How To Optimize Amazon PPC Campaigns In 2020, Part 1:
Identifying Poor Keywords and Adjusting Bids
After spending days researching keywords, setting up automatic and manual campaigns, and calculating your bids for all of your products, you can finally turn things on. It’ll take time before you can see how successful you are doing, but you feel confident your selections for your Amazon account are perfect.
You revisit your campaigns after letting them run for a while. Great news – your PPC campaigns are getting you orders! Amazon customers are interested in your products. However, you know that your account could be much more efficient.
In this two-part guide, we will touch on five fast and easy ways to improve your campaigns’ sales volume and overall efficiency. Part one will explain how to find your target ACoS, identify poorly performing keywords, and adjust keyword bids in manual campaigns.
First Things First: Identify Your ACoS Goal For Your Account
Many times, an organization planning to sell on Amazon may set forth an arbitrary number for their advertising cost of sales (ACoS) goal. Often, these values are from reading blogs or reading what other organizations have deemed as “acceptable.”
However, ACoS is not a “one size fits all” percentage, and it is more important to find a number that works for your goals. Having this number in mind will help guide you in your decision making throughout the rest of the optimization process.
It is important, however, to at least find your break-even ACoS point, which is where your advertising costs are equal to your sales. Moving forward, if your ACoS is lower than this break-even point, you will be profitable. Use this break-even point to understand what is working in your account and what is not.
Example: Sock Co. is a fictional company that specializes in premium dress socks for men.
They sell their socks in packs of six for $50.00. Meanwhile, their cost to produce the socks (CoGS) is $20.00, and Amazon charges fees of $7.50.
- $50.00 – $20.00 – $7.50 = $22.50
- $22.50 the profit for Sock Co. before advertising is factored into the equation.
- $22.50 / $50.00 = 45%
As long as Sock Co. maintains an ACoS under 45% in their Amazon account, they will be profitable. However, they decide that they want to make at least a 15% profit on Amazon, so they decide on a target ACoS of 30%.
Now that they have calculated this percentage, they can use it in the decision making regarding the efficiency of campaigns, ad groups, and keywords.
Tip #1: Pause Poor Keywords In Manual Campaigns
After finding your ACoS goal, it’s time to optimize and see what can be done to maximize its efficiency. An easy first step is to immediately pause poorly performing keywords in the ad groups with the manual campaigns. Look to find keywords that have little to no order volume, but are receiving a lot of clicks and/or spending a lot of your budget.
Example: Sock Co. has a monthly ad spend budget of $10,000 for Amazon. After running their PPC campaigns for one month, they inspect their keywords. In their account, they find that many of their keywords are performing poorly – with multiple seeing many clicks but almost no order volume. Two keywords stand out as the worst:
|Fancy Dress Socks||17,192||130||$247.00||$1.90||0||$0.00||–|
|Dress Socks For Work||12,147||59||$76.11||$1.29||1||$100.00||76.11%|
We can take away a couple of observations from these keywords:
- “Fancy Dress Socks” has spent $247.00 and received 130 clicks, but no orders. Both the spend and volume of clicks make this a terrible keyword for Sock. Co.
- Meanwhile, “Dress Socks For Work” has received 1 order with a total of $100.00 on 59 clicks totaling a spend of $76.11. The ACoS is 76% for this keyword, which is much higher than their desired 30%.
Sock Co. has 2 options here – they can lower their bids to see if the keywords will still get orders at a much lower average cost per click, or they can just as easily pause this keyword.
These two keywords combined spent $323.11 out of their $10,000 budget and only made $100.00. By pausing these and other poorly-performing keywords within other ad groups throughout the account, they can free up future budget to go towards better-performing keywords.
This will lower their ACoS and improve overall account efficiency.
Tip #2: Raise And Lower Keyword Bids In Manual Campaigns
Many of your remaining keywords within your manual campaigns are driving orders and you’re seeing sales revenue numbers.
However, when looking at the ACoS of your keywords, you see a wide variety of values. Using the data within Amazon’s seller central interface, you can start to make incremental adjustments to your bids to increase order volume and account efficiency.
Here are a few tips that will help you during this process:
- A quick Google search will deliver multiple formulas you can use to calculate bids. The one universally-proven, tried-and-true way, though, is to incrementally drop or raise your bid price for high-ACoS and low-ACoS keywords.
- If the keyword has an ACoS that is a bit too high, lower the bid in small amounts while monitoring performance.
- Alternatively, feel free to raise the bid in small amounts if the keyword is doing well at a low ACoS.
Increasing or decreasing in a controlled manner at small increments allows you to closely track the keyword’s performance at each new bid value. Making large adjustments can quickly lead to keywords becoming unprofitable or even seeing order volume evaporate.
Note: When adjusting keyword bids, only focus on keywords with multiple orders that show trends.
Example: Sock Co. has decided to go through their Amazon account’s manual campaigns at the keyword level in an effort to identify keywords that need bid adjustments. They find two in particular:
|Dress Socks For Men||$2.25||21,123||300||$634.50||$2.13||21||$1350.00||47.00%|
|Socks For Suits||$1.00||9,876||55||$45.11||$0.82||8||$500.00||9.02%|
- Problem: “Dress Socks For Men” has gotten a lot of orders and has generated plenty of sales revenue but it has a very poor ACoS for the company (45%=unprofitable). Due to the keyword’s many sales, Sock Co. decides to lower the bid.
- Solution: The keyword has an ACoS at 47% based on an average CPC of $2.13, and they are bidding $2.25 on the keyword. Sock Co. decides to drop the keyword to $1.70 to start bringing the keyword closer to the 30% ACoS goal. After lowering CPC over time, it should bring the keyword in line with their target.
- Problem: “Socks For Suits” has many sales with an average CPC of $.82 and an ACoS of 9.02% – well below their 30% ACoS goal. Since this keyword is clearly performing very well on such a low bid, they decide to raise the bid to $1.50 to increase visibility.
- Solution: Later, they see it’s getting more conversions and is still only at 20% ACoS at a $1.50 bid. They continue to raise the bid incrementally, further increasing visibility and order volume. They will stop upping bids when the target ACoS is reached or the keyword plateaus in orders.
Stay tuned for part two of this article. We’ll cover three additional tips for optimizing your Amazon ad performance:
- Finding the best keywords from your automatic campaign
- Using negative keywords to your advantage
- Experimenting with low-bid campaigns
In the meantime, we encourage you to take another look at your own Amazon campaigns and try out these techniques. If you would like help boosting your sales and optimizing for ACoS, check out our Amazon advertising services.