Digital advertising is the best way to get your product in front of a massive audience. Whether through Facebook, Instagram, Google, or even TikTok, brands that put effort into digital marketing will almost always see success. This is no different for Amazon. Brands who create sponsored content around certain products have a better chance of seeing a better return on those products, which ultimately grows their business as a whole.
As more people have realized that sponsored ads are a great way to grow their Amazon business, the cost to run these types of campaigns has risen. Because of this, it’s important to know how to create a great sponsored ad, how to get them in front of the right people, and how to develop a well-rounded strategy to make your efforts worth it.
Digital marketing takes time, effort, and patience. There’s also a learning curve that you’ll need to go through, but it can bring great results. In this blog post, we’ll discuss everything to do with Amazon Sponsored Products, including:
- Sponsored Product Overview
- Sponsored Ads Cost
- Creating Sponsored Ads
- Developing a Strategy
- Is It Worth It?
Table of Contents
Sponsored Products Overview
According to Amazon, “Sponsored Products are cost-per-click (CPC) ads that promote individual product listings on Amazon.” These ads are simple for anyone to make, including beginners. The ads show up where the customers are searching. For example, if someone searched “spring candle,” and you’re promoting spring candles, your ad will show up in places like the first page of search results and product pages.
A sponsored product will show up with a small tag that says “sponsored.” They’ll also show up mixed in with the organic search results. Because so many people browse on Amazon, sponsored ads help boost brand awareness, make more conversions, and push new or lesser-known products to people searching for similar items. Today, you will notice that everything above the fold is a sponsored post, almost creating a “pay to play” landscape. This further highlights the need to be advertising on Amazon.
You can sponsor almost any product on Amazon, but there are some prohibited items. For a comprehensive list of prohibited and restricted products, click here.
When it comes to items that are eligible for advertising, they have to meet a few requirements. For example, they need to be Buy Box-eligible and able to ship everywhere within the United States
Sponsored Ads Cost
Amazon runs on a CPC (cost-per-click) or PPC (pay-per-click) basis. In a nutshell, this means that you pay a certain amount every time someone clicks on your sponsored ad. The great thing about this model is that you can set a maximum CPC bid, and you will pay just above the highest bidder. They will then charge you every time someone clicks on your ad until your campaign budget runs out. The higher your CPC bid, the higher your likelihood that your ad will get shown in a customer’s feed. However, the bid auction system also takes into account the relevancy of your product and sales velocity and ranking.
The best way to measure your success is by calculating your Advertising Cost of Sale (ACoS). You can get this number using the following formula:
100 x [total ad spend ÷ total sales] = ACoS
The lower your ACoS, the better. Here are some guidelines to go by:
- If your ACoS is below 25%, it’s considered low. If you’re in a good spot, you might want to consider raising your budget to get even more traffic and conversions.
- If your ACoS is 25%-40%, it’s average.
- If you’re above 40%, your ACoS may be considered high, depending on your goals and strategy. If this is happening, you’ll want to look at your keywords and adjust where needed. Some brands prefer to operate at a high ACOS because they are building their brand awareness in the marketplace.
You can sponsor almost any product on Amazon, but there are some prohibited items. For a comprehensive list of prohibited and restricted products, click here.
When it comes to items that are eligible for advertising, they have to meet a few requirements. For example, they need to be Buy Box-eligible and able to ship everywhere within the United States
Knowing which keywords to use
When you’re spending money advertising on Amazon, it’s important to pay close attention to your keywords. Look at popular, high-traffic keywords, but don’t stop there. Make sure you’re not using keywords that are wasting your budget – it happens more frequently than people realize, and before they know it, their ACoS is way too high.
Negative keywords are just as important as keywords when trying to figure out what will work best for your advertising strategy.
Negative keywords will tell Amazon what keywords you do not want to rank for. For example, if you’re selling a kitchen faucet, you don’t want to advertise to someone searching for a bathroom faucet. In this case, you would use “bathroom faucet” as a negative keyword to make sure you’re not paying for clicks that won’t convert.
If you don’t use negative keywords, you run the risk of having a low click-through rate, low conversion rate, and wasted money.
Dynamic Bidding
The dynamic bidding option to Sponsored Product campaigns allow you to adjust your ad spend based on how likely it is that a conversion will take place. Simply put, Amazon will lower your bid if it’s not likely to convert, and they’ll raise it if it is likely to convert. However, it will never go over your set budget.
If your main goal is to get conversions, take advantage of this. However, if your main goals are brand awareness or traffic alone, sticking with a fixed bid or “up and down” bid will be the best option for you.
As digital marketing grows, the ability to customize your campaigns does as well, so finding the perfect campaign for you is more simple and better than ever.
Creating Sponsored Ads
Here’s how to create a sponsored ad on Amazon:
- Go to your Amazon Advertising Console dashboard
- Set the duration of the campaign (don’t pick an end date if you want the campaign to run indefinitely)
- Set your daily campaign budget
- Choose your keywords and negative keywords, or choose “automatic targeting” to let Amazon do the work for you
- Choose which products you want to sponsor
- Set your CPC bids
- Launch the campaign
Setting up an ad campaign can be hard to navigate, especially if you’re doing it for the first time or need help with the creative side. Hiring an advertising agency can lift a weight off your shoulders, and getting expert help can make your campaign even more successful. Laser Sight Digital specializes in Amazon ads, so if you would like help setting up a campaign, reach out to one of our experts today.
Developing a Strategy
No matter what you’re selling, it’s crucial to have a strategy. Whether you’re launching a seasonal item, restocking a popular item, or having a sale, you’ll need to have a solid plan to get the best results. There are two different ways to go about advertising on Amazon, and you’ll most likely use both at some point in your business journey. Here’s a breakdown of the two options:
Automatic
If you choose automatic targeting, Amazon does all of the work. They’ll show your ad to customers who have searched for similar things based on your product listing. You’ll want to start with some auto campaigns so you can get to know your audience, figure out which products perform well, and bid on keywords.
As you learn more about keywords and which ones work best for you, bidding on them will become easy, and you’ll start to see more sales.
Manual
Manual targeting allows you as the seller to choose your keywords, choose your negative keywords, and customize your campaign options.
Again, one might sound better than the other, but they work best when used together. Once you run an automatic ad campaign and learn more about your keywords, audience, and products, you can start running manual campaigns. Here’s how:
- Find the best keywords
After you run your automatic campaign, Amazon will give you the metrics you need to build your campaign. First up, the keywords. You’ll find them in the Amazon Search Terms Report. You’ll be able to see which keywords are performing well, but it doesn’t associate them with a specific product, making it difficult to see which keywords are working best. However, it is still valuable information and you should pay attention to the keywords that are converting well.
- Understand your keywords
When you’re trying to figure out which keywords are good, take a look at the data. More specifically, check the number of orders you’ve received, how many products you’ve sold per keyword, and how many clicks you’ve received per keyword.
- Choose the best structure
Because Amazon metrics don’t associate keywords with specific products, it’s crucial to create a great strategy behind your ads. If you have categories of products, it’s best to advertise one product from every category. This way, you can more clearly understand which products are converting, giving you more control and insight.
For example, if you’re selling workout gear, you might have three categories: bottoms, tops, and accessories. In this case, you’d advertise one product for each of those categories.
- Build your campaign
This is where the fun starts – use what you’ve learned so far to create a solid campaign. And don’t worry if a keyword isn’t performing the way you want it to – you can readjust if needed.
- Look at your Keyword Match
Match types tell Amazon where to show your sponsored ads. There are a few different types to know so you can get the best results.
First, we have Broad Match. If you select this option, your ads will show up for people who search your exact keywords as well as synonyms, and they don’t have to be in a specific order. Next, we’ll look at Phrase Match. If you select this option, the customer will need to type the phrase you’re using word-for-word. While it’s not as broad as the first type, it will give your ad to people who are searching for your exact product. Lastly, we have Exact Match. This will let Amazon show your ads to people who search your keywords or words similar to the keywords. For Amazon to show your sponsored ads to customers, they will have to search for your keywords in the exact order you have them.
Is It Worth It?
In short, advertising on Amazon is almost always worth it as long as you have great products, great ads, and a great strategy. Sponsored ads are only becoming more competitive, so now is the best time to start reaping the benefits. It can take some trial and error, so if you need assistance creating successful sponsored ads, the experts at Laser Sight Digital are ready to help.
