Over 66% of shoppers (Source) start their online product search on Amazon. Easy accessibility, combined with the extensive reach of customer reviews, gives users a better understanding of the product without physical proximity. This is another reason eCommerce sellers recognize Amazon as an integral part of their sales pipeline.
With 2 million small and medium-sized businesses on Amazon, getting the desired eyeballs for conversions is increasingly difficult. But with some help from Amazon advertising, you can leverage it well for your business. But first, let's understand the benefits, the types of Amazon ads, and how you can use best practices and optimize them for your business.
Benefits of Amazon Advertising for Your Business
Amazon advertising enables your business to get the desired brand awareness and visibility for higher clicks and sales.
Easy to get started and improve product rankings - Amazon marketplace advertising fastens the pace of customer interaction with your products, leading to higher Amazon searches and rankings.
Higher ROI - Amazon offers a wide range of advertising tools that equips your brand with a full-funnel analysis leading to a better ROI.
Increase in audience reach - Because users actively browse Amazon longer than other websites, it increases the chances of conversions and profitability.
Types of Amazon Ads
To give you an idea of the type of ads that can work for your business, take a look at some of them below and pick up some cues from the pro tip that follows:
1. Sponsored Product Ads
Sponsored product ads function as PPC (pay-per-click) ads via manual or automated targeting. In this, you bid for keywords - an exact match, phrase, or broad match that allows you to cater to a specific group of search queries or a more general search term.
Another advantage is Amazon provides category and product competition targeting that enables you to target certain brands, products, or categories and gives you granular control to promote your SKUs. This advertising type gives the maximum ROAS as it focuses more on conversions.
Graas Pro Tip: Place your sponsored ads below your competitor's product listing to boost impressions.
2. Sponsored Brand Ads
Sponsored brand ads let you promote keyword-based ads for multiple products under the brands-product category (your brand + product), complimentary products (products that complement each other while purchasing), and sponsored products automatic targeting (products that have a positive response in your automated sponsored campaign).
Graas Pro Tip: Use the most critical pain point and a specific product feature in the headline to increase the probability of the user clicking through the ad.
3. Amazon Product Display Ads
Use Amazon product display ads when you're looking to feature on other brand product pages in similar categories that get a good response. You can use these on your product detail page, complementary product detail page, or competitor pages.
Graas Pro Tip: Approach product ads as a means to boost conversions via cross and upsells through relevant targeting on related pages in your category.
4. Video Ads
Video ads work well when you're in the expansion phase and looking to leverage other Amazon associate sites to gain visibility. Whether you operate as a seller on Amazon or not, you can still use video ads to promote your product. Video ads can be used along with sponsored ads for maximum leverage.
Graas Pro Tip: Video ads go well when paired with text-based product information enriching the user experience.
While deciding the right Amazon ad for your business, ensure your business goals are the north star that aligns with your expected outcome. Keep a keen eye on competitors and their ad placement to know what's working and decide your advertising strategy.
Best Practices for Acing Amazon Advertising
Marketplace advertising has internal systems that track customer issues and track campaigns. This reduces the resources you need to invest from your end for an effective advertising campaign. Put in place some of these best practices to ace Amazon advertising.
Pick Keywords Strategically
Long tail keywords can be used effectively when you have a niche audience, and they are searching for a specific term that matches your product. However, avoid negative keywords or over-hyped phrases like 'best' or '#1".
Start with Automatic Targeting
Amazon ads have manual and automatic targeting. In automatic targeting, Amazon does the heavy lifting of keyword search and product matching, giving quick results. If you wish to control how and where your ads will be displayed, use manual targeting.
Organize campaign structure for better results
When you have multiple campaigns running, ensure you organize them, so no two campaigns are competing against each other. It also reduces wastage in ad spend.
How Do You Optimize Amazon Ads?
Optimize your product pages
Optimize all the elements on your product pages. Ensure that the headlines address the immediate pain points. Keep relevant, accurate, and high-resolution product images that build trust. Shoppers want a professional-looking description that helps them understand if the product is right for them.
Bid on your brand
Often, competitors bid on other brands and attract the attention of users searching for that particular brand. Bid on your brand so you can point customers searching for your brand to your product range.
Some campaigns may not show results for various reasons. Establish the cause and eliminate further spending on these, cutting your losses. Also, identify the keywords which aren't helping push the products and aren't converting.
What is ACOS and How Do You Calculate it?
There are various KPIs to measure your ad spend on Amazon. One key metric is ACOS (Amazon Advertising Cost of Sales).
Amazon's Advertising Cost of Sales (ACOS) is a metric used by Amazon sellers and advertisers to measure the effectiveness of their PPC advertising campaigns on the Amazon marketplace. It represents the percentage of total advertising spend that is attributed to sales generated from the ad campaign.
To calculate ACOS, divide Ad Spend by Ad Revenue for a percentage value.
ACOS = (Ad Spend ÷ Ad Revenue) X 100
If you have earned $250 on your ad campaign at a rate of $50 as campaign cost, your ACOS is
50 ÷ 250 X 100 = 20%
While there is no optimal ACOS since it varies for different industries, a benchmark figure between 30-40% is ideal.
How Do You Reduce ACOS for Your Business?
Your objective of running a PPC campaign can range from creating product awareness to maximizing profitability.
To achieve your objective first determine your brand's specific target ACOS and aim to achieve the break-even point before assessing its comparison to your profit margin. Then, prioritize the goals of your brand and campaigns, and based on these objectives, determine the relevance and value of Amazon ACOS to your overall marketing strategy.
When running an awareness campaign with the help of marketplace marketing, you're likely to spend more on the campaign with a little return at the start. However, as you optimize your product listings and refine your headlines, you will likely see better results that reduce your ACOS spending.
When you're looking to maximize reach and revenue, bid for your brand, leverage video ads, and narrow your focus to high search intent keywords. This way, you optimize your campaign spending for more robust results and lower ACOS.
As an eCommerce business owner, you often want to reduce your workload and integrate all your systems for better productivity. Graas offers multi-channel marketplace management that ensures your business is centrally managed concerning inventory, orders, and payments.