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3 Steps To A Profitable Amazon Advertising Campaign

Amazon Basics / October 25, 2021

Fine tuning your keyword bidding strategy is key to developing a profitable Amazon advertising campaign. Automated solutions provide good enough optimization for first-time sellers, but artificial intelligence tends to be narrow in scope by design. An experienced ad specialist can think creatively and make strategic decisions using AI as a tool to take your Amazon PPC ads to the next level.

Sellers run ads to achieve different goals, like increasing visibility, narrowing in on a target audience, and of course, maximizing profits. When you optimize your campaign for profit, your goal is to find and focus on keywords that lead to conversions. Specific keywords that convey purchasing intent are likely to yield good results in your campaigns.

There are infinite nuances to developing a profitable Amazon advertising campaign strategy, but it can be simplified into three actionable steps. The first step is to identify keywords in your campaign that are underperforming. The second step is to exclude irrelevant keywords from your list, and the last step is to optimize your Advertising Cost of Sale, or ACoS.

Step 1: How To Find Underperforming Keywords

When you optimize for profits, there are three likely scenarios for underperforming keywords. For the first, you’ll notice keywords that have a high ACoS.  This means that you are spending a lot of ad dollars to get your product in front of buyers, so your profit margin is very slim.  The second scenario occurs when your ads are getting clicks, but not converting to sales, spending your ad dollars without gain.  The third scenario happens when your ads have high impressions but no clicks.  This means that customers aren’t clicking on your ads at all.

advertising campaign amazon

To find these underperforming keywords, view your campaign’s stats for a period of at least one week. Longer periods, up to two months, are ideal for making more informed decisions, and historical data from months or years past can help you understand patterns in seasonal and social trends. If your keyword table doesn’t have columns for clicks, impressions, sales, and ACoS, be sure to customize it to add them in.

Now you’ll look for keywords with a click-through rate of 0.2% or less. Click-through rate is a statistic that you’ll have to calculate on your own by dividing the number of clicks by the number of impressions. This gives you the percentage of customers who click on your ad when they see it. Sort your keywords by impressions, from most to least, and take note of the following indicators:

  • Keywords for new products with 5 or more clicks and zero sales. This suggests that the keyword is attracting customers from an unrelated niche or otherwise is too competitive for your product.
  • Keywords with several months of data, more than 1,000 impressions, and a click-through rate of 0.15%. These are likely irrelevant to your niche.
  • Keywords with high historical click-through rates that suddenly stopped getting clicks. This may indicate a shift in keyword relevance, like the term “face mask” in 2020.
  • Keywords that are generating sales at a click-through rate of 0.2% or higher, but have a high ACoS.

Step 2: Eliminate Irrelevant Keywords

With your list of underperforming keywords in hand, take a look at the ones that have a low click-through rate with respect to the age of the campaign. If you suspect that a keyword may be irrelevant to your product, you may need to make it more specific. To determine this, try searching the keyword to see what other products show up in the results. If you see a few products on the first page that are similar to yours, try altering the keyword slightly until it becomes clear that you’re in the right niche.

Whether you find a more specific keyword or not, it’s time to decommission your underperforming keywords. Instead of removing them entirely, set the bid for each keyword to less than half of the current cost-per-click, or CPC. This may actually improve your click-through rate, as the few clicks you do get are likely to have low competition, but the real reason to do this is so that Amazon will alert you if you accidentally add this keyword to your list in the future.

Step 3: How To Optimize Your ACoS

When your advertising goal is to maximize profits, a high ACoS is undesirable. This is a sign that you are spending too much on each winning bid for your PPC ads. It’s likely that your bids are competing with campaigns from sellers with a much larger budget, or sellers whose advertising goal is visibility and sales velocity.

Fixing this problem is simply a matter of bringing your bids closer to the cost-per-click for each individual keyword. If a keyword’s ACoS is already close to your target, make smaller changes over time to avoid tanking your product’s visibility. As your bid drops, so will your sales and cost of advertising. As long as your profit increases or remains stable, continue doing this at regular intervals.

When you search your keyword table for entries with high ACoS, use a longer date range like two months if possible. Ignore keywords with fewer than 1,000 impressions as well. ACoS is volatile for new products and not always a reliable indicator that you need to adjust a bid. An ACoS of 30% or lower is a good target for most sellers; yours may vary by your needs.

How Often Should I Review My Keywords?

Keyword maintenance yields diminishing returns by nature. This is a good thing – it means you have a profitable Amazon advertising campaign strategy. Ongoing maintenance or at least surveillance is necessary to keep your campaigns on track. Sales data takes a few days to update on Amazon, so optimize your keywords once per week at most. If you have the budget to test ads for longer periods of time, you’ll make decisions backed by stronger data.

If you need assistance with your Amazon advertising campaign, we can help.  Sellozo.com is a premium advertising platform that can help you automate and optimize ad campaigns.  We also offer a 14 day free trial to help Amazon sellers start their ads campaigns the right way.  Give us a try today!

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