It is fairly straightforward to set up ads on Amazon, but it is still very important to have a good understanding of the process that is involved. In this article, we go through the various things that you need to pay particular attention to and explain how you can get started as a beginner.
Amazon ads are displayed to customers shortly before they make a purchase decision. For this reason, they can drive lots of sales.
However, some merchants, particularly smaller sellers, shy away from the time and effort involved in setting up ads. They often forego using Sponsored Product Ads and other types of ads that are available with Amazon Sponsoring. Whilst this is so, Amazon makes the task of setting up ads much less burdensome through automation.
Let’s start by going through the basics
If you want your items to appear as sponsored products on Amazon, you need to pay for advertising. You currently have three advertising options on Amazon: Sponsored Products, Sponsored Brands and Sponsored Displays.
Each of these advertising formats allows you to present your products to prospective customers. This can occur when customers are searching for certain keywords or viewing product pages.
As with Google, this type of advertising works through keywords. So if your customer is searching for “blue shoes”, for example, you can bid on “blue shoes” as a keyword. Your product will then be displayed in a prominent position to potential customers when they search for this term.
When you advertise on Amazon, you only pay when an Amazon user clicks on your ad. But there’s no guarantee that they’ll make a purchase when they land on your product page. Your conversion rate will provide an indication of just how many customers you need to attract to your product page in order to make a sale.
This can range from 3 to 100 visitors depending on the industry, product and how well your page is optimised.
1. Select a campaign type: Sponsored Products or Sponsored Brands?
If you want to create a new campaign, you have to decide between the advertising options that are available on Amazon.
If you are a beginner and wish to increase your sales, Sponsored Products and Brands will suit your needs better than Display Advertising because they allow you to target specific groups of customers before they make a purchase.
If you are advertising on Amazon for the first time, Sponsored Products are usually your best bet. These ads require far less attention than Sponsored Brands, and you can collect data with Sponsored Products ads that you can then use in Sponsored Brands campaigns.
It is often worth creating Sponsored Product ads for your best-performing items, i.e. products with high profit margins and good conversion rates.
2. Organising and naming your campaigns
You should already think carefully about the name that you assign to your first campaign and the overall organisation of your advertising campaigns and products. This will pay off if your first forays into the world of Amazon advertising are successful and you decide that you want to use Amazon Sponsored Products ads for most of your products in the long term.
In most cases, it makes sense to organise your advertising efforts by using gradually narrower, more specific categories. So if we take the famous “blue shoes” example from Google, the following structure: shoe -> sport/purpose -> colour -> brand -> model name could be an effective means of organising your campaigns.
Bear in mind that you can create ad groups within your campaigns which you can fill with products. Amazon recommends putting products that have the same category and price range into the same ad group.
Making sure that you are organised from the outset also makes it easier for you to plan and allocate your budget.
3. Creating campaigns
Once you have given your campaign a relevant name, there are a number of decisions that you need to make:
- Daily budget: Your maximum daily budget is not set in stone, but Amazon works on the basis of an average value per month. If you set your budget at £25, for example, it is possible that, on one day, ads will be displayed for £30, and on another day for £15. At the end of the month, however, your average daily budget will not have been exceeded.
- End date: If you are not planning a time-limited campaign, you can simply leave this field blank.
- Automatic targeting: Amazon automatically selects keywords and similar products to promote your product.
- Manual targeting: You select the keywords and products yourself.
Amazon allows you to set a lot of parameters manually. However, automated campaigns take a lot of the work off your hands and often generate good returns on ad spend. If you opt for an automated campaign, you can collect data in peace and make manual adjustments later. It makes a certain amount of sense, therefore, to start with an automated campaign.
4. Creating ad groups
Now assign all the products that you have decided to target in your campaign to an ad group. You can use the Amazon search field to do this.
5. Choosing a bidding strategy
There are four bidding strategies that you can choose from:
- Dynamic bids – down only: Amazon will lower your bid if there is a low probability that you will make a sale.
- Dynamic bids – up and down: similar to the previous option, but Amazon raises your bid up to 100% if it is likely that the ad will lead to a sale.
- Fixed bid – Amazon always uses your exact bid.
- Adjust bids by placement – Amazon increases your bids so that your products appear on the first results page. If you are aiming for the top rankings, this feature can help you to achieve your goals.
Dynamic bids can be very cost-effective, but they can also cost you a lot of money. It makes sense for you to try all the options when you’re starting out in order to identify the best strategy for you.
Amazon suggests how high your bid range should be so that your ads have a chance of being displayed. Invisible to you, a price auction is now constantly running in real-time: all those who have placed bids on a keyword are compared with each other. The highest price and the best merchant performance help decide who wins this auction. The winner will be displayed at the top of the results, whilst other ads will either be displayed in a less prominent position or not at all.
6. Negative keywords
Irrelevant search queries can cost you a lot of money. That’s why you can use negative keywords to stop your ads from appearing for search queries that do not pertain to your product range.
For example, if you sell blue shoes for men, “for women” or “for children” should definitely be included on your list of negative keywords. If your campaign has not performed as well as you had hoped, this is a quick and easy way to optimise your Amazon Ads campaign.
What are the advantages of a manual campaign?
With a manual campaign, you can make significantly more adjustments, such as bidding more money for keywords that are likely to lead to a purchase.
For example, if your blue shoes belong to brand XX, it is much more likely that a prospect searching for “blue men’s shoes by brand XX” will be more willing to buy than someone typing in “blue shoes”.
This is because while the former is a search for a specific product, the latter is product research. When searching for a product, a click is worth significantly more because the probability of a purchase is greater. That’s why it makes sense to have the option to make these kinds of adjustments.
How high should your bids be?
There are several factors that you need to consider when setting your maximum bid. Your Amazon advertising spend must never exceed your profit margin. To prevent this from happening, you need to know your conversion rate and profit margin. Here’s how it works:
- Every sale generates a profit of £10
- You need 25 clicks on your product page to make a sale
- If a click exceeds £0.40, you cease to make a profit
- If you want to keep half of your profit margin, you can spend a maximum of £0.20 per click.
Conclusion: Try it out, learn, optimise, and make more sales
When you’re starting to use Amazon Ads, it makes sense to start with a lower budget and use the various automation options. From that point onwards, you can dig a little deeper and learn more about the manual strategies and optimisations that you can make. Don’t invest too much money in your advertising efforts in the beginning and use the data at your disposal to optimise the performance of your ads. Over time, you will find it easier to optimise your campaigns.