Last updated on October 1st, 2023 at 02:42 pm
Advertising on Amazon’s platform is a necessary evil.
Sellers loathe paying Amazon more money just to get a sale but without it you just won’t be competitive in the marketplace—simple as that.
I’m assuming if you found this post then you have a general knowledge of how Pay Per Click works (PPC), so I will not go too into the beginner details here. I’m going to break down Amazon PPC optimization and how to get the biggest bang for your buck on advertising on Amazon.
Rather, I will focus on a few specific things to help out the intermediate Amazon seller in need:
- How to do keyword research for your PPC campaigns
- Which campaigns you should be running
- How to download your advertising reports
- What metrics to look at and how to analyze
- How to use that data to optimize campaigns
Table of Contents
A Brief Explanation
One of the most important things to understand before running PPC is your breakeven Advertising Cost of Sales (ACoS). In other words, how much can you spend on advertising before you start losing money on a per sale basis.
We find this first by calculating your profit per unit.
Let’s say you have a landed cost of $5 and sell for $20. Amazon fulfillment and referral fees total about $7. That leaves you $20-$7 = $13 (we’re using rough estimates here so bear with me).
Now we subtract your product landed cost and get $13-$5= $8.
Your profit is roughly $8 per unit or $8/$20 = 40%.
This is before any advertising cost.
Now that we know your profit margin is 40% or $8, we know that you can spend up to $8 in ads before you start losing money.
With this calculation we now know that your BREAKEVEN ACoS is 40%. So any campaign you run needs to be less than 40% in order to be profitable.
How to Find The Right Keywords
Each software has its pros and cons so it comes down to personal choice. Since I already have subscriptions, I typically use all three and cross reference to make sure I’m not leaving anything out.
Create a Master Keyword List
You will want to start crafting a master keyword list by using a variety of the tools above. A combination of reverse ASIN lookups and other keyword search tools should provide you with hundreds, if not, thousands of search terms.
Let’s use Helium 10 as an example and go with a “door draft blocker” (ASIN: B072QDSJKT) for the product.
Here is a product I found that we can use for a reverse ASIN lookup.
I would then go into Helium 10 and enter this ASIN into the Cerebro tool. Below you can see it spits out a long list of keywords and the corresponding rankings that this particular ASIN has for those keywords.
If you were selling a similar product you would also try to rank for these keywords as they are driving most the sales.
You can also gather even more keywords by entering other relevant competitors and repeating this process.
Another useful tool within Helium 10 is the “Magnet” which allows you to lookup any keyword and see the relevant search terms that you may want to target.
I use Helium 10’s Magnet and Cerebro together and export those lists into an Excel spreadsheet to create my “master list”.
At this point you’ll have hundreds or even thousands of keywords. I personally go through and delete anything that I deem irrelevant. Yes, this takes time so you can either outsource to your VA or just suck it up and do it yourself.
What Campaigns Should You Run?
I hear a lot of people ask, “what is better, manual or auto?”
This is kind of a silly question because you should be running BOTH!
Everyone has their own secret sauce on what they like to run but I believe in attacking from ALL angles.
That being said, I typically run 4 separate campaigns for every ASIN:
- Auto – Great for hitting lots of unexpected keywords and gathering initial data from Amazon.
- Manual Exact – Best for keywords that are the MOST relevant to your product and you know will convert well.
- Manual Phrase – Good for both relevant keywords and as many keyword variations that might be relevant to your product. This campaign will help you find new long tail search terms that you might have thought of before.
- Manual Broad – Similar to an Auto campaign, a Broad match campaign will show you the widest variety of keywords that are even remotely relevant to what Amazon thinks your product is about. Good for getting a large range of new keyword ideas—like casting a wide net.
- ASIN Targeting (recently added) – This is a nice little feature Amazon added which allows you to run ads directly on your competitors’ product listings. You can either select a category of products that you want to target or enter in specific ASINs.
This is a rough description on these match types and if you’d like to learn more about the specifics of each and what they do you can do a quick Google search and find plenty of blog posts on that topic.
The biggest mistake I see new sellers make when setting up campaigns is not using enough keywords.
They still leave out a TON of highly relevant and high volume keywords that could be generating sales!
Once you have your list of keywords download them into an excel spreadsheet or copy and paste into a text editor.
Now head to your Amazon Seller Central Advertising Dashboard.
To make this effective, we’re going to create four separate campaigns. For each product you should have one Auto Campaign, Broad Match, Phrase Match, and Exact Match.
Take the keywords from your master list and copy and paste into a new ad group. Each ad group should only belong to one campaign for its respective match type.
For example, Broad Match Campaign will have one Broad Match ad group with all of the keywords you pasted from your keyword report.
This structure makes keeping track of the budgets and bids simple and allows you to see how each campaign performs compared to the others.
Now set the bids and budget. This is going to differ for every market depending on your niche and the competition, but a good rule of thumb is to set the below bids when starting out:
Broad Match: $1.00
Phrase Match: $1.50
Exact Match: $2
Set budgets from $10-$20. Of course, if you want more data faster or are more aggressive in your spend, then increase the budgets to whatever you’re comfortable with.
Let these run at least a week or two. If you notice that some campaigns aren’t spending then there is a good chance your bids are too low.
Go through and adjust your bids up 10% at a time, if necessary. After a few weeks you should now have some data to work with.
How To Download Your Search Term Reports
This step doesn’t need too much explanation but just to be thorough I’ll do a quick walk through of where to get the reports.
Go into your Amazon Seller Central Dashboard and scroll to “Reports.” You’ll then see “Advertising Reports” from the drop down menu. Click on that.
From here, it’s as easy as selecting the report period and clicking on “Create Report.” I usually go back one month as it gives me enough data to make meaningful changes but not too long as to be irrelevant.
And that’s that. Upload that sucker into Excel or Google Docs, whatever suits you best.
What Metrics To Look At
Download your search term reports and sort by 7 day sales. We want to see which search terms are generating sales, if any at all.
If you are generating sales from search terms that aren’t already in your campaigns, make a note to add those in your exact match campaign.
If sales on certain search terms are high but ACoS is also high, make a note of this, which we’ll discuss further down. Conversely, if you are making sales but ACoS is low, take note.
See the image below for a brief example of how you can see which keywords are performing and which you may want to archive or add to the “negative” list.
Next, I will typically sort by spend because I want to see if I am spending a lot on keywords that aren’t converting. Some people ask “how much do you spend on a keyword with no sales before throwing it out?”
For this type of question I don’t have any hard and fast answers but if the spend of a single keyword is nearly 100% of the product cost or more then I assume that it is not going to convert. So if you’re product cost is $20 and you’ve spent $20 on clicks for a single keyword and still haven’t converted, then it’s safe to say that you will not make sales on that keyword.
There is no single way to evaluate a search term report and many people will do what they feel most comfortable with. What’s important is to discard high spend clicks that generate no sales while taking note of keywords that are converting and adding those to additional campaigns and upping bids/budgets.
Additionally, any search terms that you deem completely irrelevant can be added to the “Negative Search Term” list in their corresponding campaigns.
Now Adjust Bids and Optimize
Earlier we took notes of high and low ACoS keywords which we can alter optimize at this step.
A common theme is that an entire campaign will have a high ACoS but specific keywords within the campaign will have a much lower ACoS.
So now we optimize bids. Any keywords that are generating sales but have a high ACoS you need to lower bids. Start by lowering by 10%.
Any keywords with lower ACoS you can raise bids by 10%.
If you have any keywords that are close to your breakeven ACoS you can try lowering slightly, 5-10%.
The goal is to optimize each campaign this way, reducing bids on high ACoS search terms and increasing bids on low ACoS search terms.
If done properly, this will increase sales and lower overall ACoS to a more sustainable level.
As mentioned earlier, PPC is highly dependent on the product and competition. If you’re selling cell phone cases you will struggle to do anything meaningful simply because competition is high and the product cost is so low.
On the other hand, if you’re selling large, expensive industrial equipment, you can probably enjoy less competition and you will have much more wiggle room in your margins to play with advertising spend.
There is no guaranteed methods for success with Amazon PPC and many people get frustrated because of this. However, the fundamentals explained in this email can benefit any seller, new or old.
To Recap our steps:
- Capture all of the relevant keywords using our comprehensive keyword research tool
- Setup four separate campaigns for each match type: Auto, Broad, Phrase, ASIN and Exact
- Let run for one to two weeks at a $10-$20 per day budget
- Download Search Term Reports
- Throw out all irrelevant, low CTR search terms by adding them to your Negative Keyword list in their respective campaigns
- Lower bids on high ACoS search terms and increase bids on Low ACoS search terms (5-10%)
- Continually check back week to week and re-optimize by repeating steps 4 through 6.
- Make $$$
If done correctly, PPC can give you a leg up on the competition, help you rank, and give you insight into what customers are searching for.
Use the tips outlined above to take your PPC game to the next level and achieve new milestones in your Amazon sales.
If you have additional questions or need clarification on any of the steps, please drop a comment below and I’ll do my best to answer any questions.