The rapid growth of Amazon provides plenty of opportunities to innovate and make the most of new advertising capabilities. This growth trend will continue in 2020 as Amazon refines its offering and advertising options become more sophisticated.
If created and managed properly, the right advertising strategy on Amazon can help you sell more inventory, sell it at a faster rate, and increase your organic ranking.
Sellers will have to move quickly to stay up to date with new features, formats and campaign types and ensure that their current approaches are not getting stale. A solid Amazon advertising strategy will be needed to take your business to the next level. Here, we have a five-step process for re-evaluating and optimizing your Amazon advertising strategy in 2020.
Step 1: Think granularly about goals
In 2020, just considering your goal as “more sales" will no longer work. There are many strategic approaches that you can and should adopt on a product, group or brand level. For example:
- Be top on a particular keyword
- Promote the bestseller for a new product line
- Sell out product
- Gain market share over a competitor
- Stay market leader of a product line
Your ad strategy cannot be a one size fits all solution. It should match the goals you have decided upon.
One way to decide your goals is to base them on the four stages of sales engagement (the funnel) : Awareness, Interest, Decision, and Action, and set your ad strategy accordingly. You would then certainly consider, at least, a combination of Sponsored Product, Brand and Display ads to reach customers throughout the entire funnel journey.
For a newly launched brand on Amazon, you would be looking to first create awareness and then shift the focus to more sales-oriented campaigns. For Sponsored Product and Brand, you would also be working at a product by product level with a custom pay-per-click (PPC) strategy specific to reaching your targets on each product. For PPC, you would also be looking to create defensive campaigns for brand protection along with generic campaigns to increase visibility.
Here are some high-level examples of how you could use PPC strategies to match your goals:
|1. Protect brand||Use Brand keywords|
|2. Increase long term sales||Use Generic keywords|
|3. Gain market share||Use Competitor keywords|
|4. Attract new customers||Use Out of category keywords & send users from external sources to Amazon|
Step 2: Develop robust campaign structure
One of the best ways to increase visibility and ROI on Amazon is to find and use the right keywords in the best way. A typical account that has been around for a while will be filled with manual campaigns and a mix of brand and non-brand keywords. Our audits tend to show most are overpopulated with low-performing keywords.
There is a way to clean up campaigns and replace those low-value keywords with high-performing ones — having a solid campaign account structure.
A solid account structure, enables you to:
- Leverage New Auto Campaigns: Auto campaigns are the kick-off point for your PPC strategy. You use auto campaigns to let Amazon generate keywords which you then refine with more focused manual campaigns, a process known as search term optimization.
- Search Term Harvesting: Add new keywords or new negative keywords to better match your campaigns to your customers' intent, another key element of search term optimization.
- ASIN Discoverability: Check that your keywords and bids are giving your products the visibility they need.
- Negative Keyword Opportunities: Use negative keywords to reduce unnecessary spend and raise product rankings.
Step 3: Revisit targeting
Using the new manual targeting capabilities on Amazon, announced in August 2019, you can fine-tune your PPC campaigns to target categories, brands, and ASINs. You also have new ways to refine your automatic campaigns.
There are a range of strategies to exploit: Category Targeting, Brand Targeting, and ASIN Targeting. To approach this effectively, you need to go back to your goals and make sure they are aligned with the targeting strategy you choose. Some strategies can be applied to any type of product; others are very product-type specific.
Product ASIN Targeting presents interesting opportunities for advertisers on Amazon, again with a number of strategic possibilities available. For example, you can use ASIN targeting when your product is comparable to another but cheaper. Targeting complementary goods is also another way to effectively use ASIN targeting ads.
The Category Targeting feature enables you to target your own product categories on Amazon. This can be very useful for the following product types:
Generic products that do not have very specific (“long-tail”) keywords to optimize for, as generic keywords are usually relatively expensive.
For new products that are currently not being searched. It was very difficult to sell items on Amazon that did not have a high-volume keyword search; this may now change with the new Product Targeting features.
You can also use category refinements to target high traffic brands using Amazon Brand Targeting. You can identify competitor brands that are spending heavily on Sponsored Brands and will have traffic coming their way as a result. You can then target these brands using the “further category” refinements.
Step 4: Balance your spend — offense vs defense
You need a clear offensive and defensive strategy in place, and a solid understanding of your goals for each. For example, a good defensive strategy might involve spending against your branded search terms to prevent competitors from targeting your listing. Conversely, you could target your competitor’s brand. But don’t forget that Amazon has a massive non-branded search volume which is your opportunity as an advertiser to acquire new sales.
A good rule of thumb is to allocate around 40% of your budget to defense (targeting keywords directly related to your brand), and about 40% to pursuing keywords you would like to own, including competing brands. The remaining 20% can then be reserved for harvesting or testing.
Amazon advertising also has a double benefit of being able to improve organic rankings on search terms. Sales have a direct influence on a product’s organic ranking. Therefore, more sales generated via PPC ads will have a positive effect on a product’s organic ranking.
Focusing on metrics like conversion rate instead of ACoS can be an effective way to concentrate your ad spend on improving organic visibility and thus overall sales.
Ad display on Amazon is based on relevancy — so make your organic and ad keywords match. Amazon only shows your PPC campaign ad if it’s relevant to the search term of a customer. PPC campaigns can therefore only work if a product listing was first optimized for relevant keywords.
Always on means you are maintaining a consistent presence. Amazon now reserves most of the space at the top of the page on the first search results page for paid placements. Always on means you increase your chance of consistently being there. It may capture demand you never thought of. But basically, an always on approach to campaigns will keep your brand top of mind especially as customers tend to buy at all hours of the day and night.
Step 5: Think long-term
As an Amazon Seller or Vendor, Customer Lifetime Value (CLV) is especially important. The value of Amazon to ecommerce and retail more generally has resulted in significant investment in analytics tools by third-party vendors. By pulling transactional data from Amazon MWS and deploying advanced machine learning and AI algorithms, advanced Amazon analytics software can calculate robust CLV estimated based on customer persona and projected ‘buying trajectories’. This estimates the total lifetime value of a customer based on the product they buy — giving you a far longer-term picture of the value of making a sale.
Amazon is famous for its sales completion — far outstripping any other e-commerce platform. The ability to look long-term introduces some interesting strategies. For example, taking short-term losses to expand market domination and gain long-term growth. It also improves your ability to use ads further up the funnel, investing in awareness strategies that drive up total advertising costs in exchange for long-term gain.
Desire for more advertising opportunities has already begun to be reflected in the types of ads Amazon now makes available. The better your analytics, the more effectively you will be able to exercise these new features, including:
Amazon Posts, in beta, lets brands curate a shoppable feed of products that link to product detail pages. And Amazon Follow lets customers who have expressed interest in a brand receive updates from them.
Sponsored Display now enables you to separately manage the two default audience segments for views campaigns: those who viewed your advertised products (product views) and those who viewed similar products (similar product views). You can monitor performance and manage bids separately for each segment.
“Stores” is a multi-page, immersive shopping experience on Amazon that allows you to showcase your brand and products. Creating a Store is free and doesn't require any web development skills. Stores is available for sellers enrolled in the Amazon Brand Registry, vendors, and agencies. You do not need to advertise on Amazon to create a Store.
From market to basket
Proper usage of Amazon Advertising requires that you distribute your marketing budget in a target-oriented way. Your goals will determine in which phase of the sales funnel to invest. What you do need is constant monitoring and a review of both your high-level goals (market) and sales success (basket).
To maintain this balance, a regular audit is recommended. Although blowing our own trumpet — our audit service can improve your Amazon ad performance immediately with an in-depth report revealing wasted ad spend, missed revenue opportunities and best keyword practices — and its free. Worth a look.
To audit your campaign, we deploy purpose-built analytics tools, the same kinds of tools that deliver robust CLV calculations, along with buying trajectories. Ultimately, getting this type of perspective is what will allow you to formulate a wider bidding strategy and ACoS benchmark for different products and for customers at different stages of the sales cycle. Understanding your customer will give you a competitive advantage and enable the optimized decision-making required to deliver the Amazon advertising results you need.