Hey, Dave here. Today’s podcast will once again be about PPC. But, we’ll be going into the more advanced strategies that Mike did not cover in his popular podcast on the same topic.
So, what can you expect from this particular episode?
- A refresher on the main types of Amazon advertising
- A look at Amazon Bit+
- New product targeting that was recently rolled out
- Headline search ads
Listen until the end for more information on these. If you’re looking to really dig deep into these new concepts and strategies, I’ve written a blog post that should be able to supplement what was discussed in this episode.
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Full Audio Transcript
Dave: Hey guys, Dave Bryant here with the EcomCrew Podcast. Today I am doing an episode solo, talking about some more advanced Amazon PPC strategies that you can use for your brands to hopefully get a better ACOS for your products and also get some more revenue coming in through your advertising campaigns. So, I'm going to talk about a couple things that Mike didn’t address in his really popular podcast he did a few weeks ago, podcast 147, Amazon PPC step by step guide. In this podcast, I'm going to talk about some things like Amazon Bid+, the new product targeting that Amazon rolled out and headline search ads.
So let's get into it. So the Amazon today, there's three primary ways to advertise, at least for your kind of typical third party seller, their sponsored products and that's the one that most of us are probably doing, their sponsored brands, it used to be called headline search ads. And again, this is one that probably a lot of us are doing. And now there's something called product listing ads/ product targeting. And this is what Amazon rolled out last month in November. And they made it open to basically all third party sellers. Now, these ads used to be available mostly to people who used to hack to get access to AMS within Amazon. And AMS is basically Amazon's kind of advertising platform outside of Seller Central.
And these ads are really powerful. But again, people haven't had access to them until last month. And what these ads allow you to do is to target particular products that you want to advertise on. So these are normally your competitors. So if you're selling a garlic press, if you’re selling Dave Bryant's garlic press, then you would target Mike Jackness’s garlic press, Jane Doe's garlic press, etc, etc. And these ads are going to appear in a couple of different places. Normally, they're going to appear beneath the buy box. And if you browse around Amazon, you'll see what I mean here, there's ads that appear beneath the buy box for different competitors’ products. And the other area that they appear is as sponsored products related to this listing.
Now that last one, sponsored products related to this listing, they appear around the middle of the product detail page. And these formally, you could only get access to through automatic campaigns. And with automatic campaigns, you of course, cannot really control a lot of the targeting with an automatic campaign. So Amazon was basically using their best judgment to guess what pages are relevant for your products, and then they place your products on those pages. And to be fair, Amazon actually does a fairly decent job of targeting, at least in my review of my advertisement reports, Amazon, those targets that they do on my competitors’ products normally have some of the best ACOS of all of our ads.
So to get access to these, you simply create a normal sponsored products campaign like you normally would. And then just like how you normally choose between automatic targeting and manual targeting, you'll now see this third option their called product targeting. And this is where you can enter a bunch of different ASINs for your competitors that you think you will convert well on. Now, how do you get these ASINs? You do a couple of different things. If you know your niche inside out, then you probably have a good idea of who your top competitors are anyways, and those are a good place to start.
The other thing you can do and this is the most effective by far, you download your automatic campaigns, you take the ASINs out of there, you plug them into your product targeting campaign. And now all of a sudden, you have way more control than you ever had before with automatic campaigns. When you set up one of these campaigns, you're also going to see that Amazon has so conveniently given you the option to target by demographics, by category, and a bunch of other macro level variables. Don't do this. In experience working with AMS, the old basically platform for these types of ads, these types of targeting do not work well at all. And it makes sense if you think about it.
If you're again, if you're selling a garlic press, well, you want to be targeting other garlic presses, because people are probably looking for garlic presses at that point, instead of targeting like a broad kitchen category. Now, the advantage is when you do target broadly like that, sometimes you can get some really cheap clicks. But the chances of these converting are far less likely than if you're targeting ASINs. So at least in the beginning, I highly, highly recommend just targeting ASINs, don't look at any of these demographic variables that you can start targeting. It's not nearly as flexible and as powerful as Facebook is. If you're a Facebook advertiser, you know you can go crazy with your targeting and do some really magical things. You can't do this with Amazon. So just forget that you've even seen that part of product targeting.
Now, the other type of advertising you can do within Seller Central is sponsored brands, formerly known as headline search ads. Now, if you're not using these, you should be because headline search ads, like everything new has a slightly lower cost right now that it's probably going to have a year from now and once all the cool kids start using sponsored ads. Now, sponsored ads are used by a lot of people. But a lot of people are still ignoring sponsored brands. Now, with sponsored brands, there's one kind of caveat that you need to know about using them and it's that you need to have three products to actually use them, because these sponsored brands appear at the top of search results pages, and they're basically a listing of three different products.
So if you have one product, you only have one giant skew in your Seller Central, you're not going to be able to use sponsored products. But chances are good that you do actually have multiple products in your Seller Central. And so you can pick three desperate products and advertise them on your sponsored ads. But you should not do this. You want your sponsored ads to be as tight as possible, you want those three products that you're going to display there to be as related as possible. And the hack that kind of works really well right now is to have just variations there in your sponsored ads.
So we sell a lot of different ropes, we basically have our different rope sizes being advertised there. So we'll have a half inch rope being advertised, a 70 inch rope being advertised, and a seven inch rope being advertised there. And this works really well. So if you have any color variations, any size variations, just use those variations in advertising in your sponsored ads. So in the actual product development stage of your products, if you have a product with variations, and you're doing two variations, maybe a blue and a red running shoe, it's worth considering actually developing a third variation simply so you can use sponsored brands within Amazon. So if you're going to have a blue and a red shoe, think about making an orange shoe because then you can really use sponsored brands effectively and get some pretty good ACOS.
So it's again, like a lot of things it's worth to consider these things in the product development stage when you're thinking about your products, and you're having them manufactured. Now, in terms of targeting with sponsored ads, these are all keyword dependent. So you pick a bunch of keywords and you target them. It's not a whole lot different than sponsored products. Now, Amazon suggests five different strategies for bidding on sponsor brands. I'll go over these really quickly. And then I'll tell you why you don't want to be using most of these. So Amazon recommends branded keywords.
So if you're selling Nike's, then you'll bid on the word Nike, Amazon recommends competitor branded keywords. So you'll target Reeboks, if you're selling Nike's. You can bid on complimentary product keywords. So for example, if you're selling Nike shoes, then you could target shoe laces. You can target out of category keywords. And I have no idea how this could ever go bad targeting something completely unrelated. But basically, again, if you're selling Nike shoes, you can start targeting things like running shoes and hiking shoes and just go crazy with a bunch of different categories that you're targeting.
And finally, you can use sponsored product automatic targeting keywords. Basically, this is Amazon's way of saying, go into your automatic campaigns and download your most successful keywords, and put those in your sponsored ads. And yes, if that sounds good it is. So let's go over these really quickly. So, the most successful type of targeting that you're going to do is simply to take all those keywords that are doing well in your sponsor products. Hopefully you have nice manual campaigns for these products and keywords, take those keywords, and plug them into sponsored brands, and you're going to get similar good results.
The other thing that you should be doing is using branded search. And again, you're probably doing this with your sponsored brands. But people are actually searching for your products, so hopefully you have a nice giant brand like Nike or Reebok, thank you for listening by the way. Take that brand that you have and make that one of your keywords that you're targeting, and of course, have all your variations in there. So again, if you're Nike, you'll be targeting Nike running shoes, you will be targeting Nike basketball shoes, Nike tennis shoes, etc, etc.
The ones that you do not really want to be considering targeting, and this comes from Amazon's documentation is the first one is competitor branded keywords. Yeah, sometimes competitors’ keywords do work well. So if you're selling Nike's target Reeboks. The truth of it is though Amazon is a very bottom of funnel marketplace. People normally know what they're searching for. It's hard to move somebody off buying a pair of Reeboks if they're committed to buying Reeboks. The other one that Amazon recommends complimentary product keywords. So again, if you're selling running shoes, targeting shoe laces, but again, Amazon is very bottom of funnel.
So yeah, you might be able to catch somebody who's looking for running shoes and also sell them on a pair of shoe laces. Chances are pretty bad though, that you're going to be able to do that. The only time this actually becomes worthwhile is if you can get bids at just pennies and pennies on the dollar, then yeah, maybe you consider it and monitor those campaigns very closely. But in my experience, rarely are those profitable. And the final one, out of category keywords. So again, these are somewhat loosely related category keywords but not that related. So if you're selling running shoes, then you target something like hiking shoes and that type of thing.
Again, it's hard to convince those people who are searching for hiking shoes; it's hard to convince them to buy a pair of running shoes. So, I wouldn't consider those three types of targeting which Amazon has the kindness of heart to try to suggest that you do target. So just stick to branded keywords and all those keywords that you have in your sponsored product campaigns and just plug those into your sponsored brands.
Okay so let's talk about ACOS, how sponsored brands and product targeting ads compare to sponsored products, and also how much money should you be spending on advertising in general. So, I'll give you the lowdown here really quick with how sponsored brands and product targeting ads compare relative to sponsored products. And the lowdown is that they have a higher ACOS than sponsored products. Sponsored products still have overall the best ACOS of any advertising medium on Amazon today. Now, I'll give you some numbers here that I compiled last year comparing the three types of advertising. Now keep in mind, things have changed slightly since last year. But overall, these numbers I give you right now are going to be fairly applicable.
So, for our sponsored brands on the brand that I tracked, our average ACOS was 10%. For our product targeting ads, our average ACOS was 19%. Now that sounds fantastic. Keep in mind though, that our average ACOS of sponsored products was just 7% for this brand. So headline search ads were around 40% higher ACOS than sponsored brands. And our product targeting was well over twice the ACOS of our sponsored products. And talking to other people, this is pretty consistent with their experience, headline search ads, product targeting ads; they're always going to be more expensive than sponsored products.
Now, some people have had better experiences. Some people have found that product targeting ads perform better than sponsored brands and vice versa might be true. You can play around with it. But again, just expect that you're going to spend more for those two types of advertising than you will for your sponsored products. And that's one thing to keep in mind. If you're selling your sponsored products, or not selling, but if you're running your sponsored products at either breakeven or a loss, you're probably going to be in the negative if you start toying around with these types of advertising mediums.
And if this is the case for you, I definitely recommend refining those advertising campaigns that you have right now, making sure that those are tight. And I mean, your sponsored product campaigns are tight before you start really messing around with other types of advertising, because if you're losing on your sponsored products, you're going to lose even more on these types of advertising. Conversely, though, if you do have some really tight sponsored product campaigns, and you're just trying to throw more money at them because they're turning your nickels and the dimes, well, if you start using sponsored brands and product targeting, you're probably going to increase your sales incrementally, and you're going to do it while profitable.
So again, if you have some nice, profitable sponsored product campaigns, well, by all means, start throwing some money at sponsored brands and product targeting. Okay, now let's talk about how much money should you be budgeting for advertising overall, within Amazon. So I talked to five higher volume sellers. Most of these sellers had revenue of a million dollars or above per year. And I asked them how much of your sales are coming from Amazon advertising. So basically, if you're selling a million dollars on Amazon, how much of that is coming through organic sales, and how much of it is being accounted for from advertising? And you can see this number within your Amazon dashboard, Amazon advertising dashboard, it'll tell you how much, every revenue is accounted for from advertising.
So I asked these sellers how much of it is coming through various PPC campaigns. And of these five sellers, their totals range from 25 to 35% of their total Amazon sales were coming as a direct result of advertising. So, for someone on that 25% spectrum, if they had a million dollars in sales, 25% of their sales were coming through paid advertising, and 75% of it was coming through organic results. Talking to people over the last year or so, this number is pretty consistent with what I've heard off the record. Most people are getting about one quarter to one third of all their sales coming through advertising. And again, this is more support of the idea that Amazon is becoming predominantly a pay to play marketplace.
Now, while there's consistency with how much of a person's overall sales are coming as a direct result of advertising, when it came to average ACOS, these were all over the place. And they ranged anywhere from 16% of an average ACOS just for their advertising campaigns all the way up to 80% of their ACOS for their advertising campaigns. So there's really no consistency there. Most people who are listening to this probably want like a ballpark of how much they should be spending as a target ACOS, and of course, this really varies depending on the margins for your products.
And by the way, the person who does have an 80% ACOS, I know their products pretty well and they're closer to a 60, 70% margin product so of course, they can afford to spend a lot of money on advertising. If you're kind of a lower margin seller, which unfortunately, most of us are, staying below 30% is a good kind of rule of thumb. I personally, I actually like to keep my ACOS well below 15%, and below 10%, even ideally. Now, of course, around this time of year ACOS too start to get higher, but looking at it over a year, that's kind of my rule of thumb; keep it below 30 for most sellers. And ideally, at least in my case, I try to keep them under 15%.
Now, again, there's always caveats to trying to give these rules of thumb. If you're a newer brand, you do you have to spend a lot more on ACOS. It's just a fact of life because you're going to have a lower conversion likely because you have few to no reviews on your product. So your conversion rate is going to be lower than for a well established product that has a ton of reviews, has the content refined, has excellent imagery, all those good things, they're going to have a better conversion rate. And that means that a better conversion rate is always going to result in lower advertising costs.
All right, one more thing to kind of touch upon here before we wrap up, and it's Amazon's Bid+ bidding. Now, Bid+ bidding is basically an ability within your manual campaigns that allows Amazon to increase maximum bids in a campaign by up to 50% when ads are eligible to show on the top of search results. So for example, if you're bidding $1, and you're just barely missing that first page, and the top bid is $1.20, then Amazon will at their own discretion, they'll up your bid up to that $1.20 to get you appearing on the first page of the search results. Now, again, if you're like me, you're pretty skeptical of this, Amazon wants to spend more of my money, I don't want to do that. And so you just ignore it.
But Amazon Bid+ actually works pretty well in my AB testing that I did. So, I compared it, I compared August without Bid+ on a few campaigns and I compared it to September where I turned Bid+ on. And to give you kind of a summary, our average ACOS went up about 30 to 40%, depending on the campaign. And that's to be expected; we're spending now more on our bids. But conversely, our sales went up anywhere from zero percent all the way up to 400%. So by being able to have our ads appear at the top of search results, in some cases, we’re able to almost quadruple our sales. So it's incredible.
And when I talk about this 35% increase in ACOS, that's growth. That's not like an extra 35% on our ACOS. So if we had 10% ACOS before, that means that our new ACOS after putting Bid+ on was 13.5%. So it's manageable. Again, if you're running profitable campaigns, you have a little bit of money to throw at it and your big problem is that you're not getting enough impressions and enough sales, then definitely consider Bid+, because it's actually going to increase your sales pretty significantly. You're going to have a cost on this, yes, you're ACOS is going to go up but if you can afford it, you're going to get rewarded with a lot more sales. And hopefully, not only are those sales going to directly pad your coffers but they're hopefully, also going to increase your velocity and get you some more sales overall resulting from organic.
So to turn Bid+ on again, this is only applicable to manual campaigns, go to your campaign settings, kind of right around the area where you set your daily budget, you'll see an option to enable Bid+ bidding. By default, it's going to be off. And that's probably a good thing for most people. So you have to enable it, but that's how you find it.
That last thing I should kind of mention here is that within Seller Central, as third party sellers, we have access to all these different advertising types that I've talked about here. Now, what you don't know perhaps is that there's a lot of other advertising options available mostly to higher volume sellers and people who sell directly to Amazon using Vendor Central. Now, Amazon has an entire website called Amazon Advertising. Just go to advertising.amazon.com, and you can see some of these nifty different ways that advertisers are allowed to advertise on Amazon.
They include things like category sponsorship; so basically, you can sponsor the entire fishing category on Amazon. Product display advertising, this is basically banner ads. Video advertising through prime video and off Amazon display advertising that encompasses a whole bunch of different things. Now, in my previous life when I was a Vendor Central customer, with my boating brand, we used to always get pitched by our buyer about spending a bunch of money on one of these different advertising mediums. Now these different advertising mediums seem to share a couple of things.
First off, they're all ridiculously expensive. So these are not pay per click advertising mediums. Actually, they might be, but on top of that, if you can pay per click, you have to make a significant commitment just to be even on the platform. So normally, it's a low to medium five figure investment. So, I believe when we got pitched to sponsor the entire fishing category; I think our buyer wanted us to spend about 15 grand to get that sponsorship and that was on the lower end because fishing is not that competitive of a category. So for some of the more competitive categories like running shoes, it can be really, really expensive.
And the other commonality that these things share is that they're not really bottom of funnel advertising campaigns. These are top of funnel build brand awareness types of advertising campaigns. So most of us running private label brands, that is not really us. I know we all think that we run these amazing brands and some of us do. And we all have nice little brands, I'm sure. But we're not Nike's and the Reeboks of the world where you’re just trying to get some brand awareness and hopefully two or three years down the road capture somebody looking to buy a pair of running shoes. So you're not missing out a lot by not having access to these different advertising options. But it's worthwhile for you to be aware of that they do exist out there.
So, that kind of wraps up this follow up episode on kind of some more advanced Amazon PPC strategies to give you a broad overview of how your account should look. So, if you have a really well optimized and smooth running machine running, you're going to have a few different advertising campaigns, you're going to have your automatic keyword campaigns, you're going to have your manual keyword campaign. So that's going to contain a mixture of exact match keywords and broad match keywords. You're going to have a manual targeted product campaign, and that's the new one that Amazon rolled out in November, definitely take a look if you haven't already. And then you're going to have your sponsored brands aka headline search ads.
So those are the biggies that you want to have in your account. It's a lot of work, especially if you have a significant catalog. But Amazon advertising is extremely effective still, and if you put your time and effort in you can make it profitable as well. So that's it for this episode. If you go over to EcomCrew.com/Amazon-advertising, you can check out the follow up blog post to this where you get some cool imagery to go along with hearing me blurb, and until the next episode, happy selling.