Research by survey by shows that 80% of Amazon advertisers plan to increase their Amazon advertising budget in 2019. This means the competition is getting fiercer, and it’s crucial to step up your Amazon advertising strategy. While most advertisers begin with the fundamentals, they gradually acquire more sophisticated strategies over time. The good news is that there are numerous ways to utilize Amazon’s advertising tools and features to improve the return on your advertising investment. Here are eight Amazon advertising tips that you can implement immediately to enhance the performance of your ad campaigns:
- Use Sponsored Brands to increase brand visibility
- Prioritize product-level profitability
- Utilize the Flywheel effect
- Employ category-specific targeting for Sponsored Products
- Utilize negative keywords to minimize wasted ad spending
- Maintain a flexible Advertising Cost of Sale (ACoS) objective
- Use auto campaigns for exploration and manual campaigns for exploitation
- Optimize your bids Let’s delve into each tip in greater detail… An effective ecommerce strategy is a multi-channel ecommerce strategy. Download our free guide to Google Shopping and start promoting your brand today!
1. Enhance brand visibility with Amazon Sponsored Brands
Previously referred to as headline search ads, Sponsored Brands are utilized by approximately 18% of shoppers, as per a study conducted by Cowen and Co.. Positioned above the Amazon search results, Sponsored Brands ads enable advertisers to enhance brand awareness and are beneficial for promoting a range of products.
How to utilize Sponsored Brands on Amazon
Sponsored Brands are well-suited for top-of-the-funnel advertising, particularly when combined with category keywords or branded searches. Leverage them to boost brand recognition by capitalizing on the opportunity to incorporate a custom headline, your logo, and ASINs. Moreover, you can utilize Sponsored Brands to direct clicks to both your storefront and your product listing pages.
2. Prioritize product-level profitability
It’s also essential to analyze more granular data by focusing on product-level profitability. Each SKU has its unique profit margin, and it’s crucial to grasp the gross profit at a product level before incorporating paid advertising. This data will highlight the products that stand to gain the most from paid advertising while minimizing your risk.
How to leverage product-level profitability
Before implementing paid advertising, evaluate product-level profitability to identify products with the highest and lowest profit margins. It’s counterproductive to waste ad spend on products that won’t yield returns, so you’ll conserve valuable ad dollars by pinpointing the products that stand to benefit the most.
3. Understand the Flywheel effect
The Flywheel effect involves using paid advertising to generate earned media to drive overall business growth. Earned media and paid media encompass reviews, product page views, and orders, while your product content constitutes owned media.
Image via HubSpot Here’s how it works: Paid ads attract traffic to your product pages, enhancing the product’s ranking in organic search results. Increased traffic and a favorable position in organic results heighten the likelihood of the product receiving the “Amazon’s Choice” badge. Subsequently, the “Amazon’s Choice” designation attracts more attention from shoppers, leading to increased traffic, and so on, creating a continuous cycle.
How to capitalize on the Flywheel effect in your Amazon campaigns
Utilize business metrics to gauge your performance. However, remember that advertising operates within a larger context, so avoid the common error of measuring success solely based on ACoS (Advertising Cost of Sale). Instead, focus on your overall revenue, gross profit, and TACoS (not those tacos—we’re referring to Total Advertising Cost of Sale). TACoS measures how your ad spending influences overall revenue, including organic sales.
4. Employ category-specific targeting for Amazon Sponsored Products
Sponsored Products are the most widely used advertising option, employed by around 29% of shoppers, according to research by Cowen and Co. These ads are displayed above, below, and alongside Amazon search results, as well as on product detail pages, and share similarities with Google’s product listing ads. Sponsored Products empower you to utilize category-specific targeting, connecting your products with complementary items, thereby increasing the chances of converting shoppers. Known as Product Attribute Targeting (PAT), this feature enables advertisers to showcase their products in ads alongside a specific group of brands or products, or next to items within a designated price or rating range. Consequently, if you only want your ads to appear alongside top-rated products, Product Attribute Targeting allows you to do so. If you sell products like parts or accessories typically purchased with a different product, you can use PAT to display your ads to shoppers considering that product. Even if they don’t buy your add-ons immediately, you’ll benefit from brand recognition if they decide to purchase later. You can even choose to feature your ads alongside competing products or brands.
Sponsored products related to a Keurig.
How to utilize category-specific targeting for Sponsored Products
When setting up your Sponsored Products campaign, Choose manual targeting. Choose your products and bidding strategy, then select the product categories you want to target. You can further refine your product category targeting by specifying brands, price ranges, and star ratings to pinpoint your ideal customers. For new product launches, capitalize on category-specific targeting by targeting similar brands and products to leverage relevant searches. This strategy provides immediate access to a target audience interested in your offerings, allowing you to hit the ground running without spending time testing various keywords.
5. Utilize negative keywords to reduce wasted ad spending
Similar to Google Ads, Amazon negative keywords are keywords that you exclude from broader keyword searches to prevent ranking for irrelevant search terms. For instance, if you sell $10 headphones, you’d want to rank for searches like “headphones” but not “Bose headphones.” In this case, “Bose” should be added as a negative keyword. When identifying negative keywords to filter out, focus on keywords generating high traffic but low conversions. Essentially, you’re paying for clicks that don’t translate into sales, squandering your advertising budget. Nobody enjoys wasting money, especially advertisers. This often occurs with overly general and short keywords like “top.” Ideal customers likely seek something more specific, targetable with a better long-tail keyword (such as “blue button-down shirt for men”). Furthermore, what if most of those customers aren’t searching for shirts at all but those classic spinning toys once adored by children?
Without more refined keywords, predicting what customers seek is impossible, leading to wasted ads when they’re looking for something you don’t offer on Amazon. Thankfully, leveraging negative keywords significantly reduces wasted ad spending by preventing your ads from appearing in non-converting searches.
How to reduce wasted ad spending with negative keywords
Utilize the Customer Search Term Report, filter by spend, and identify keywords with zero sales. Add these keywords to your negative keywords category, and voila! No more budget wasted on non-converting ads. You can also add negative keywords with bulk operations.
6. Maintain a flexible Advertising Cost of Sale (ACoS) objective
Naturally, a lower ACoS is desirable. However, is that always the primary goal? ACoS represents the ratio of ad spend to revenue. For automatic campaigns, ACoS is calculated at the group level, while manual campaigns provide product-level ACoS. A lower ACoS is generally preferable, but each campaign should have a specific goal based on whether you’re launching, liquidating, or aiming for ongoing profits from a product.
How to set your ACoS goals
For best-selling products, the objective should be to minimize advertising costs. Being best-sellers implies that customers can easily find these products. Conversely, for product launches, a higher ACoS (at least initially) is beneficial for gaining traction and accumulating reviews (remember the Flywheel effect).
7. Use auto campaigns for exploration and manual campaigns for exploitation
While the “set it and forget it” approach might seem tempting, automatic campaigns aren’t always ideal. Auto campaigns offer limited control, and you can’t set bids for individual search queries. However, they excel at another function: keyword discovery.
How to leverage auto campaigns effectively
Utilize auto campaigns to uncover converting search terms and incorporate them as keywords in your manual campaigns. Strive to automate keyword optimization processes whenever possible, including negative keywords, refining keyword match types, and migrating search terms from auto to manual campaigns.
8. Optimize your bids
We’ve discussed the pitfalls of a hands-off approach, which applies to keyword bidding as well. Ad group default bids can be detrimental because your bid won’t be optimal for every keyword. Instead, set your default bid at the keyword level based on your maximum cost-per-click. Continuously monitor conversion rates and adjust bids accordingly. For example, if your conversion rate drops without a corresponding bid adjustment, you’ll lose money.
How to optimize your bids
Determining the perfect bid without constantly analyzing vast amounts of data is practically impossible. Instead of drowning in data, automate the bidding process with technology that uses machine learning to maximize your profits.
Sell more, spend less
Certainly, other Amazon ad types exist, including video ads, product display ads, and traditional display ads. Some advanced Amazon advertisers effectively utilize a diverse mix of ad formats to generate substantial profits. However, spreading your ad budget thin across every available ad type isn’t necessary for success. If you’re ready to elevate your Amazon advertising strategy, implementing these tactics will help you increase your Amazon sales without exorbitant ad spending or valuable time.