As many of us already know, on Amazon half of the work is already done if you can manage to have a quality organic listing and positive seller standing with Amazon itself. The algorithm on Amazon is a combination of organic and paid advertising, and to get the most out of Amazon in terms of sales and revenue, these two channels must be working hand-in-hand. This is far more crucial on Amazon than most other platforms, where organic and paid work can be somewhat disparate.
Recently, competitiveness amongst Amazon listings continues to escalate. Getting a quality ROI from this marketplace is not as simple as it once was. There are plenty of sellers, within the United States especially, who seem to be struggling in establishing their businesses and getting their brand the visibility they would like.
We have assembled a list of tactics that should help you get the edge over your competition in 2022 and into the coming years. A sophisticated advertising strategy stands out as the most empowering place to start. If done correctly, Amazon search ads and display ads can be a game-changer for your business.
Be methodical when making budget decisions
If you are just getting started with Amazon ads, it is better if you take it slow, one day at a time. Start with a limited budget so that you can easily do trial-and-error testing to see what works for you. You are bound to face high competition in the beginning.
When you set your budget, it’s important to look at your average cost of sale (ACoS). This is the amount you spend to obtain leads which can help make sure that your budget will work with it. You need to understand how this works so that you can maintain healthy profitability.
Just like any other channel, you'll want to carefully weigh the costs of advertising and production when it comes to determining just how much you should spend on marketing. Amazon advertising is no different.
Sales tax, fees, product and overhead costs take off around 50% from your earnings. After those are accounted for, you'll only have 50% of the original budget to go around on advertising and then finally, profit.
This means that your ACoS needs to be less than 50% for your business to gain a profit. Anywhere from a 15-40% ACoS is not uncommon on Amazon advertising, so you’ll want to keep this in mind as you account for your budget on this platform.
As you identify your ACoS, your confidence as an advertiser and business owner will increase as you establish a system for healthy profitability and increasing revenue over time.
Try a web-based calculator to calculate the margin built into a product. There are many online tools for calculating ACoS as well—don’t be afraid to try these shortcuts to know for certain you are making sound financial decisions…especially if you’re just starting out in this kind of budget management.
Opt for Sponsored Display Ads
Sponsored Display Ads are yet another unique feature introduced by Amazon for self-advertising one’s business. The primary distinction of these ads from other Amazon ads is that they don’t target keywords. Instead, they target customers by their interests and behaviors. They also compare consumers’ with similar interests or purchase histories to grow the audience segments and see if new customers might also be interested in what you're advertising.
Therefore, for all the newly established businesses or even the well-established ones, these Sponsored Ads might work as an important tool for bringing incremental traffic and brand awareness your way effortlessly. Using Sponsored Display Ad campaigns, you can feel assured that any potential customer who might have viewed a product similar to yours at another business store will be able to view your product(s) as well, making your brand more prevalent within the category segment.
Sponsored Display Ads are currently one of Amazon’s less popular campaign types due to their newness. As advertisers become more comfortable with this ad type, competitiveness will surely increase; so this is one easy way to get ahead of the competition.
Amazon DSP (Demand Side Platform)
Amazon DSP, or Demand-Side Platform, is where advertisers can go to programmatically buy video and ad placements. Like many other DSPs, Amazon provides the connection for programmatic ads that include placements on Amazon directly or across the web, including a network of thousands of Amazon partner websites. This gives brands a more diverse range of targeting opportunities. Use audience insights to determine what reach is available in your audience segments. Exclusions are an effective way to keep your audiences fresh: rule out past purchasers or set a 30 day purchase window…there are very few products on Amazon that would have a buying cycle longer than 30 days. If a customer was not ready to make a purchase decision in that time frame on this platform, they are not likely to make a purchase at all.
Take advantage of your Amazon ‘honeymoon period’ wisely
The initial 45 days of advertising on Amazon are known as the ‘honeymoon’ or ‘learning’ period. This is the time when you can best put your efforts into making the most of experimentation and learning about everything that goes on in establishing one’s business.
If you fail to make the most of this period, chances are high that even after this time, you will struggle to meet your goals in this very competitive marketplace. The first month or so is a crucial time for testing product pricing, keywords, descriptions, ad messaging, and promotions. All of these factors could greatly impact your effectiveness on Amazon, so be aggressive and don’t be afraid to test many different approaches week over week. Just be careful that your A/B testing is clean and well-documented so you know exactly what was productive and what wasn’t moving into the post-honeymoon phase.
Don’t use too many keywords(or the wrong ones)
Keywords can become a source of big problems for you when you are targeting too many terms on the ad side, keyword stuffing your description or product names, or simply taking the wrong approach in how or what you are bidding on.
To avoid these pitfalls, it is best if you do your research, evaluate similar sellers, and see how many keywords they use to promote their products. Thorough competitive analysis at the forefront will save you a lot of headache in the long run. There are many tools that can help you with this work, or it can be done manually. Either way, be specific in establishing the right competitor list to evaluate; and be thorough in your analysis of each competitor.
Consider using an Amazon partner
Once you feel comfortable with Amazon ad formats and key strategies, you may want to consider leveraging an Amazon Advertising partner. Amazon evaluates and approves key vendors to help their advertisers drive even more value from their campaigns. A partner like Marin Software can help you use machine learning and cutting-edge technology to streamline and amplify your Amazon campaigns.
Advanced analytics can deliver reports and insights within and across your Amazon campaigns and also give you a cross-publisher view if you are using other marketplaces like Instacart, Criteo, or CitrusAd. MarinOne also proactively scans your account every day to identify opportunities to grow revenue and decrease costs. It’s important to note that Amazon only holds your historical data for 90 days. A tool like MarinOne can give you access to all your previous campaigns with unlimited data retention.
It’s never a bad idea to incorporate automation into the day-to-day management of campaigns to save you time. Actions like bulk changes perform the same edits across objects and campaigns so you don’t need to do that manually. Another big time saver is SmartFeed which pulls in your inventory feed and syndicates that data to Amazon (and other publishers) to automatically pause and resume campaigns based on your inventory levels. You can also take advantage of day parting which schedules and deploys your budget during the most effective times of the day for your products.
Some Amazon partners, like Marin, also offer bid optimization to help advertisers determine the right level of spend and forecast the expected conversions, revenue, and profit based on your goals. You can also use MarinOne’s pacing tool that shows you how you are progressing over your selling period and adjusts your bids to keep you on track.
While it is a competitive market, don’t be off put or consider stepping back from Amazon advertising just yet. With thorough research, careful planning, and ongoing optimization, Amazon absolutely can produce the results you are looking for. It is unmatched in terms of customer intent, quick purchase conversions, and return on investment. It also happens to be the second largest search engine in the world; and therefore, not to be ignored.
To embrace Amazon for the good of your business, go along with its competitive pace and keep on implementing new strategies until you feel confident in your AMZ marketing chops. If you are keen to learn and implement the right techniques, you will find yourself reaching your KPI goals on Amazon in no time.