Amazon’s Sponsored Product ad platform has changed the way we sell on Amazon. Long gone are the days when you could list a product on Amazon.com and sales would start pouring in without much effort. Now, with ever-increasing competition, marketing is a necessary part of launching a product on Amazon, and Sponsored Products is the primary tool used by third party sellers and vendors to advertise their product within the marketplace.
Proper setup and optimization is critical to running a successful and profitable Sponsored Products campaign. You should be using both Automatic and Manual campaigns with tightly defined ad groups and carefully researched keywords in multiple match types. More detailed information on setup can be seen in our post Amazon Sponsored Products - How To Set Up an Optimized Campaign. Don’t forget to optimize your product page for conversion; page optimization is the foundation of any solid marketing strategy.
Once your campaigns are set up properly, weekly optimization is a must. Without monitoring and adjustments, your ad campaigns will miss out on sales and/or have a terrible ROI. Depending on the size of your account and whether or not you use any tools to help automate, this step could take a few minutes or a couple hours each week. Whatever the time cost, weekly optimization needs to be a priority if you want to run a campaign that is optimized for sales and conversion.
There are five basic steps to weekly optimization. I’ll review each of them, but first it will be helpful to define a couple of the terms used in Sponsored Products:
Keyword - The word or phrase you enter into your manual campaigns broad, phrase, or exact match.
Search term- The word or phrase a customer uses to search for a product. These may be identical to or different from your keywords.
So, for example, if you use the keyword “blue hats” in your ad campaign as a broad match, a customer who searches for “mens blue hats” may still pull up your ad. Part of weekly optimization is checking your keywords and adjusting bids based on their performance. Optimization also includes checking the search terms customers are using that are generating clicks on your ads and deciding whether or not to add them to your campaigns as their own keywords.
Your keywords can be found within the Campaign Manager or the Campaign Performance Report (found under Advertising Reports). Search terms are only found in the Search Term report. You will need to pull this report from Seller Central or use software that does it for you to review your search terms.
With that in mind, here are the five basic steps you should be taking weekly to optimize your Sponsored Product campaigns:
Pull a search term report from Amazon or use software that does that for you. Once you get the data pulled, you are looking for search terms that are not performing— those with an ACoS above your target.
Once you find these, you’ll need to first decide if the search terms are relevant to your product. If they are not (for instance, you sell men’s hats and you have search terms related to women’s hats), you will want to add these as Negative Exact match keywords to your campaign or ad group.
If the search terms are relevant, it may be worth testing them as keywords in the different match types at a low bid to see how it performs. Sometimes the conversion rate is just a little lower and it needs a lower bid to be profitable. If the keyword continues to underperform after a few weeks, add it as a negative keyword.
Next, you will look for the profitable search terms—those at or below your target ACoS. Add these back into your ad group as broad, phrase, and exact match keywords.
As you find new search terms, check your product pages to see if they are optimized for these new terms. You don’t need to rewrite copy, but just add the new keyword into your backend or work it into your existing copy. This will help you continue to refine your offering, optimize the way you appear in organic search, and target customers interested in your product.
After reviewing your search terms, take a look at your keywords in your ad groups. Find those that are not performing well (with ACoS higher than your target) and lower the bid by 20%— more if the ACoS is extremely high.
Next, find your profitable keywords— the ones with the ACoS at or below your target. On these keywords, increase the bid by 20% or so to see if you can get more traffic and sales with a higher bid.
When increasing your bids, keep in mind a max bid level you are comfortable with that will keep you profitable. For example, if your conversion rate is 10%, you should plan for 10 clicks per sale. So, a $2 bid x 10 clicks means $20 in ad spend per sale. If your product sells for $20, this would be a 100% ACoS, which probably isn’t acceptable.
A fifth step you can take is to brainstorm and build upon the profitable search terms you found. For example, if you found that you were getting sales on the search term “hats for vacation,” you would add that as a keyword, but could also add “vacation hats” and other similar phrases.
This is just a quick overview of the basic optimization steps. These should be done weekly for newer campaigns. Biweekly may be enough for well-optimized campaigns, but performance should still be checked weekly. There are also more advanced bidding tactics that base bids on more than just ACoS data, but also look at conversion rates, click through rates, and other performance data. Third-party software that analyzes this data will be useful for optimization more advanced than what I have outlined in this article.
Sponsored Product ads are here to stay and are now a necessary part of a solid Amazon strategy. More and more sellers are realizing this, and over the past few years as more sellers have started advertising, we have seen ad costs go up across the platform. To continue to be successful (and profitable) in their advertising, sellers will need to be continually optimizing their campaigns and working smarter than the competition. Staying on top of new developments, new strategies, new features, and advertising and marketing opportunities will be critical to any seller looking for success in the Amazon marketplace.
Looking for an expert to optimize and manage your Sponsored Product ads for you? At Egility, we offer full-service setup, optimization, and management of your Amazon advertising, including Sponsored Product ads. We use advanced software to analyze and manage your performance, and we stay on top of the latest Amazon advertising trends. Click here for a free 30 minute consultation.
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