How do I start with Amazon advertising?

Advertisers must have a professional seller account and the buy box of a product to be able to advertise on Amazon. For vendors, Amazon Retail must own the Buy Box for Sponsored Product Ads to be played. The playout of Sponsored Brands is independent of the ownership of the Buy Box. If you own the Buy Box, you should follow the steps described below.

Status Quo Analysis: Is your product “Retail Ready”?

  1. Optimizing the product detail pages for product qualification 

The relevance of sponsored products is based on the organic ranking and the product information provided by the retailer. To become relevant for the Amazon algorithm A9, all self-influencing information should be optimized. These are:

  • Product title
  • Attributes
  • Product pictures
  • Description
  • Reviews
  • Response time
  • Terms of delivery
  • complete product data
  • Price
  • Backend keywords
  • Customer feedback

The result of good search engine optimization (SEO) is to appear on the first page within the organic search results. As long as this is not the case, sponsored product ads will help to become visible to potential customers inappropriately in important places. However, a search engine optimized product listing is also important for Amazon advertising. Firstly, because Amazon considers the ASIN to be more relevant and secondly because clicks on the ad and sales are more likely if the product detail page is of high quality (all necessary information as well as product images, etc. available).

  1. Break-even ACoS (Advertising Cost of Sale) calculation 

Various performance values can be used to measure the success of PPC ads. One very well-known value is the Advertising Cost of Sale or ACoS for short, which represents the ratio of advertising costs to advertising revenue. It provides information about the efficiency of advertising, but not about absolute costs or sales. At this point, the importance of the so-called break-even ACoS is already explained. Before you create an advertisement, you should always know the break-even ACoS of each advertised product, since this tells you the value at which your advertisement becomes unprofitable.

However, it is not possible to give a blanket answer to the question of the ACoS value above which the ad is generally profitable since each product has a different margin. What is a very good ACoS for one retailer can be an unprofitable value for another.

Therefore, to determine the profitability of a campaign, the break-even ACoS of the product must be known. This is the value at which the costs incurred in the sale, including advertising costs, of a product and its sales are equal. This means that neither profit nor loss is made.

The break-even ACoS is calculated by deducting all taxes, costs and fees as a percentage of the sales price of the product. For example, if the profit margin of the trader with product X is 21% after deducting all costs, the trader with an ACoS of 21% for this product makes no loss – but also no profit. For this product and its campaigns, the ACoS should, therefore, be lower than the break-even ACoS of 21% to make a profit on the advertising. We have visualized this in the following figure.

You must know your break-even ACoS before you start your advertising campaign to see if it is profitable and if not, to be able to make the appropriate adjustments.

  1. Keyword research 

For your Sponsored Product Ads to be played, you must define the keywords or ASINs for which your ad is to be played. 1DigitalStack helps business to find the best keywords for Amazon via their highly advanced Machine Learning based algorithm. They help you to optimize Bid Optimization and Intelligence to help your business grow exponentially on Amazon and other marketplaces.

Since this is often not sufficient for a target group-oriented play out, you should carry out your keyword research. You can either use a tool to help you, or you can do manual research. We recommend that you do both in parallel.

Consider both fat-head and long-tail keywords.

Despite the rather low search volume, long-tail keywords are important because — precisely because of their specification — they often generate a high sales rate.

  1. Target definition 

Some Amazon merchants start Amazon ads without being clear about what exactly they intend to do with them. This makes it difficult to find the right strategy for each product to be advertised. On the other hand, individual campaigns can be more difficult to evaluate in terms of their success or failure.

You should, therefore, set a target for each product you want to promote before you start advertising. These are goals such as increasing sales, profit maximization, awareness, etc. Depending on which target you choose, you will define different advertising formats as well as budgets, bids and target values.

This also depends on the status of your product in the product life cycle.

After a product launch, for example, it may make sense to first make the product known with high daily budgets and an aggressive strategy. Profitability need not be a priority. Once the product is established, the ACoS and profit should be kept in mind. In the degeneration phase, either high bids can be used to pick up the few interested parties for the “expiring” product before the competition. Or you can pay more attention to ensuring that the advertising remains profitable and accept little play out. Check out the guide on ‘How you can succeed on Amazon’.

The decision for an advertising format also depends on the goal you want to achieve with your advertising. Sponsored Brands are therefore ideally suited to create brand awareness and make your brand known. Sponsored Display Ads, on the other hand, can be used to generate additional sales and increase turnover if products have advertised that complement the targeted product.

How do I create a Sponsored Product Ad?

Once the optimization of the product listing and keyword research has been completed and the target has been defined, you can start building campaigns.

Since the Sponsored Product Ad is the most used advertising format on Amazon, the following describes how to create an ad of this format in Seller Central.

Sellers can create Sponsored Product Ads within Seller Central, and vendors can create them within the Advertising Console (formerly AMS or Amazon Marketing Services). The user interfaces look relatively similar.

Create 1st Campaign.

After logging in, click on “Advertising” at the top of the navigation and then on “Manage campaigns.”

By clicking on the yellow button “Create campaign”, a campaign is created.

After that, you set up the campaign and select the following data:

Campaign name

Think about a uniform, easily identifiable name syntax. This includes ASIN, Match Type and focused strategy e.g. SPA | {SKU} | {ASIN} | {Short Title} | {Match Type} ] | {Focus}

Start and end date

Choose a start date and optionally an end date or let the campaign run indefinitely. We recommend the latter.

Daily budget

This is the maximum budget available on average per day for this campaign. The costs per click are automatically deducted from this budget. We recommend starting with 20,- EUR.

1.Alignment (auto and manual campaigns) 

Start with an automatic campaign and use manual campaigns immediately, or after a few days at the latest, using Amazon’s search term report. With the keyword report, you can see which keywords have triggered which search terms for your ads. You use these keywords as keywords in the manual campaign.

  1. Choose the bidding strategy. 

The next step is to select the campaign bid strategy. You can choose from the following three bidding strategies:

Dynamic bids – lower only (our recommendation)

Amazon lowers the bids if it is unlikely that the ad will generate a sale. This has been applied to all campaigns before 2019 and is also our recommendation.

Dynamic bids – increase and decrease

Amazon increases the bids (up to 100%) if it is likely that the ad will trigger a sale and lowers the bids if it is unlikely.

Fixed bids

Amazon does not change your bids depending on the probability of purchase.

  1. Create ad groups. 

You can then create an ad group as a seller in Seller Central within the campaign. Give it a name and only select products for an ad group that is very similar, e.g. all children of a Parent ASIN, as they will receive the same keywords. In principle, the relationship between the performance of a product and the keywords within the ad group or campaign lost on more than one product. Similar products, therefore, often represent variations by size or colour.

For auto campaigns, you can now either set the “Set default offer only” at the ad group level or set individual bids for four automatic targeting groups.

The bid is the maximum bid you are willing to pay for a click. We recommend

working with crooked bids and starting with 0.27 EUR or the max. CPC.

  1. Set negative keywords 

In the last step, you can add negative keywords to your campaign.

Then click on “Start Campaign” and your Amazon Sponsored Product Ad is created. If you have not already done so, we recommend that you transfer keywords from the Auto campaign to a Broad and Exact campaign and make the appropriate bid adjustments. Also, the bids of the targeting groups in auto campaigns (e.g. replacement targeting) should be adjusted up or down depending on the performance. The next goal is to identify good and bad performing keywords in the Broad Campaign and to transfer them into an Exact Campaign to increase and decrease their bids individually, thus enabling precise control.