This post is by Tara Johnson, Lead Reporter for Retail at Tinuiti.
Web Retailer’s Amazon Sellers survey showed that 67% of Amazon sellers actively promote their items, and of those 74% use Amazon Sponsored Products, making it by far the most popular form of advertising for Amazon sellers.
But there are many Amazon sellers – a third, according to the survey – who don’t promote their items in any way at all. And why should they, when they already pay Amazon fees to sell their products?
In this article, I’m going to explain why you should consider using Amazon Sponsored Products to help grow your business. I’ll take you through the nuts and bolts of how it works, with a real-life example and some practical advice on how to get the best ROI.
What is Amazon Sponsored Products?
Sponsored Products is one of the most powerful Amazon advertising tools sellers can leverage to increase profitability for their online store.
Amazon is designed to provide the most relevant and compelling product information on product pages and Amazon search. For Amazon sellers, the goal is getting more visibility on Amazon search by increasing product Discoverability and converting more detail page sessions into orders.
Driving shoppers to product pages (Discoverability) and converting those shoppers once they reach the product detail pages (Buyability) – are the two major levers for Amazon seller strategy and the foundation for success on Amazon.
Sponsored Products can appear below the search results, in the right column on the search results pages, and in an ad placement on detail pages. Ads may also appear on both mobile (as seen below) and tablet browsers.
Why Should Sellers Consider Using Sponsored Products?
The primary goal of Amazon Sponsored Products is to get items placed on the first page of the Amazon SERP for desired search terms. Leveraging Sponsored Products so that your items can be found on Amazon is essential to sellers who want to maximize their visibility on the Marketplace.
Amazon sellers can use Sponsored Products to:
- Increase product Discoverability
- Get more Buy Box traffic
- Positively impact Buy Box factors
- Highlight new offers
- Display unique selections
- Gain exposure to offers with low sessions
- Increase visibility for clearance items, and seasonal promotions
- Overcome the inertia of listing a new-to-Amazon ASIN with no pre-existing sales history
Sponsored Products also offers robust advertising options through manual and automatic campaigns.
- Manual targeting ads are surfaced by the relevancy of the shopper query to the seller’s chosen keyword targets. In other words, Manual targeting lets sellers explicitly identify the keywords for searches their ads are surfacing for.
- Automatic targeting ads are surfaced by the relevancy of the shopper query to seller’s product content. With automatic targeting, Amazon targets a merchant’s ads to all relevant customer searches based on product information.
In January 2016, Amazon introduced Automatic targeted campaigns for Amazon Vendors. Previously, Sponsored Products’ automated campaign targeting was only available to third party sellers (not vendors) but now both vendors and (select) 3Ps have access to these types of campaigns.
Because campaigns with automated targeting are designed to generate more search traffic to ads, introducing this feature to vendors will significantly improve their visibility on the Amazon since these ads are served based on the relevancy of the shopper query to the seller’s product content.
Generally speaking, we recommend sellers start with automatic campaigns and use performance data to inform the creation of more aggressive manual campaigns – there’s more on that below.
Example of How Sponsored Product Ads Can Increase ROI
We’ve seen direct results from all three of Amazon’s vendor advertising solutions including Headline Search, Sponsored Products and Product Display Ads. But, in our experience we have seen the biggest impact from the Sponsored Products’ program.
Below is an example of how a tool manufacturer was able to successfully increase sales, visibility and brand awareness using Sponsored Products for the first time.
With no active Amazon PPC strategy in place, the power tool manufacturer mentioned below was faced with the challenge to improve their ROI in Q3. The first step to improving their campaign strategy was launching their AMS campaigns.
The manufacturer built out five new Sponsored Products campaigns each week, in addition to the development of one Headline Search ad and one Product Display ad (to target their competitors).
The power tool company decided to focus more on their Sponsored Products development (rather than Headline Search and Product Display Ads) since Sponsored Products is known to have a higher ROI.
As a result, the vendor saw their overall sales increase 43% during a 4 month period, largely thanks to their marketing efforts through Sponsored Products campaigns.
Practical Advice on Using Sponsored Products
1. Harvesting The Best Keywords
Harvesting keywords is a vital component of an Amazon seller’s strategy. Bidding on the right keywords for your products can improve your page sales rank and organic listings, and will ultimately influence your product sales.
Since Amazon customers tend to have a higher intent to purchase, selecting the best keywords for your products is essential to your marketing strategy. One of the most useful tools available to sellers within Sponsored Products is the Search Term Report.
Although many third-party Amazon keyword tools look appealing, they will not give advertisers the raw data required to make educated bidding decisions. Third party keyword services can definitely bring value to your campaigns, but they should only be used as a complementary tool to Sponsored Products data.
This is why we recommend that advertisers utilize the Search Term Report for Sponsored Products located in Seller Central as their main source of keyword harvesting.
The biggest reason you want to pull this type of report is because it’s actual customer data. It’s not theoretical search term data, this is what your customers have been searching for to find your products.
2. Redefining Campaigns & Budget Awareness
Unfortunately, when it come to Amazon’s advertising efforts such as Sponsored Products many sellers still have their reservations, specifically around spend.
Sellers should start with Automatic campaigns at low bids and gather data around what keywords are performing best. Once you have some actual data to go off of, you can confidently begin to make manual campaigns around keywords that perform well. This way you know you are bidding only on keywords that convert at a profitable rate.
It will be key to watch how certain products and campaigns are performing. If they are performing poorly, you can cut back spend in those areas and reinvest it into the campaigns/products that are proving to perform well.
You can also set budgets for multiple campaigns as well. Let the campaigns run out of spend a few times to know which ones could benefit from larger budgets. If they perform well, increase your budget. If they don’t, then reduce or leave it the same.
Additionally, Amazon sellers can set daily budgets at the campaign level or a daily spend that would encompass all campaigns.
If you are especially concerned about your marketing dollars, you could set an account daily cap of say $50 or $100 and regardless of your campaign daily budgets, you will never exceed the account-wide spend.
Usually we wouldn’t recommend sticking with an account-wide budget instead of a campaign level budget, but if you are restricted to a certain daily dollar spend it is a good way to stay within your means (as seen in the account wide example below).
Just make sure that if your marketing spend is your main concern you are not panicking or making rash decisions every other day.
Set a budget and bid level and keep it steady for at least a week, ideally 7 to 14 days, without making any changes so you can get a clear look as to what your ACoS (advertising cost of sale) will be for those products at that bid level and budget.
Sponsored Products is a powerful tool, and it can significantly boost your sales on Amazon. In this article I’ve set out some key strategies to help you make the most of it.
I hope you’ve found it useful and I’d be happy to answer your questions in the comments below.
For more information on Amazon Sponsored Products, email me at [email protected]
This post was by Tara Johnson, Lead Reporter for Retail at Tinuiti. Named one of the top 50 Ecommerce Experts in 2015, Tara specializes in premium content creation with a focus on the Amazon Marketplace and Google Shopping. She is also the leading voice behind CPC Strategy’s Blog and a contributor to Search Engine Watch.
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Amazon Sponsored Products: How to Increase Your ROI