By Franz Jordan
Amazon Sponsored Products (‘PPC’) can play a huge role in the growth and success of your business. In 2016, sellers using Amazon PPC doubled globally, and PPC clicks grew over 150%. However, it remains that running ads on Amazon continues to be a great source of confusion and frustration for sellers.
When it comes to Amazon PPC, it’s important to understand that there is no ‘perfect’ method to set up an ad campaign. For sellers, there will always be a trade off between a low maintenance campaign structure vs. a time-intensive ‘perfect’ campaign structure that will require you to monitor thousands of keywords per product.
At Sellics, we’ve created an Amazon PPC campaign guide designed to be low maintenance and scaleable, focused on giving you the benefits of granular keyword control in Exact Ad Groups without the need to monitor a large volume of keywords.
The goal is to equip you with the knowledge and key metrics you need to help you optimize your PPC ad spend and ultimately improve your profit margins.
Note: you will want to make sure your product listing is optimized before getting started with Amazon PPC.
Part 1: Define PPC campaign goals
The first step when getting started with Amazon PPC is to define your campaign goals; i.e. why are you running ads on Amazon in the first place?
The two main goals of running PPC campaigns are:
- to maximize profit (you will need to calculate your target ACoS), or
- to maximize sales (you will need to calculate your breakeven ACoS)
Once you’ve defined the goal for your new PPC campaign, you will need to calculate the key metrics that will allow you measure the performance of your ads.
Key metric 1: Determine your break-even ACoS
The ACoS (Advertising Cost of Sale) is a key metric used to measure performance of PPC campaigns. ACoS indicates the ratio of ad spend to sales:
ACoS% = ad spend ÷ sales
The break-even ACoS refers to your profit margin before your ad spend is taken into account. As a seller, you won’t incur a loss for a product as long as your ad spend is less than your profit margin.
In the example above, your profit margin is 35%. This is also your breakeven ACoS, and as long as you don’t spend over 35% on PPC to promote your product, you won’t lose money.
Note: As you make more sales via PPC ads, this will also help to boost the organic rankings of your product. You will want to estimate how many extra sales you’ll make via organic sales, and add it to your break-even ACoS.
Key metric 2: Determine your target ACoS
Your target ACoS refers to your target ad spend. By defining the net profit margin you wish to make for each product, you can also define the maximum amount you wish to spend on ads for your product.
Using the above example of a breakeven ACoS of 35%, if you wish to make a profit margin of at least 10% before ad spend, you should only allocate 25% of your Go to the full article.
Source:: Business 2 Community