Updated January 28th 2018: Amazon sponsored products is Amazon’s Paid advertising medium. It’s also something that 99% of Amazon businesses do not do correctly. Please please please do not get this wrong as you will be leaving thousands on the table or worse paying tens of thousands over bidding on keywords and optimising for the wrong potential customers!
Note: We’ve also recently built an Amazon PPC training course designed for people who are looking to do this manually and achieve extremely low ACOS figures.
The PPC platform allows you to build a campaign and target specific keywords on this campaign, including how much to bid, what products to link to and your daily spends. In this guide we breakdown everything you need to have a successful campaign and make thousands of sales!
Table Of Contents
- 1 How to Create an Amazon Sponsored Products Campaign
- 2 What Does ACoS Stand For Amazon?
- 3 Should I use Amazon Sponsored Products?
- 4 How To Create An Amazon Ad – The Build Process
- 5 Stage 1 – Keyword Research
- 6 Stage 2 – Implementing keywords
- 7 Stage 3 – Pre-launch CRO & Reviews
- 8 Stage 4 – Launching The Campaign
- 9 Stage 5 – Bid Optimisation & Scaling
- 10 Conclusion
How to Create an Amazon Sponsored Products Campaign
Before we get started on how to actually build an Amazon sponsored products campaign I wanted to take care of some FAQs that I get asked by clients. Generally speaking Amazon PPC is an incredibly effective way to generate sales at a very low ACOS and as a result I recommend all Amazon seller build a campaign.
What Does ACoS Stand For Amazon?
Acos stands for Amazon Cost Of Sales and is essentially how much you pay vs how much you earn in sales.
For example if we have a product that costs $100 and we pay $10 in advertising to make 1 sale then our ACOS is 10%. This is on top of other Amazon fees don’t forget. So if we have a net profit margin on these products of $50 (after Amazon seller fees and manufacturing fees) then we have roughly around a 50% acos to work with to generate sales. Anything over 50% would mean we are losing money on this keyword/product.
Another key point is that we can actually take a slight loss on the front end of sponsored products and Amazon PPC IF we can then make this back later on. There are 2 core elements here.
1.) Lifetime Value Of A Customer – If you have customers that love your product and will keep coming back again and again then you should spend as much as possible on advertising as your lifetime value will be so high. This is the core argument of whoever can spend the most on advertising will win.
2.) Organic Ranking Improvements – When you make a sale through any channel you will receive a slight increase in organic rankings and visibility. This in term of course makes it more likely you will generate sales through organic keyword searches (this is the goldmine of Amazon and the SOLE GOAL we have for our entire business model.)
Should I use Amazon Sponsored Products?
The short answer is yes!
Amazon’s SP campaigns are very easy to set-up if you have experience with keyword research or have used a similar advertising platform (Adwords or FB advertising for example) in the past. Amazon’s campaign manager is actually a lot easier to use too. As you do not have to create any specific ads, all that changes is the product listing is shown with the only difference being a “sponsored” tagline under the product. [screenshot below]
As you can see the majority of products on top of competitive search terms (this is laptop stands as the keyword) has sponsored products on top. These companies pay a fee per click through to their products and a certain percentage convert into customers.
How To Create An Amazon Ad – The Build Process
Now that we have the “what” out of the way we can look into the actual steps I take in the building of a successful sponsored products campaign. These are the 5 steps I use for personal and client businesses and the ones that have achieved incredible results time upon time, such as the campaign screenshots below.
Stage 1 – Keyword Research
Keyword research and analysis is the process of finding what search terms people are searching when they want to find your product. This is the first step to any of our optimisation campaigns as we need to determine what the client’s product is in the eyes of the buyer. Most of the time the product’s keywords are very obvious. For example if we are looking for something to prop a laptop up the most likely keyword is of course laptop stand. But what else do people search? What else can we optimise our listing for and also put into our PPC campaigns?
To do this I use a tool called merchantwords, I have no affiliation with them but the tool rocks! If you put in your primary search terms “laptop stands” you can see it shows you the top terms (by search volume) in relation to this keyword. This is great for getting the terms DIRECTLY related to your keyword. For example this one simple task has now given us 3,500 keywords (500+ of which have over 1,000 searches a month!) Which we can now implement into our content and PPC campaigns.
But what about the keywords that don’t contain the direct keyword in itself? What if someone was looking for a computer stand for example? Or a tablet stand? Our product might be relevant for these users searching, but if we do not know these keywords we are never going to rank for them.
There are 2 ways to find these, the first is go to the Google keyword planner and type in your primary keyword, there are other tools that do a similar thing in a better way but these are paid solutions. For example Ahrefs is an incredible tool for this. This process gives us another 500+ keywords to go through. Some of course won’t be relevant or will be information based queries, but the majority are going to give you a great list of keywords to implement into your listing and campaign.
The second is good old fashioned asking people. When you ask someone how would you describe this product or what do you think this is? And they have to list 5 variations, this will give you some awesome keywords that maybe even Google missed.
Once you have your keywords in place you can get onto stage 2 which is implementing keywords.
Stage 2 – Implementing keywords
This is essentially on-page optimisation for the listing itself. If you don’t have a well optimised product page then you will not convert very well. This all means that you will be spending a lot of money to make very few sales, we get fully onto CRO and what needs to be in place before you launch a campaign in the next stage, but for your listing to convert for the keywords you found, they will need to be in there in the listing itself from the start. For example if I have a bunch of keywords I want to rank in Amazon’s search engine, and then prospects search this, they expect to see these keywords in your title, bullet points etc. It’s not only important from an Amazon ranking’s point of view but also for a customer conversion too.
I’ll be writing a full guide on how to implement keywords into a listing and perfect on-page optimisation in the near future so watch the space.
Stage 3 – Pre-launch CRO & Reviews
CRO or conversion rate optimisation is something you should test before starting your campaign. This is how well your listing converts. I like to look at the traffic vs sales figures to get an idea of this. If you have a 10% conversion rate (number of people who visited your site vs number of people who purchased) then you can realistically calculate how much you should be bidding for your keywords. But we will go further on to bid optimisation in stage 5. For now look at the data inside your seller central account that shows traffic vs sales and ensure your number isn’t something ridiculously low.
CRO Quick tick checklist:
- Do you have 10+ reviews?
- Do you have your keywords integrated into your listing?
- Do you already have another marketing medium set-up?
- Do you have a review process set-up?
These all need to be answered YES!
Note: If it is very low this may be from doing incorrect marketing elsewhere. For example we had a client that ran FB ads at $100/day. They saw a few sales for a $40 product so continued to run the ad. The issue was the conversion rate was tiny and the campaign was still in a loss. They made an average of 3 sales, but of course with Amazon fees and manufacturing costs this was a relatively big loss per day. The issue was also that they were getting about 500 visits a day from Facebook and only 3 sales. That’s below a 1% conversion rate, not good! Below I’m going to talk about how to improve conversion rate of your products inside Amazon listings.
Most of the time people will start an Amazon sponsored products campaign with no reviews or less than 5, this is business suicide as people like to know what others thought (social proof), essentially you need to ensure you have 20+ reviews in place before starting an Amazon PPC campaign. How do you get 20+ reviews? Walk outside and ask people to buy your product and leave a review, it’s really not that hard. Get creative if you have too. Soon I’ll be doing a full guide on how to generate reviews for Amazon which will include methods inside their Terms of service of course. If we look back at our example with laptop stands, we can actually see one product with only 4 reviews and one with over 250.
Using a tool called Jungle Scout we can estimate how many sales these products make per month. Although the product with 4 reviews is actually in the 1st position and the other product is in 3rd you can see by the results below that the product with only 4 reviews makes an average of only 34 sales a month and a revenue of £700. Whereas the other product generates 136 sales per month for £5,400. A huge difference.
So stage 1 of CRO is having enough reviews. Once you have this you can move onto the second step.
On top of reviews you want to have a listing that has good copy on. Copy-writing is stage 2. There are only 3 key elements to ensure your copy is perfect on. These are the: Title, Bullet Points and Description. The description is less important as very few people read all of an Amazon listing before making a decision, but for the people that do, you want to ensure you have a well written and in-depth description talking about the products features and what benefits they provide. Include as much information as possible here even if you think it might be only a minor benefit. In the description you can also talk about your brand, customer service and refund policies.
The title is where you should include a range of your keywords but also in a way that doesn’t look overly keyword-stuffed. When you have 10 keywords all one after the other in a title tag, it really does put off potential buyers. As a result you want to ensure you are not putting off these people. The easiest way to do this is to ensure your title is not just written for the search engine but also for customers too.
Finally you want to ensure your bullet points are correct. This involves taking your top features and USPs for your product and talking about what makes them better than the competition. You can also talk about the great reviews you have received and essentially in these lines you are giving key product information whilst selling the product at the same time.
Stage 3 is images – You have to have images that look good. Showing your product being used in multiple different situations, as well as having feature benefit images too. This involves adding text to images or stats showing why your product is better than the competition. Assuming most people do not read the text description of your listing, you have to get the benefit of your products across in the images instead as 90% of people will view all the images before making a purchasing decision.
Stage 4 – Launching The Campaign
So by now you have your keywords, your listing is ready and you are going to start the campaign. I’m going to start from the very beginning when I talk about how to exactly set-up a profitable sponsored products campaign.
Inside your seller central go to advertising and hit campaign manager. When you are in here click the gold create campaign button. Here you will get some options on what to name your campaign, daily budget, start date, end date etc. All this information isn’t that important. For clients that have less than 10 products that are all specifically different I call the campaign name the name of the product. If they have 20+ then its going to be the group of products we are working with. In this case though you can just name your campaign anything you want.
Keep the start date today so it starts as soon as we finish and end date I like to have no end date. Budget you can put whatever you like but I recommend starting as high as possible, but again if cash flow is an issue then just go with whatever you need. The final option on this page is to select automatic or manual targeting. PLEASE put manual as automatic will be a quick way to lose all your money.
When you click next you’ll be taken to step 2 of the set-up. This involves creating the ad-group. Again if you only have a few products just create one of these for each product. In the ad-group name part just name whatever the specific product or model is. Once you’ve selected and added the relevant product(s), you will scroll down to the “set a bid and provide keywords” section. Here you want to click provide your own keywords and copy and paste all the keywords we discovered in stage 1. Default bid can be set at anything for now, I just like to do £0.50.
When you add your keywords you will see the keyword bid option. Here you can see first page bid data. I personally like to be at the top range of this, this means you’ll appear in the top 3 and you won’t be charged an incredible amount but we’ll move more onto that in stage 5. Sometimes there won’t be any data in which case you’ll just keep it at your default bid option. Once you have your keywords and some sort of selected bid input then click save and finish. When you go back to the advertising home section now you will see your live campaign.
Obviously in your case if this is your first campaign you will only have 1 and there will be no spend or stats up yet. To quickly run through the stats the spend is of course the total advertising spend, sales is your total revenue that has come as a result of direct clicks only and then the ACOS figure as we mentioned above which you want to be as low as possible,
Once this information is set-up there is only really one stage left and that’s to optimise the bids and tweak the campaign as it goes along. There are a lot of ways to do this but I like to start by using Amazon’s data as this is the best way to scale very quickly.
Stage 5 – Bid Optimisation & Scaling
What we are looking to do here is to see what bids Amazon is recommending and where we are appearing in the results. As we saw at the start of the post we know that even if we bid lower and appear in the 2nd or 3rd advertising spot, with more reviews we can outsell the competition AND on top of that we will be paying less put click so we will be making more per sale too.
Once Amazon has some data they will show you the suggested bids. They have an algo that outlines what these bids are and its very similar although less evolved to the algo used in Google and Facebook. Here all you want to do is go 0.01p/c above the suggested bid. Later on in the campaign we will decide which ones to scale and which ones to potentially remove, but for now I want you to just do this. Once you’ve put this figure in it should automatically save. As you can see the keyword bid is one above the suggested bid.
Although this is a great product getting conversions at 10% ACOS is incredible, the issue is it’s a small volume, which brings me on to the next point.
Once you’ve found what ads convert, increase the daily budgets and the bids. This will lead to more sales at a SLIGHTLY higher conversion rate, but the difference between conversions vs the volume increase in revenue will earn you more money. This is something that most people get confused with so I will quickly touch on it.
What I’m talking about here is scaling ads that work to the point where conversions start to get worse. Let’s take an example above. Let’s say we spend £40 a month to make £400, that’s a 10% ACOS and a great profit margin for a 40% profit margin product. In this case we have a 30% profit margin as we are taking 10% of that hit in advertising. This means we earn: £160 – £40 ad spend = £120 profit per month. That’s great as its just one product and one ad but its still not a lot of money. Instead this is what I would recommend.
Increase daily budgets to the highest, remember its unlikely you will even reach this, but to be sure you are not limited you want to do this. Next you want to increase your bids 20-50%. This will lead to a more expensive click but the VOLUME of sales you get will also increase dramatically. So let’s say our ACOS goes from 10% to 20% BUT we spend £200 a month instead of £40. Now we’ve made £1000 in sales that month. When we look at the stats it’s £400 – £200 spend = £200 profit (over 50% increase in end profit) just from spending more money on something we already knew would work. This is what we did for a client below and expected the conversion rate to go down slightly, but it turns out it just didn’t (this is the perfect situation but most of the time not possible.)
As you can see the acos didn’t change that much but the volume was increased each month and as a result the client made over double the amount of sales and hence a huge increase in profit.
If you don’t want to get too complex this is where you stop, you just optimise your bids once per week (or few days if you prefer) and then take the profit each month. If you do want to get more complex then you can spend more time removing specific keywords and increasing bids proportionally up or down based on the acos and profit margin of each individual keyword and product. But honestly this is something that you do not need to actually do. Amazon sponsored products is set up in such a way that you will earn simply from getting the right keywords, this is why stage 1-3 is so important.
If you are interested in a video course outlining all the key elements in real time and diving into how we build campaigns for 6% acos, click the image below.
Amazon PPC is one of the best ways to not only make sales but also improve best seller rank (which leads to higher organic rankings, which of course leads to more sales!) If you have any questions about our PPC processes or would just like to get in touch to discuss your Amazon business, do not hesitate to contact us via the homepage.