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.

Google Display Network vs. Demand Side Platform

Marketers have lots of choices when it comes to display media, however, the primary choice for many people who are engaged in Search Engine Marketing and looking to increase display reach is the Google Display Network. But there are pros and cons of using the GDN instead of employing a DSP and the best decision is not obvious. Here are the primary factors to consider when choosing GDN, DSP or both.

Budget – If you aren’t spending over 100k a month, the reasons to consider a DSP are less compelling because you probably can get all the reach, targeting and ad diversity you need from within the GDN.

Banner Testing – Custom ads cost money to create. The GDN and some DSP facilitate Dynamic ad creation within their ad servers using templates. In addition, some DSP integrate with a DCO (Dynamic Creative Optimization) platform such as Flashtalking or Spongecell to allow for creative to be dynamically created from feeds or other data sources. Google GDN serves text centric ads using Adwords account data and ad groups, but it also has a responsive ad creation tool for the GDN. One can include images, and it can be effective.

Reporting – When you stay within the Google technology stack, centralized reporting is much easier to implement and manage.

Ease of use – The GDN looks and feels almost like Adwords, making it easier for agency or in-house staff to use it without additional training.

Budget Fluidity – If budgets are being moved around based on results or changes in target KPIs, it’s often easier to do so within one platform.

Reach – While GDN has good reach, DSPs now have that reach plus more – so if you’re doing retargeting or need to reach a niche audience, a DSP can often find more of the audience you’re looking for. DSP have inventory from AdX (the DoubleClick Ad Exchange) plus other exchanges/SSPs (Supply side Platform) such as PulsePoint, OpenX, AppNexus, Sonobi, Rubicon, PubMatic and others. In addition, there is an option of doing PMP (Programmatic private marketplace) where there is a direct publisher-to-advertiser relationship and programmatic direct with specific publishers.

CPC vs. CPM preferences – The GDN gives you a choice as to How to pay. But even though you will be invoiced on a CPC basis, the yield management algorithms inside the GDN are calculating an effective predictive CPM when deciding where, and how often, to serve your ad. Nearly all inventory purchased through DSPs is made available for real-time bidding on a CPM exchange, including Google and others.

Data Partnerships – Google gives you access to many audience types, including retargeted audiences and demographic, contextual and interest based targeting. Similarly, DSPs often have data partnerships with a broad set of partners and can facilitate the use of that data not only for targeting but also to influence the bids on inventory/impressions. DSPs have inventory from AdX plus other exchanges, including AppNexus, Rubicon and PubMatic along with PMP partnerships and programmatic direct.

Integration with a DMP (Data Management Provider) – Data is a byproduct of programmatic media and marketing in general. Larger marketers use DMPs to collect, unify and activate data. This allows them to identify and target the right audiences. DMPs can also be used in conjunction with a DCO platform to personalize ads to segments of the audience. This personalization can even be based on recent experiences or engagements you’ve had with others.

Some advertisers and agencies use a DSP and GDN at the same time, but one must be cautious when doing this. If you based your bids on the same audience, the result may be that you’ll end up bidding against yourself because inventory in AdX is bid on by your DSP and Google GDN simultaneously. If you need to use both your DSP and GDN to accomplish your marketing objectives, make sure you use different ad creative and perhaps a different landing page user experience.