Nowadays, Amazon Advertising is a must for an increasing number of sellers. This is due to the ever-increasing competition on the marketplace.
Ads positively impact product page views, transactions and revenue. In general, they’re very effective for a short boost in sales. However, a successful long-term advertising strategy is a completely different thing.
Unfortunately, many sellers don’t understand how advertising on Amazon really works, and can thus lose both paid and organic traffic.
In this article you’ll learn about:
Last Updated on November 3, 2023 by Zeljko Drazovic
In today’s retail market the battle for customer attention is fiercer than ever. The reality is that being first in organic may not mean that much on marketplaces.
As Amazon, eBay and other platforms have increased the prominence of paid ads, the first organic result may not pop up until the middle of the page.
As a result, more and more Amazon sellers need ads.
At the same time, many sellers aren’t familiar with how Amazon Advertising really works. For example, sometimes you must put in more advertising effort, another time products can sell relatively easily with no (excessive) ad spend. It’s important to adjust advertising activities accordingly.
For a well-thought out advertising strategy, you can use ad agencies. The question remains: is it the best return on investment?
The fact is that automated advertising solutions can help you manage your campaigns easily and effectively. Artificial Intelligence and automation can help you save time, spend less money and, above all, sell more on Amazon.
A good understanding of how advertising on specific marketplaces works is essential. Sellers need to advertise the right product and do it well. Otherwise, they’ll spend more money than necessary.
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Amazon Ads help sellers grow their sales, but they also grow Amazon’s revenue. And Amazon loves it.
Amazon Ads help sellers increase:
Amazon PPC campaign types include Sponsored Products, Sponsored Brands and Sponsored Display.
Remember that advertising does not sell your products. It helps you amplify your sales by bringing extra traffic. Thus, your listings should already be well-optimized and bring conversions.
A well-known concept among Amazon advertisers is retail readiness. “Retail-ready” means the seller’s offer (listing + product) is ready to compete against other offers in the niche and it builds trust.
Investing in advertising, no matter how efficiently executed, won’t be worthwhile if products are not retail-ready to drive conversions.
Retail readiness defines the parameters for optimizing listings for conversions, such as:
Metrics will help you evaluate the effectiveness and profitability of your ads. For example, if you already have 20-30 clicks and no sales, it’s a red flag. Higher CPC means higher competition.
Conversion Rate (CR = orders/clicks*100) and the so-called Advertising Cost of Sales (ACoS = ad spend/ad sales*100) are 2 important metrics that should be tracked by every seller.
Sales are always the end goal, but the question remains: at what cost? What is more important for you: sales or profit?
When prioritizing sales over profit, you need to achieve a break-even ACoS (your return only needs to break even with spend). A lower ACoS means you’re making profit. A higher ACoS means you’re losing money.
In the latter case, make sure to prevent wasted spend: reduce your ACoS, e.g. by cutting off traffic coming from irrelevant or unprofitable keywords.
When you start advertising on Amazon and you don’t have too much data about your clients, start with automated campaigns. You should get some reliable stats and insights after 3-4 weeks. When you know what works (keywords, bids, etc.), use this knowledge to set up the right manual campaigns.
Automated campaigns are good for research. Learn what brings conversions and invest in it.
Moreover, use search term reports to learn whether they’re relevant to your product and get rid of non-performing keywords. If you identify a very effective keyword, make sure it’s present in your product listing.
When you’ve collected enough data from your campaigns, now is the time for optimization.
Amazon ad optimization includes optimizing bids/CPC, adding negative targets and transferring targets (keywords, ASINs) from auto to manual campaigns and between manual campaigns. Do it periodically for every product campaign. Allow some time between optimizations to get statistics.
As for bid optimization, here are some basic rules:
Optimization requires ongoing discipline. As already mentioned, you can do everything manually, but be prepared for a significant investment of time and resources. Alternatively, consider an automated advertising tool.
When, over time, paid marketing campaigns reach a plateau in a given market, increasing ad spend/CPCs further to grow traffic can decrease campaign clicks, sales and the overall profitability. What helps to increase profitability are lower CPCs on less competitive markets.
On marketplaces such as Amazon and eBay you can sell on markets with less competition and more sales potential. These are often foreign markets where local online sellers aren’t able to offer specific products or meet the local demand. For example, in Italy many products have to be imported from abroad, e.g. clothes from foreign brands or vehicle parts for cars.
The possibility of satisfying the unmet demand for unique products from overseas is one of the biggest worldwide opportunities for ecommerce retailers.
On international markets, sellers can get the additional visibility to international buyers and the low CPCs on these markets. This can be a huge opportunity for marketplace sellers who want to stand out from their competitors.
Webinterpret’s AI-based ecommerce solution helps sellers leverage ads on different international markets. With access to comprehensive data and vast ecommerce knowledge, we can help sellers tap into their actual sales potential to achieve the best possible ROI.
Don’t wait to use automation to grow your sales right now!
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