Updated: Dec 27, 2020
According to a survey by Third Door Media, 80% of Amazon advertisers have plans to increase their Amazon advertising spend in 2019. That means the competition is heating up, and it’s time to take your Amazon advertising game to the next level.
Most advertisers start with the basics, learning as they go and adding more advanced tactics to their repertoire over time. The good news is there are several ways to leverage Amazon’s advertising tools and functionality to start getting better results with your advertising dollars.
Here are eight Amazon advertising tips you can put to use right away to get more traction from your ad campaigns:
Build brand awareness with Sponsored Brands
Focus on product-level profitability
Take advantage of the Flywheel effect
Use category-specific targeting for Sponsored Products
Use negative keywords to reduce wasteful ad spend
Have a flexible Advertising Cost of Sale (ACoS) goal
Use auto campaigns to explore and manual campaigns to exploit
Optimize your bids
Let's dig into each tip in more detail...
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1. Build brand awareness with Amazon's Sponsored Brands
Formerly known as headline search ads, Sponsored Brands are purchased by about 18% of buyers, according to a survey by Cowen and Co. Because they appear above the Amazon search results, Sponsored Brands ads help advertisers build brand awareness and are useful for promoting multiple products.
How to use Sponsored Brands in Amazon
Sponsored Brands are ideal for top-of-the-funnel advertising, especially when paired with category keywords or branded searches. Use them to build brand recognition by taking advantage of the opportunity to incorporate a custom headline, your logo, and ASINs. You can also use Sponsored Brands to send clicks to both your storefront and your Products Listing Page.
2. Focus on product-level profitability
You’ll also want to take a look at more granular data by focusing on product-level profitability. Individual SKUs have different profit margins, of course, and it’s essential to understand gross profit on a product level before introducing paid advertising into the mix. This data will show you which products could benefit most from a paid advertising boost, while minimizing your risk.
How to leverage product-level profitability
Analyze product-level profitability to determine which products have the highest and the lowest profit margins before implementing paid advertising. There’s no point in wasting ad spend on products that won’t benefit, so you’ll save yourself some valuable ad dollars by identifying the products that could benefit most.
3. Understand the Flywheel effect
The Flywheel effect is the concept of using paid advertising to generate earned media to drive overall growth. Earned media and paid media are comprised of reviews, detail page views, and orders, while your product content is owned media.
Image via HubSpot
Here’s how it works: Paid ads drive traffic to your product pages, boosting the product’s position in the organic search results. Traffic and a favorable position in the organic results increases the likelihood that the product will earn the “Amazon’s Choice” designation. In turn, the “Amazon’s Choice” label earns your product more attention from shoppers, resulting in more traffic, and so on. It’s a continuous cycle.
How to capitalize on the Flywheel effect in your Amazon campaigns
Use business metrics to measure your performance. Keep in mind, though, that advertising doesn’t exist in a bubble—so avoid the common mistake of measuring success based on ACoS (Advertising Cost of Sale). Instead, look at your total revenue, gross profit, and TACoS (not those tacos—we’re talking about Total Advertising Cost of Sale). TACoS is a measure of how your ad spend impacts overall revenue, including organic
4. Use category-specific targeting for Amazon Sponsored Products
Sponsored Products are the most popular advertising option, used by about 29% of buyers, according to Cowen and Co.’s research. These ads appear above, below, and alongside the Amazon search results, as well as on product detail pages, and are similar to Google’s product listing ads.
Sponsored Products allow you to use category-specific targeting, which pairs your company’s products with complementary products, thus increasing the odds of converting shoppers. Known as Product Attribute Targeting (PAT), this feature makes it possible for advertisers to showcase their products in ads next to a specific set of brands or products or alongside items within a specified price or ratings range.
So, if you only want your ads to show up alongside top-rated products, you can do that thanks to Product Attribute Targeting. If you sell products such as parts or components that consumers typically purchase to go along with a different product, you can use PAT to show your ads to shoppers who are considering buying that product. Even if they don’t spring for your add-ons right away, you’ll benefit from brand recognition if they decide to buy later. You can even showcase your ads alongside competing products or brands if you choose.
Sponsored products related to a Keurig.
How to use category-specific targeting for Sponsored Products
Choose manual targeting when setting up your Sponsored Products campaign. Select your products and bid strategy, then select the product categories you want to target. You can also narrow your product category targeting to specific brands, price ranges, and star ratings to hone-in on your target customers. If you’re launching a new product, take advantage of category-specific targeting to target similar brands and products to capitalize on those searches. This strategy will give you immediate reach to a target audience with an interest in what you’re selling, and you don’t need to spend valuable time experimenting with a bunch of different keywords to hit the ground running.
5. Use negative keywords to reduce wasteful ad spend
Just like in Google Ads, Amazon negative keywords are keywords that you exclude from a larger keyword search, to make sure you don’t rank for the wrong search terms. For example, if you sell $10 headphones, you will want to rank for searches of “headphones” but not searches of “bose headphones.” In this instance, “bose” should be added as a negative keyword.
When trying to decide what negative keywords to filter out, also look for keywords receiving a large volume of traffic but few conversions. In other words, you’re paying for clicks that don’t convert to actual sales, meaning your valuable ad dollars are going to waste. No one likes to waste money, particularly advertisers. This can often happen with keywords that are too general and too short, such as “top.” Ideal shoppers are likely looking for something much more specific that can be targeted with a better long-tail keyword (such as a “blue button-down shirt for men”).
Plus, what if most of those customers aren’t looking for a shirt at all, but those old-school spinning toys once loved by kids?
There’s no way to predict what those customers are looking for without better, more refined keywords, so your ads will go to waste when shoppers are looking for something other than what you’re selling. Fortunately, you can eliminate a great deal of wasteful ad spend by leveraging negative keywords, which prevents your ads from showing in the searches that don’t produce sales.
How to reduce wasteful ad spend with negative keywords
Use the Customer Search Term Report, filter for spend, and identify the keywords with zero sales. Add those keywords to your negative keywords category, and voilà! No more money spent on ads that don’t generate sales. You can also add negative keywords with bulk operations.
6. Have a flexible Advertising Cost of Sale (ACoS) goal
Obviously, the lower the ACoS, the better. But is that always what you should be aiming for? ACoS is a ratio of your ad spend to revenue. For automatic campaigns, ACoS is at the group level, but for manual campaigns, you get your ACoS on a product level. Low is preferred, of course, but every campaign should have a goal depending on whether you’re launching a product, liquidating a product, or trying to generate ongoing profits from that product.
How to set your ACoS goals
For best-selling products, your aim should be to lower your advertising costs. They’re best-sellers, meaning shoppers can already find those products easily. For product launches, a higher ACoS (at least in the short term) is useful for gaining traction and earning reviews (refer back to that Flywheel effect we discussed earlier).
7. Use auto campaigns to explore and manual campaigns to exploit
While the idea of setting it and forgetting it might be appealing, automatic campaigns aren’t always your friend. Auto campaigns give you only limited control, and you can’t set bids on individual search queries. Auto campaigns are useful for another function, though: sourcing keywords.
How to use auto campaigns to your advantage
Use auto campaigns to discover search terms that are converting and add those terms as keywords in your manual campaigns. You should look for ways to automate all keyword optimization processes whenever possible, including negative keywords, refining keyword match types, in addition to auto to manual campaign search term migration.
8. Optimize your bids
We’ve already touched on the dangers of set-it-and-forget-it, and that’s true for the keyword bidding process, too. Ad group default bids can hurt you because your bid won’t be successful for every keyword. Instead, set your default bid at the keyword level at what you can afford to pay per click. You should keep a close eye on your conversion rates and continuously adjust your bids. If your conversion rate goes down, for instance, and you don’t adjust your bid, you’re going to lose money.
How to optimize your bids
It’s impossible to know the perfect bid without analyzing hordes of data constantly, and no one has time for that. Instead of slaving over your data, automate the bidding process with technology that uses machine learning to maximize your profits.
Sell more, spend less
Of course, there are other Amazon ad types, including video ads, product display ads, and traditional display ads. Some advanced Amazon advertisers successfully use a broad mix of ad types and generate substantial profits. You don’t need to spread your ad dollars thin and run every time of available ad to see results. If you’re ready to kick your Amazon advertising game up a notch or two, employing these tactics will help you make more money selling on Amazon—without costing you a ton of ad spend or valuable time.