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Spending on Amazon Ads for Profit vs. Rank/Visibility

Amazon PPC is an endless game where standing out amongst the competition in the largest global online marketplace means winning. Having an advertising expense of $11 billion back in 2020, Amazon’s ad spend is expected to increase 34% ($2.8 billion) each year. This statistic sheds light on several aspects of the situation such as the strictness of the ad competition on Amazon and the increasing amount of budget that brands and advertisers are now willing to pay just to score the top spot in the SERPs.

In today’s blog, we’ll answer some of the most important questions that almost every Amazon Store owner might ask themselves at some point:

“What’s the difference between spending on Amazon Ads for profit vs for ranking and visibility? How can I achieve success with each of them?”

Other than that, how do you know which one to prioritize? How do you get started?

 

Spending on Amazon Ads for Profit vs. Rank/Visibility

Spending on Amazon Ads for Profit 

While many would assume that spending on Amazon Ads for profit is simply a temporary way to get your products noticed by shoppers, this strategy is actually an investment with long-term benefits. The more your product ads become exposed, the more clicks and sales you’ll get along with organic placement boosts.

A fact that many people tend to forget is that Amazon’s PPC race isn’t a temporary sprint, it’s a relentless marathon with a variety of different strategies and difficulties. There isn’t a single strategy that works for everyone either. You’ll have to continuously depend on tools, metrics, and many other factors to determine the strategy that best suits your ad’s purpose, which in this case is to gain more profit. 

Here are some great strategies you can try to improve your Amazon Ads for profit:

  • Restructure your budget

Determine how much you want to and can spend.

There is no specific amount that you need to spend in order to guarantee a win with PPC ads campaigns. However, for beginners, many experts would advise using 10% of your total revenue to act as your initial budget. Break down that budget by using 5% on sponsored display ads, 20% on sponsored brand ads, and 75% on sponsored product ads. 

You’ll also want to think about which products you want to advertise. Picking can be difficult as you may or may not know which of your products will sell the best yet. If you don’t have any idea yet, for good measure, it might be good to follow the same strategy that large retailers use: the 80/20 approach. This approach lets advertisers focus on the top 20% of their products first before feeding the rest of their advertising budget into other existing or new campaigns.

You also need to factor in your need to get a better amount of data to help optimize your campaigns better. Remember that with less Amazon PPC Ad spend, there will be fewer people to target, fewer places to help expose your brand to, and fewer opportunities for conversions. 

Read: Ultimate Guide to Amazon PPC Budget Rules for Sponsored Brand, Sponsored Product, and More

  • Keep optimizing your campaigns

Maintaining your campaigns doesn’t necessarily mean looking at your dashboard and other metrics from tools that help measure them, you must also know how to understand the results and identify opportunities for improvement and increased exposure.

Setting targets in place and leaving campaigns to simply run is not the best way to go. Consistently keep an eye on it and tweak whatever it is that’s not performing up to standard. Gather data and make good decisions as you see fit. Not keeping a close eye on your campaigns might generate costs you’re not prepared to pay, so it’s important to observe and educate yourself along the way. 

It also helps if you compare your data to your competitors’. This way, you’ll have a better idea of what your similar target market is looking for and what you can possibly offer to steer them in your direction. While it’s not always true that whatever works for your competitor from the same industry will work for your own brand, it’s good to have an understanding of what can potentially work and what can guarantee failure.

  • Take note of your organic to PPC sales ratio

Your organic to PPC sales ratio gives you an insight into your organic sales as opposed to the sales you’ve made through Amazon advertising. It is ideal to have your PPC range around 20% and your organic sales to be around 80%. If this ratio were to be reversed, it may mean that the seller needs to pause campaigns and redo the whole drawing board as more of their budget is being spent on ads and that fewer people are finding their products and buying them without seeing the ads that the seller has paid for. If more money is being spent on advertising, then it can spell several more financial inconveniences in the future, so take time to rethink your campaigns and observe your metrics before setting out to run campaigns again.

READ: Ultimate Guide to Amazon PPC Budget Rules for Sponsored Brand, Sponsored Product and More!

  • Learn to analyze trends better through your dashboard

As mentioned earlier, it’s important for every Amazon Store owner and advertiser to learn how to decipher the metrics in every campaign. Knowing how to use tools and your Seller dashboard is one thing, interpreting the metrics is another. Having the ability to review your campaign’s metrics can help you assess the opportunities and complications in your campaigns. These metrics include ACoS, BACoS, ROI, sales, clicks, click-through rate, impressions, CPC, and many others.  It can also help you optimize for different aspects such as keywords, bids, and other related metrics.

Spending on Ads for Ranking/Visibility

Among the many indicators of a successful Amazon PPC Ad campaign is a boost in ranking/visibility. However simple this may sound, it’s not at all easy. With the booming eCommerce industry and an increasing number of people flocking to Amazon for everything they need, it’s no surprise that the competition to rank higher and gain the most visibility through Amazon ads is getting tighter every year, too! What’s even better is that there are so many tools and several knowledgeable Amazon Ads Management experts available online to help you meet your Amazon advertising goals. 

For many Amazon advertising beginners, it’s best to opt to spend on Amazon Ads for the purpose of ranking higher. If one of your goals is to have a higher BACoS, it might be better to spend a bit more as this can help boost your sales. As exciting as it sounds, you have to be very careful about how much money you spend to gain ranking as you can lose your rank quicker than you gained it as reducing your ad spend will pull back your rank. 

You won’t produce any sales if your product doesn’t appear on Amazon’s search result, so spending on ads for ranking and visibility is definitely the gateway to increasing your sales flow, ad revenue, and organic revenue. 

In general, Amazon cares far more about metrics such as your conversion rate, click-through rate, and the times potential customers have added your product to their carts. Simply put, they care less about your ad spend to maintain your rank and visibility. Spending too much on products that aren’t performing well may hurt your organic rank, result in poor ROI, generate high ACoS, and hurt your advertising budget, so proceed with caution. 

But if you’re simply starting and want to make a name for your brand through Amazon Advertising, here are some effective ways you can try to improve your Amazon Ads strategies for higher rank or visibility:

  • Experiment with the algorithm

It’s a known fact that 70% of Amazon consumers won’t even go past the first page of search results when they look for products. This fact is exactly why ranking higher on the SERPs should be on every seller and advertiser’s list of priorities. Amazon’s A9 algorithm is a big mystery to everyone, making it difficult to figure out what will and won’t work. This secret algorithm filters through millions of products every day and displays the best search results for customers. There is no surefire way to know how the algorithm works. However, there are ways you can try to help contribute to that. You need to pay attention to Amazon’s ranking factors such as pricing, sales rank, product listing completeness, stock supply, relevancy, popularity, metadata, and reviews. Combining efforts in making sure these factors are satisfied will help you optimize your product listings and increase your Amazon ranking.

  • Boost brand awareness

Amplifying brand awareness is among the many challenges you’ll encounter as an Amazon store owner and advertiser. Similar to many well-known big brands, the goal is to help your customers make purchase decisions and to make your customers remember your brand’s name and products at first glance. To help make potential customers aware of your brand, you need to make more than just a few efforts of optimizing your product listings. You also need to stretch your ideas and efforts for Amazon PPC Ads and creative assets for all your campaigns and your Amazon storefront. 

Do this by making sure your branding is consistent starting from the fonts you use to the colors, the aesthetics you choose for your graphics, the way you tell stories about your brand and products, and the experience you give your customers. Amazon recommends creating a marketing funnel that can help you visualize and determine the next few steps in your brand awareness campaign. 

At the very top of your funnel, you should include Awareness (inspire customers to seek more attention), Consideration (where customers are considering making a purchase), and Conversion (where customers are ready to make a purchase). Similar to many aspects of Amazon selling and advertising, there is no one size fits all strategy for brand awareness. You just need to remember that you’re competing for the attention of thousands of customers who are looking for the same products that you and several other brands are offering. 

READ: How can I access Amazon Editorial Recommendations?

  • Make use of Sponsored Product Ads

When it comes to discovering new products on Amazon, Sponsored Product Ads are one of the best advertising strategies to use. This ad type is known to produce higher click-through rates, an opportunity to have a better ROI on their ad spend, and to have better data that can be used for generating better campaigns.

With this type of ad, it’s a common misconception by store owners and advertisers to assume that it will be easy to rank high with Sponsored Product Ads just by bidding high. Your ads will need to present an offer that’s relevant and valuable. When ads provide value, they become a magnet for the attention of potential customers, making marketing funnels more effective and cost-efficient. 

  • Optimize existing listings

Amazon PPC ads won’t create all the magic on their own. You need to optimize your Amazon listings and make sure you follow the guidelines set for creating them. Optimizing your listings will also help increase your chances of getting even more visible to potential customers. Some of the most important factors that you need to consider are pricing, logistics, and listing. Your products’ pricing needs to be competitive enough to match the features of other similar products and affordable enough that it doesn’t eliminate you from the competition. 

You need to create pricing strategies that can promise more value than the rest whether it’s by participating in promos or having a more affordable price than the rest. For Logistics, you always want to have the fastest shipping option. If you can get the product to your customers the quickest, you’ll be in favor of a lot more customers already. Finally, for your listings, you need to be able to entice your customers to choose you through high-quality images, having a concise and detailed product description, having great content, and monitoring your reviews and star ratings.

READ: Amazon Retail Readiness: How You Can RUIN Conversions and Limit Your Ad Spend if You’re Not Retail Ready

  • Advertise outside Amazon

A lot of Amazon sellers and advertisers don’t realize this, but Amazon isn’t the only place where people can advertise their Amazon products. You can enhance brand awareness by sharing content through social media pages and ads, your website, product inserts, emails, and many other related mediums. By creating links that go from an external source to your Amazon store, you’ll be able to nurture a new audience and a different marketing funnel that can be profitable if executed well. 

  • Pay attention to your sales velocity

Rumored as Amazon’s A9 Algorithm’s main factor for determining rank, sales velocity is the measurement of the speed at which you make money. This equation helps you create a representation of your efforts’ relevance and helps you increase your listing’s value and figure out a gameplan to drive consistent sales and an increase in conversions:

Sales velocity = (Number of opportunities) X (Average Deal Size) X (Win Rate or Conversion Rate)

                                                                     Pipeline Length or Sales Cycle Length

  • Conduct a high-level keyword research

While you may already have an idea of what keywords customers are searching for to find products that you’ve listed, it’s important that you take a more professional approach and use tools that help you determine them. Amazon’s A9 algorithm, like many search engines, makes use of keywords to help users find what they’re looking for, so it’s not a surprise that knowing what keywords are most searched can benefit your listings.

Amazon collects the data that consumers type into the search engine, helping you determine the search terms that can easily point customers in your direction. While Amazon can help you with this, it’s good to not abuse it either. Don’t stuff your listings with too many keywords and use as many short-tail and long-tail keywords you’re allowed to use. As long as you follow Amazon’s guide for content, you’ll be good to go.

Choosing between spending on Amazon Ads for profit and for ranking or visibility can be tricky, but it highly depends on your needs. They each have their own strategies and requirements, but when they’re done with a lot of planning and budgeting, they’re achievable and less daunting as time goes by. 

 

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