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Please note this is an older article. We advise you to check out the 2022 version here.
The verdict is in; Amazon PPC advertising is something that every brand selling on Amazon should be taking advantage of in 2018 (and beyond). But, this isn’t exactly a new revelation. In fact, we already wrote about it here, and here.
So why write about it again? In the world of ecommerce, or digital advertising technology, the world changes very quickly, and 6 months is a long time. If you created your Amazon PPC campaign 6 months ago and haven’t touched it since, now is the time to panic. Your campaign is probably outdated and under-optimized, but keep that panic in check for a minute while I guide you through the here and now of Amazon PPC in 2018.
So how ARE your campaigns doing? Do you know if they are meeting or exceeding industry averages? How do you tell if they are underperforming? Let’s take a look.
Know Your Costs and Margins Before Spending a Penny
In order to properly optimize a PPC campaign you’ll need to determine your profit margins. Without these numbers you could over-spend on PPC without really realizing it until you take a look at your long term balance sheets. So, start looking at those balance sheets now to determine your unique formula for a successful campaign.
One of our previous posts discusses 4 different methods for determining your ideal ad spend. If you’re new to this territory, or if you just feel like your methods aren’t working for you, I recommend giving the post a read. Additionally, if you are on SC and taking advantage of FBA, Amazon has a great revenue calculator that will do a lot of the legwork for you.
There’s more to it than averages though. Each brand still needs to consider the competitiveness of their category when determining their ideal ACOS and share of overall sales driven by PPC. Add that to the calculations you did to determine your profit margin and you start to get somewhere.
Know Your Industry and Product
The 25/25 rule and other methods for determining ad spend are great in theory, and often even in practice, but they can sometimes fail to factor in the nuances of various industries and your unique product.
If you’re regularly over-spending on PPC you could be in a highly competitive category, up against some big brands that don’t mind dropping whatever it takes to get the clicks.
More detailed and niche ads and keywords are generally better than the wider search terms. For example, when you search for “Mascara” on Amazon.com it returns over 700 listings for this single and very identifiable item. Change your search to “Waterproof Mascara” and suddenly the listings number drops down to 270. If your product has a unique identifier you can take advantage of (that is still an accurate product description) you may be able to save yourself some cash on bid prices and reach a more targeted audience.
However, if you take a look at your advertising reports and see that the majority of your sales are coming from the most expensive keywords it wouldn’t be a great idea to abandon those any day soon. Instead, try making small changes to your campaign in order to make your ads and keywords as relevant as possible.
Learn from History
Learning from history is always a good thing, but in order to properly do this we need to be paying attention. Amazon PPC campaigns can be really easy to set up and walk away from, but while it’s possible to do that and still gain sales through PPC, it’s definitely not ideal.
If you’ve been running Amazon PPC campaigns for a little while now it’s worth your time to compile and analyze reports. These reports can then help you shape your new campaigns or optimize your existing ones.
For brands that have been running Amazon PPC campaigns for at least a year it’s beneficial to analyze the entire previous calendar year to help you get the most out of your PPC campaigns in 2018. Looking at the entire year will help you to see seasonal trends or correlate bad performance to a specific ad or product that you were testing over a period of time.When you look at these reports in depth you can better optimize your campaigns from month to month.
Unfortunately, there are some limitations to Amazon’s reporting, where you can only look back at 60 days at a time, so if you were inconsistent in downloading reports in 2017 you should take this opportunity to make sure you have a plan in place to regularly download reports in 2018.
How long should I wait to see results?
Changes in your PPC campaigns won’t work their magic overnight. You need to take into account the habits of shoppers and how buying trends will change over time.
If you sell outerwear you’re going to see an increase in clicks during an unseasonal snow storm, but those clicks will likely drop off again after the immediate need passes. If you just look at data from that week you won’t get a good overall picture of how the campaign performs outside of a buying trend.
You want to know how your campaigns perform over a larger portion of time, but you don’t want to wait forever before making changes if you feel it could be optimized further. I think that 4-6 weeks is a good amount of time to allow a campaign to run before analyzing results and making changes.
Are there better ways to spend my money?
If you are happy with your ad spend and results, but have a little more budget to allocate for 2018, maybe just hold onto it for a little while longer. Amazon has been investing a lot back into their seller platforms and new entities like Amazon Media Group, so in all likelihood, we can expect to see them bring more advertising offerings to Amazon brands in the near future.
If 2018 is the year your brand is looking to become more profitable on Amazon, Bobsled Marketing is here to help you optimize your Amazon PPC campaigns. Contact us to discuss the options.
