While sponsored products are a great way to promote your listings and get your merchandise in front of more customers, there are many Amazon sponsored product mistakes that sellers make that hinder the effectiveness of their ads. By avoiding these common pitfalls, your listings can reach more customers, drive more clicks and make more sales.
Mistake #1: Misunderstanding Competing Advertising Goals
In a perfect world, you would be able to both increase your sales volume and decrease your advertising cost of sale (ACOS) in a short amount of time. But what many sellers don’t realize is that these goals are often at odds with one another.
Think about volume, efficiency and speed as three corners of a triangle. You can meet any two of these goals at once, but you can’t have all three. You can increase volume quickly while sacrificing efficiency, or increase efficiency quickly while sacrificing volume. To achieve both volume and efficiency you have to grow sales slowly over a long period of time.
1. Use Amazon sponsored product ads to grow your volume quickly by maximizing exposure and impressions through aggressive bidding. This will increase your reach and also your volume, but it will result in less efficiency. As a general rule of thumb, every next sale is slightly harder to achieve than your last. This means that as your volume increases, the cost of making these sales rises as well.
2. On the flipside, you can eliminate wasted ad spend and decrease your ACOS in a short amount of time by cutting bids on inefficient keywords and pausing low-performing campaigns. This will maximize your ROI, but also reduce your reach and volume.
3. So how do you boost both volume and efficiency? The old adage “slow and steady wins the race” definitely applies here. By making daily micro-optimizations over time you can slowly increase volume while also reducing your ACOS. This won’t produce dramatic results overnight, but it will put you in the best position for long-term success.
Why is it so difficult to achieve both volume and efficiency in the short-term? Think about the consumer purchase funnel. As you increase volume you are moving up the funnel from loyalty to awareness and gradually reaching and converting people who have less and less intent to buy. These sales will, by definition, be less efficient because you are reaching people with less relevance to your product.
Understanding this push-pull relationship between efficiency and volume and adjusting your advertising goals, as a result, will put you in a great position to maximize both factors over time. It will also prevent you from committing one of the top Amazon sponsored product mistakes out there.
Mistake #2: Creating a Campaign Strategy That is Too Broad
This leads us to our second mistake: creating a campaign strategy that is too broad. In order to achieve that high volume, low ACOS overtime you have to be able to continually optimize your strategy with small micro-adjustments on a regular basis. In order to make these micro-decisions based on performance, you have to think small when it comes to your campaign strategy. Because of time, budget or knowledge restraints, many sellers are too broad in their campaign strategies and sacrifice both volume and efficiency as a result.
In a perfect world, a single Amazon Standard Identification Number (ASIN) runs both a manual targeted campaign fueled by manually inputted keywords and an automatic targeted campaign that runs automatically off of the product’s content – i.e. titles, bullet points and descriptions.
- Auto targeting campaigns are best for "keyword harvesting" - that is finding out where your keywords are matching for relevancy and producing clicks and conversions
- Manual targeted campaigns are best for elevating your most effective keywords through more aggressive bidding
By experimenting with auto targeting campaigns and then refining within your manual targeted campaigns you can slowly reach that sweet spot of efficiency and volume.
Mistake #3: Misunderstanding the Meaning Behind ACoS Calculation
When it comes to correctly understanding and interpreting ACOS, you want to start by setting the right goals for your sponsored products – the two options being maximizing profits or maximizing sales.
When you first launch your sponsored product, start by focusing on maximizing sales. This helps build your volume and establish your ranking. Amazon uses sales history to inform rankings, so if you can boost that from the start you can increase your overall ranking and profits in the long run.
In this phase of sales maximization, a breakeven ACOS is all you need to help achieve your goals. Once you start to rank for that product, then switch your goal to maximizing profits. It’s at this point that you should shift your focus to your target ACOS.
To determine your breakeven and target ACOS, start by calculating your profits before your sponsored product spend. This percentage in comparison to your revenue is your breakeven ACOS. Based on the profit margins you hope to achieve, adjust this breakeven percentage to determine your target ACOS.
Mistake #4: Using Emotion, Not Data, to Make Decisions
When making decisions regarding your campaigns, you should always let the data, not your emotions, guide you. That being said, there are three important tools you should employ:
Merchant Words: This tool lets you discover what customers are searching for already. This helps you understand where volume already exists before you go hunting for it.
The Amazon A9 #: Type any word or phrase into the Amazon search bar with a # in front of it and it will populate a list of relevant search terms by volume. These terms are great keywords to consider when constructing your sponsored product campaigns.
mostSearch Term Report: This report provides you with the keywords you bid on, what people have actually searched, the conversion history and the ACOS. Words that have a high conversion rate and low ACOS are terms you should definitely consider incorporating into your manual targeted campaigns and product listing.
Mistake #5: Forgetting Conversion Rate When Optimizing Your Listing
Amazon values your product’s conversion rate over everything else. Why is this? Well, Amazon makes the most money when a purchase is made. If you make a sale, Amazon profits and everyone wins. This is why conversion rates are so critical to your listing optimization, especially when it comes to sponsored products. In general, if you are in a bidding war with another seller, the conversion rate will often be the deciding factor in who wins for that keyword.
Before you can optimize your listing for conversion rate, you first have to understand what your conversion rate is. Unfortunately, Amazon doesn’t give you your true conversion rate (number of orders per session), but you can easily calculate it yourself by dividing your Total Order Items (including Total Order Items B2B) by your Sessions – you can find both numbers in Amazon Seller Central under Business Reports. In most categories, a 3% conversion rate is good – a 5% conversion rate is amazing.
Do keep in mind though that not all conversion rates are created equal. In addition to your general conversion rate, Amazon looks at your unit session percentage. Why? Because costs go down and profits rise for Amazon when a greater number of units are purchased and shipped in a single order. This is why sellers are able to set up coupons within Amazon that incentivize people to buy duplicates of a single item. We highly recommend taking advantage of this tool, as it can help boost your ranking.
Mistake #6: Not Monitoring Your Campaign on a Regular Basis
Because of time and budget restraints – or simply laziness – too many sellers commit this as one of their Amazon sponsored product mistakes. They set up their sponsored product campaigns and leave them to run without updating or making those micro-adjustments we talked about earlier. This “set it and forget it” approach can damage your business in three areas:
Bidding: If you set a bid for a specific keyword and never go back to check the results you won’t know if the change helped or hurt you. It could cause your ACOS to skyrocket and you would never know.
Keyword Selection: The same idea applies here. If you have automatic campaigns running or if you have broad and phrase match keywords harvesting for you in a manual campaign, you’ll never reap the fruits of your labor if you don’t check in and make the necessary micro-adjustments on a regular basis.
Advertised ASIN Selection: If you add new SKUs to Amazon but you don’t add them to a sponsored campaign you are missing out on all the advertising benefits of sponsored ads.
Don't Make These Amazon Sponsored Product Mistakes;
Take These Steps Instead
We’ve covered a lot of common Amazon sponsored product mistakes.
- Aim to grow both volume and efficiency overtime by making daily micro-adjustments to maximize your campaign strategies.
- Think granularly when setting up your campaigns so you can constantly test and refine your strategy based on what’s performing well and where the fat needs to be trimmed.
- Use data, not emotion, to drive the decisions around your sponsored ads.
- Understand how to calculate and use ACOS based on your unique business goals.
- Keep your conversion rate top of mind when optimizing your listings.
- Monitor and adjust your campaigns on a daily basis.
For questions or more information on Amazon sponsored product mistakes, contact our team at Awesome Dynamic. We will be happy to help you create an Amazon seller strategy to help your business grow!