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Profitable Amazon PPC Campaigns in Four Simple Steps

Amazon Basics / September 8, 2021

“Spend money to make money.” That’s common business advice that you’ve likely heard or applied while selling on Amazon. Investing in profitable Amazon PPC campaigns is an essential cost of selling on the platform. But after a certain point, increasing ad spend can be counter-productive, undercutting your profits and wasting your resources.

To run successful PPC campaigns on Amazon, you need to continually optimize your bids so your sponsored ads are placed high enough in relevant search results to drive sales without wasting your ad spend.

Whether you’re brand new to the platform or an experienced Amazon advertiser, there are essential optimizations that you should always incorporate. We’ve outlined four simple steps you can take to optimize your PPC campaigns on Amazon.

Decide which PPC campaigns you need to optimize first

The fundamental optimizations we’ll describe here can help you achieve more cost-effective keyword bids for your PPC ads. But any techniques you apply should fit within a larger Amazon advertising strategy.

Sellers should generally aim for an average advertising cost of sales (ACoS) of 15% to 20% across their entire account. Often, sellers mistakenly believe that all their campaigns and keyword ads need to reach that ACoS as well–but trying to achieve that can ultimately be a waste of time and money.

Campaigns and ads targeting certain product categories or highly competitive keywords can have an ACoS that will always be significantly higher or lower than your account average. You need to set reasonable expectations whether you’re optimizing entire campaigns or specific keywords.

Identify which of your ad campaigns have the ACoS furthest from your target account average. Manual optimization can be highly effective but time-consuming, so it’s important to focus your optimization efforts where you’ll get the most cost savings.

Then, you can set time aside weekly to optimize those campaigns and their keyword bids using the next three steps. This approach will allow you to focus your time and attention to adjust campaigns with the most wasted ad spend and steadily increase profit margins across your entire account.

Identify underperforming keywords within your ad groups

Once you’ve determined which campaigns need the most attention, you can start identifying underperforming keywords. Every keyword in an ad group will have its own metrics–you’ll be looking for keywords (with at least 1000 impressions or at least 5 clicks):

  • Relatively few clicks.
  • Low click-through rates (CTR).
  • Few total orders or sales.

Seeing low numbers for a keyword’s clicks or its CTR tells you that customers using related search terms don’t find your product listing relevant to their needs. Depending on your overall optimization strategy, look at metrics from the prior two weeks up to the prior two months.

Sometimes, more recent data will be more relevant, especially as you head into holiday seasons or big events like Prime Day that can dramatically shift your ad performance. Other times, a wider date range (like 60 days) will show you if keywords that underperformed recently have actually been profitable over the life of the campaign.

Reduce wasted ad spend on irrelevant keywords

If a keyword has five or more clicks and zero sales, eliminating that keyword or lowering its bid will cut wasted ad spend, reducing your campaign-level ACoS and increasing your profit margins.

When running keyword research, you may not have time to check whether the Amazon search results for each keyword match your advertised products, especially if you’ve set up campaigns for multiple listings. Weekly optimizations are a great time to catch irrelevant keywords that may have made it into your ad groups.

Potentially irrelevant keywords will have very few clicks, especially once a keyword has generated over 1000 impressions, which means you have enough data to make a decision. Keywords that have generated zero sales and have a CTR below 0.2% aren’t likely to improve in profitability, even if you adjust the bid amount, because your ad is irrelevant to people searching related terms.

Instead of eliminating or pausing these keywords, reduce the bid to 60% of the current cost-per-click (CPC). When you deactivate or remove keywords on Amazon, you no longer have data to track that keyword’s performance–the next time you do keyword research, you’ll likely add that keyword to your campaign again, wasting more money on ineffective ad spend.

Lower ACoS on unprofitable keyword match types

Often, the keywords that you’re bidding aren’t the same as the search terms that show your PPC ads on Amazon, especially if running different types of ads for the same phrase.

For this step, you’ll need to compare ad performance across keyword match types–broad, phrase, and exact match ads. This requires comparing metrics for each ad for a specific keyword phrase, either manually or using tools like Excel pivot tables.

Then, you’ll determine if any ad type is unprofitable for each keyword. Look at data from the past 60 days, focusing on keyword ads that have:

  • Over 1000 impressions
  • An ACoS above your breakeven.
  • A bid amount that’s higher than the current CPC.

For unprofitable keyword match types, reduce bids to 80% to 90% of the current CPC, depending on how aggressively and quickly you want to cut ad spending.

Try Sellozo: A scalable solution for Amazon PPC optimization

Applying these fundamental optimization techniques can dramatically improve your ad performance and lower your ACoS. But as your business grows, handling this work manually will only become more time-consuming and harder to execute properly.

With Sellozo’s automated optimization and campaign management tools, you can make sure that you always run profitable Amazon PPC ads and cut wasted ad spend, while having more time to take care of the rest of your business. Ready to see for yourself? Try the Sellozo platform with our free 14-day trial.

More Helpful Articles:

What is Amazon PPC?

Amazon PPC Optimization: What Is Your Ranking Strategy?

Creating Your Amazon PPC Foundation

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