In 2018, Amazon affirmed its position as an advertising giant, ranking as the third largest ad platform in the U.S. behind Facebook and Google. With advertising revenues of over $10B, more brands, both large and small, are smartly sinking their ad dollars into Amazon advertising.
So, what does this mean to you as a seller?
Well, more advertisers = more demand = higher CPC (cost per click).
When CPC increases, so does your ACoS (Advertising Cost of Sale). As the trend to spend more ad dollars on Amazon’s platform continues to be on the upswing, lowering your ACoS, even when you’re encountering higher demand, may seem like a tall order to fill, literally. Our team of Amazon advertising wizards has put together these tips to help you understand how to lower your Amazon advertising ACoS and keep profits high.
1) Use Negative Keywords
To keep your ACoS low, you’ll want to invest in negative keywords to prevent your ads from showing when you don’t want them to. Amazon advertising allows you to “block” ads from showing in specific searches through the use of negative keywords.
If used in the right way, negative keywords can save money on your budget and increase conversions by making your ads more likely to appear for qualified consumers. You’ll be paying for clicks on your ads from buyers who have a particular interest in products like yours, better utilizing your dollars spent.
Because you may not know exactly which negative keywords are going to trigger impressions, you can build your negative keyword list as you move through the advertising process. Check your keyword search report from time to time to find more keywords that should be blocked.
Tips for finding negative keywords before you’ve launched your ad campaign:
Use tools like Google Planner, keyword.io, Virtual Launch, and Jungle Scout to create a list of keywords you want to block first.
Look for search terms that are not applicable to the ASIN or set of ASINs you are advertising for in that campaign.
Example Item: Travel Makeup Bag
Negative Keywords: backpack, suitcase, purse
Tips for finding negative keywords in existing campaigns:
Double up by creating an auto-targeting campaign and a manual targeting campaign with broad and/or phrase match keywords.
Once your ads have gotten enough clicks, download your search term query report and filter by terms that have over 15 clicks and zero orders.
Add these into your campaign as negative keywords.
Once you’ve honed in on the perfect set of keywords, check back from time to time so you can stay ahead of any changes with shoppers, competition, and the market. Check out this article for more on Amazon Advertising Keyword Tips.
2) Review Campaigns Often
In addition to examining your keyword data, you’ll want to check in on, and make adjustments to, your overall ad campaigns often. Your competition, shopper search behavior, and consumer needs change over time. Each campaign and ad needs to be reviewed frequently to make sure that shoppers are being directed to your products appropriately.
As a seller, you never know when a new competitor will come into the marketplace, outbidding you on keywords and driving shoppers away from your page. You’ll need to consistently assess which keywords are the most valuable to your profits, recognizing that you may need to add to your ad budget or allocate costs differently, even if only as a temporary measure.
Likewise, shopper behavior tends to change over time with new items entering the marketplace. Your products may need to have new keywords added based on popular search trends. Adding to your match types and long tail keywords can ensure that you’re spending your ad dollars on the keywords that are driving customer clicks to your products while allowing you to filter out the ones that aren’t worth the ad money. By regularly reviewing and updating your Sponsored Product ads, you’ll enhance how you spend your budget and boost ad exposure, increasing your orders.
3. Reduce Your Reliance on Auto Campaigns
With automatic targeting campaigns, Amazon targets ads to all relevant customer searches based on your product information. This includes category, product description, and related products. Your ad will be eligible to be shown in the keyword search results if your product closely or loosely matches similar search results from shoppers. One benefit of using automatic campaigns is that you can discover long tail keywords you otherwise never would have thought of. Automatic campaigns can be very advantageous when you first launch a new product.
Once you’ve got a handle on which keywords are bringing you sales and which are costing you unnecessary clicks, you can piggyback off of what your search term query report says and switch over to a manual ad campaign. Now that you know exactly what shoppers are searching for and how they’re getting to your products, you’ve taken advantage of both types of campaigns to optimize your ACoS by getting clicks for the right keywords, both positive and negative.
4. Move Top Performers to a Single Product Ad Group (SPAG)
Single Product Ad Groups (SPAGs) are fairly simple; they’re ad groups within your ad campaign that contain only one product. Ideally, SPAGs allow you to have more control over and better performance from your shopping campaigns. You can ensure your products appear in relevant searches and that the bids connected to each of your products send shoppers to you for the right keywords.
Also called “carve outs,” SPAGs are a way to move your top-performing products into their own campaigns to ensure that you’re focused on the products that are making you money. Your bid spend budget will be optimized because you won’t be bidding more for keywords than what your product is worth and you’ll drive more relevant traffic to your merchandise. Implementing a small number of top-performing SPAGs within your other ad campaigns is a great strategy to augment your sales in a manageable way. Find out more about the different campaign options here.
5. Split Your Auto Campaign into Two Campaigns
All auto campaigns on Amazon have targeting options for automatic targeting groups: substitutions, loose match, complements, and close match. It’s easy to play around with these features to determine which are getting you the most clicks on your keywords. However, if you really want to drill down your data to figure out the keywords that can keep your ACoS low, consider splitting your automatic campaigns into two individual campaigns for the same product.
By setting one ad campaign for close and loose match and another for substitutions and complements, you’re better able to control dynamic bidding by selecting the exact keywords that are driving clicks to your products. Additionally, dividing up your campaign will enable you to also identify which negative keywords to include so your average CPC is also lowered, allowing you to spend ad dollars efficiently. Once you’ve got the right combination of keywords and your bid spend is on-target, you can combine the product campaigns back into one super-effective ad campaign.
6. Run a Sponsored Brands Campaign
It can be easy to overlook the idea of running a campaign for your overall brand, but this strategy can actually lower your ACoS. Instead of constantly paying the CPC for each individual ad, you can draw shoppers to your Store through a Sponsored Brands ad.
These ads, which feature your brand logo, a custom headline, and up to three of your products, appear in search results for the keywords you bid on and help to generate recognition for your brand and product portfolio. You can implement custom messaging to help consumers see your brand the way you want it to be seen. Eventually, this approach can lead to the selection of your brand as an Amazon’s Choice brand.
Shoppers typically have to do more than one search to get to the item they’re looking for, especially when they’re seeking related items from the same brand. By allowing shoppers to click on your brand and then be taken to your Store, you can have all of your products in one place, making it simpler for them to shop around. This means you’re paying less CPC because they’ve already arrived at a one-stop-shop, removing the series of clicks they would otherwise perform to see all of your products. You won’t be paying out as often for individual clicks on ads for each item; instead, paying for the Sponsored Brands ad campaign is a great option to lower your ACoS.
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7. Target Products
Product targeting allows you to choose specific products, categories, brands, or other product features that are similar to the product in your ad. Use this strategy to help shoppers find your product when browsing detail pages and categories, or when searching products on Amazon. When it comes to targeting, there are four different match types for keywords: broad match, broad match modifier, phrase match, and exact match. For more on keyword targeting, visit our article Fourteen Amazon Advertising Tips to Jump Start Your Sales.
The key is to use a combination of these match type options to reach buyers with the highest level of purchasing potential. Initially, by using broad match type, you’ll be able to draw in the maximum number of consumers possible. You can then move on to narrowing down your keywords to bring in the right kinds of shoppers.
Exact match is a double-edged sword in advertising. It is the most limiting because you will only connect with customers who search for an exact keyword, but you’ll be able to narrow down your targeted shoppers. This match type allows for misspellings and plurals, but will not separate or add to your keywords.
Broad match is the least-targeted match type, but it can be useful in driving traffic to your products and discovering new valuable keywords. For a broad match, you add words in the front, middle, and/or end of your keywords. For example, if your keyword is packing cubes, then your ads can show up in searches such as large packing cubes, black packing cubes, or packing cubes for travel.
In addition to broad match, phrase match allows you to narrow the searches that retrieve your ads. Words are typically added in front of or after your keywords, and they can include misspellings or plurals. Using our example of packing cubes, your ads can appear for searches such as washable packing cubes or packing cubes for kids, but the words in your keyword will not be separated.
Once you’ve figured out the magical combination of keywords, negative keywords, and long-tail keywords that drive the right customers to the right products, you’ll be able to use your bids more efficiently, only choosing the ones that are resulting in conversions. Once you’re using your ad dollars to maximize sales by targeting products to the right shoppers, your ACoS will go down and profits will go up!