Optimizing your advertising strategy is key to succeeding on Amazon. Many sellers and agencies think increasing their campaign budgets will naturally lead to more ad impressions, clicks, and sales. However, it’s often not that simple. Follow these Amazon advertising optimizations tips to start growing your Amazon business.
If your Amazon PPC ads aren’t competitively placed, bigger campaign budgets won’t drive as many sales as you might expect. Instead, regularly adjusting bid values–higher or lower–can be essential to developing cost-effective campaigns. Learn simple Amazon advertising optimization tips to increase your profit margins and understand the correlation between pay-per-click ad bids and your advertising cost of sale (ACoS).
Why does bid optimization matter?
Amazon sellers often focus on lowering their ACoS–the lower this percentage is across their account, the less their advertising costs are consuming their profits. But how do bid amounts affect your campaign and account ACoS?
When you target specific keywords (or search terms) in a Sponsored Product campaign on Amazon, you have to choose a maximum bid amount. Based on search query relevance and how your bid compares to others in Amazon’s auction-based system, your sponsored ad will get a certain placement in the search results. And you pay the amount you bid for that placement when your ads are clicked.
If your bids are too high or too low, you’ll either be spending too much on advertising relative to your sales or your bids won’t be competitive enough to get a profitable page placement, resulting in a higher ACoS. So, when you’re not seeing the profits you want, you may need to adjust your bid amounts–up or down–instead of wasting money on bigger campaign budgets.
Your Amazon advertising optimization strategy for bids vs campaigns
When optimizing your PPC advertising, you need to look at several different metrics within Amazon’s campaign manager dashboard. Depending on the product category you’re targeting, keywords will have varying levels of competition, so it’s important to understand which metrics are important and why.
Primary metrics for bid optimization on Amazon
First, you need to look at metrics specific to bid performance. The Amazon campaign manager has a lot of metrics to consider, but for this bid optimization strategy, you need to primarily focus on:
- Cost-per-click (CPC)
These will tell you which of your campaigns and keywords bids are profitable, which are relatively expensive, and which need to be optimized. For the optimization strategy we’ll explain here, the most important metric is your ACoS. If you can lower your relative costs for your most expensive keywords, you’ll reduce the ACoS for your entire account.
Secondary metrics for Amazon campaign optimization
Other metrics can provide important context for campaign optimization, but often you don’t want to focus on them when adjusting keyword bids. Your campaign manager also provides data on:
Things like impressions, CTR, and page placement are highly influenced by your bid and the search volume of the keyword you’re targeting. Also, these metrics can only be adjusted at the campaign level. So, use these to provide context about individual keyword goals and to develop brand awareness strategies, but not to directly optimize bids for specific keywords.
How to optimize your Amazon PPC bids manually
Now, we’ll show you a simple method for consistently optimizing your bid amounts. Generally, Amazon sellers and experts agree that an ACoS between 15% and 20% is ideal. But when optimizing specific campaigns, start by making sure all your campaigns reach a 30% ACoS first. Then, once all your campaigns are optimized to that point, you can focus on lowering your account ACoS even further.
Here’s how to optimize your PPC campaigns on Amazon:
- Open your campaign manager and filter your campaign from most to least “Spend” over the last month.
- Open 5 to 10 of your most expensive campaigns based on “Spend” in separate tabs, ignoring any that already meet your ACoS goal of around 30%.
- Next, make sure that your Sponsored Product campaigns don’t have any placement modifiers that will skew the results of your bid adjustments over time.
- Click on your ad group and open the “Targeting” section.
- Now, filter keywords from most to least “ACoS” to optimize your most expensive PPC ads.
- Use the following bid formula to adjust bids for the 5 keywords with the highest ACoS in each campaign that you have open.
First, calculate your maximum spend. Multiply keyword “Sales” times your target ACoS (e.g. 30%).
Then, calculate your maximum bid. Divide each keyword’s maximum spend by its number of clicks.
This will tell you the bid you need to set to hit your target ACoS at your current conversion rate for each keyword. For example, if you were targeting an ACoS of 30% for a keyword with $1,000 in sales and 500 clicks over the last month, your maximum spend would be $300, and your maximum bid would be $0.60.
Significant adjustments to your keyword bids (e.g., from $2.50 to $0.75) can affect your page placement. But although a lower placement can drastically reduce ad impressions, the lower bid competition can lead to higher click-through rates and lower CPC and ACoS, which you can monitor over time. You should regularly optimize your bids to make sure your advertising budget is being maximized.
Optimize, scale, and grow your Amazon business with Sellozo
These Amazon advertising optimization tips are a great start to fine-tuning your bidding strategy. But as your account and business on Amazon grow, handling bid optimization manually can become increasingly time-consuming. Sellozo’s PPC advertising solution–powered by artificial intelligence (AI)–helps Amazon sellers and agencies save time and scale their ad optimization.
Instead of repeatedly adjusting bid and campaign optimization by hand, our AI-driven platform lets you automate your Amazon PPC advertising. You can set ACoS goals per campaign, and the Sellozo platform takes care of adjusting bids to meet those goals, allowing you to sell and run more products and campaigns. Sign up for a free 14-day trial today.
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