Amazon Sponsored Products - How To Set Up an Optimized Campaign

With increasing competition on Amazon, sellers need to use every tool available to help them stand out from the crowd. One of these tools is Amazon’s advertising platform, which has become a critical part of a successful Amazon strategy. Amazon currently has two ad platforms available to sellers: Sponsored Product ads, which have been around for a few years and have become a core component of selling on Amazon, and Headline Search ads, just recently made available for brand registered sellers. Currently, when performing a search on Amazon, customers will likely see one of these two ads before ever seeing the organic search results. In this article, I will review a little of what Sponsored Products advertising is and how to get your campaigns set up for success. Headline Search ads will be reviewed in another article.

What Are Sponsored Products Ads?

Amazon’s Sponsored Products ads are a PPC (pay per click) ad platform that places ads throughout the Amazon marketplace. As a seller, you’ll set up campaigns and ad groups, then pick a product to advertise and keywords to target. Bids are set at the keyword level, and the seller with the highest bid on  keywords relevant to their product generally gets the most favorable placement. You pay only when a customer clicks on your ad. Sponsored Products is a second price auction, meaning that if you bid $1.00 and the next highest bid is $0.90, you only pay $0.90 per click.

The primary factors that go into successful ad placement are: bid level, keyword relevancy, click through rate, and conversion rate. Amazon wants to show customers products they are likely to buy. So, if you are selling rolling pins and are trying to bid on the keyword “dinner plates,” Amazon may not deem that term relevant to your product and decide to not show the ad. If your click through rate or conversion rate are very low on a particular keyword, that will further communicate to Amazon that your product is not relevant to the search term and your ad placement may suffer.

Ads are placed primarily in two places on Amazon’s site: within organic search results and about halfway down a product page.

Sponsored product ads in search results
‍In search results

Sponsored product ads on the product page
‍On the product page

Five Steps to Setting up Successful Ads

I see many sellers put together a quick ad campaign only to spend a lot of money for very little return. A good Sponsored Products ad campaign will take into account what we know about how Amazon places ads as well as how to set up campaigns and ad groups to be as targeted as possible. Here are 5 steps to build a successful Sponsored Products campaign.

1. An optimized product page 

The first step is to take a look at your product page. A well-optimized product page is the foundation to a good advertising campaign; sloppy pages will hurt your ROI on any of your marketing efforts.

A good product page will have several high-quality images, a great title, and bullets that clearly state what the product does and what makes it different from the competition. Great copy will use keywords most relevant to the product and the audience. Adding Enhanced Brand Content will also help boost your conversion rate.

2. Choosing keywords

Take a look at the keywords you have used in your product copy— these will be the foundation of your keyword list to use in advertising. You can also look at competitor pages, again being sure to choose only keywords that are most relevant to your product.

With those keywords as your seed list, start expanding on similar phrases. One good way is to simply use the Amazon search bar. Start typing in your keyword phrase and take a look at the auto populated list, this is a good indication of what search terms customers are using.

Another resource you can use are third party tools that provide a list of search terms used on Amazon. In my experience, most of the search volume estimates are off, but they are still good tools to use to help you brainstorm your keyword list. Again, stick to the relevant keywords for your product.

When you are ready to ad your keywords to your ad groups, use all three match types, broad, phrase and exact. This will allow you to test all three and optimize their bids based on performance. On Amazon, it’s not a given that exact match will perform better than phrase or broad, you have to test to find out which match type converts best. The broad and phrase match types will also generate new search terms that you can add back into your campaigns.

3. Campaign and ad group setup

I get a lot of questions on this, and there are many differing opinions on how to organize your campaigns and ad groups. My advice is to make your ad groups as specific as possible, taking into account how to be practical about scaling if you have a large number of SKUs.

Your ad groups lump your products and keywords together, so each keyword needs to be relevant to the products in the ad group. For example, you may sell t-shirts for men and women in several different colors and sizes. I would suggest creating one campaign for men’s t-shirts and one for women’s, then within each campaign create an ad group for red shirts, blue shirts, black shirts, etc. This way you won’t have keywords related to blue t-shirts running in the same ad group as your red t-shirts.

You can choose to be more specific and create ad groups for red large shirts, red medium shirts, etc., but that may become unmanageable if you have many SKUs. If you sell more clothing items, you can have campaigns for men’s shorts, women’s hats, etc,, with ad groups that get more specific on style.

Some suggest you keep only one ad group per campaign, making each campaign very product specific. This does help you review and monitor your ad metrics, including ACoS at the campaign level instead of clicking through to each ad group. Again, it can be harder to scale for hundreds or thousands of products, so you’ll have to decide what is best for your product line: just keep in mind to keep ad groups as specific as possible.

4. Automatic and manual campaigns 

Sponsored product ads have two campaign types: automatic (Amazon chooses your keywords for you based on your page content) and manual (you choose your keywords). You need to set up both an automatic and manual campaign for each product with identical sets of ad groups. The automatic campaign should be set up at a lower bid and will serve as a research campaign for more search terms that will eventually be added to your manual campaign. The manual campaign will be highly targeted, focusing on keywords you have chosen as relevant to your product. Your bids and your return will be higher on the manual campaign.

5. Decide on your goals and monitor 

Most sellers will set goals around their campaign’s ACoS (advertising cost of sales = ad spend/ad sales). I always get asked what a good ACoS is, but the answer is that it depends. First, what is your break-even ACoS? This is generally equal to your products gross margin, which would be sales minus all expenses, including COGS, Amazon, and shipping costs.

Next, what are your goals for the campaign? Are you trying to launch a new product and maximize visibility? Your ACoS target will be higher and you may be happy running ads at your breakeven ACoS. Or are you just trying to give sales a boost and want a profit on your ads? If so, you will need to keep campaigns under your break-even ACoS.

After you have identified a target ACoS for each campaign, you will need to monitor and adjust ads weekly to meet those targets. This can be done by adjusting bids, adding negative keywords, and finding new search terms to add in. I’ll cover the weekly optimization in more depth in my next article.

Using the above steps as a guide for your Sponsored Product campaign setup will put you in a position to optimize the return on your campaigns and maximize your brand’s exposure in the Amazon marketplace. Keep in mind that a well-run ad campaign will not only bring in incremental sales, but will also have a halo effect and increase your total organic sales. Amazon is investing heavily in their advertising platforms, rolling out more and more tools and opportunities for sellers to advertise their products and brands. Sellers not including advertising in their Amazon strategy will likely begin to fall behind their competitors, so take a look at your Amazon advertising strategy and determine what you can do to maximize your sales today.

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Looking for some help with your Sponsored Product ads? At Egility we offer set up, optimization and management of your Sponsored Product ad campaigns. Click here to schedule a free 30 minute consultation.

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