest keyword bid will win the Amazon advertising bid auction.
The second price auction is how Amazon’s PPC bid auction works. The winning offer will always be a penny more than the next highest bid, all else being equal. For example, your keyword bid for the term “leather notebook” is $1.00, whereas the next highest bidder is $0.95, again all else equal. You would be charged $0.96 for each click, which will be your CPC (cost per click)
Another factor that can affect your bids is Amazon campaign bidding strategy you set. It can either be a dynamic or a fixed bid based on Amazon’s algorithm. For dynamic bids (down only), Amazon lowers your bids when your ad does not convert into sales. Meanwhile, for dynamic bids (up and down), Amazon can raise up your bids when it is most likely to generate sales and lowers it down when it doesn’t. For fixed bids, you have full control over raising or lowering your bids on your campaigns.
One of the best ways to avoid overbidding and underbidding is to optimize your Amazon PPC bid. You can do that by following this formula:
Optimal Bid = (Average Order Value (AOV) x Conversion Rate) x Target ACoS
Optimal Bid = ($19 x .10) x 0.3 = $0.57
There are a lot of metrics in your Amazon advertising dashboard, if there is one metric that you really want to just keep an eye on and monitor, that would be the CPC (Cost per Click) stat. The reason why this is a very important metric is because:
AOV = [Sales/Orders] = 840.44/55 = $15.28
CPA = 1.56/0.1698 = $9.10
Realistic Target ACoS% = $9.10/$15.28 = 59.55%
In the above example, is what your ACoS % you can expect if your CPC is $1.56 with an AOV of $15.28. Whether this ACoS is acceptable to you that will be based on your break even ACoS which will be discuss later. In the meantime calculate your realistic target ACoS % and have this figure in your back pocket.
Determining your breakeven ACoS % is quite simple, it is basically your profit margin on a per unit level.
ie your profit margin is 22%, therefore your breakeven ACoS is 22%. If you break down your individual product P&L it should looking something like the below:
If your Amazon PPC campaign is over the breakeven ACoS % of 22% than the campaign is in the red, on the other hand if the campaign is under the breakeven ACoS % than your campaign is profitable. Another important note is that your Breakeven ACoS does not have to be equal to your Target ACoS, but target ACoS should be close to your realistic Target ACoS based on your CPC.
As promised below are 6 actionable steps to optimize your Amazon PPC, if you follow these step regularly, at least on a weekly basis I will close to guarantee that there will be ACoS improvement within one month timeframe.
These are keywords/category/PAT that is bleeding you dry because click/spend is going into it and no orders has been attributed, you have given them a chance now its time to cut your loses.
Let just say my target ACoS% is 40%, you can replace this number to whatever your target ACoS% is.
The idea for this is to make sure the keywords that are really driving sales at a low cost gets a bid that closer to the market. This will ensure that you are winning the keyword bid auction.
Now we are going to explore adding negative keywords in your campaign. You go to the “Search Term” function inside your Amazon ad console inside your ad group. Please note this feature is only available for Sponsored Products
Criteria (In your Search Term Screen):
Staying the search term console, you will now do the opposite and add these search term that has done well and attributed to at least 2 orders. There a different terms for this process in the Amazon PPC community such as Search Term Harvesting, Positive Keyword, Adding Keywords, Search Term Isolation etc
Criteria (In your Search Term Screen):
You probably can figure out by now from the above optimization process that scaling and implementing it across multiple campaigns and marketplace will be very time consuming. We at SellerMetrics can take the guess work (and actual work) out of Amazon PPC Optimization by automating above 6 steps optimization process.
Imagine if all your campaigns/keywords/search terms are completely streamlined across all of your marketplace/accounts, that how much time you can save for more criterial business decision such as launching new product or writing new books. Lets see how this is done on SellerMetrics.
Using SellerMetrics’ console you can make keywords level bid changes across all your Amazon advertising marketplaces/accounts. So you don’t need to go in and out of campaigns, then into another account like seen in the previous. Your bid change also be done using CPC as your baseline whereas this is something supported on your Amazon advertising console.
Step 5 ➡️ Add Negative Keywords
SellerMetrics negative keyword function make adding negatives so easy, just set up a rule.
For example, I want “X” keywords from “Campaign A” to be inserted into “Campaign B/Ad Group B” as negative keyword (exact) when keywords “X” hit “Y” Clicks with Orders = 0.
Step 6 ➡️ Add High Performers (Search Harvest)
Same with search term isolation, SellerMetrics makes this super easy with the rule set up.
For example, I want “X” keywords from “Campaign A” to be inserted into “Campaign B/Ad Group B” as a new keyword (can pick exact, phrase or broad) when keywords “X” hit “Y” Orders/or ACoS%.
Check us out, we have a 14 days (no credit card required) trial.
Here are other Amazon PPC keyword optimization tips to consider when optimizing your ad campaign:
1. Consider the type of keyword matches
This helps potential buyers search for relevant sponsored products. For manual campaigns, it can be classified into broad, phrase, and exact matches. Broad match types contain all components of keywords in any order. Phrase match types contain all components of keywords in the same order. Exact match types contain word-for-word keywords.
There’s also a negative keyword setting that can help you eliminate targeted searches not related to the product you are selling and words that are not converting into actual sales.
2. Set your goals.
One of the best ways to measure whether your campaign has been successful is by setting your goals right off the bat. For PPC campaigns, goals can be measured by calculating ACoS. Or by determining if the sales or impressions are maximized, and by evaluating if the target profit margin was achieved.
3. Keep an eye on your budget.
For proper budgeting, first, you must compute for the break-even ACoS before setting your ad spend. This way, you’ll be able to determine the maximum amount that you can spend on your PPC campaigns to reach break-even. Next, if you want a profitable campaign, you can compute your target ACoS. Do this by determining your profit margin and the break-even ACoS. It is good to note that your hall not spend your target ACoS to assure a profit.
We hope this article has given you more insights about Amazon PPC optimization for sponsored products. In case you need more assistance in setting up your ad campaigns and navigating Amazon PPC… We offer an easy-to-use Amazon PPC software that helps you rank higher on Amazon’s search results pages. This way you can easily achieve your sales goals.
To learn more about our product, please click here. For more information about Amazon PPC optimization and other related topics, feel free to browse through our Amazon FBA resources.
If you have questions or insights to share, please feel free to post them via the comments section. Please also consider joining our Facebook Group where we discuss any questions you may have about running an Amazon business.
We are SellerMetrics, our Amazon PPC Software helps Amazon sellers, brands, KDP Authors and agencies navigate Amazon Advertising PPC via bid automation, bulk manual bid changes, and analytics.