Amazon advertising has come to be a quintessential component of scaling on Amazon. Amazon has millions of sellers, and with everyone fighting for the top spot, it takes skill and strategy to come out as a winner. Amazon PPC gives sellers the opportunity to market their products and reach a large audience while giving their sales a powerful boost.
However, if done the wrong way, it can prove costly and reverse your marketing efforts. In this article, we’re going to discuss some of the mistakes that sellers make with Amazon advertising and what you can do to avoid committing them.
What is ROAS?
In the world of Amazon advertising, ROAS (Return on Ad Spend) is one of the key metrics used to measure the performance and efficiency of a campaign. It is the metric by which you can calculate the amount of money generated or lost from the amount of money invested into a campaign. It is the inverse of ACOS (Advertising Cost of Sales).
ROAS is calculated using this formula:
ROAS = Total revenue from ad spend➗Total ad spend OR ROAS = 1/ACOS
Top PPC Mistakes to Avoid for a Good ROAS
Using the right ad types according to your objectives
Launching PPC campaigns should always align with your business goals. Sellers use various strategies to ensure the success of their campaigns. But choosing the wrong ad type can be detrimental to improving your campaign ROAS as well as your long-term profitability.
Amazon has 3 different ad types – Sponsored Products, Sponsored Brands, and Sponsored Display. Each of these serves a different purpose and helps you achieve different goals.
For example – if you’re looking to build brand awareness and visibility by achieving more impressions and are less focused on increasing sales, then Sponsored Brand ads are better than Sponsored Products. Sponsored Brands should be used to target customers at the top of the sales funnel, whereas Sponsored Products work best for improving conversions.
Remember, it is important to have a well-planned long-term strategy. This lets you understand and analyze which customers clicked on your ads and at what point of their shopping journey, along with the right ad types. On the whole, this helps improve your ROAS overall.
Regular bid optimization
Your bidding strategies need to be constantly checked on as it is not a set-it-and-forget-it kind of concept. How much you bid changes according to the time as well as during peak shopping season when you will have to bid more aggressively for a particular keyword because of high competition. If you bid too low or moderately, you can lose out on important sales to your competitors. At the same time, if you’re bidding too high, it means your ACoS will be very high, and your ROAS will be low. Optimizing bids need to be done frequently along with monitoring them, preferably on a weekly basis if not daily.
Measure the right KPIs
When it comes to measuring the performance of your ads, there are several important ad metrics – impressions, clicks, conversions, CTR, CPC, etc. However, analyzing all these metrics for all campaigns will do you no good. You need to measure KPIs depending on your campaign goals. You may see high numbers, but if they’re for the wrong performance indicators, you’re not going to know if you’re on the right track in terms of your business goals or not.
So how can you know what KPIs to focus on?
Many sellers think that a high conversion rate and clicks are good. But if you notice that your CTR is low, it is an indication that you’re missing out on optimizing several other crucial factors. On the other hand, if you’re looking to increase your brand awareness and exposure, then a high CTR and clicks are good indicators.
Ultimately, many advertisers want to achieve a high ROAS. While you may have achieved this, if your ad spends, on the whole, doesn’t take into account the profitability of your product, it is an indication that your overall profitability and revenue are moving on a downward trajectory.
To ensure a good ROAS overall, you need to always ensure that you’re looking at the bigger picture and focusing on your brand/company’s long-term goals.
Targeting the right audience and relevancy
Amazon Sponsored ads are known to be useful in reaching a wide audience. However, targeting a wide audience is not always as fruitful as targeting the right audience, however large. Your ads have to be relevant to the shoppers you’re trying to attract. Otherwise, you’re spending your precious ad dollars with the chances of a low ROAS. To remedy this, what you need to do is define your goals, as this will help you define the right kind of traffic that is guaranteed to convert better.
Amazon Sponsored ads allow geo-targeting so that you can target your ads to specific regions where you’re most likely to get high-converting traffic instead of targeting an unnecessarily large audience. Another method to ensure a good ROAS is with dayparting so that your ads run only at times of the day when your target audience is most likely to shop.
In terms of keywords, make sure you focus your research on forming a list of negative keywords because they help you cut down on wasted ad spending. Also, for a good RoAS, many sellers often forget the importance of long-tail keywords. These have better conversion rates as they bring in shoppers who are searching for a very specific product and hence are high-converting.
Strategy, structure, and Sponsored Brand ads:
While optimization and automation are important, sellers need to focus on sustainable profitability and adopt ad structures and strategies that facilitate this. While running PPC campaigns, sellers need to remember that they need to drive their profitability without spending a lot of money on making a sale profitable.
Another important thing is to focus on improving organic ranking and traffic side by side with PPC. Keeping this in mind, after a thorough analysis of different ad types and structures, Sponsored Brand ads have been noted to generate a ROAS that is higher than the other two ad types.
Automation with SellerApp for a good ROAS
The SellerApp advertising suite comes with automation features that allow you to optimize your campaigns for a high ROAS. With the ability to create custom rules from scratch by defining the conditions for which you want to set triggers, you can optimize your bids and control ad spending.
You can also choose dayparting for your ads or choose from pre-defined rule templates for automation. The three rule templates – Keyword Harvester, ROI Optimizer, and Money Saver help you. The Money Saver helps with negative keyword targeting by optimizing bids for keywords that bring in low conversion.
The ROI optimizer lets you set a target ACOS and ROAS so that your bids are optimized for the most potential campaign keywords so as to help you achieve your goals easily. The Keyword Harvester allows you to optimize your bids in such a way that you reach relevant customers and increase conversions, impressions, and visibility for your products. SellerApp automation is a safe way to ensure your campaigns are on the right track to achieving a good ROAS.
As stated earlier, Amazon PPC offers a range of benefits to sellers but make sure you tread carefully, especially while structuring your campaigns and optimizing your bids. While automation software may be slightly pricey, it can help you save your money by ensuring that you don’t make costly mistakes.
Don’t lose sight of your brand and company goals and structure, and deploy your campaigns accordingly. Regular monitoring and optimization are important. As long as you are on top of your campaigns and don’t forget to check on their performance and progress regularly, you are sure to be on the right track to PPC success.
About the Author:
Arishekar N, Director of Marketing & Growth at SellerApp, is a specialist in digital marketing, in addition to website keyword optimization for search engines. His areas of expertise include enhancing the organic & paid ranking of web pages on search engines with innovative SEO & SEM strategies and online promotions.