Although Sponsored Products is one of the most powerful tools for driving discoverability and incremental sales for Amazon sellers, with so many levers to pull it can be difficult for sellers to know where to start.
The most frequent Sponsored Products inefficiencies stem from bid levels, keyword matching and optimization, campaign differentiation and structure. Because Amazon is a constantly evolving marketplace, remaining stagnant in your marketing strategy is no longer an option.
In our recent Amazon series we will walk through the 4 phase Sponsored Products Campaign development process including:
- Product Content Evaluation
- Automatic Campaign Implementation (Phase 1 & 2)
- Manual Campaign Creation (Phase 1 & 2)
- Bid Refinements
In the first part of our series we talk about how important Product Evaluation is. Now, we will dive into how to build out your campaigns based on the Automatic Campaign Implementation (Phase 1 & 2).
Tips on Automatic targeting vs. Manual targeting
Automatic targeting located in the Sponsored Products Campaign Manager enables sellers to make changes more fluidly. With automatic targeting, Amazon targets ads to all relevant customer searches based on product information.
Manual Targeting is a process by which sellers manually set keyword options for Sponsored Products ad campaigns.
Pro-Tip: Automatic targeting lets sellers skip the process of selecting keywords. However, Automatic Targeting removes the higher level of control associated with Manual Targeting. While Manual Targeting lets sellers explicitly identify the keywords for searches their ads are surfacing for.
Pro-Tip: In January, Amazon introduced automated campaigns for vendors through Amazon Marketing Services (AMS). Previously, this campaign management was only given to third party sellers.
Below we outline the 2 phase approach to setting up your automatic campaigns – focusing on keyword harvesting and bidding strategy.
Sponsored Products Automatic Campaign Structure – Phase 1
1. Give All Your Products a Chance to Perform – You want to give all of your products a fair opportunity to perform. This is where many sellers make the mistake of choosing products they want to perform well rather than letting the data guide them through the process.
- We recommend an initial bid level of $.15 to $.25 to start.
- Keep in mind there is going to be some product and category dependency / variation depending on where you are advertising.
2. Sponsored Products Ads will only surface only when you are in the Buy Box – What this means is that you will never drive traffic to a detail page, where your competitors are owning the Buy Box.
3. Data Harvesting – The main goal of running Automatic Campaigns is to obtain customer search term data – data you should apply to future campaign build-outs.
Pro-Tip: Amazon tracks clicks and spend immediately. Sales can take up to 2 to 4 days to process. What this means is in the early phase of running your SP ads you may see a lot of clicks and no conversions – which are going to result in high spend and high average cost of sale. The gut reaction to this data is that you will want to pause the campaigns because you feel like you’re just wasting spend. You don’t want to jump the gun before these products have had a chance to fully absorb the data.
Sponsored Products Automatic Campaign Structure – Phase 2
4. Use the data Amazon provides instead of making a personal decision.
5. Actions are driven by your company’s goals, for example:
- Volume – Some brands just want to get their name out there and build their brand credibility. Even a 1:1 return on advertising spend is considered acceptable.
- ROI – For other sellers, margins might not be suitable for those type of risks so there’s a more strict ROI focus.
6. Once you decide what your goals are, that is when you can determine Ad Group Differentiation using advertising cost of sale (ACoS) as a guidepost. This is when you can start to weed out which products are performing well and deserve a higher bid vs. those products that are not performing well.
For example you may want to run:
- High bids on well performing products: $.50 to $1.25
- Medium bids on average performing products: $.15 to $.50
- Low bids on poor performing products: $.02 to $.15
7. Leveraging Data
Sellers often make these decisions based off of the ACoS. You may also want to advertise as least 50% of the product’s Average Selling Price (ASP), before you make a decision to downbid. For example, you advertise a $100 pair of shoes and you only spent $8 in clicks on that pair of shoes – with no sales. But, if the next click leads to a sale (which would put your ACoS at 8%), you could still consider that a success. You don’t want to react too quickly and downbid until you have spent at least half of the average selling price of that item.
Check back soon, when we discuss the implementation of Manual Campaigns (Phase 1 & 2).
FAQs About Automatic & Manual Campaigns
Q. If I’m already running a manual campaign, should I also develop an automatic campaign as well?
A. If your manual campaign, that’s already up and running is doing well – there is no reason to pause it. However, in addition to that it would definitely benefit you to also launch an automatic campaign strategy. There’s a pretty good chance there are keyword opportunities you are missing out on because you are not harvesting that data from Amazon through Manual Campaigns.
Q. Is it okay to keep my products in both manual and automatic campaigns, at the same time?
A. Absolutely. For example, if your bidding .50 in your automatic campaign and a competitor is bidding .75, and then you are bidding $1 in our manual campaign – the bid is NOT going to be $1. The bid is only going to be .76 just to beat out the competition. So, you are not going to drive the price up on yourself.
Q. How many keywords do you recommend starting out with in Sponsored Products (manual campaigns) and why?
A. Sellers should start with at least 25 to 40 keywords. The reason is because you want to start with a large number of keywords but not so large as to the point of excessive (500+). You don’t want your spend to run out of control. Odds are – if you are using 500 keywords for an ad group – many of those terms are going to be inefficient. Your products are not going to surface for them anyway – because your product is not going to be relevant. You also don’t want too few keywords because you are not going to generate enough volume. We’re found in our experience, 25 to 40 works best starting out.
For more info, check out our post on 15 Questions to Know to Increase Amazon Sales.