Amazon PPC Marketing – Technically Optimize Your Campaigns Structure
Amazon PPC marketing, in the past couple of years, has been developed into a powerful digital advertising channel. Amazon Pay-Per-Click is an advertising model in which marketers pay to Amazon to reach the shoppers interested in their brand and products. Nearly identical to Google Adwords, you pay a fee to Amazon when a customer clicks on your sponsored ads.
Amazon sponsored ads enable the sellers to ‘buy’ online visibility to their brand, products and services – atop Amazon’s search results page. However, leveraging the PPC potential of this marketing platform demands you to have a well-rounded PPC strategy in place to achieve your business goals.
In this blog to Amazon PPC, you will learn about maximizing ad results with technical optimization.
For setting up a new campaign, you must know how it should be structured.
Here’s a few questions you need to ask yourself before stepping into campaign setup and management.
- Do you adjust your campaigns’ daily budget to manage your sales or adSpend?
- Do you have ad groups containing different products – more than one specific product?
- Do you run campaigns with different match types – broad, phrase, exact?
If the answer to any of these questions is yes, the possibilities are higher that you are doing something wrong. Simply put, there is a room for improvement in campaign performance.
And, to fix it for the all-out benefits, knowing the basics becomes mandatory.
PPC management made easy for the Amazon advertisers seeking ACoS as low as 5%.
Following entities if you comprehend well actually make your campaign structure pretty straightforward.
Here’s the 6 attributes you should know and understand in detail.
- Ad groups
- Product ads
- Negative keywords
- Campaign negative keywords
Let’s begin with layering your Amazon PPC advertisement.
Campaigns – Your 1st Layer Entity
This efficient frontier helps maximize profitability for a given number of sales or respectively given a certain profitability we are maximizing sales.
How do we do that?
By scaling profitable keywords up and no-profitable keywords down.
As a consequence, you have to scale profitable products up and no-profitable products down
This can be managed by applying the Bid Management Formula (BMF).
Bid = Acos x sales ÷ clicks
(ACoS = ad spend ÷ sales)
(Sales = conversions x average basket)
(Average basket = total units sold ÷ number of invoices)
Note: Average basket size refers to the number of items getting sold in a single purchase.
Here’s more versions to BMF depending on which factors you are counting on.
Bid = Acos x conversions x avg. basket ÷ clicks
(conversions = clicks x conversion rate)
Bid = Acos x clicks x CR x avg. basket ÷ clicks
Bid = Acos x CR x avg. basket
Now, as you can control the average basket your primary risk is CR (conversion rate).
To mitigate this risk, we can reduce our daily budget but this would limit our maximum reach and thereby our maximum sales as well.
Remember, the only function of the daily budget is to provide a safety net.
Pro Tip: Don’t activate the premium bid adjustment if you are applying the bid management formula.
Here, you should know what is default bid?
BMF requires data on the sales and clicks the keyword generates. If you don’t have that data or sufficient data you cannot apply BMF and that’s why you need a default bid.
The higher you set your default bid, the more traffic and consequently sales you will generate. However, your average CPC will be higher as well and consequently your ACoS will be higher and your profitability will be lower.
Ad Groups & Campaign Negative Keywords – Your 2nd Layer Entities
Ad group service status has a few additional values compared to campaign service status that significantly helps you in identifying the configuration errors.
For the reason that an ad group can be accessed even when the parent campaign is paused.
Pro Tip: Its advantageous to have one product for an ad group
Next to ad groups comes campaign negative keywords.
You can reap the benefits of effectively using campaign negative keywords in your PPC advertising by knowing how to rightly put them to work.
By comparing Negative Keywords and Campaign Negative Keywords, the only difference you will find is that the later don’t have an ad group ID which means campaign negative keywords will affect all the ad groups associated to a given campaign.
Pro Tip: Don’t use campaign negative keywords when a lot of different products are associated with a campaign.
Product Ads, Keywords & Negative Keywords – Your 3rd Layer Entities
Let’s start with the product ad that’s simply your advertised product.
In this first entity on the third layer, SKU of an advertised product is the most important property because the API used considers it as a primary product identifier.
You can connect multiple SKUs to the same ASIN (Amazon Standard Identification Number of a product to be advertised).
By comparing product ad servicing status and ad group servicing status, the former has additional values – advert post and ad group archives that, again, helps identify configuration errors.
Keywords are the second entity on the third layer.
The most important thing at this stage is Match Type Property – it can be broad, phrase, or exact
The following scenarios will help you better understand this phenomenon and how your ads will be shown against the search queries of your target audience.
Keyword = Coffee & Match Type = Exact 🡪 Your ad will only be shown when someone searches just for the word “sneakers”
Keyword = Coffee & Match Type = Phrase 🡪 Your ad could also generate impressions when someone searches for “chocolate coffee” or “coffee maker”
Keyword = Coffee & Match Type = Broad 🡪 Your ad could also generate impressions when someone searches for synonyms like “brewed cappuccino” or “classic espresso”
From here, you can easily conclude that a broad match keyword can bring you 100% reach, then the exact match keyword that typically generates nearly a half of it.
Exact match will not work even if your portfolio doesn’t contain a lot of products. To solve this issue and reduce the overlaps, the best way out is to exclude the non-relevant search queries. For this, you can use negative keywords.
Pro Tip: Use broad match plus negative keywords strategy to maximize your expected reach while reducing the likelihoods of overlaps and non-relevant search queries consuming your budget.
A Popular Myth You Better Know!
People often say that an exact match is cheaper than the broad match type, but that’s not so true.
It’s very important to differentiate between search queries and keywords.
Search Query –> what the customer searches for
Keyword –> what we book
When the match type is exact a keyword only generates matches for a single query but when the match type is broad hundreds or thousands of search queries can be a match as each query has its own KPIs like clicks, cost per click, conversion rate and so on.
The keyword KPI that can be downloaded from the Amazon Seller Central are actually weighted averages of the KPIs of all the search queries.
Hence, you cannot say that exact match keywords strategy is generally cheaper. It actually depends on the KPIs of all the specific search queries associated with your target keyword.
Another Problem You Cannot Ignore Is “Collision”
Let’s say you book a keyword ‘coffee java beans’ with exact match property and keyword ‘coffee’ with broad match property.
If someone searches for ‘coffee java beans’ both keywords may generate a match and in advance you can’t be sure which keyword wins Amazon’s internal option.
Such accidental overlaps will reduce your bid management efficiency.
The perfect solution, to theoretically solve this issue, would be to only book exact match keywords. However, it’s practically not possible because Amazon has a limit of 2 million keywords per account.
Negative keywords are the last entity on the third layer.
Using negative keywords, you can make sure that your product ads are not generating traffic for specific search queries.
Well, you may find a positive match for your defined negative keywords.
For example, if you are selling ‘black coffee for weight loss’ and book keyword ‘coffee’ with broad match you might want to add ‘coffee for beginners’ to your negative keywords.
Negative keyword match type is only;
- Negative exact
- Negative phrase
Note: You can assume that there is no negative broad match type as it would be difficult for you as an advertiser or a seller to predict all the affected search queries. So, the best thing is to only work with negatives exact.
It’s time to set up your campaigns – automated or manual; the choice is yours.
Now, as you have all the information in your hands, you can correctly structure your Amazon PPC Campaigns that are technically optimized to achieve your business goals.
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