If you are selling on Amazon then you might sell enough by simply relying on the organic search results. That is what you should of course aim for. Why spend money on adverts if you can generic sales naturally.
However, you might find yourself in a space that is simply so difficult to get noticed in that you need to take specific actions. Maybe you are entering a new space with a new product and you need to get things established fast. Or perhaps you have stock you really need to move to free up cash flow and you see paid promotion as the way to get some cash moving.
You should make sure you understand fully and can justify why you are prepared to look at paid for advertising. Once you have reached a solid conclusion you can now start looking at the practicalities.
Make sure you monitor the ROI (Return on Investment)
Amazon ads work on a pay per click basis. If you don’t bid highly enough you won’t be able to place the advert. But if you end up paying too much then it will impact heavily on your margin
We’d recommend that you fully calculate where the costs are with respect to the item you are selling. We provide a number of calculators that make that process as simple as possible – our Amazon Profit Calculator is a good place to start.
You’ll find within Seller Central a range of reports to help you see how well you are doing for adverts and ad costs. What you’ll need to do is stay on top of what sales are being generated as a result. If the profits being generated are outweighed by the costs of promotion then you’ll need to think again, unless of course you are simply trying to shift stock regardless.
A Sponsored listings strategy
As mentioned earlier if your product is new then it may well pay to put some promotion behind it. If that is something you think is worthwhile you’ll need to set yourself some goals.
One of the key goals you’ll have in mind is undoubtedly that related to the ranking position in the category. Or perhaps you are trying to obtain a good number of decent reviews to give the item some credibility. Set yourself a budget and some form of target, you may well get the target wrong initially, but it’s a good way to help you monitor things and look at the spend versus the results.
If you opt to sell at breakeven while your ads are running or even to make a loss while sales get established make sure you know what your end stop position is. You can always pause, review and then change strategy as required.
When you set up a campaign to promote your product you’ll need to pick some keywords. You should know these already if you have written great descriptions and bullet points, see our post on How to improve your Amazon listings if you haven’t.
A good research resource is the auto complete on the search boxes on Amazon, eBay and Google. But you'll also want to use the Google Adword tool as a free resource and even Google Trends.
If you have previously used an automated campaign then you should have a list of the more useful search terms that were reported.
The best keywords are the ones that generate sales. You’ll find that these tend to be the ones most closely aligned with the specifics of the product you are selling. For instance “Batman Lego” as a keyword is more likely to create sales for your Batman Lego products than simply using “Batman” as a keyword. You might get lots of clicks – but your cost of sales will be very high. Keep checking that your keywords are generating sales and a sensible return. If they are costing you too much then stop using them.
Not all products are ideal for paid promotion. Take clothing for instance, clothing is a very subjective choice and listings for clothing have multiple variations such as style, colour, size and material. That means that the shopper is more likely to continue browsing after they have clicked on your ad. Just as with the Batman example above your Click Through Rate might be high for your paid promotion, but you may find that conversions (ie sales) are low.
Click through rate
We’ve mentioned click though rate a few times already, if it’s a term unfamiliar to you then in short, Amazon keeps a count of when it is clicked and the number of clicks divided by the number of times shown is referred to as the Click Through Rate or CTR.
An acceptable CTR is around about 1%. The higher the better as long as sales follow.
The CTR is reliant on the effectiveness of your copy, is it compelling and clear, and is the image really selling the product. And it should go without saying that the CTR is also dependent on what it is you are selling, if the item is not popular then no amount of work on the copy will improve things.
You can always do some A/B testing to see what works best – ie ad copy A or ad copy B. You’ll have to manage and review these manually as at the time of writing Amazon doesn’t provide any compare and contrast reports.