Shoppers are spending $88,000 on Amazon every single minute, and it’s no question that Amazon is a lean, mean, profit-making machine. Unfortunately, that’s only part of the story.
As you already know, simply having a presence and listing your products on Amazon doesn’t mean that you’ll see your eCommerce revenue shooting through the roof.
After all, there are millions of other sellers on Amazon’s platform, and competition is fierce.
Now that you understand the importance of differentiating yourself from these other sellers, let’s discuss how you can use Amazon Sponsored Ads to do just that. Read this article to learn the 4 pitfalls you should avoid when it comes to your Sponsored Ads.
1. Not knowing your breakeven point
Here’s a question the team at PPC Entourage gets a lot: how much budget should I spend on my sponsored products?
Well, here’s the thing: there’s no hard and fast rule that will tell you exactly how much you should spend. But as a general rule of thumb, as long as your ads are profitable, and you’re making money with each sale, then you’re good to go.
So before you start setting up your Amazon Sponsored Ads, work out the numbers, and figure out your break-even point.
Say you have a product margin of 40% (make sure you’ve accounted for your non-product related costs such as office rent, warehouse space, salaries, etc). This means that your maximum Advertising Cost of Sale (ACoS) should be 40%.
Now, you’ll have to take your advertising goal into account as well. Assuming you’re launching a new product, and your aim is to generate more awareness, you might be okay with simply breaking even. But if your key goal is growth or profitability, then you might want to aim for a lower ACoS (say 20%?), so that there’s still some money on the table.
2. Spending money on a non-optimized listing
Some Amazon sellers go into Amazon Sponsored Ads with the notion that as long as they spend enough, they’ll be able to make money. That’s not the case.
Yes, your Sponsored Ads will get more eyeballs on your listings, but they won’t magically make your ads more compelling to shoppers. The bottom line? If you’re promoting listings which aren’t properly written and optimized, your PPC performance won’t be good, and you’re essentially flushing money down the drain.
Again, before you start creating your Sponsored Ads, take a long, hard look at your listings, and make sure that they’re up to par. At the very least, you should have:
- An eye-catching feature image
- High quality images showing the product at different angles
- High quality images showing the product in use
- A clear, descriptive product title
Last but not least, use your keywords in a natural manner in your product description. Here are a few positive examples:
- This yoga mat comes with a yoga mat bag
- Yoga mat with 5 yoga mat designs and yoga mat bag
- 5 different yoga mat designs available to choose from
- Yoga mat is non-slip and non-toxic
And some negative examples:
- Yoga mat for men, Yoga mat for kids, Yoga mat for women
- Yoga mat and blocks, yoga mat and bag, yoga mat backpack
If you’re not sure whether your listing is performing well, one simple way to find out is to look at your conversion data. Log into the Amazon Seller Central, and access your Business Reports, then click on “Detail Page Sales And Traffic”.
You’ll be able to look at your Session Percentage here. This refers to the percentage of sessions that result in a sale, and is calculated by taking the total number of orders divided by the number of sessions.
The ideal Session Percentage varies according to your industry, the nature of your product, as well as the number of sellers with similar listings. But as a general rule of thumb, those with Session Percentages of less than 5% can do more to optimize their listing.
Be sure to also compare the Session Percentages of your different products. Say the bed linen you’re selling has a Session Percentage of 8%, and the memory foam pillows you’re selling have a Session Percentage of 15%. This means that it takes less views on your memory foam pillows to result in a sale – all else being equal, it makes sense for you to shift your budget to your pillows instead!
3. Using generic search terms
Intuitively speaking, we can see how Amazon sellers might prefer to use generic search terms with their Sponsored Ads. If you’re selling memory foam pillows, for example, you might think that more people would search for a generic term such as “pillow”, and that you’d have more success targeting these search terms.
On the contrary, this isn’t the best strategy. First, generic terms are more expensive, and bidding on these terms will drive your costs up. On top of that, you might get traffic from shoppers who are looking for items you aren’t offering (eg microbead pillows, buckwheat pillows), which is a waste of your time and money.
4. Not refining your campaigns
Sellers who are new to Amazon Sponsored Ads typically start off with automatic targeting campaigns. These are great because they help you dip your toe into the world of Amazon PPC without much effort, but you’ll still have to refine the search terms that Amazon has auto-populated your campaigns with.
Basically, you’re removing all the search terms which are getting clicks, but not driving sales. Don’t make the mistake of simply letting your campaign run on auto-pilot. Like many Amazon sellers, we did this when we were first learning Sponsored Products; after looking at the numbers, we realized that one of our campaigns had a search term with 591 clicks and zero sales. Again, this is a colossal waste of money.
Going through your campaigns and identifying your non-performing keywords takes up a lot of time. If you want to expedite the process, check out the Keyword Optimizer tool that we built. Here’s a quick guide on how to use our tool.
A final word on Amazon Sponsored Ads
At the end of the day, Amazon Sponsored Ads are a highly powerful medium that can help you take your sales through the roof… if you know how to use them properly. For best results, be sure to avoid the 4 pitfalls we’ve listed here. To get more ROI out of your sponsored ads, check out PPC Entourage’s Amazon PPC software!
Michael Zagare is a serial entrepreneur, a recovering physical therapist, and the founder of PPC Entourage.
Mike has an unquenchable thirst for knowledge in all things Amazon, and loves sharing that knowledge with other sellers to help them take steps towards personal and financial freedom.
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