BELIEVE ME, THERE IS ONLY ONE WAY TO MAXIMIZE YOUR VISIBILITY TO ALL THOSE 300M EYEBALLS WHICH ARE BROWSING AMAZON APP.

How do you maximize your visibility to over 300 million eyeballs that are browsing Amazon on the mobile app alone? How do you convert those numbers to sales? Well, the short answer is through Sponsored ads.

20% of Amazon sellers get 80% of the sales

20% of products bring 80% of revenue

AND.. 20% of the Keywords bring 80% of sales – That’s right!

So, if you are thinking, well, I have got my product listings optimized, inventory stocked, and promotions setup; what could I possibly do more to ensure bumper sales! Then let me ask you, is Amazon sponsored ads a part of your selling strategy?

When used correctly, Amazon Sponsored ads or Pay-Per-Click ads can be the best thing that ever happened to your business. So, let’s dive right into it.

–What is Amazon Sponsored Product Ads?

Amazon allows professional sellers to advertise their products on shopping search results pages and relevant product detail pages. In order for their ads to show up, sellers bid on keywords that they want their products to rank for. It is based on a pay-per-click model where sellers pay only if the customer clicks on their ad.

Sponsored products help drive inorganic traffic and sales.

Sponsored product ads is a powerful tool and can potentially blow up your sales way beyond your imagination. Let me give you a few examples of what sellers like you have been able to achieve with sponsored products in the past.

As you can see, intelligently spent advertising dollars could cost you as little as 12% of the sales that they generate, and, give you that much-needed sales push.

And these figures are only for sales directly attributable to PPC campaigns. You will notice acceleration in organic traffic and sales as well, once these campaigns begin to show results and your BSR improves.

While meticulously planned campaigns can be acceleration tools; the flip side is also true for campaigns that lack planning and careful execution. It’s not uncommon for campaigns to turn into money-draining machines if not monitored and timely fixed.

How does Sponsored Product Ad work?

The Amazon search algorithm matches products to the customer’s search query in real-time.

Amazon reviews search history to check what products sold best for the search keyword entered and then pushes them in search results and ads.

If your bid and product match Amazon’s selection criteria, your ads are shown to the customer.

If the customer clicks on your ad, you are billed for that ad (Pay-per-click). 

How much to spend on sponsored product ads?

Three important metrics that help you decide your budget for sponsored ads:

1. Target ACoS (Advertising Cost of Sales)
2. Product Price and margins
3. Sales conversion rate

ACoS = Total $ spend on advertisement / Sales by $ value

Sales conversion and product price/margin info is readily available on seller central. ACoS can be calculated as follows:

ACoS is an Amazon advertising-specific metric that lets you evaluate the effectiveness of your campaigns. 

Example: Let’s assume you spent $ 1000 on advertisements that generated $5000 in sales. Then the ACoS is: $1000 / $5000 = 20%

Calculating break-even ACoS and Target ACoS

Once you have arrived at the dollar amount remaining post all charges and costs, you have what is called the break-even ACoS, i.e., if you were to spend them all on ads, you will not be left with any profits!

Calculating Profit MarginsAs a % of PriceExample (for a $100 product)Amazon Selling Fees15%$15Amazon FBA Fee14%$14Freight Forwarding + any shipping costs6%$6Unit cost of manufacturing or sourcing25%$25Profit Margin40.00%$40

You may not necessarily want to spend all those precious dollars on advertising. For practical purposes, your target ACoS should discount any profits you want to keep.

So, for $40 in pre-ad margins and a profit margin target of say 15%, your target ACoS = 40-15 = 25%

Spending more initially to gain traffic and then optimizing for higher profit margins makes for a good strategy to start off with.

Crowded and competitive product categories usually require aggressive ad spending.

How to set your default bid?

And so we finally begin to arrive at the default bid amount, which tells Amazon how much are you willing to pay for the keywords that you want to rank for.

Default Bid = Target ACoS * Product Price * Organic Conversion Rate

 Example:

Default Bid = 25% * $100 * 5% = $1.25

Setting up a daily and monthly budget – While creating your ad campaign you will be prompted to specify your daily ad budget for that particular campaign. We recommend taking a top-down approach in order to arrive at this number.

Say you have set aside a marketing budget of 20% (varies basis product/industry type) of total revenue, out of which 5% is set aside for Amazon promotions. Then the daily ad budget can be calculated as follows: 

(Amazon monthly ad budget) / (Number of days in a month) = Daily ad budget

(Daily ad budget) / (Number of campaigns) = Daily ad budget for each campaign

We will later learn how to rationalize the daily budget per campaign, as you would not want to assign the same budget to each one of your campaigns.

Introduction to Amazon campaign manager

Having decided upon a daily budget and a default bid, you head over to Advertising -> Campaign Manager page on seller central to create your first campaign.

The campaigns you create would be structured as below:

Campaign: This is where you group your campaign as product/product type(if you are selling in multiple categories) and the type of campaign: manual or automatic.

Manual campaigns allow you to set your own keywords that you want to bid and rank for.

Automatic campaigns are driven by Amazon’s algorithm, autotargeting based on product info and so you don’t have to specify target keywords.

Automatic campaigns can be a great starting place when you are new to sponsored ads and want to mine for keywords you could potentially rank for. However, be mindful of your ACOS and daily budget as they would need close monitoring and recalibrating.

Ad Group: Next level of granularity for your campaign. Makes it easy to manage and test out.

Keywords: These are words and phrases that you are bidding on in order to get your ads to show up in search results and product detail pages.

Different types of keyword match types: If you want to set and target your own set of keywords rather than allowing automatic targeting, then Sponsored ads allows for three different types of keyword match types:

Broad Match or the short-tail keywords: Broad match type keywords allows for a wider search matching. Your ads will show up for any combination of search terms that include the keyword/s or any close variations of it.

Phrase match: Phrase match type keywords are typically a combination of Product + modifier. Your Ad shows up only if the user searches for the exact keyword phrase with/without other preceding or succeeding words.

Exact match: As the name suggests, your ad shows up only if the user searches for the exact target keyword without any preceding or succeeding words.

Important thing to note here is that all your exact match type keywords should be added as negative keywords in your broad or phrase match type ad groups as otherwise, these would end up cannibalizing each other.

Some powerful tools to help you select laser-targeted keywords for your campaigns and ensure maximum conversions for minimum ad spend:  AHREF Keyword Explorer:https://ahrefs.com/keywords-explorer

As we know Google is the largest search engine around us right now, but let me remind it’s certainly not the only one. Ahref’s Keyword Explorer provides keyword volume on 10 other search engines like Amazon, Bing, YouTube, and etc. Moreover, it provides search volume for 172 different countries, which will make your task easier. 

Ahref’s Keyword Explorer gives search volume, keyword difficulty score, and estimated number of clicks for your Broad Match as well as Phrase Match. So invest in Ahref Keyword Tool to find out what works best for your product.

Example used – Wooden Spatula.

Google’s keyword planner: https://ads.google.com/intl/en_ph/home/tools/keyword-planner/

Keywords.io: https://keywordtool.io/

Keyword Tool will provide comparisons of metrics like Search volume, trend, Cost-Per-Click, and Competition which will pave the path for finding suitable and perfect keywords. This also allows you to eliminate the negative keywords for a more accurate list of phrases. Step up your keyword game by analyzing the competitors' targeted keywords and phrases by using Keyword Tool.

Moz keyword explorer: https://moz.com/explorer

Moz Keyword Explorer is known for efficiently predicting search volume for a particular keyword which is almost 90%accurate. Scrutinize the SERP Analysis for a better understanding of where your pages lie for the targeted keyword.

Ubersuggest: https://neilpatel.com/ubersuggest/

Neil Patel’s tool being the holy grail for performing SEO, this will provide a complete overview of Keyword ideas and thier metrics. It also provides insights on Paid difficulty (PD), i.e. estimates competition in paid search. So get yourself use to these tools in order to level up your keywords.

Types of reports available to advertisers and how to analyze them?

1. Search Term: Search term report is the Holy Grail for advertising optimization. It provides exhaustive data on which search term was used to find your product. This report includes all the metrics like Keyword targeting, Keyword Match Type, Customer search term used, Sales and conversion rate for that term during a specified period, Clicks, CTR, Impressions, CPC, and Spend. Your search term report can act as a keyword research tool to figure out the best exact match for the maximum percentage of conversions. Also, this report helps you analyze which search terms are having a poor conversion rate and, hence can be converted to negative keywords. But let me remind you, this report only reflects the data on the number of clicks and not impressions.

2. Targeting Report: Targeting keyword report is the same as the Search term report, the only difference being that it groups and summarizes its data by targeting keywords, and not the search terms. If you’re looking for a report that consists of all the keywords used in all the campaigns, then Targeting Report is the one. This report is extremely useful to identify and remove all the duplicate keywords to prevent bidding against yourself.

3. Advertised Product: Advertised Product provides information on sales and performance metrics for all campaigns and Advertised ASIN. Metrics like Impressions, click, click-thru rate, sales, advertised ASIN, advertised SKU, and etc are included in this report, which is useful in analyzing the product’s performance. This report helps the sellers to know which campaign has received at least one impression. So no matter how much your clicks are, even if they are zero but have at least one impression, then it will be reflected in this report.

This is the only report that provides data with SKU information. If you need to analyze advertising data based on SKU, this is the report you will need to dive into.

4. Campaign: This report provides insights on campaign-level performance data. It helps sellers review all the campaign status in one place making it easily accessible and easy to operate.

5. Placement: The key use of this report is to provide information on campaign level performance for different ad placement. You can gain broad campaign insights with placement reports as it gives you an account-wide view of how your campaigns are performing rather than looking at them individually. This will help you see the effectiveness of your bidding strategies and re-strategize them.

6. Purchased Product: In this report, you will come across only the keywords and not the search terms. So that means, the customer who purchased your product didn’t necessarily click on your targeted keyword. This report contributes to knowing which ASIN brought the purchased products into the listing. It also indicates which keyword was attributed to the purchase of that product. Filtering the report by Advertised ASINs and Purchased ASINs will help you in sorting your entries.

7. Performance over time: This report has very limited metrics included. Though it says performance over time, this report focuses only on clicks, Cost per click, and total spend for a given period of time. The same generic data can be found in Dashboard too.

Bonus Section: Other advertising tools available to Amazon sellers

Being an Amazon seller, you will never run out of resources and tools to help you through your selling journey. Some more advertising tools to add to your arsenal: 

Source: //advertising.amazon.com/