3 Ways to lower Amazon Advertising ACoS

Amazon Advertising revenue topped $10B in 2018, creeping up right behind Facebook and Google, as the third largest ad platform in the US. There would be a major influx of brands investing more into Amazon advertising. Why is this important? More advertisers = more demand = higher CPC. When CPC increases, so does ACoS (Advertising cost of sale). With more ad dollars being allocated to Amazon than ever before, lowering ACoS may seem like a tall task. Here are some ways to make Amazon more profitable.

Negative Keywords - Negative keywords play a key role in keeping ACoS low with Amazon’s advertising platforms. Negative keywords allow you to control what search terms not to serve ads for, which ultimately improves your profitability by focusing ad spend on relevant terms that are more likely to convert and drive sales. Adding negative keywords to your campaigns from the start will help you optimize the campaign faster, as you won’t be wasting money on clicks for irrelevant searches.

Tips – Use keyword planner tools to find negative terms. Create an auto-targeting campaign AND a manual targeting campaign with Broad and/or Phrase match keywords. Once your ads have accumulated enough clicks, use the search term query report. Find and add negative keywords back into campaigns.

Isolate your search terms - In Amazon’s eyes, broad and phrase match keywords are actually “buckets” of search terms often yielding thousands of results for off-topic items. What does this mean? If you target a broad or phrase match keyword, you can only set one bid for that keyword. Amazon then applies that bid to the entire bucket of search terms that match to it. Search term isolation redefines how brands should manage their advertising on Amazon.

Tips - Look at your search terms report frequently and find important keywords. Move these converting search terms into specific campaigns as an Exact Match keyword. Negate the same converting search term from all other campaigns.

Effective Bid Management - Bid management is a lot more complex than most advertisers realize. As we mentioned above, Amazon’s advertising platform only really allows you to control bids for exact match keywords. Phrase and Broad keywords manage a bucket of search terms, which limits your ability to control the CPC. Below are some common scenarios one might encounter when optimizing bids:

If there are low ad sales and high ad spends – Bid down on keywords.

If there is a high conversion rate and low impressions – Increase the bid to capture more traffic and sales

If there are high clicks but low sales and low conversion rate – Check your price and detail page content to make sure they’ve competitive and encouraging conversions.

If there are high impressions but low clicks – Optimize your product image and product title to get better CTRs.

Use below equation to calculate your bids –

Bid = Average Sale Price X Target ACoS (decimal) X Search term conversion Rate (decimal)

I hope these tips to lower your ACoS will help you save money on wasted ad spend and reinvest those funds in your business. Whether you decide to tackle this on your own, with the help of auto-bidding technology, or hire an agency partner, these strategies will help stretch your ad dollars further. Even if your ACoS isn’t skyrocketing yet, Amazon is just getting started with their advertising business and things are about to get crazy, really soon.

How to define and use Ideal target market?

Ironically enough, when it comes to promoting themselves, many businesses jump straight into marketing and forget to really think about the most important part of marketing: their target market. This is a real problem because knowing exactly who you’re targeting with your marketing is the key to successfully reaching, connecting with and convincing them to buy what you’re selling. So, while it’s tempting to jump right into building your marketing campaigns and putting together creative, it always pays to stop and think about your target market first.

Who am I targeting? - Whether you’re a new business or a decades-old company putting together a new ad campaign, you should always be asking yourself “who am I targeting?” Even if you sell products with broad appeal, this question is still important. Specifics sell and the more specifics you know about the market you are targeting, the more effective your marketing will be. The more clearly and precisely you can answer the question “who am I targeting?” the more focused and effective your marketing will be. Obviously, you have to balance market size with market specificity, but understanding that who you are targeting and what motivates them is the key to create compelling marketing campaigns.

How current customers use my products? - Even people who use your product or service for the same thing may use it for different reasons or in different ways. For example, if you offer invoicing software, you may have some customers who use it for every client and transaction, while others only use it for certain clients or situations. Segmenting your current customer base by how they use your product or service can give you a lot of insight into your target market(s). Odds are, if your current customers love your business for a particular reason, potential customers who are motivated by the same things will be likely to respond to marketing that focuses on that same issue.

What am I trying to sell? - This might seem like an obvious part of any marketing campaign, but when it comes to defining your target market, knowing what you are trying to sell is important, especially if you’re changing what you are selling. Many businesses try to use old marketing tactics to sell a new product and then wonder why their results are bad. Whether you’re trying to market something new or simply get more sales for a particular product or service, it’s important to think about who your new target market is. Different products and services appeal to different audiences, so even small tweaks to what you’re selling can have big effects on how well your marketing works.

What is the competition doing? - You can also learn a lot from the competition—both about what to do and what not to do. You can clearly see that this business is targeting high-intensity people who probably lead high-intensity, busy lifestyles. To appeal to this market, their ad copy is high energy and focused on the flexibility of their offering. If you happen to be a competitor of theirs, there’s a lot you can learn from this. On the one hand, if you want to target the same market, you can look for keywords or phrases they are using to try and catch the attention of their target audience. Alternatively, if you want to differentiate yourself and try to target an alternative market, you could try focusing on price, a different exercise option or offering lower-key classes that might appeal to less intense potential customers.

Is my target market niche or non-existent? - One final thing to keep in mind as you identify your target market is the size of that market. The narrower your target market is, the easier it is to create specific, highly targeted messaging for them. Given the massive reach of online advertising platforms like Facebook and Google, this isn’t a common problem, but it is something to keep in mind as you define your target market(s). If you find yourself struggling to effectively target the market you’ve selected, you may need to take a step back and expand your audience a bit.

While it can be easy to assume you know who your target market is and what they want, taking the time to really think about what you’re selling, who you’re selling it to and how to best sell it can significantly improve your marketing results.

Impact of 5G on Marketing and Advertising

5G is gearing up to launch later this year. The coming of next-gen 5G wireless transmission will be a big deal for marketers. Verizon has launched a 5G-enabled home broadband service, AT&T has started 5G service in a dozen cities and 5G networks are expected to be available by mid-2019. With data rates from 1 to 10 gigabits/second – up to 100 times faster than 4G LTE and a major decrease in latency, 5G could alter a lot of the existing digital landscape.

End of Cable - Cable connections & set-top boxes could become irrelevant. If you get a new, large TV, for instance, it might pick up all the HD and 4K programming you want from the air wirelessly. This would totally disrupt the cable and Internet Service Provider industry because the fixed wire infrastructure would no longer be necessary to deliver fast Internet and hundreds of TV channels, and it would similarly disrupt the ad-buying and -serving infrastructure built around it. But it also means something more profound for marketers: any surface with a 5G wireless transceiver can become a high-resolution screen, and an outlet for the most intelligent computing service available.

A 5G-enhanced media environment, offers more ad inventory opportunities as super-fast wireless connectivity means high-end screens can be located anywhere. It also could dramatically change the kind of messaging marketers and advertisers do. The biggest marketing impact of 5G will be that consumers will have actual voice conversations with mobile devices, not just issue a few voice commands and interact at other times via thumb-typing or screen-touching. Mobile marketing could become entirely oriented toward voice conversations.

But it’s not just data repositories that may have to be redesigned to handle massive demand. Advertising infrastructures will also have to be re-invented. Present-day programmatic technologies aren’t built for the demands of a system that delivers ads up to a hundred times faster. The industry needs to prepare for 5G in other ways as well, such as updating creative specs on ad formats and file sizes.

Understanding Amazon Advertising Attribution

Amazon sales attribution is when Amazon assigns credit for a sale to a specific campaign. For example, when a user click on one of your ads and buys a product within a certain time period such as 7 or 14 days, the “sale” is attributed to your campaign. There are three different dashboards you can use to advertise on Amazon.

Seller Central – also known as 3P or the dashboard third party seller’s use.

Advertising Console – known as Amazon Marketing Services (AMS) or the dashboard vendors use (1P/first party sellers)

Amazon DSP – formerly, the Amazon Advertising Platform (AAP), run by the Amazon Media group (AMG). Amazon DSP is offered through AMG managed service. It is also available through select agency partners as a self-service tool or directly to top-tier, large budget advertisers.

Amazon tracks attribution differently depending on the platform you’re using.

Seller Central Attribution

Sponsored Product Campaigns – Sales attribution is measured on a 7-day click through attribution window. If a user clicks on an ad, comes back up to 7 days later, and buys one of your products from your brand Amazon will attribute the sale to that campaign. Sales are attributed only to the last ad the user clicked.

Sponsored Brand Ad Campaigns (SBA) – Sales are measured on 14-day click-through window. Sales are attributed only to the last campaign the user clicked. SBA follows what Amazon calls “Brand Halo” sales attribution. This means that if the user clicks on your ad and buys any product with your brand name on it, not just a product featured in your SBA ad, Amazon will attribute the sale to that campaign.

“Brand Halo” gets very tricky. If you are a brand that has listings with different variants of your brand names, Amazon will attribute any sale from any of those brands, including sales made by anyone on Amazon who sells products under your brand.

Amazon Marketing Services – Attribution for the AMS differs from the Seller Central, even though many of the ad types are the same. Across the board, all the units in the AMS work on Amazon Brand Halo attribution whereas in Seller Central, only SB works on Brand Halo. Instead of a 7-day click attribution, AMS works on a 14 day click-through attribution.

Amazon DSP – There are a few different ways that Amazon attributes sales in the DSP platform, Amazon Display advertising platform. First, if you are advertising a product sold on Amazon, there are two types of reporting metrics or values to measure your return on ad spend: Product Sales and Total Sales.

Product Sales only tracks the ASIN you provide to Amazon for conversion tracking purposes. There is no Brand Halo attribution applied here. Amazon currently has to manually approve each list of ASINs you provide to them to verify they are indeed yours. The Product Sales metric is calculated on a 14-day view through attribution window. Viewable Impressions are based on the Media Rating Council Viewability standards. Only 50% of the display ad needs to be in view for one second or more for a sale to be attributed. Also, only 50% of a video ad needs to be in view for two seconds or more for a sale to be attributed. If user saw a DSP ad but then clicked on an SP ad, SP would take the credit for the sale, not DSP.

Total Sales tracks sales on the ASINs provided to Amazon for conversion tracking and all Brand Halo sales from the brand names included in the tracked ASINs list. If a brand gave a list of the ASINs with 10 different brand names, like the licensed brand, then total sales would be skewed because Amazon would attribute any sale from any of those brands in the list, even if you weren’t tracking those ASINs. Total sales are calculated on a 14-day view-through attribution window.

With Amazon DSP, you can also serve ads sending traffic OFF-Amazon. You can track the number of conversions attributed to the ad campaign but not the amount or type. The same 14-day attribution applies. It’s important to understand not just the numbers, but also the attribution behind the numbers so you can get a complete sense of how advertising is really performing to your specific goals.