Is it Worth Launching Paid Ads (PPC) for my first Amazon FBA Product?


You have your product in the Amazon FBA warehouse and you are getting ready to launch. This is the moment you have been waiting for months. Aside from picking a product, the launch might be the most nerve-wracking part. This is your first product and you want to make sure it is successful. You need to know if it is worth doing pay per click (PPC) ads on your first product.


Not only is it worth it, it's an absolute must when you're launching a product! It's the only way to get eyes on your product. Even if you aren't in a super competitive category, PPC brings your listing to the first page where shoppers will see it and (if all else is right) buy it.


How PPC Works

Amazon receives hundreds of thousands of searches every day. Most of these searches are multiple words or what we call long-tail searches. When someone searches, Amazon returns the products they think the user desires most. These are known as the organic results. Mixed in with them are the sponsored results. These sponsored results appear based on relevance as well as how much the seller is willing to pay (bid) if the customer clicks that result.


If your product is buried on the 4th or 10th page of the search, your chances to get any sales are nearly impossible. How high you rank on the search results are based on Amazon's algorithm, which favors products with more sales velocity. Simply put: you won't get any sales because you don't rank high enough and since you don't rank high enough, you won't get any sales. Sponsored ads are the solution to this problem.



How to Set Up a PPC Ad Campaign

Creating the campaigns is straightforward compared to other paid advertising platforms. Sign in to your Seller Central account, then on homepage hover over Advertising menu, from there choose Campaign Manager. When you name your campaign, keep in mind that you can create multiple ad groups within a campaign, so choose a broad campaign name. The four core components to focus on:

  • Budget and Bids

  • Keywords

  • Match Types

  • Optimization

For the budget, it is important to get as much exposure as possible when you are launching. While the sky is the limit, you max daily spend will rarely all be used. It will depend on how much you are willing to invest, how much margin you have, and what percent of traffic converts to sales. To place your ad, you bid on keywords that you want your product to rank for in search results. This is a cost-per-click bid, you'll pay every time a buyer clicks on your ad. Ideally, your bid will be high enough to win, but low enough to be profitable.


You may choose to take a loss, in the beginning, to get units moving, but to determine what is a loss vs profitable paid advertising you will need to calculate your margin to get your advertising cost of sale (ACoS). Your margin is the sale price minus the cost of goods and all fees, including shipping. Your margin divided by your selling price is your ACoS threshold or breakeven point.


Example: You sell your product for $32. Minus all fees you are left with $13. 13/32=0.41 or 41% ACoS threshold. Any keyword that has a cost of sale of 41% or less is profitable. You can see you ACoS in the keywords tab of your advertising tab. Visually, it is easy to determine what is performing within your target.


Under the Campaign Settings page, you will set you ad campaign name, daily budget, campaign time frame, and targeting. Setting a daily budget is a way to minimize risk, for now, pick $50. If you entered a super competitive category it may make sense to have a daily budget of only $10 or $15. You can stop paying after you've gathered a statistically significant number of impressions. In your time frame, pick an end day about one month away. Remember, we can always change these and likely will. This is just to get the process started. This brings us to targeting.


There are two targeting types when you set up your advertising campaign: Automatic and Manual. In an Automatic campaign, Amazon determines what search queries to show your ad for. In a Manual campaign, you choose which keywords to display your ads for.


In an Automatic targeting campaign, Amazon will crawl your listing and determine what keywords, what match types, and what to bid within your budget. Starting with an automatic campaign for 1-3 weeks will get you some real data and reports to tell you what people are searching for to find your product and which of those search terms convert the best.


Take the data from your automatic campaign and use it to intelligently start a Manual campaign. Don't turn off the automatic campaign just yet! Reduce the budget, add negative keywords, and let it keep working to hunt for keyword opportunities. More on that in a bit.


The Manual targeting campaign requires you to provide a list of keywords. This will be a mix of words from your Automatic campaign search term report and words you find using 3rd party software such as Google Keyword Planner, which is free to use at first. Now would be a good time to get a free trial of a keyword tool and milk it for all it's worth.


In a manual campaign, you set the keyword match type. The exact match type only includes your keywords plus plurals and misspellings. The phrase match type includes the above plus a word or two before/after your keywords. Finally, broad matches include the above plus synonyms, variations, and stem words (think grill vs grilling).



Example: Your keyword is "garlic press."

The exact match will include:

  • garlic presses,

  • garlic press,

  • garlics press.

Your phrase match will include:

  • copper garlic press,

  • garlic press for chef,

  • garlic press for home kitchen

The broad match will include:

  • garlic mincer,

  • kitchen tools,

  • copper kitchen tools,

  • garlic pressing, etc.


Now, start your campaigns, sit back, and don't change anything! It'll be 2-3 days before you see results, but you need your campaigns to gather useful data over time for you to make any sound decisions. The more impressions, the more representative of what is actually happening. Tweaking too soon would be making a decision on incomplete information.


How to Optimize Amazon PPC Campaigns

Once you have collected a statistically significant amount of data, at least 1,000 impressions, you can optimize and refine your campaign. If you aren't getting enough impressions, then you don't have a good enough keyword. If you get a whole mess of impressions but no sales, it could mean there is an issue with your listing, photos, title, price, or other things. If your listing is optimized and designed to convert, this shouldn't be a problem.

The goals of PPC optimization are simple:

  1. Cut Wasted Spend

  2. Increase Profitable Conversions

  3. Find New Keywords to Expand Campaigns

Let's filter and sort your PPC report to understand what's working.


First, Filter by Order Numbers: Which keywords are driving the most conversions. Keep this in mind with how much you spend to acquire the sale.


Second, Filter Keywords by ACoS: Identify which keywords convert to a sale and at what ACoS. Too high? Reduce bid on the keyword. Too low? Increase bid so your ad will appear more frequently.


Next, Filter the Keywords by Spend: Make sure these keywords convert and they are profitable (or at least in your tolerance of unprofitable, this is not a long-term plan, it's only for some launches).


Then, Look at Bids: If keyword converts but ACoS is too high you can make small incremental adjustments (about $0.25 per week) until it's in the sweet spot.


Finally, Look at Broad Match: Anything and everything that is remotely relevant will come up here. To control searches with better accuracy use negative keywords.


Now, let's cut wasted spend by using negative keywords. Negative keywords are one of the most effective means of reducing ad spend while improving relevance and conversion. Adding a negative keyword will prevent your ads showing for irrelevant terms thus saving you money from clicks. In Campaign Manager, click on the Campaign Settings tab. Then click on negative keywords. Any phrases you include in this box will be excluded from the auction of keywords. You can add these at the campaign level or ad group level. You can also add them to your automatic targeting campaigns to tell Amazon they're irrelevant.


To increase profitable conversions consider moving a targeted keyword from broad match to exact match. Not only does Amazon show a preference for this, but it allows you to have more control of your bids to hone important converting keywords.


New keyword opportunities will come from the search terms report. You want to determine what buyers are searching for and purchasing. Filter by product sales and use keywords that have had sales and add them to an exact match campaign. Different search terms perform better with different match types. Also, use your favorite keyword tool to help discover new opportunities as well.


Keywords, Keywords, and More Keywords.

While there is no right number of keywords to include, you'll want to start with at least 200 in your targeting campaigns. Amazon search is about long-tail keywords that may be 4 words or more. If you start with too small of a sample set it will be hard to identify those keywords. Bear in mind, you can make changes at any time and remove keywords. You can find keywords using the free Sonar tool from Sellics.


All keyword suggestions in Sonar are based only on Amazon search queries. Including other sources such as Google would produce inaccurate results as consumer behavior differs significantly. Think of this: When someone searches on Google they are looking for information. What is? How do I? Do I need? When someone searches on Amazon they are looking to buy. Show me X. Oh, that's what I want! One-click purchase and two-days later it is on your doorstep.


The way Sonar works is to search a huge database of product/keyword combinations. The data is now (August 2018) updated on a continuous basis. Previously, the data was pulled in batches, but a switch to new infrastructure has allowed them to pull continuous search term data from Amazon. Keywords will now get picked up quickly for newly launched products. Not bad for a free tool, eh?


To determine what keywords your competitor is ranking for (a healthy amount of spying, I'd say aiming to emulate success) use Sonar's Reverse ASIN lookup. It will include the most recent list of the keywords your competitors are ranking for on the first page of search results. Even with this new update, I'd still keep Automatic campaigns on to mine a keyword opportunity before it is "public knowledge" to all sellers.


Summary

Amazon PPC will boost your business. There's too much competition to rely only on selling a quality product. PPC makes your product highly visible to attract buyers in a crowded marketplace. The easier it is to find your products, the easier it will be to make sales. PPC ads are a necessary part of your budget when you plan to buy and launch a product whether it's your first or fifth product.

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