E-Commerce startups have a tendency to rush through the product manufacturing and importing process while overlooking the importance of having a solid marketing plan ready on launch day.
My impression is that importers underestimate what it takes to start selling products in today’s marketplace, that is both larger and more competitive than ever before.
I advise our customers on Chinaimportal.com to start their marketing research and make plans for their campaigns at the same time as we start working on the product together.
If you intend to start selling on Amazon, then this guide, written by Davide Nicolucci at Wearegrowthhack.com in Hong Kong, serves as your introduction to paid advertising on the Amazon marketplace.
This is covered
- What is Amazon PPC Sponsored Product Ads Marketing?
- Amazon PPC Cost Example
- Why sellers can’t rely on free traffic from Amazon to sell products
- How to select the right keywords or categories for your product
- How to reduce your ad cost per sale once your campaign is running
- When you should start planning for your Amazon PPC campaign
What is Amazon PPC Sponsored Product Ads Marketing?
Sponsored Product Ads are probably the most effective way to get traffic to your listings, especially if you are just starting off your Amazon selling journey. Amazon Ads work in a very simple way, but understanding and mastering the entire system is not an easy job.
As the name suggests, we are talking about Pay Per Click (PPC): a performance-based Advertising system that can be managed directly from the seller central.
Any seller with active listings (both FBA or FBM) and eligible products (see product eligibility here) can run PPC Ads and start getting valuable impressions, clicks, sales in just a matter of hours or even minutes. If your ad is not eligible, or if you don’t own the Buy Box, you won’t be able to run any ads. We suggest you make sure you know how to effectively secure your Buy Box (start-up guide here).
As just said, PPC is definitely one of the most efficient ways to get visibility, traffic, and sales on all Amazon marketplaces. Though, this is not the only way to get traffic: Amazon provides a wide range of tools for both sellers and vendors available on seller central and Amazon Advertising Services. Sellers can also use a lot of other channels as effective source of external traffic (social media, influencers, advertising).
The great thing about PPC Sponsored Product Ads, is that they are constantly evolving, allowing sellers to use new ways of targeting their customers and communicating value to them. We will be exploring below the different types of ads available:
A. Sponsored Products – Keywords Targeting
This kind of ads is available for all sellers and will place the product listing right on the search page results (you can notice the Sponsored tag near the ad) OR on related product pages. When using keywords as targeting you will be able to choose which keywords to bid for, which type of match for each keyword (Broad, Phrase, Exact) and what level of the bid to apply to every single keyword.
B. Sponsored Products – Products Targeting
You can also decide to target directly similar products (related or competitors product) or entire categories of products. Your ads will appear once again directly on the product pages or on the search results.
The first step for Sponsored Products Ads (Option A & B) creation on Amazon Seller Central.
C. Sponsored Brands
Available for sellers with at least 3 active products, these ads will appear mainly on top of the search result page, displayed as a banner. You will be able to choose your 3 products to display as well as your copy text and logo.
D. Product Display Ads
This kind of ads is targeting directly other products and appears next to the add to cart button of your target product. You will be able to add a call to action / creative text to your ad and test various combinations for top performance.
As you can see from the list of main available type of ads above, there is a lot of space for different targetings and for testing different ads. It will be your job to try out many combinations and split your budget into different sources of traffic in order to optimize your ROI.
You can see full beginners guide on how to set up, manage and optimize your Amazon Sponsored Products PPC Campaigns in this blog post.
Amazon PPC Cost Example
The charging system and performance are very easy to check by taking a look at the Advertising Campaign Manager or by downloading the advertising report.
Here are the main things to consider when evaluating PPC Ads performance:
- CPC – cost per click
- ACoS% – Advertising Cost on Sales
- ROAS – Return on Ad Spend
- Number of clicks
- Spent Budget
- Total Sales
Let’s present an example to show in detail how the costs work:
Your product’s price is $20.00, your average keywords bid is $1.20. This means that on average you are willing to spend up to $1.20 for each click. After you run your campaigns, you see that you’ve been charged $100 for 125 clicks and you have sold 15 items.
- CPC = total ad spent / number of clicks = $100/125 = $0.8
- ACoS% = total ad spent / total sales = $100 / $300 = 33%
- ROAS = amount of sales for 1$ spent = $3
Note: Amazon Sponsored Products Ads are very straight-forward and easy to understand. The hard work will be to find the best combinations and strategies for bidding, products selection, keywords selection, product targetings, dynamic bid placement, etc.
Remember to consider your product life cycle phases (launch, maintenance, clearance) and other important elements that might affect your targets and objectives.
Why can’t sellers rely on free traffic from Amazon to sell products?
Unfortunately, ranking on Amazon is not as easy as it used to be just a few years ago. This is because selling on Amazon today has become a very crowded business.
This goes together with the exponential increase of gross revenue of Amazon global marketplace year after year and with the number of new sellers: there are today more than 5 million sellers on Amazon and over 1 of them has joined in the past year.
Many new Entrepreneurs don’t understand that it’s a lot more competitive these days. The opportunity is huge, but this game is as competitive as it’s ever been.
For this reason, and for other various reasons (eg: unfair competition), it is almost impossible to rank high on Amazon search page without using illegal tricks or without targeting a very small niche of products.
The right use of PPC ads offers a way to start up your paid presence on Amazon, increase impressions, clicks, and sales, and eventually also boost your organic presence. I’d suggest to any new seller to make the right use of Amazon PPC and understand how to make the best use of it (investment for long term strategy, short term visibility, sales, etc).
How do I select the right keywords or categories for my product?
There are many ways of adding “targetings” to your Ad Campaigns.
If you’re using keyword targetings, the best way is to start up automatic campaigns and manual campaigns with BROAD match. This will allow Amazon to use a larger pool of targetings for your ads and it will be your job to, later on, filter out the keywords that do not perform well or that are unrelated or even irrelevant.
Finding the right keywords
There are a lot of ways, the easiest one is to use the suggested keywords by Amazon during the creation of each campaign. Other easy ways to get keywords are Amazon’s search box suggested terms, Google Adwords planning tool, Keyword providing tools, etc. Here’s a comprehensive list of keywords sources (paid or free) for Amazon sellers.
Finding the right categories and product targeting
As for keywords targeting, categories and product targeting can be directly suggested by Amazon during the creation of campaigns or can be researched for more in-depth targeting. Products will be targeted in any Automatic Campaign.
You can download the search term report to see which product targeting are delivering the best performance. As well, certain product targetings will be suggested by Amazon while creating your new campaign, as well as categories.
In order to operate a deeper product targeting, we suggest to divide your Ad Groups or Ad Campaigns into different categories, each one with a specific purpose, eg: defend your own products, attack competitors and related products, attack similar products with higher or lower price or with fewer reviews, etc. You can get creative here!
Example of management of PPC Ads: more than 360,000€ in sales with less than 13% ACoS (source: wearegrowthhack.com) in 30 days.
How can I reduce my Advertising Cost on Sale (ACoS) once campaigns are up and running?
This is probably the most sought for and the hottest topic when it comes to PPC: how to decrease your ACoS% while increasing sales and be able to make a good profit from PPC?
There are many elements that contribute to increasing or decreasing your total ACoS%, but we can break them down into 3 main categories. Understanding how to optimize them will be key to your success:
Listing Conversion Rate
The CR (conversion rate) of your listing is probably one of the most important metrics to look at. Even if you will send a lot of clicks to your listings, but these clicks are not converting into sales, you would end up wasting budget and big chances to sell your products. Elements that influence CR that need to be optimized are the title, bullet points, content, images, reviews, EBC content, additional media/video, etc. Make always sure that your listing is FULLY optimized before running any PPC campaign.
Your relevance score will not only affect your organic rank but also it will affect your PPC rank and overall PPC performance. A good way to increase your PPC relevance – when your listing is already optimized – is to make sure that all the converting targetings are added to your listing’s content and backend. To do so, download the search terms reports, filter out the selling terms and make sure to add them to your listings.
Targetings that waste your budget
When you run automatic campaigns or product categories targeting campaigns, you might not be able to immediately see what targetings in details are using your budget. To have a full picture of how your budget is spent, download the search term report. You will see there which keywords or ASINs are spending your budget. Eliminate (add as negative targeting) from your campaigns these keywords and ASINs that are spending budget without delivering sales or have an ACoS% that is a lot higher than your target.
Product Ads Selection
If you’re running campaigns with multiple groups, and each group runs multiple ads, you should definitely look into the ads selection and how much each product ad is spending. It might be crucial to your overall ACoS% to pause/archive these ads that are not performing well and move them into new groups or new campaigns. Correct optimization of PPC campaigns should always take this into consideration.
Let’s say that I am currently in the process of manufacturing products in China or Vietnam. When should I start planning for my PPC campaigns?
PPC itself doesn’t take long to plan ahead for. You can definitely start gathering data and keywords before you launch your product, in order to better know how to market it, how to structure your listing content and what kind of keywords and products to target.
We recommend to operate detailed market research within Amazon and collect data, keywords, related ASINs from your competitors, look at their content, look at the reviews, etc.
Another important element to look at are your product reviews: should you start your PPC campaigns before or after getting reviews on your listing?
While advertising a listing with a lot of reviews would be better for your ACoS (lower cost in sales, through higher conversion rate), starting earlier would give some benefits in getting impressions, gather more keywords, and test different strategies that include targeting different keyword types, different products, different placements, different bid strategies, and so on.
Growth Hack Consulting HK LTD is the first Amazon Seller Agency based in Hong Kong, founded in January 2017. Davide Nicolucci, owner and director, has been working with Amazon FBA/FBM sellers for the past 6 years, leading projects across Asia, the USA and Europe.
Growth Hack Consulting offers a wide range of services for Amazon and E-Commerce sellers: PPC Management, Listing Optimization, Translation in 7 languages, Localized Digital Marketing, SEO, Product Launch and Social Media Management.