An Insider’s Perspective: Are Amazon Sponsored Ads Worth It?

Courtney Goudswaard
•
August 2, 2023

🤓 Truth: Amazon’s algorithm provides weight to gross sales velocity, enhancing natural placement in search outcomes.

🤔 Opinion: Striving for high natural product listings on Amazon requires an funding in Amazon promoting.

✅ Proof: With the assistance of the sensible people within the eCommerceFuel (ECF) discussion board, let’s focus on the professionals and cons.

Right here’s a fast snapshot of what we’ll cowl:

Professional: Amazon PPC campaigns improve product visibility

Getting your product seen is the primary hurdle, and Amazon Sponsored adverts assist overcome this by highlighting your product on to an energetic shopping for viewers.

“Amazon is the Google of merchandise. What do I want to purchase, and if I’ve an Amazon account, I decide, I try and by no means give it some thought once more. As a consumer, it couldn’t be higher.” —ECF Member

Leverage peak season gross sales

Adverts carry out finest in peak season like holidays and Prime Day, when visibility competitors and conversion charges soar. Capitalize on these durations by rising advert spend. 

Amazon Prime Day (APD) was an enormous success for this model. 

“On day 1 (of APD), we skilled a 278% enhance in gross sales whereas nonetheless remaining worthwhile.” —ECF Member

And possibly, you don’t want to affix in on the reductions.

“We had related outcomes, about 300% enhance on Day 1 and ~200% on Day 2. We did zero reductions, although.” — ECF Member

Every sale whether or not from Amazon sponsored product adverts or natural gross sales will increase the possibilities of merchandise getting evaluations and improves your product’s natural rating in search outcomes.

That is a part of the key sauce of Amazon website positioning.

“Once we run PPC adverts on Amazon, we’re primarily trying to make use of the PPC as a technique of accelerating our natural search rating in Amazon.” — ECF Member

One ECF member generated $8,197 in gross sales from $459 advert spend—a 1,685% enhance. 

Projecting these outcomes yearly, he anticipates a return of $49,182 from a $2,754 funding in Amazon promoting.

“My motive for posting our current success was to encourage different ECF members to attempt it in the event that they’ve by no means run adverts on Amazon Sponsored Merchandise earlier than. It’s the very best PPC $ we’ve spent.” —ECF Member

His technique? Utilizing MerchantWords for key phrase search, specializing in “actual match sort” key phrases with 1,000 or extra searches, and commonly reviewing top-performing key phrases. 

“The takeaway for me transferring ahead is to do each auto and handbook focusing on campaigns. In any other case, we’re leaving cash on the desk and maybe some natural rating.” —ECF Member

Experiment with completely different promoting applications

Don’t be a type of folks leaving cash on the desk by solely utilizing Sponsored Product Adverts. 

Amazon has a number of marketing campaign sorts to select from.

Joshua Rawe, an Amazon skilled on the ECF discussion board and the Co-Founding father of eSpark, is stunned on the variety of Amazon promoting accounts he’s reviewed that rely solely on Sponsored Product advert campaigns. 

In his opinion, these accounts overlook the potential of Sponsored Model and Sponsored Show adverts, which supply a higher vary of placements and focusing on choices.

Professional: Outperform rivals who’re capitalizing in your potential gross sales

Your rivals might already be bidding on key phrases particularly searched by your potential prospects. This implies your strategic presence with Amazon adverts can assist you seize these gross sales that in any other case may go to your rivals.

“Somebody, immediately, is bidding on your individual key phrases, for people who find themselves particularly looking for your merchandise and getting extra gross sales than you’ll have had in the event you had been utilizing Amazon promoting.” —ECF Member

Utilizing the fitting goal key phrases

In maximizing the effectiveness of your advert campaigns, the fitting key phrase focusing on and the usage of damaging key phrases play an enormous function. 

Detrimental key phrases enhance the efficiency of your adverts by enhancing your click-through-rate (CTR). They make sure that your adverts are displayed solely in response to related searches, decreasing publicity to non-targeted or irrelevant impressions.

This technique focuses on attracting extra viewers, minimizes wasted clicks, and will increase the chance of high-quality, related customers clicking in your adverts.

By eliminating particular phrases and phrases, you acquire higher perception into the search outcomes that work nicely in your adverts. 

Let’s shed some mild on the cons related to Amazon promoting which will affect your resolution.

Con: Managing PPC promoting on Amazon will be time-consuming and expensive

Managing Amazon Sponsored Adverts is a multifaceted activity involving balancing the sources at your disposal, the experience required, and the time it calls for. Contemplating the complexities, the very best method for your enterprise would possibly look completely different to a different. 

Navigating PPC Promoting Manually

Managing PPC adverts manually will be extremely time-consuming, probably diverting consideration from different vital areas of your enterprise.

“I’ve about 145 campaigns at any given time and it takes me about 4-5 hours per week to handle them (I make adjustments to PPC each Thursday morning and document these adjustments).” — ECF Member

Utilizing Automated Software program Options

For companies with quite a few merchandise, managing PPC campaigns manually could also be inefficient. Automated software program options permit companies to scale their PPC promoting efforts whereas releasing up worthwhile time.

“With any software program you’ll have to be in charge of at the very least 1 factor, which is inputting the specified end result. If you need hands-off in any respect prices then you definitely want somebody working it for you.” —ECF member

Suggestion: Perpetua is fairly near hands-off, however it’s essential watch a couple of issues if you wish to maintain spending in verify, at the very least inside the first 30 days.

​​Whereas automation can streamline the method, the prices related to these software program options must be fastidiously thought of to make sure they align along with your total funds. Perpetua begins at $250/month for as much as $5,000 month-to-month advert spend.

Hiring Exterior Experience for Optimizing PPC

Partaking an company or a guide to handle your PPC campaigns comes with its personal prices, and it doesn’t harm to grasp the professionals and cons of outsourcing vs in-house. These professionals cost for his or her experience and time spent in your campaigns. 

Costs range drastically primarily based on the scale and complexity of the campaigns and the company’s or particular person’s status and expertise, however you will be trying on the $1,000-$2,000/month value vary.

Once more, this may be price it, relying in your scenario and targets.

“I like figuring out we’ve somebody who is continually working to get essentially the most out of the spend. Additionally they have instruments they use to research adverts at scale.” —ECF Member

Don’t anticipate success in a single day.

In episode 305 of eCommerceFuel’s podcast, Greg Mercer founder and CEO of Jungle Scout stated to anticipate it to take one-two months to get sufficient visitors and gross sales knowledge to determine what’s working and what isn’t.

Even for business leaders like Easy Fashionable, it took them six years of constant testing and iteration to collect sufficient insights and make a daring, transformative resolution relating to their Amazon promoting technique. 

Read Full Twitter Thread

The co-founder of Easy Fashionable, Bryan Porter, had a change of coronary heart with their Amazon advert spend in 2022. Regardless of being Amazon’s high drinkware provider and investing over $10 million on Amazon adverts since 2016, they lowered their funds to $0.

Some factors to ponder first:

• Easy Fashionable has robust model recognition
• They provide aggressive pricing by way of a low-markup mannequin
• They solely promote within the first-party (1P) market on Amazon

One ECF member agreed with Porter’s method: “I’d moderately have a smaller, reliably worthwhile enterprise than an enormous one hooked on quantity like a drug addict. It’s short-term ache, however I’ve to get off this unending ad-inflation treadmill earlier than it kills us.”

However every part comes with context. After 6 months, Easy Fashionable examined their assumptions with one other million in advert spend, revealing their new technique:

One ECF member examined numerous advert metrics to optimize profitability. 

“We’ve had blended outcomes, and it is dependent upon the merchandise and your objective. For one merchandise, we turned off PPC persistently for Friday-Saturday, our earnings went up, and our rank has stayed robust. In truth, final week, we bought precisely one much less unit in these two days as we did in the identical 2-day span the week earlier than, once we bought 110 models with PPC. An additional $850 in our pockets.”

However, one other member stated a lot of their merchandise out of the blue dropped in rating after turning off adverts.

Growing the funds for a profitable advert marketing campaign initially led to a discount of their natural gross sales and earnings. So, after making changes to decrease it, they achieved a stability the place adverts boosted earnings with out cannibalizing natural gross sales.

“Each product has its equilibrium level; it’s essential take a look at and measure to see the place you find yourself.” — ECF Member

The member additionally plans to experiment with decreasing adverts to 1-2 days per week for high-ranking merchandise.

Takeaway: Not all companies will profit from scaling again or fully eliminating their Amazon advert spend. The choice ought to take into consideration components like model recognition, product pricing technique, and stability between natural and paid gross sales. 

Finally, experimentation and cautious evaluation of the outcomes look like key in figuring out the simplest technique.

Promoting on Amazon is usually a double-edged sword. Over-reliance on paid promoting can create a scenario the place a considerable portion of gross sales is pushed by adverts, which will be dangerous if advert prices rise or if the effectiveness of adverts decreases.

“On the whole, what Amazon has discovered with sponsored adverts is that it’s a particularly efficient manner for sellers to self-select the utmost quantity of margin that they’re prepared to surrender to make the sale.” — ECF Member

Take word: 

• It’s best to by no means spend extra on PPC than what Amazon is paying you. If that’s the case, PPC isn’t the issue…it’s essential have a look at what itemizing optimizations you may make to extend conversion charges. 
• Don’t look solely at promoting value of gross sales (ACOS) — have a look at whole promoting value of gross sales (TACOS). TACOS exhibits you a significantly better image of how your total promoting is doing. TACOS exhibits how a lot promoting is affecting your natural gross sales. However there’s a correlation that the extra you spend on PPC, the extra natural gross sales you’ll get as nicely. And the TACOS provides you that snapshot. 
• Goal for 15-20% TACOS. It exhibits in the event you’re overspending or underspending. You probably have lower than 15%, you’ve got extra room to work on PPC optimization. In case you are at 25-30%, it is best to work on some Amazon website positioning rating methods.

One ECF Member famous a sudden hunch of their main product’s Amazon efficiency. They spent six months implementing numerous methods to attempt to compete. Then, a bombshell dropped. 

By means of anonymized promoting knowledge obtained from an Amazon consultant, they found a heavyweight competitor had entered their area of interest.

“Based mostly on what I’m seeing, I’d be scared to throw advert cash on the drawback, however I additionally really feel like, if we don’t, we’re simply gonna get floor to mud.” —ECF Member

He shared the anonymized adverts knowledge evaluating their model to the highest 4 rivals of their area of interest, asking the ECF discussion board: “How would you react to the info under? What would you do?”

And the advantageous people of ECF weighed in, revealing a lot of issues he may management:

• Promoting Technique: Think about constructing sponsored adverts that focus on competing merchandise. This technique can assist to make sponsored merchandise adverts journey on their visitors coattails and make potential prospects conscious of the product when they’re on the competitor’s web page.

“Conversion and advert administration work hand in hand. So work on conversion charge optimization on these ASINs or proceed to, and examine what these competing merchandise are doing and ensure you are doing all these issues at the very least as nicely or higher.” —ECF Member

• Pricing Technique: Think about elevating the product value to compete on advert spend. The next value may assist soak up the elevated promoting prices whereas including a notion of premium high quality to the product.

“It may be time to contemplate elevating your value so you may return to competing on the spend. I did this with some merchandise, and it was an actual sport changer.” —ECF Member

• Worth Proposition: Spotlight the enterprise’s distinctive promoting factors and strengths, particularly in areas the place rivals fall quick. For instance, improve customer support, present straightforward returns, supply a lifetime guarantee, or emphasize on being a US-based firm.

• Put up-Buy Engagement: Think about post-purchase promoting methods, similar to product inserts, to reinforce buyer expertise and construct model loyalty.

Last Ideas: Amazon Promoting Is Like Having a Mortgage

Regardless of the challenges of time funding, value, and rising competitors, you’ve got lots to achieve by promoting on Amazon. You may considerably enhance your product visibility, amplify gross sales velocity, successfully enhance your natural rating, and strategically outpace your rivals.

This analogy sums it up nicely…

“I used to say that PPC is the brand new lease. Nonetheless, I feel it’s extra akin to being the brand new mortgage. It’s a must to personal that property (PPC) to even reside within the neighborhood (AMZ).” —ECF Member

This implies a shift in notion. Similar to a mortgage implies possession of a property moderately than merely paying for its use, investing in Amazon promoting is seen as a manner of building a extra everlasting and vital presence on Amazon. 

It’s not only a payment to pay however an funding that may yield substantial returns over time.

Need entry to three,000+ discussions of Amazon-related recommendation?

There’s sufficient normal recommendation on the market regarding learn how to method Amazon adverts. Wouldn’t you like having others weigh in in your particular questions and scenario? You’ll discover it within the ECF neighborhood. You may be taught extra concerning the neighborhood or apply to affix immediately.

Put up by Courtney Goudswaard

Courtney Goudswaard is a contract author for eCommerce and associated SaaS manufacturers. She approaches her craft in a journalistic setting, delivering evidence-backed, action-packed, and easy-to-understand content material that retains your readers hooked. Join together with her through www.scribblecontent.com or on Twitter @courtig