Creating a Profitable Amazon Advertising Campaign

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Every day, thousands of Amazon sellers start their workday with one common goal: Increase sales. While there are numerous strategies that can be used to accomplish this goal, most start with Amazon Advertising campaigns.

In general, Amazon will reward products with a high volume of sales by improving their organic search ranking. This aspect of Amazon’s search algorithm helps strengthen already established sellers while creating implied barriers of entry for new sellers. Because of this, new sellers cannot rely solely on organic traffic to grow their business and drive sales.

In order to compete with larger, more established companies, most sellers will turn to Amazon pay-per-click advertisements to jump-start their efforts. While difficult to execute, a properly run Amazon PPC advertising campaign will help you sell your products while simultaneously improving organic search rankings.

But, where do you start?

Five Keys to Amazon PPC Success

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1.) Set an Appropriate Budget

Prior to actually creating your advertising campaigns, you’ll want to establish a budget to base your efforts on. This dollar amount should be a direct function of how much revenue your business is currently generating. Because of the increased competition on Amazon, advertising is rapidly becoming more important to appeal to potential buyers.

Retail Bloom usually recommends 5% of Amazon monthly sales for advertising as a general rule of thumb. For example, if you’re earning $50,000 each month on Amazon, then $2,500 would be an appropriate budget to use as a baseline. As you go, this number can be adjusted to match your sales goals.

In successful advertising campaigns, increases will be observed in both “Advertising Sales” and “Organic Sales”. This phenomenon is known as “The Halo Effect". This effect demonstrates that Amazon increases organic traffic and exposure to advertising based on your campaign success.

2.) Find the Right Keywords

When choosing keywords to bid on, it’s important to find terms that will lead shoppers to your products. This is very important for your Amazon advertising strategy. Advertisers must ask themselves, “What would a shopper type in the search box if they were looking for a product like mine?”. The answer to this question leads you to the keywords best-fit for your campaigns.

If coming up with keywords on your own proves to be too difficult, there are plenty of free keyword research tools out there, like Helium10 and Google Keyword Planner.

3.) Organize Keywords based on their Purpose

Ad Groups are another critical element of efficient Amazon advertising campaigns. Instead of having keywords for all of your products in one group, split your keywords into separate ad groups based on product type. This increases conversion rates and reduces unnecessary ad spend due to users being served product ads that are most relevant to what they’ve searched.

  • Example: If your company sells athletic apparel, separate your keywords based on the different types of apparel that they refer to. This way, keywords relating to “running shoes” don’t interfere with your bids on keywords related to “basketball shorts".

When bidding on keywords, there are three different match types for keywords:

  • Broad: The search term can include your keywords in any order or variation, and may also include related synonyms, acronyms or abbreviations.
    • Example: If you bid on the broad match keyword “running shoe”, the search term “shoe for running men” could trigger your ad to show.
  • Phrase: The search can match your keywords exactly, but may also have minor variations, like plurals. The search terms can also contain additional words behind and/or in front of your keyword.
    • Example: If you bid on the phrase match k
    • Keyword “running shoe”, “running shoes” could trigger your add to show. Your ads could also show for “blue running shoes for men”.
  • Exact: The search term needs to be an exact match to your keyword in order to deliver. If the search term includes additional words before or after the exact keyword, the ad will not deliver.
    • Example: If you bid on the exact match keyword “running shoes”, “blue running shoe” would not cause your ad to deliver. It’s possible that “running shoe” would cause your ad to show, but any other slight variations would prevent this action.

Outside of these three types of keyword matches, you can also add in Negative Keywords. These include words that you do not want to appear in search queries that display your ads. 

  • Example: If your company only sells men’s shoes, you may consider adding “women”, “ladies” or “girl” as negative keywords. This will help you avoid customers who are on Amazon for the specific purpose of buying women’s shoes.

4.) Determine Your KPI’s

In order to decide which campaigns/keywords are performing most efficiently, you should track the amount of revenue your ads are generating in comparison to the amount their spending. The most common metric used for this purpose is called Advertising Cost of Sales (ACoS).

Amazon describes ACoS as “the percentage of direct sales you made from Sponsored Product ads, or the overall brand sales you made from Sponsored Brands that resulted from your advertising campaign. This is calculated by dividing the total sales from advertising.”

In addition to ACoS, there are a handful of other metrics used to determine campaign success. These KPI’s include: Impressions, Clicks, Sales, Units, Cost-per-Click, Conversion, and Click-Through-Rate

By analyzing your KPI’s, you leave no doubt as to the outcome of your advertising efforts; whether you are making profits, just breaking even or actually losing money.

5.) Optimize and Adjust

Successful Amazon PPC campaigns aren’t made overnight. They’re the result of outstanding flexibility, adaptability, and patience. As you continue to optimize and fine-tune your bids, your campaigns will grow more profitable and efficient.

Consider this brief overview to help you get started:

  • Use your first campaigns to test which keywords are the most profitable in terms of sales.
  • Refine your keyword lists as you go to make them as efficient as possible.
  • As a general rule of thumb, increase bids for high-performing keywords and reduce bids for keywords that aren’t getting the job done.

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The Bottom Line

Keep in mind: the suggestions outlined in this article assume that the product listing content is already optimized. Most advertisers find that setting budgets, refining keywords, and grouping carefully help them gather the data they need to create profitable Amazon advertising campaigns.

Still, Amazon isn't a static platform. It’s important to keep a watchful eye on your campaigns. The most successful Amazon advertisers view their campaigns as being a dynamic canvas, requiring consistent optimization and attention. As a result, extensive efforts are typically rewarded with increased sales and greater visibility. This is why most businesses will hire outside professionals to monitor and execute the Amazon side of their eCommerce business. With all of the different job duties that come along with being a business executive, it’s possible that Amazon advertising could fall to the wayside. Outsourcing this piece of your business takes one additional task off your plate.

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How can Retail Bloom help with advertising?

Retail Bloom offers a wide variety of Amazon advertising services for companies, including advertising campaign execution and keyword optimization. Whether you already have ad campaigns running, or you need help getting started, Retail Bloom can help. By scheduling a free consultation with Retail Bloom, you’re taking the right step towards increasing sales, streamlining your advertising processes, and eliminating headaches.

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