Advertising on Amazon is a must for any seller who is serious about gaining or maintaining a strong foothold on the #1 online retailer in the world, but it is especially advantageous for launching a new product or boosting sales on existing listings. Read on below to learn more on what to do and look for during each phase of the Amazon advertising lifecycle.
When you are launching a new product on Amazon, it is critical to hit the ground running by advertising. But before you do, you should make sure your listing is fully optimized. Amazon looks at multiple factors to determine what products should show up for search queries.
If you do nothing when listing a new product, it will likely sit around and gather dust. This is because the product doesn’t have any sales velocity yet and, consequently, Amazon doesn’t deem it relevant to shoppers’ search queries. You have to remember that Amazon always prioritizes the buyer and wants to show them only the products that it thinks they will like. If there is no data to support the new product and its popularity, it likely won’t show up on search pages for any given search term.
In order to be proactive and start driving some sales, you will need to get the flywheel effect going and advertising is one of the easiest levers to pull. You can do this either through sponsored ads on Amazon or through external paid advertising platforms such as Facebook, Google, Pinterest, etc. Ideally, you should begin by advertising on all of them, testing different campaign strategies, and finding which platforms work best for your audience.
For instance, according to Statista, Pinterest’s users are 77% female, meaning that a male-centric product may perform better and have a higher Return on Ad Spend (ROAS) on other platforms. However, 23% of the 300+ million active users are male or unspecified, so you can’t know for sure until you’ve tested.
Whatever type of ad you choose to use, you should remember that the first and most important step is to generate maximum exposure for your product while targeting as many new (and relevant) shoppers as possible. This is when you will want to keep a close eye on impressions, which indicate the number of times a customer sees your ad. Next, you should focus on clicks to make sure your ad is helping to increase detail page views. Amazon considers both of these metrics when ranking products, which is another added bonus from advertising.
The first phase of the advertising life cycle usually lasts about three months and should be considered as an opportunity to test your hypothesis on which keywords, product targets, and audiences are the right fit. You should mainly focus on how to drive maximum traffic to your detail pages while discovering new keywords.
The purpose of the second phase is to drive incremental orders and sales through advertising. Thousands of impressions don’t mean anything if they don’t result in product sales. It becomes less important to generate ample, but mindless, traffic and more important to target the right customers who are likely to purchase your product.
This is also when the click-through-rate (CTR) becomes a focus point. While clicks tell you how many users clicked your ad, CTR takes into account how many impressions the ad has had, giving you a better picture of how well the ad performs. If a keyword has a high CTR, it is eliciting a consistent, positive response from shoppers, which indicates that the product is relevant to their search. However, if the CTR is high but sales are low, it means that the keyword may not be relevant to the product and isn’t meeting the expectations of the user.
It doesn’t make sense to pay for clicks that don’t lead to any conversions. On average, if a keyword has more than seven to ten clicks in Amazon without driving any sales, then the product is likely not a good match. However, the number of clicks to watch for depends on the product price: the higher price points require more clicks. If your keyword is not a good match, you should consider pausing the keyword or adding it as a negative. The goal is to start getting rid of wasted spend on keywords that are irrelevant to the product.
This phase lasts about six months and focuses on improving the conversion rate by matching your product with relevant search terms. It is important to build a sales history around these to increase the organic rank within Amazon.
This is the last phase of the advertising life cycle. The main objective is to drive profitable ad sales. Most advertisers have an advertising cost of sale (ACoS) target. Staying below the ACoS threshold assures that the advertising efforts are driving incremental sales at a rate that is higher than the cost of business.
You also need to consider the cost per click (CPC) and conversion rate of each keyword in order to optimize your campaign appropriately. A keyword could be generating many ad sales at a cost that negates the profit. By lowering your bid you may have to sacrifice some ad sales, but you will be more profitable in the attained sales.
You should prioritize category keywords that are driving the most incremental sales; the CPCs may be a little higher for these but remember that this improves the organic rank. You can then offset the high CPCs with lower ones on keywords that are less important to you. It is important that the overall ACoS of the campaign is below your threshold but other than that, you have room to choose which keywords to bid on and where to use your resources.
Advertising benefit’s are multifaceted; you can collect relevant data for your product while placing it in front of as many shoppers as possible. You can then utilize the data to optimize your product detail page by including high performing keywords, which in turn will help to improve your organic rank.
Amazon advertising, done right, can help you capture and maintain a strong foothold on Amazon. Pattern, on the other hand, can help you capture, maintain, and scale a strong foothold in the global ecommerce market.
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