Tidying Up Your Ads: Amazon PPC Best Practices
Have you been watching "Tidying Up with Marie Kondo" on Netflix? We have! Her KonMari method for clearing out the clutter in your home is inspiring viewers throughout the US.
We're applying some of her ideas to selling on Amazon. With the many different types of sponsored ad campaigns, varying approaches, and the tremendous amount of keyword data available it's easy to get overwhelmed or lose sight of where you want your overall advertising strategy to go. Tidying up your pay-per-per-click (PPC) campaigns and keywords can help ensure your success.
Minimize Your Work: Automatic Campaigns
For each manual pay-per-click (PPC) campaign you run, create an automatic campaign. Since Amazon will do all the heavy lifting and select keywords for you, automatic campaigns require minimal effort on your part. Amazon will conveniently gather all the keywords and impressions they receive into a "big pile" and deliver it to you.
From there, you can go through the report to find the keywords that “spark joy” and lead you in new directions for new PPC campaigns. They can also provide different insights into how customers are searching for and using your product.
Impressions That Don’t Bring Joy: Negative Keywords
“Negatives” are keywords or products where you do not want your ad to appear. Using them allows you to prevent your ad from displaying among irrelevant search results.
For example, let’s say you’re selling a children’s toy shaped like a dog. While the term “dog toy” technically describes your product, you’ll want to include it in your negative keywords to prevent your product from appearing when people search for toys for their pets.
Using negative keywords or products ensures that you deliver a more targeted campaign. Any keywords that are receiving a large number of high-cost clicks, but aren’t converting into sales, should be added to your negative keyword list to preserve your budget.
Stay Organized: Multiple Campaigns
PPC campaigns require trying various strategies to find the best possible combination. To speed this process along, run multiple, organized campaigns to find your “sweet spot.”
Start by running a campaign exclusively with top-of-the-funnel keywords like “t-shirt,” and then try more specific long tail keywords, like “crew neck long sleeve t-shirt women.” We found these examples using the MerchantWords database. With over one billion unique keywords, MerchantWords can help you discover high-opportunity, long tail search phrases in your niche.
We recommend starting between three and five campaigns to avoid getting overwhelmed and tracking the success of the keywords from each as you go along. This same strategy can be used on product-targeted campaigns.
Within a few months, you’ll compile an organized list of keywords that spark joy and create success for your product. By dividing your campaigns into various keyword lengths, you gain more specific insight into where you should be focusing your time and money. You’ll also learn which strategy works best for your product.
Prioritize Your Spending: Bid Adjustment
When starting a new campaign, your bids will be estimates – guesses based on your knowledge of keywords and Amazon’s suggested bid range. Once your campaign has been active for several weeks, you’ll have enough knowledge to make educated changes.
There may be some keywords that you bid highly on, that do not result in clicks or sales. Look at your average cost of sale (ACoS) to determine if you should lower your bid. ACoS indicates the ratio of ad spend to targeted sales.
ACoS = 100 * (Total Ad Spend ÷ Total Sales)
For example, if you spent $15 on advertising and it resulted in $50 of sales,
your Advertising Cost of Sales would be 100*15/50 = 30%
If any keywords have an ACoS above 40%, consider lowering your bid by ten cents and observing the results for two weeks before continuing to lower your bid or keep it the same. This strategy helps to conserve your daily budget and advertise efficiently.
Likewise, if there is a highly-converting keyword, we recommend increasing your bid to improve your sales and the efficiency of your campaign. Keep in mind that a keyword or phrase that works well for you now might not have the same effect later, so continue to check back in and don’t worry about discarding keywords that aren’t working anymore.
Picture Your Goals: Steady Progress and Patience
Set firm goals for your metrics to help measure long and short-term success. Many sellers use an average cost of sale to gauge how successfully an ad campaign is running because it tells you if the money you’re spending on ads resulted in sales.
For most ad campaigns on established products, the ACoS will be between five to fifteen percent of total ad spend (e.g., if it takes $10 worth of clicks to get a sale, your average ACOS would be $0.50-$1.50). Staying within this range ensures that you’re bringing home a tidy profit and well on your way to achieving your ideal business and lifestyle.
However, if you’re launching a new product, this metric could be significantly higher. In order to gain organic sales and increase awareness, your ACoS could increase to 100% or even greater (e.g. if your product costs $10, your ACoS could be $10 at first). Operating at a loss can help in the short-term while your product gains momentum, but is not an effective strategy for long periods of time.
We hope these tips help you run organized and profitable advertising campaigns that spark joy and success!