Amazon Automatic Campaign Placement

5 Lessons I Learned Spending $100,000 On Amazon PPC Ads Last Year

Note: Listen to this post instead using the audio player below, and consider subscribing on your favorite podcast player!
[spp-player optin=”off” ctabuttons=”on” poweredby=”off” url=”http://api.goshortwave.com/shows/OVS74gI6VsijB2Ri/episodes/s2ZvUe2LVSKWN0ijrNTdm3A6MpMLB9KE/play.mp3″]

Having spent over $100,000 in Amazon pay-per-click ads in 2019 across of hundreds of campaigns, I’ve learned a lot of lessons that wouldn’t have been obvious at the beginning.

Relatively speaking, Amazon PPC is still a relatively new platform, and it is constantly evolving. New tools and advertising strategies are coming out all the time, and there isn’t as much known about the platform vs something like Adwords or Facebook ads.

Therefore, I wanted to release this post to share all of my key findings over the last year.

Let’s look over some key Amazon pay-per-click strategies that have been helping me to reduce ACoS and make more sales on Amazon!

1. Amazon PPC Converts Very Well

Amazon PPC Sample Campaign
A small, sample campaign

Relatively speaking, Amazon PPC will offer some of the best bang-for-your-buck when it comes to advertising products on Amazon.

While I always recommend focusing the majority of your marketing efforts towards your own website, Amazon PPC is one of the cheapest ways to gain exposure to your Amazon products specifically. And because Amazon shoppers are already much closer to making a purchase, they’re far more likely to convert as well.

Although ACoS (advertising cost of sale) has risen steadily as more advertisers have jumped on the platform, it’s still likely to be one of your more profitable channels, as shoppers are already in the buying state of mind.

This is especially true if you target keywords that are specific and long-tail. A keyword like ‘women’s dress’ is going to lead to shoppers that are simply browsing, whereas a keyword like ‘women’s blue dress with lace’ not only has much less competition, but targets people who have already made up their mind about what they want.

Ideally, you will maximize clicks to customers that are as close to converting as possible. This means that you avoid wasting money on terms people use to ‘browse’ or ‘window shop’, and instead focus on keywords that indicate immediate purchase intent.

2. It’s Sometimes Worth Running Ad Campaigns At A Loss

This doesn’t seem like it would make sense – the entire point of an ad campaign is to make a profit with it, isn’t it?

Unfortunately, it’s not always so simple.

Despite having my ads viewed almost 100 million times in 2019, the overwhelming majority of my sales came from free, organic placements in Amazon’s search engine.

In order for Amazon products to rank, they typically need to have sales in the first place. Amazon uses sales velocity and conversion rate among a number of other factors to determine where to place products for a given keyword.

In order to get your products to rank on page 1, it’s very likely that you will need to run pay-per-click ads – even at a loss, in order for your products to make it.

In an ideal scenario, your product page will convert well enough to maintain its position, even if you turn advertising off. In other cases, continuing (at least some) advertising is required in order to stay on page 1, and continue making those organic sales.

Ultimately, the increase in free, organic sales make up for the fact that the the ads themselves are technically running at a loss.

3. Be Careful With Automatic Campaigns

While the majority of my Amazon advertising campaigns are manual, I have experimented with their automatic campaigns as well.

My results have been very mixed.

In my experience, the higher the search volume for your type of product, the more effective automatic campaigns can be. There are more keywords for Amazon to actually target, and they’re more likely to be relevant.

These can burn through money quickly before they become profitable, but it is much easier to identify profitable keywords and block ads from showing on keywords that lose money.

If you are selling more niche products however, automatic campaigns will likely bid on terms that aren’t relevant enough to convert well.

For example, if I was selling a football themed cotton t-shirt, Amazon’s automatic campaigns were likely to bid on terms such as ‘cotton t-shirt’ – which means our product was showing up for searches that weren’t relevant to 99% of people.

Amazon Automatic Campaign Placement
Here we can see two advertisers getting a product placed for the keyword ‘white cotton shirt’ despite the fact that 99% of people aren’t interested in the topics on these shirts.

When running an automatic campaign, it’s vital that you’re actively monitoring the keywords you’re being placed for (as well as the ASINs that Amazon places your ad on), and that you actively move irrelevant / non-converting keywords to your negative keywords list.

Otherwise, it’s possible to blow through a large budget without getting much in return for it.

4. Automation Is Key

If you’re running a large number of campaigns, I cannot stress enough how important it is to begin automating some of your routine tasks.

These automations do not have to be particularly complex.

For example, if you can see based on existing organic sales that your product converts at an average of 10%, you can create an automation to automatically move a keyword to negative (or drastically reduce its bid) if it goes 30 clicks without receiving an order.

At the same time, if a keyword is performing particularly well, you may want to automatically increase the bid for it to ensure you appear in the number one spot more frequently.

ACoS can change very quickly. Even something as simple as a new competitor entering or leaving the market can dramatically affect your ACoS for the month, as can Amazon suddenly deciding they’re going to start (or stop) showing your ads for a given keyword.

Automation allows you to stay on top of it all, without room for human error.

Personally, I use Sellics to handle my Amazon PPC automation. It comes with a suite of other tools too, which makes it a pretty good value if you’re spending a good amount of money on Amazon PPC each month.

5. Continuously Optimize Your Listing

Success with Amazon PPC is not only about lowering your cost-per-click, or even finding keywords that convert well.

Remember that Amazon’s goal with pay-per-click is to make the most amount of money possible per placement. This does not only include the cost from the clicks themselves, but also the money they make when the product actually sells.

Amazon wants your product to sell, because they make additional money when it does. Both from the referral fee (on all orders), as well as their fulfillment fee if utilizing FBA.

However, if your product doesn’t convert well, then you’ll be charged higher bids to make up for it.

A few ways to optimize your listing include…

  • Writing better bullet points.
  • Improving copywriting in the product’s description.
  • Adding new / better images showcasing your product.
  • Split-testing titles.
  • Split-testing prices. Believe it or not, one of my products saw a 11% increase in total profit by lowering price from $19.99 to $19.95! This adds up to thousands of dollars over the course of a year.

Increasing conversions on your listings has a number of key benefits.

  1. Amazon will place your product in higher ad positions, at a lower cost-per-click. This reduces your advertising cost, and forces competitors to bid even higher to reach the same spot.
  2. Your listing converts better. More people that click will become buyers, further lowering your advertising cost of sale.
  3. Because your product converts better, it will move up in Amazon’s search results pages, leading to an increased volume of free, organic sales.

Although I believe it to be overpriced for what it does, Splitly.com is probably the best split-testing tool for Amazon listings at the moment, and it’s what I’m using for my most important tests.

Conclusion

As sellers, it’s important that we embrace the tools that are available to us.

Despite the fact that it cuts even further into our margins, Amazon PPC can be a very effective way to generate the awareness and eyeballs onto your listing, giving it the sales volume it needs to make it to Amazon’s first page.

I hope that this article has been helpful for you. I’d love to hear more about your experiences with Amazon PPC, and the lessons you’ve learned as well. I’m sure we can all benefit from hearing what you have to say.

Finally, for more eCommerce tips, be sure to sign up to my mailing list – I only share information I truly believe to be valuable, and it would be wonderful to have you as one of my subscribers.

To your success,

– James McAllister


Comments

15 responses to “5 Lessons I Learned Spending $100,000 On Amazon PPC Ads Last Year”

  1. Wow! You really spent $100,000 on Amazon PPC Ads? That is massive budget for real for an amazon fba business.

    1. Hey Hopeton, that’s right! Actually the big problem I’m having right now is that there just isn’t enough search volume for my product lines to scale it any further at the moment – looking forward to seeing how Amazon’s ad platform continues to grow this year!

  2. Thanks for sharing your experience.

    I am enlighted to discover about the use of automation from you.

    You explained very clearly the importance of this especially when you have a large inventory.

    1. Hey Tekkaus, no kidding! When you’re managing this many campaigns, you either need to pay somebody to manage them manually, or at the very least knock the bulk of the work out with automation. Even with manual management, automating a lot of the basic things can save a lot of time. These tools have been incredibly valuable for me!

      1. Appreciate your reply.

        I agree that automation will free up your precious time and let you do more with it and in turn you can free yourself to do even more profit-making actions.

        Brilliant!

  3. Eddy Abasiada Avatar
    Eddy Abasiada

    Wow the amount you spent on PPC is huge. I get scared of running ads at times because of the fear of loosing my money

    1. Hey Eddy, thanks for stopping by!

      It does seem like a lot of money, but when I first started Amazon PPC I really didn’t put that much into it. Even with new campaigns I usually know within the first $100 whether or not it will run profitably, and adjustments can be made to further reduce wasted ad spend. Additionally, with automation you can quickly kill or reduce spend for ads that aren’t performing well, so the downside risk is pretty minimal.

      For as much as I’ve spent, I’ve made a lot more in direct sales, not to mention the benefits of ranking higher in Amazon search organically because of the ads. So, it’s definitely been worth it. I’d spend $10 million if I could, there just isn’t enough demand for my products to spend that much hahaha

  4. HI James

    Really nice insight from someone playing big in the ecom game.

    I like that you point out the benefit to running ads at a loss (occasionally) … it’s called “investment”… and it’s something many cannot afford to do, but others are just too scared to do.

    Good instruction here.

    -Donna

    1. Hey Donna, it’s good to hear from you! How have you been?

      Very well said and this is true outside of Amazon PPC as well. Far too many people expect Facebook ads (for example) to be ROI positive from the beginning. If they can’t get an ad to be profitable straight away, they just assume their market is too expensive or they’re doing something wrong.

      On Amazon, it’s easier because you don’t have to worry about ad creative – only keyword targeting. On Facebook, it may take 10 tests to know what headline, image, ad placements, targeting etc. actually work best – meanwhile, you may already have lost quite a bit of money to figure that out.

      Things get even more complicated when you have to manage multiple campaigns. I have ran Pinterest ads in the past for example that were unprofitable on their own, but quite profitable when combined with Facebook retargeting.

      Still, if you’re unwilling to lose money in the beginning, you may never get to the point where you can turn the campaign profitable! As you say, it’s an investment.

  5. Lawrence Westfall Avatar
    Lawrence Westfall

    With all the organic traffic that Amazon gets, I really don’t see the need to advertise on Amazon’s website. I do quite well selling T-Shirts and Books on Amazon and haven’t spent a dime on advertising. I’ve read too many horror stories.

    1. Hey Lawrence, thanks for stopping by!

      It definitely depends a lot on your market and the level of competition your product has on their marketplace. Some products can still gain natural visibility straight after their launch, but those products are becoming fewer and fewer as more sellers continue to flood the platform. Even with a lot of search demand, unless you show up on page 1 – preferably towards the top, you simply won’t make any sales.

      An investment into PPC can help a new product get – and hopefully stay there! That’s the way I see it anyway.

  6. With all the organic traffic that Amazon has received, I don’t really see the need to advertise on Amazon’s website. I sell t-shirts and books pretty well on Amazon and don’t spend a penny on advertising. I have read many horror stories.

    1. It definitely depends on the product – most of them are so saturated now, that it’s impossible to be found without first running PPC ads to the product. This assumes you’re launching an entirely new listing of course, rather than selling an existing product that already has traction on Amazon!

  7. sheerbaz Avatar
    sheerbaz

    Really nice insight from someone playing big in the ecom game.

Leave a Reply

Your email address will not be published. Required fields are marked *