Selling products on Amazon is a highly competitive business, but with the right strategies it can also be a highly profitable one. Those strategies are not especially complicated and they can work for pretty much any product out there.
The main strategy we will be looking at right now is Amazon sponsored ads. If you have ever searched Amazon for a product, then you have likely seen these ads at the top of the search results page and distributed throughout the page as well.
The sellers of those products are using Amazon’s pay per click campaign, or PPC. A PPC campaign can help increase product sales due to a higher visibility for those products using specifically targeted keywords. Even though you are paying to have your product advertised, a PPC campaign can still generate a healthy profit. Here is how you get started.
The first thing you need to do is find out what are the most searched keywords for your product, and there are a few ways to do this. Amazon gives you the option to run an automatic PPC campaign, or a manual PPC campaign, for your product. You should start with an automatic campaign first, Amazon will do most of the work for you, including choosing which keywords best suit your product.
Once the automatic campaign has run for a week or two, you can check your advertising report to find out how well your campaign is working so far, but more importantly, to find out which keywords are the most useful. Once you have discovered that information, you can then use the keywords with the highest conversion rates in your manual campaign. Don’t cancel your automatic campaign just yet, though, if you leave it running, it can continue to source good keywords for your manual campaign.
As for that manual campaign, it gives you more customization than the automatic campaign because you can choose your own keywords. Those keywords can be taken from your automatic campaign or from a keyword search tool. Once those keywords have been chosen, you can then use them in three different ways
Broad – Your keyword will activate on any search that includes those words even if they are non-consecutive. For example, if your keyword is “jump rope,” it will activate for search terms like “jump rope for men,” “jump rope for women,” “jump speed rope,” “weighted jump rope,” and so on.
Phrase – The keyword will get activated for any phrase that includes it, so search terms like “jump speed rope” will not be activated.
Exact – Your keyword will only activate when people search for it exactly, so it will not be activated by search phrases like “weighted jump rope” or “jump rope exercises.” Only the term “jump rope” will be activated.
*Note that you can include certain parameters in each type of search, you can allow them to include plural or singular searches (jump rope and jump ropes) as well as misspellings, acronyms, and abbreviations.
Starting Your Manual Campaign
It is a good idea to start three different manual campaigns using one of each of the search categories, with this method, you can discover keywords in one campaign that you can use in another campaign.
For example, if your broad manual campaign finds that the phrase, “one pound weighted jump rope,” is a highly searched term, you can then plug that keyword into your exact match campaign. That specific keyword phrase might be cheaper to buy than the broader keyword and could help you generate more sales while saving you money.
What To Spend on Your Amazon PPC Campaign
With a PPC campaign, you bid for high value keywords and the highest bid shows up in the highest sponsored product position, the second highest bid in the second position, and so on. Once the bidding has been finalized, you don’t actually pay any money unless someone clicks on your ad. Naturally, you want to make more money than you spend on advertising and you can use what Amazon calls the advertising cost of sale (ACoS) to make sure that you are doing so.
Basically, the ACoS is a measurement of how much you make in sales vs how much you spend on advertising and is measured as a percentage. So, if you spend $2.50 on advertising and make $5.00 in sales, then your ACoS is 50%. You can figure out that the higher the ACoS, the more money you are making. You can use the ACoS to find out which campaign and keywords are performing the best and then make the necessary adjustments to focus your PPC strategy.
There is a limit to your spending where the campaign will not be profitable because the money you make is not significantly higher than the money you spend. Calculate this by adding up the various fees related to the manufacture and distribution of your product and then subtracting that total from the sale price of your product. The resulting number is the profit you will make from that product. Divide the sale price by the profit and the result is the percentage point that is the limit of your ACoS budget.
You can make a profit by bidding on any keywords that cost less than the ACoS limit you calculated.
How To Refine Your Amazon PPC Campaign
Use as many keywords as possible in the beginning – Amazon searches tend to be very specific, so it is difficult to know exactly which people are searching for at first if your range of keywords is too small and narrow. At the beginning of your campaign, you can use over a hundred keywords and then gradually reduce that number as you learn what people are searching for.
Use the ACoS to filter your keywords – After running your campaign for about a week, you should have a good idea of which keywords lead to the most conversions and adjust your bids for those keywords accordingly. If a keyword has an ACoS that is higher than your limit, then you should either stop the campaign for that keyword or lower your bid until it falls into the profitability range.
Conversely, if any valuable keywords fall well below your ACoS limit, then you can increase the bids on those keywords so that your product appears in more searches.
Make sure that your campaign is successful and profitable – Even if your product is selling well, you might not be turning a profit because the ACoS for a strong keyword could be at, or beyond, your limit. In those cases, you should either lower your bid for that keyword or remove it entirely.
The Advantages of an Amazon PPC Campaign
It Can Boost Your Products Organic Ranking
Organic rankings are the natural search results that have not been paid for using a PPC campaign. However, a PPC campaign can increase the sales of a product, which boosts its sales history. A product’s sales history has a positive effect on its organic ranking regardless of whether those sales came from a PPC campaign or not. Essentially, the better a product sells, the higher it will be on the search results page.
Get Attention For a New Product
New products have a difficult time getting noticed because they have a lower search history, so they have difficulty climbing in the ranks of the organic searches. A PPC campaign can increase the visibility of a new product, which leads to more clicks, which leads to more sales. Even if the campaign is not profitable in the short term, it can become more profitable in the long term once the new product starts ranking higher in the organic searches.
It Can Be Used For Seasonal Sales
Black Friday, Christmas, Valentine’s Day, and other seasonal holidays are prime spending periods. You can use holiday or seasonal related keywords to garner extra attention for your product. Once the holiday has passed, you can use those same keywords to sell off any excess inventory in a postseason sale.
Consider an Amazon PPC Campaign For Your Product
As you can see, there are many benefits, and few disadvantages, to a PPC campaign. As long as you keep an eye on your ACoS limit and make sure that your campaign spending never exceeds your sales, you can make a tidy profit. Some simple keyword research is all that you need.
Even better is the fact that you don’t have to run the campaign indefinitely, once your product starts to rank highly in the organic searches, you can reduce the spending on the campaign, or even stop it completely. With an Amazon PPC campaign, the sky’s the limit.