You are an Amazon seller and you want to start running Amazon sponsored campaigns, huh? Well, you've come to the right place. In this article we're going to talk about why you should be running sponsored ads on Amazon, and we're also going to be going into the three foundations for successful sponsored product ad campaigns.
Why Run Sponsored Ads?
Why should you be running Amazon-sponsored ads? First and foremost, there is very little competition. Why is that? There's not a lot of competition because Amazon sponsored ads are still very, very new. Imagine what it was like over a decade ago when Google add words first came out. Because there was not a lot of competition you could get amazing cost per clicks, you could get amazing conversions on your ads through Google AdWords, because they were brand new. Now it's very hard to tun Google AdWords to products and get a return on your investment. Because Amazon sponsored product campaigns are very new now, you're able to take advantage of the fact that there's not a lot of people who are actually using them.
The second is that Amazon sponsored products allow you to bring new products to market. When you create a brand new product, whether it be a bundle or a private label product, Amazon has no idea what your product actually is. Yes, they can see in your title that you've put certain keywords in your title, but they don't know exactly what it is. They can see your description and see that you have certain information about the product, but they don't know if you're keyword stuffing and just trying to rank for a ton of different keywords. They want to know whether or not your product in relevant or not.
The best way to do that, the best way to understand whether your product is actually relevant to search is when a customer puts in a search term into the search bar, they find your product and then they buy it. That's the best way for Amazon to know whether your product search terms are actually relevant. Amazon sponsored ads let you do that.
They also let you reinvigorate stagnated products that are not selling. If you had products in the Amazon warehouse that are just sitting there that you need to get moving, Amazon sponsored product campaigns can actually help you get those moving faster. The reason that is is because by using Amazon sponsored ads you're able to target ads that Amazon did not necessarily think were relevant to your product at the time. When the customer searches for that particular product using those search terms, and if they actually buy your product, Amazon sees that as a conversion statistic and could potentially raise your organic rankings. If you have products that are just sitting there, you might want to consider running sponsored ads to them.
Ultimately, sponsored ads help you to tell Amazon what your product is about, whether it's a bundle, whether it's a private label product, Amazon wants to know what search terms they can use to get your product in front of a buying customer. Amazon wants to sell product, that's all they care about. They don't make the majority of their money off of your sponsored ad campaign budget, they actually make more of their money off of how much they sell your product for and how much quantity they're able to sell of your product. They want to make sure that you are getting customers who want what you are selling.
The Three Foundations for a Successful Amazon Sponsored Ads Campaigns
Let's talk about the three foundations for successful sponsored ads. When you're running sponsored ads you have to keep three things in mind in order to actually convert on the product that you are selling. There's not a lot that goes into sponsored product campaigns, but if you ignore these three things you're more than likely not going to be able to sell your product at all.
The first thing to consider is your price. You need to understand that your price in relation to your competition is very, very important. If your price is much higher than the rest of your competition, it is very unlikely that you're going to be able to sell your product. Think about why people go onto Amazon in the first place. A lot of people go onto Amazon because they feel that Amazon is going to give them the best deal. When they search for a particular product using a keyword and they see fifteen products on the search results page, they want to know that they are going to get the absolute best deal for their search.
When they see that all of the products on the search page are around fifty dollars each, and the product that you're trying to sell is around the hundred and fifty or three hundred dollar mark, they don't understand why your product is going to be so high. They don't see how even though your product is very similar to all these other products, they don't understand why your product is so expensive, and they are very unlikely to buy your product.
If your price is close to all of your competitors, then it's much more likely that your product's going to sell. At that point in time the things that could determine conversion into a sale might be how many reviews you have, whether or not you have good reviews or bad reviews, and other things like that. More often than not, if your price is much higher than your competition, you are not going to be selling anything.
#2 Market Demand
The second foundation that you need to understand is market demand. If there is nobody searching for your product then you're not going to be able to sell that product very often, if at all. If there's nobody searching for your item you're going to be hard pressed to sell it. In order to determine whether or not you have a product that also has a market, you might want to use tools such as Keyword Inspector or Merchant Words. Both of these tools allow you to quickly determine whether or not there's going to be a market for your particular search term or product.
Something to keep in mind is that these tools only give you estimations. Nobody knows for sure how much traffic goes to specific listings on Amazon. That being said, you have to take the estimated search results of these software tools with a grain of salt. There's been numerous times when these software products have told me that there's thousands and thousands of people searching for a specific item, when really there was zero. The only way to determine whether or not there is actual traffic for a specific keyword is to actually run sponsored ads.
That being said, if you want the best way to test whether or not you have a market, you want to run sponsored ads on your product. Find as many keywords as you can that relate to your product. The more specific the keyword the better. The more niche the keyword the better. You want to avoid broad keywords that a lot of competitors are going to use and really focus on keywords that are very specific to a customer search. The more specific you are the more likely the customer is going to find your product relevant and buy, plus they're going to also be more likely to convert.
#3 Higher Margin Items
The third principle is that you need to have a decent amount of margin on your product. If you don't have a big enough margin of profit it's going to be very, very hard to run sponsored ads. I've seen numerous times when people only have a four to five dollar margin on their product and they try to run sponsored ads, but they don't even have enough of a budget because of their low profit margin to test. They need to be able to have enough padding in their profit margin in order to see what keywords are actually going to be successful and which ones are not in your sponsored ad campaign.
The bigger the margin, the bigger the ad spend that you have. For example, say you have a product that gives you one hundred dollars in net profit. You could spend up to a hundred dollars in ad spend before you are going to go into the red. You can spend up to a hundred dollars in ad spend and still break even. Why is this important? It's important because you have to remember that Amazon is also helping you to raise your organic rankings, so the more keywords that you can find that convert, the more likely it is that Amazon is actually going to reward you with free organic rankings in the end. The bigger margin that you have, the bigger ad spend that you have, and the more ability you have to test what keywords work with your product.
Remember, the goal of running sponsored ad campaigns, one of the best things that you can do is run these campaigns so that Amazon knows what keywords are relevant for your product. When they understand what keywords are relevant for your product, they will raise you up in the organic rankings for that product, which means that over time you will start selling more and more of your item for free, simply by Amazon rewarding you for letting them know what search terms were relevant for your product.
Stay tuned for the next article where we're going to go deeper into why you should be running sponsored ads and how best to set them up.