This is a guest post from Sarah Whedon. Sarah is SMB & Entrepreneur marketing lead at Teikametrics. Teikametrics’ Flywheel platform combines analytics, automation controls, and artificial intelligence to drive the best return for your ad spend on Amazon.
The best way to succeed with Amazon ads is to work backwards. Start by identifying your goals. Why are you advertising? What are you hoping to achieve for the product that you’re advertising? Where is the product in its lifecycle and are you trying to change that? Where does the product fit into your larger business?
Once you know the purpose of your ads, then you can work backwards from the goal to select a strategy for structuring and managing ads.
Identify goals for your products
Your advertising goals should reflect both the place your product is in its lifecycle and also your long-term goals for your business.
There are four stages of goals for advertising a product on Amazon — successful launch, continued growth, the transition to profitability, and sometimes the need for liquidation. Meeting each of these goals requires different advertising strategies.
When a product, brand, or campaign has had a presence on Amazon for six months or less, it can be considered new, and your goal will likely be to launch. The purpose of advertising in this stage is to increase the exposure of the product or brand to kickstart sales velocity.
During launch, spend typically runs high. This is because Amazon doesn’t have much sales history of your product, putting you at a natural disadvantage versus entrenched competitors. An investment in spend is necessary in order to get established on the Amazon marketplace. Serving ads in front of as many shoppers as possible develops product awareness, generates reviews, and builds up the store of data you need to base decisions on as you further optimize your ads going forward.
The launch phase is followed by a growth phase, typically after your product or brand has been live on Amazon in the range of six to twelve months. It’s likely time to shift from a launch goal to a growth goal when you’ve driven sufficient traffic to your product page and are increasingly able to convert that traffic to sales.
Where previously in the launch phase you were focused on exposure, you’re now going to focus on building sales volume and improving sales rank. Your spend may begin to shift down as you get increasingly focused on high-performing keywords.
The next phase is profitability. You’re ready to shift your goal to profitability when your products or campaigns have had a chance to mature and reach your desired sales volume. Getting to this point can take a year or more on Amazon.
Now is the time to focus on driving incremental revenue for your best-selling products. You should have a high volume of sales data and be able to reduce spend on certain keywords or terms prescriptively in order to sustain profitability.
Sometimes when a product is no longer performing well or has been replaced with a newer model you just need to move inventory to either free up warehouse space or avoid long-term storage fees. At that point, the goal becomes liquidation.
In that case, you’ll want to increase spend in order to increase sales regardless of a rising ACoS. You may take a loss, but that can be the right thing to do over the long term in order to free yourself of a product that will cost you money to store while allowing you to focus on your winning products.
Structure campaigns according to goals
Once you know your goals for your ads you can structure your campaigns according to those goals.
Put products with matching goals together in campaigns, thinking forward to whether those products are likely to continue to move through their lifecycle at the same pace. If the new teddy bear is just launching while the stuffed bunny is in the profitability stage, you need to have the ability to advertise more aggressively on the teddy bear in the launch campaign while advertising more conservatively on the bunny campaign.
It’s best practice to organize products with similar margins together in campaigns as well. This enables you to target your advertising spend efficiently.
Having a consistent naming convention for campaigns helps to keep all this organized. For example, you can include the word “GROWTH” in the name of a campaign, and if that goal changes, update the campaign name in Seller Central to reflect the change.
Evaluate campaigns based on goals
It’s helpful to evaluate your advertising campaigns by focusing on the metrics that align with your goals.
You can measure a successful launch by analyzing impressions and clicks as well as spend. You want to see impressions rising, indicating a large number of customers are viewing your product, followed closely by rising clicks. Spend will rise to match the rising clicks.
In this launch phase, advertising cost of sale (ACoS) tends to run high, because you’re favoring generating those impressions over a focus on conversions.
Measure growth by watching for increases over time on sales volume and improved click-through-rate (CTR). At this point, you can begin shifting to a decline in spend as well as possibly a decreasing ACoS although your focus will likely remain on topline revenue.
You can know whether you’re achieving profitability by measuring ACoS. When profitability is your goal, you’ll also gain the flexibility to decrease spend further.
The success of liquidation can be measured in sales volume.
Use Teikametrics Flywheel to automate goals-based campaigns
- Screenshot of Teikametrics Flywheel Campaign Creator
There are many ways to build and manage your ads. Teikametrics’ Flywheel’s Campaign Creator with Product Goals Optimization allows you to select your goals for each of your products, and then Flywheel automatically organizes campaigns based on those goals as well as other factors such as margins.
Flywheel’s AI-powered bidder optimizes bids on your campaigns in alignment with the goals you’ve set, helping keep you on track every single day.
In Flywheel’s dashboards you can view and analyze all the metrics described above for assessing campaigns — impressions, clicks, spend, conversions, click-through-rate, sales, and ACoS.
Whatever system you use to build and manage your campaigns, if you start at the end with the goals you want to achieve and then work backward to build the structure which supports those goals, you set yourself up for the best chances of success with your Amazon advertising.