Conversion rates above 10% or sometimes up to well over 20%. I keep finding it bizarre; however, it is a reality on Amazon. Advertising is a fantastic way to get your products visible to a vast audience, but you can also easily waste a lot of money through advertising. In this article, I will give you 8 tips for effective advertising on Amazon.
To reach a conversion rate above 10% at Amazon you have to be on page 1 of the search results with your products. One way to accomplish this is to do a proper launch action.
The advantage of such a launch strategy is that with your product you will land quickly on page 1 and get a lot of free traffic to your listing. Another way to get your product on page 1 of the search results is through advertising, now called Amazon advertising. Here 8 success factors for advertising on Amazon:
1. Do not start advertising until you have a few 5-star reviews
You can of course already start advertising if you do not have any reviews yet. In contrast, my experience is that your cost-per-sale is a lot higher than if you already have some excellent reviews. Consumers just like social proof.
Do you always have to have 5-star reviews? It depends. If all my competitors have 5-star reviews, I will not advertise if I only have 4. This is really a waste of money. Then make sure you stop this money in improving your product. Having a very good quality product is the basis of success on Amazon.
Advertising with an average of 4 stars on your product I would only do if all other competitors on average also reach a 4-star rating.
2. Advertise only on your products with high conversion rates
The conversion rate of your product has a significant impact on the effectiveness of your ad campaign. Suppose two sellers sell a similar product at the same price. Seller A has a conversion rate of 20%, while seller B has a conversion rate of only 5%. Now, of course, 5% is not bad, but in the long run, seller B will not make it with his product.
[su_pullquote] A calculation example: Suppose the average cost per click (CPC) is 50 cents and both sellers just start their advertising campaign. In order to realize 100 sales from advertising, seller B needs 2000 clicks (100/5%). This costs a total of 1000 euros (2000 * 0.5). Seller A only needs 500 (100/20%) clicks to get 100 sales, which amounts to 250 euro (500 * 0.5). A difference of no less than 750 euros.[/su_pullquote]
It does not stop there. The algorithm of Amazon will naturally want to show the product of seller A to consumers rather than the product of seller B. Seller A will, therefore, be ‘rewarded’ with a lower click price. In order to maintain the same visibility as seller A, seller B will eventually have to offer a much higher cost per click to generate the same 100 sales.
So advertise only on products with good conversion rates. What is good? With products up to 50 euros, my experience is that they must be well above 10%.
Where can you find the conversion percentages on Amazon?
For this, go to Reports > Business Reports > Detail page Sales & Traffic. Here you can look at the Unit Session Percentage column.
3. Determine your profit margin per product before you start advertising
Knowing your numbers is, in my opinion, one of the critical success factors in every business. Similarly on Amazon. When you see the profit margin per product, you also know what you can spend on advertising to break even.
Suppose you sell a product on Amazon for 20 euros and that the profit after all costs (purchase price, shipping costs, Amazon fees, etc) is 5 euros. In this case, your profit margin is 25% (5/20). This also means that a sale via advertising, also known as Average Cost of Sale (ACOS) within Amazon, may cost a maximum of 25% to play breakeven. If you are going to do analyzes, it is important that every product knows your profit margin and thus also knows your maximum ACOS.
4. Add as many negative phrase keywords as possible at the beginning of the campaign
You have the option to add negative keywords to your ad campaigns on Amazon. This means that if a visitor enters one of these words in the search bar, your advertisement will not be shown.
Suppose you sell a stainless steel paper towel holder. In this case, I would not want consumers to see my ad when they search on wooden paper towel holder or plastic paper towel holder. The chance that someone, in this case, buys your stainless steel holder is, in fact, very small.
The clicks on your ad will lead to little sales, which not only boost your costs but also influence the performance of the campaign and lead to higher costs per click. In this case, I would add the words “plastic” and “wooden” as a negative phrase. My advertisement will never be shown if someone uses these keywords in his search terms.
5. Imagine that you analyze your campaigns monthly
Advertising is not a set-and-forget strategy. You will have to dive into the advertising report every month to further optimize your campaigns. Which optimizations you will implement depends on the goal of your advertising campaign. The advertising report can be found under Reports> Advertising reports. With Report Type, choose Search Term.
Some optimizations that I personally go through:
1. Search terms that have had more than 10 clicks but have not generated any conversions, add a negative phrase to your campaign.
Why 10 clicks? I assume that the conversion rates on Amazon are above 10%. This means that at 10 clicks you must have had at least one sale. If this is not the case, then this search term is apparently irrelevant to my product and I do not want to be shown on this anymore. Of course, you can give your own twist to the 10 clicks. You may have a better feeling at 15 clicks. Fine, it is important that you exclude search terms that cost you money and do not yield anything.
2. Keywords that have converted but are not profitable, with a maximum cost-per-click (CPC).
Suppose your profit margin on your product is 25% and that a sale via advertising (ACOS) costs you 40%. This sale has therefore been loss-making. In this case, it is wise to lower your maximum CPC, so that this search term will be at least breakeven. Perhaps you now think: “Why breakeven? I want to make a profit. “The great thing about Amazon is that every sale you realize through advertising has a positive effect on your organic position for that search term. Advertising sales also lead to more profitable organic sales.
3. Increase the maximum cost-per-click on keywords that have been profitably converted.
Suppose your profit margin on your product is 25% and a sale via advertising on a certain search term is 10%. In this case, you can increase the maximum CPC to further increase your visibility. Apparently your product is very relevant for this search term. Here, you also want to get the maximum out of it.
6. Be careful with the advertising advice that Amazon gives
This may sound very strange, but it is really true. Regularly sent Amazon messages with the message to advertise more, because for example, the holidays are coming. The message is often to increase your budget and to increase your click prices considerably in order to increase your visibility. This ‘strategy’ naturally spells Amazon’s cash, but often leads to unnecessarily high costs.
7. Make sure that terms that you convert correctly appear in your listing
The advertising report indicates which search terms best convert your products. It is important that you add these words in your title since the title is the most important field in your listing (when it comes to organic ranking in the Amazon search engine).
Do you have multiple words that convert well? Place the one you can no longer place in your title than in the search term fields on the backend of seller central. By placing these words in your title and search field fields, you can be sure that you will be indexed for these words in the search engine. It would be a shame if you do not index on words on which you convert well in your advertising in the search engine and therefore can not rank organically.
Use up to 250 characters on the backend search terms fields. If you put more than 250 characters there, chances are that you are not indexed on any word. Special characters, such as an umlaut, count for 2 characters.
8. Use a credit card that saves you miles or points
Finally, not just an advertising tip, but certainly worth it if you spend a lot on advertising. I have linked an American Express card to my advertising accounts on Amazon, Google, and Facebook with which I save miles. As a result, I fly ‘free’ business class every year to the sourcing trade fairs in China.
Hopefully, you have something to do with the tips above. If you have any questions or even good tips yourself, please leave them in the comment field below.