Maximize the ROI from your Amazon ad spend, grow sales, increase search rankings, and lower advertising costs.
When you first start an optimizing session, you may want to quickly look and find the campaign with urgent needs. If you see campaigns that have spent a lot recently without sales, campaigns that are out of budget, brand new campaigns, or campaigns generating more sales than usual, you may want to start with those campaigns first. You should come back and repeat the optimization process with all the campaigns though.
You’ll typically want to set an ACoS that you target. There is a lot that goes into selecting your target ACoS, and you’re going to set that on the product level. ACoS is the Average Cost of Sales as a percentage. For example, if you spent $100 and generated $400 in sales from the advertising, your ACoS would be 25%.
Keep the target ACoS roughly the same, but change it occasionally as the product goes through the product life cycle. In the short term, targeting a higher ACoS will allow you to generate a higher volume of sales, but at a higher cost per unit. A lower ACoS target, all else equal, will generate lower volume of sales but at a higher profit margin.
The target ACoS is going to determine how you bid for keywords in the campaign. Typically, campaigns that are advertising the same product will all have the target ACoS.
This tab will show you how the campaign has been performing, split up by the location the ads appear.
You can view the ACoS and sales volume of the campaign split up among top of search, product pages, and rest of search.
If there’s not much difference in how the different placements perform, do nothing. If you notice that one of the placement types consistently performs better than the others, add a bid adjustment for that placement. In the example below, top of search is consistently yielding an ACoS 1/3 the cost of the other two placements. In this situation, you can change the bidding adjustment to 200%, so the bid will increase by 200% when the ads appear in the top of search, yielding roughly an equal return regardless of placement.
Do not change these bid adjustments unless there is enough data to support the change. When you do make a placement adjustment, you may want to also go into the targeting section and lower the overall bids accordingly, so the ACoS for the other placements that you didn’t adjust, don’t rise more than you would like. You also need to be aware of the placement adjustments later in the process as you are adjusting the bids on each individual keyword.
For sponsored product campaigns, not sponsored for sponsored brand or display campaigns, there is a setting in the campaign settings that determines how Amazon treats your bids.
These settings give Amazon a certain amount of flexibility to adjust your bids, based on the chance of a conversion rate that they foresee for any given search.
- Down only allows Amazon to lower your bid for you when they deem a chance of a conversion less likely. This is the best option for most ad campaigns. The most common exceptions are when you are launching a new product or are trying to promote a product that historically has not sold well on Amazon.
- Up and down will allow Amazon to both lower your bids when they consider the chance of a conversion for a given search to be unlikely, and to raise the bid when they deem the chance of a conversion to be high. Use it rarely, as it will usually lead to a very high ACoS. If you’re selling products that have sold on Amazon for a long time, and don’t want to check your ads regularly, this may be a good option. Consider testing up and down in a single campaign for a few weeks to see whether it improves or hurts performance.
- Fixed bids doesn’t allow Amazon to change the bids in the background for you. Use when you are launching a new product or if you are trying to up spend on a product that hasn’t done well in the past. This will lead to a higher ACoS. Even with product launches, it may be better to start with down only and then switch to fixed bids if you’re not getting very many impressions and clicks.
The bidding strategy isn’t something you will change regularly. However, you should always check that setting before you adjust bids in the targeting section. If you switch bidding strategy settings, the campaign may spend a lot more or less than it was before, so make sure to check it regularly after a change. Also, keep in mind the bidding strategy when selecting bids.
Check search term reports for keywords, and adjust keywords and match types. Add keywords or more specific match types for keywords you are already bidding on.
The targeting section tells you the keywords you are targeting and your bid. However, since keywords can pick up a variety of searches, it’s only by checking the search term reports to see exactly what your customers have been typing in. Customer search term is exactly what customers typed in and the Keywords column lists the keyword that triggered the ad in a search.
We can see below that this campaign had 6 sales from people who typed in canxida remove advanced candida antifungal, and our ads showed for that search because we bid on candida antifungal. Because we have enough sales from that specific search, we can see where the conversion rate trends, it would be a good option to add as an exact match keyword.
Click on the Actions drop down on the left of a search term to either add a search term as a keyword, or a negative exact or phrase. A negative exact or phrase will prevent the ad from triggering when they type in that search term.
Because we earned several sales from canxida remove advanced candida antifungal, we can add it as an exact match keyword. Assuming we are targeting a 35% ACoS, we would place our starting bid right around $1.84. We’ll usually pay a bit lower than we bid, and since a $1.84 CPC cost $1.84, if we set our bid to that, we’ll probably end up paying about $1.50, getting us to our 35% ACoS if the trend continues. We will of course need to monitor this keyword in the next steps to make sure it continues to average out to the ACoS we want.
Whenever search terms have 3 or more sales from a search term, you may want to add an exact match keyword for it. Sort by spend and find search terms that are spending, but not contributing sales. For those, you may want to add a negative exact for those searches, if the search term isn’t relevant to the product, or lower the bid if the ACoS is just high.
Pause or lower bids for keywords or product targets under your target ACoS, and raise bids that are averaging under your target ACoS.
Software tools like Teikametrics or PPC Entourage will do this automatically for you.
You tend to pay 50%-80% of what you bid. So for example, if you want your CPC (cost-per-click) to be $3, you would usually set your bid to about $4.50. If that gets you above or below your target, lower that bid some more or raise it.
- For keywords that are yielding an ACoS higher than your target, lower the bids to get it closer to the target. If it’s twice the target ACoS, you would look at your previous CPC, and then bid 40%-30% lower than that. The lower bid will generally yield a lower ACoS but less volume.
- For keywords that are yielding an ACoS lower than your target, raise your bid to try to maximize sales. Over time the ACoS will likely rise, and you can adjust your bid higher or lower as that happens. A higher bid will generally yield a higher ACoS, but more volume.
Many keywords will get few impressions. That’s normal, and it’s because Amazon will only show your product for keywords that it deems relevant. Also, many keywords overlap. If you are noticing that your bids are somewhat high, but you are still not getting many impressions at all, you might need to change your bidding strategy.
Make sure you’re looking at the appropriate time period, and you have enough information to make bidding decisions. If a keyword only spent a small amount, or just got one sale, there is no way to know if that is because the bid is too high or too low, or rather the sale was just a coincidence. Wait until you get 2 or 3 sales and can start to see a pattern before you adjust bids. If you do have a keyword that is spending a lot but not generating any sales, it’s likely safe to lower that bid.
Make those adjustments for each keyword and each ad group.
Update budgets and make sure they are high enough that you can get 5+ clicks within the budget, otherwise Amazon may never show your ads at all.
You’ll usually get an alert if any of your budgets are out of budget for the day when you adjust your ads. The budgets are a good backup to limit excess ad spend - however, it’s generally better to limit your ad spend by lowering your bids rather than using your budget caps.
Conversion rates are best in the evening, so you want your budget to last the whole day. Usually once you are hitting your target ACoS, sellers will simply raise their campaign budgets if they hit them. If a campaign is over the target ACoS, it’s best to go in and lower the bids all around first, get it to roughly the ACoS you want, and then raise the budget after that.
Optimizing ad campaigns is not a one-time process. For new campaigns, you may want to check them more often for the first week or so. The conversion rates will fluctuate over time, so you need to continue to adjust bids. Customers may purchase that type of product more during some weeks than others, you’ll slowly gain more and more reviews which will typically raise the conversion rates, and many products are effected by seasonality.
For products that sell a lot in Q4, you’ll typically want to raise bids throughout October & November, then lower a little around December 23rd. Then after January 1st, you’ll want to lower them significantly. Most products that get a big boost from holiday shoppers will have their ACoS shoot up in January, if they don’t proactively lower the bids ahead of time.