Advertising on Amazon has become a huge business. The reason it has become such a large business is simple: it works. Amazon has become the third largest digital advertising platform behind only Google and Facebook, so it’s a fantastic way to allow brands to reach more customers. Advertising on Amazon can be tricky, however. There are definitely some pitfalls to avoid, and some strategies that you can employ to increase your presence in the marketplace. In this post we’ll go over some topics and ideas to help provide you with some tips and insights on advertising your business on Amazon.
Your Brand’s Advertising On Amazon
One of the most common concerns we hear from those who work with the Charmac team is “we’re advertising on Amazon, but we don’t think we’re doing it near to the level we could be. Our ACOS (Average Cost of Sale) is high or ROAS (Return On Advertising Spend) is low and we just don’t think we’re doing everything we can.” Usually this boils down to two things:
The right software for your brand’s specific needs, and the right process or methodology behind your advertising enables you to bid efficiently and effectively on Amazon. When these two facets are working it enables you to measure how advertising is growing your overall revenue, and how profitable that revenue growth is.
How To Optimize Your Amazon Advertising
As covered in the previous section, the two main elements you can use to optimize your Amazon advertising are the proper software, and the right process. But what does that mean?
In terms of software, there are a ton of different providers out there that you can simply tie directly into your Amazon Seller Central account through Amazon’s API and do all kinds of incredible things in terms of bidding efficiently and effectively in the software. This helps lessen your dependence on the campaign manager and Amazon Seller Central. The software allows you to make more detailed and granular changes, and allows you to track those changes. Some of the largest companies in the space are:
- Ignite from Seller Labs
- Ad Badger
Once you decide on a software based on your needs, one of the biggest tasks you’ll want that software to handle is optimizing your bid amounts. This can be done by putting in targets. Think things like “I want a target ACOS of $XX.XX” or “I want YY% ROAS”, and having the software automatically move bids up and down based on your goals. This allows you to bid efficiently and not chase dollar after dollar.
Another key component of the software is keyword management. Software that helps manage the keywords you’re bidding on helps you double down on the keywords that are working, find more keywords to target, and change your strategy against keywords that aren’t performing. The software can even help recommend things like moving keyword bidding from a broad phrase match to an exact match. Alternatively it could suggest you negate out specific keywords. Why does this matter? Because managing this process manually becomes complex rapidly. Good software helps avoid this time-suck on your team’s resources.
Once you’ve found the software, it’s now time to create your process around that. It’s good to regularly check your metrics, but if you’re using your software to optimize your metrics it’s a great idea to keep a log of those changes. This allows you to look back at the changes you made, and the results that followed.
For example you can start out with a hypothesis on what effect you think your changes will have. Then record the changes you make, the date, and then the next time you set out to optimize your campaign you’ll be able to look back and see what the previous result was. A process like this is going to give you a much better view of your business, help you make the right decisions, and provide insight where to invest more money when it comes to Amazon advertising.
Recent Changes To Amazon Advertising
Amazon has become a key player in the digital advertising space. Recently it was announced that Amazon advertising makes more money than YouTube advertising. It’s still limited when compared to Google and Facebook in terms of targeting and different bidding types or placements, but it’s rapidly catching up.
One of the most recent changes to Amazon’s advertising has been the sponsored display campaigns. These allow you to optimize for impressions, page visits, or conversions, and you can choose how your bid will be optimized.
As always, it is very important to realize what kind of product you have. Are you a one-time purchase, high-value item, or are you a recurring consumable item that someone’s going to buy again and again? Use this to tailor how you use this new feature.
What Does Success Look Like?
In the past we worked with a brand that, when they first came onboard, was spending between $10,000-$20,000 a month in advertising on Amazon while seeing a ROAS between 1.5x – 2x. One of the first things we did for them was dig into their campaign and find out what was working and what was not. Over time we cut their ad spend down to a manageable level of just $6,000-$8,000 per month, while increasing the ROAS to 5x.
If you can optimize your ad spend like this, it influences Amazon’s algorithm in a couple different ways that are positive for your brand:
- You’re increasing your conversion rate by turning a high volume of unqualified traffic into qualified traffic that is going to buy. That’s important because it’s a sale, and Amazon sees conversion rate as a metric for ranking your products on their platform. This leads directly to the second big thing you’ll see:
- Amazon is ranking products in the search results based on how often it sells, and because of your increased conversions you’ll move up in the organic search rankings
This flywheel effect on Amazon should be every brand’s target. A self-propelling engine where growth begets more growth. When advertising is done well, it leads to more organic sales, which allows brands to increase their monthly ad spend.
The Three Most Common Amazon Advertising Mistakes
When it comes to making mistakes advertising on Amazon here are the three big ones to avoid:
- Set it and forget it: This is when a brand has started a campaign, but they don’t give it the necessary attention. Maybe they set things up like budgets, some bid amounts, chose some keywords that worked well on past Google campaigns, and they’ve chosen some products. Then they let the advertising run indefinitely. The spend isn’t monitored, and the campaigns aren’t tested for ways to improve performance.
- Underspending: It’s common to underspend on your Amazon advertising. Some brands are apprehensive about spending on Amazon advertising, and while that is understandable, it’s also a missed opportunity due to the reasons highlighted in the above section.
- Overspending: Some brands have the opposite problem. They’ll throw good money after bad money not being able to see any measured success or progress from that advertising. Their mindset is often in the correct place, but they lack the process and / or software to optimize their efforts.
No matter where you’re at in the journey, whether your brand is in the “set it and forget it” bucket, or the overspending or underspending buckets, the framework covered in this post is a great way to improve your Amazon advertising.
Find the right software that fits your specific needs. Design a process that leverages the software to improve your advertising over time. And hold your team accountable to improve advertising over time. Proficiency with advertising is one of the keys to unlocking the next level of growth on Amazon.
Not sure if your Amazon advertising is all it can be?