Advanced Amazon Advertising Strategy For 2020
In 2019 the average Amazon advertising cost of sales was 34.42% (for context pet products was 41.56%).
Depending on your business and Amazon advertising strategy your target may be higher or lower.
The point of this article is to show you the one lever that will give you more control over your ACoS.
You can use this lever to:
1. Run more profitable ads
2. Predictably scale your ad spend
While this Amazon advertising strategy can be extremely complex the underlying principle is very simple.
We believe that the easiest way to have more control over your ACoS is to bid on your most profitable search terms with individual keywords, otherwise known as exact match bidding
Advanced Amazon Advertising Strategy Part 1 – Why exact match bidding is important
Did you know… everytime you bid on a keyword your ad can potentially reach thousands of different search terms?
When a user searches Amazon for anything there is a mini auction going on.
If you are running a relevant ad and bidding on a keyword that can show up for that search term, you get included in that auction.
If your bid is high enough you get shown in their search and charged if someone clicks your ad.
The nuance that ends up inflating ad spend and limiting your control of ACoS is when you have the same bid across searches with very different user intent.
For example, imagine you are Amazon and own the home furniture brand Rivet (read this article on why they created Rivet to compete with Wayfair in the one category they aren’t winning outright, home furnishings )
If you are bidding on a keyword like “white couch” your ad could potentially be showing for searches like “white couch pillow” and “white couch cover”.
This is a problem because:
1. If your couch ad has pillows in it for some reason and you end up getting a lot of clicks that aren’t converting you would likely kill your ad spend on that keyword based on incorrect information.
2. This keyword might end up being so profitable that you don’t even realize you’re still winning auctions for search terms that aren’t converting
3. You limit your ability to scale because increasing your bid might actually have you showing up for more of these mini-auctions that you didn’t want to be at like “white couch cleaner” or “white couch cushion”
This means that the closer you can get to a one to one relationship between each search term and a single keyword, the more optimized your bids can be.
You might be wondering, but how on earth am I going to find all the exact match terms that people are searching for that end up buying my products??!
Advanced Amazon Advertising Strategy Part 2 – Search term bid isolation process.
Did you know… that you can use broad and phrase match campaigns to show you the exact terms that convert the most buyers?
This strategy isn’t obvious because it seems less profitable in the short term.
Why would I be using my ad budget on these broad match terms when I know people who search my brand are more likely to convert??
To use the couch example, maybe you find that variations of “modern white couch” is actually driving profitable sales for you.
You can “promote” this keyword to a new phrase match campaign with an increased budget to continue to collect data before graduating to your exact match campaigns.
Your auto campaign is a broad match, research is phrase match and performance is exact match.
Once you search terms graduate to your performance campaign you add them as a negative keyword to your auto campaign.
Now you should be able to optimize your bid for each of the exact match search terms with full confidence your ACoS won’t balloon out of control.
You might be thinking this seems like a lot of work…
Advanced Amazon Advertising Strategy Part 3 – Auto cascading strategy.
Did you know… there are bidding tools that can automatically promote “winning” search terms into new campaigns for you?
If you’re waiting every two weeks to manually run reports and find out which broad match campaigns have identified search terms that are driving sales you are missing out on significant revenue.
Especially when you consider we recommend, at a minimum, that companies run 18 separate campaigns per product line.
Here’s a list of those campaign types you should be running:
1. Conquesting campaign
2. Category campaign
3. Brand campaign
4. Complementary campaign
Conclusion: The map is not the territory. If you aren’t breaking these campaigns apart it’s next to impossible to understand what is really driving sales and more importantly, where you can profitably scale spend to drive more sales.
Watch out for agencies that aren’t separating out campaigns like this and increase spend on your branded keywords then report that your return on ad spend went up.