There is no doubt that advertising on Amazon is on a roll. Amazon is now the third largest advertising platform behind Google and Facebook. Yet, typically, cost per click (CPC) is around 90 cents and the average conversion rate is 13%, compared to 2% to 3% on Google. It can be considered a golden age of PPC (pay per click) advertising on Amazon.
But with more advertising dollars pouring into Amazon, cost per click is on the increase. And with constant changes to the system by Amazon, staying ahead is becoming more of a challenge. The recent introduction of Sponsored Display ads to go alongside Sponsored Products and Sponsored Brand ads is evidence of how PPC is constantly evolving.
How do you become and maintain a position as master of Amazon PPC advertising? The simple answer is: understand what the data is showing you, and have a robust process to do something with that analysis. Let’s break that down into our five steps.
1. Get organized
“To achieve great things, two things are needed; a plan, and not quite enough time.” Leonard Bernstein, composer and conductor
When looking at PPC on Amazon, there are many moving parts to consider, including what reports and data are available, the bidding process, optimizing your product listings, and deciding which products you want to sell. It’s easy to get caught up with a desire to just get going. However, taking some time to sort out your revenue goals, KPIs, product portfolio and marketing objectives will stand you in good stead when making key decisions on your PPC choices.
To address Leonard Bernstein: you must optimize what you are doing with good documentation, dashboards and professional project management, and you have to save time by adopting good systems and processes.
What you should do:
Every six months (at least) review your overall plan — once you have created one.
You should look to answer questions such as:
- Does the plan still make sense?
- Are there new markets/competitors to consider?
- Are new campaigns working as planned?
- Are you doing what you thought you were going to do?
- Are your processes robust?
- Is everything being monitored at the right level of detail and frequency?
- Are your project management systems, dashboards and analysis software optimized to give you the right insights? And what evidence do you have of this?
This is a major review and at least one full day should be set aside to carry it out.
2. Get some structure
When it comes to advertising on Amazon, there are a lot of options — and those options keep changing. It’s worth acknowledging this and building processes and structures that won’t be completely thrown off by Amazon adding new PPC options or features.
The first stage is to look at how you are project managing your PCC. While most PPC activities start simple, usually using journals and diaries to keep everything moving — eventually this process bumps up against problems of scale. The volume of reports, data and new features being added to Amazon advertising adds to this complexity.
Fortunately, there are many project management web tools and processes available that will help manage your PPC operational structure. However, make sure that you deploy these tools to augment your chosen approach — not dictate it. Just because your business has a Microsoft Project license, for example, doesn’t mean you should necessarily use it. Again, if anyone is familiar with waterfall vs agile, they will know that fashion trends stretch far beyond the garment business (to misquote Larry Ellison),
Choose the approach that suits you and your business. For example, while sprint-and-scrum as a methodology may be used in your business — especially if you have any software developers — it’s more suited to rapid development of one-off objectives, rather than the analysis, implementation, monitor and iterative approach that is PPC management. So, fit the method to the need — not the other way around.
What you should do:
If you are not already up-to-speed, you will have to take some time to research project management tools and techniques. These tools keep you organized. You can set-up and monitor campaigns, set to do lists and reminders, and ensure you’re carrying out your regular checks. Even experienced sellers can find themselves forgetting to change bids on campaigns if not prompted regularly.
Packages which fit the bill for PPC activities include: Asana, Trello and Smartsheet. Fortunately, each has a freemium version that you can use to trial and experiment to find the tool that is best for you.
You should also get your data storage in order and label your files properly. This will take some thought, but you should consider labeling reports and files to match your KPIs to make sure you can pull historical data as well as immediate reports.
Once you have set up your processes, you should also consider an external PPC audit of your approach to ensure you are following best practice and making the most of your PPC campaigns.
3. Test your assumptions
A master of Amazon PPC should be considered part artist, part scientist. Good PPC management combines creativity and gut feel with robust systems and methods. Any hunch can be tested and validated by solid processes — and any process will throw up unique insights that can be identified and exploited.
There are many KPIs to consider when managing your PPC campaigns, but the major ones are optimizing bid price, making sure you don’t run out of budget and that ensuring you’re hitting your target ACoS (advertising cost of sale). Underlying this is search term analysis and keyword selection — we will come on to this in the next section.
What you should do:
Even if you are focused on PPC, it’s worth optimizing the organic search elements of your listing. For this, you can use A/B or split testing. But beware, A/B testing on Amazon is not the same as on a regular website. With web traffic, you can alternate which variation a user sees on every single visit. However, Amazon will only provide traffic data for an entire day — so you have to test accordingly.
Due to the delay in getting data from Amazon, A/B testing on Amazon can be considered near impossible, but you can still use it to your advantage by systematically modifying headlines, main product features, descriptions and images. This enables you to better align your keyword approach with your PPC campaigns.
The intensive nature of such testing lends itself to a quarterly approach. But there are other areas you can check on more frequently.
On a daily basis, you should monitor the budget position on your campaigns and review campaigns that are running out of budget — then you can either lower your bids, or consider increasing the budget if your bids are doing well.
Basically, you should be looking for any campaign metrics that are unusual — this is especially true in the early stages of a new campaign to ensure everything is working as expected.
4. Use the data
Your general approach to PPC campaigns on Amazon can be summarized as follows:
- Find profitable keywords that convert to sales
- Migrate converting terms to exact match bidding
- Negate non-converting search terms
- Optimize bids for high and low performing keywords to make sure that you are within your ACoS target
- Repeat or replace
The challenge is to sift through reports with thousands of rows to try to identify new performing keywords — and that may only be for a handful of products. The PPC master uses PPC automation tools to carry out this heavy lifting and make sense of their data.
The right tools will let you review keywords and targeting strategies, expand your list to include synonyms, and use phrase lookups to find undervalued keywords. One just then needs to check search volumes and do reverse ASIN lookups.
A good analytics tool will help you with keyword selection, bidding strategies and optimized product listings. By transferring bidding from “broad match” to “exact match” campaigns, you can focus on your highest converting search terms through an iterative process called Search Term Optimization, that is worth reading about in detail itself.
Customer analytics tools will also shed light on your customers, their buying habits, and give an indication of the lifetime value for key customers and demographics. You can then feed this information into bidding decisions. This can help redefine your ACoS strategy for key products.
A large part of PPC management hinges on understanding data. A solid data review approach will not only make it easier to understand your data and audit your PPC campaigns, but it will also give you more time to take action on those insights and deliver the outcomes you need.
What you should do:
Evaluate analytics tools to see which is right for you. Ensure that the software can support ways to find and identify the high-value search terms and execute more advanced approaches, such as a ‘search term optimization strategy’. Advanced software able to crunch numbers coming from multiple data streams and estimate customer lifetime value relies heavily on AI and machine learning technology. These are assets to look out for if you want to optimize your strategy.
You can also use data and reports provided by Amazon to carry out regular reviews on your campaigns. However, there is added complexity here. It’s worth noting that if you want to look for long-term trends, you need to make sure to export your data. Amazon will only store PPC data for 2 months.
For keyword optimization and bid price management, you can use Amazon-provided data to check how your PPC strategies are progressing. From this data, you can understand what is driving (or impeding) ACoS. Do this by focusing on CVR, CTR and CPC (Conversion-Rate, Click-Through-Rate and Cost-Per-Click) and modify your campaigns accordingly.
Another point worth considering is performance monitoring across multiple regional marketplaces. Analytics software is extremely useful in ensuring you are downloading and using the data from those country reports. It’s far too easy to get fixated on your “home” market and miss country-specific opportunities.
5. Keep an eye on the big picture
The danger with PPC is that everything can appear immediate and “in the moment”. You can easily end up reacting to events rather than anticipating them. One key element in becoming, and staying, a master of PPC is to also look at wider issues affecting your PPC strategy and campaigns.
Over the long-term, analytics tools will start to identify trends. They can provide in-depth insights on repeat purchases and cross-reference persona data and PPC data. You suddenly get an increasingly detailed estimate of how many products different buyer personas are likely to buy — now and in the future.
Deploying machine learning and AI means these predictions can be made with stunning accuracy, and will improve over time. They will become a key element in how you plan your PPC strategy. For example, by integrating customer lifetime-value estimates and cross-selling/upselling strategies into your plan, sponsored brand and sponsored display ads can become a critical tool in building a longer-term customer relationship.
What you need to do:
Use your quarterly review to act just like the customer. Go into Amazon and try to search for your products like a customer would. That way you can see what your competitors are doing. Do you know who they are? Are they using any new tactics or features like Stores or Videos?
You can also set up some automatic targeting campaigns to get a wider view of what is really happening in the marketplace. You may discover new terms that are emerging, which may result in new keywords to bid for or even products to target.
Don’t forget your seasonal events — they come up faster than you think and some elements, such as inventory, may have surprisingly long lead times. Also, make sure you are using last year’s analysis to drive this year’s approach.
Finally, ensure you have a formal review process for Amazon feature enhancements — Amazon moves pretty fast and you can be sure there will be lots of new data and reports coming your way in 2020.
The future of PPC on Amazon
In the next few years, Amazon PPC mastery will get harder rather than easier. We will see more ad types, more complexity and more detailed demographic retargeting options. To keep up with these changes, you’ll have to stay on the cutting edge, make the most of the technology that is being placed before you, and remember to always be planning out and optimizing your PPC campaigns.