PPC: Building a Successful Strategy on Amazon
February 16, 2021 Jenna Craig
There are many components to what makes our brands successful on Amazon—world-class creative branding, inventory management, various marketing channels, etc.
Sellers often ask what the cheat code or secret contact at Amazon we have that can explain our success. We assure you we don’t have a magic button or a red phone that connects us to Jeff Bezos’ office, but we have learned a thing or two from operating a portfolio of 100+ brands. And one of the most straightforward tactics that any seller can use to their advantage is PPC.
Quite often, in the FBA businesses we acquire, we see founding sellers that are under-utilizing PPC.
Generally speaking, many Amazon sellers should be investing more in PPC. Unfortunately, we’re also seeing rising costs in PPC. But there’s still a way you can play the market to see some big gains.
How Most Sellers Run PPC
Marketing costs are rising across Amazon, and some sellers may be wondering how they’re going to adapt. When optimized, PPC can drive massive increases in sales velocity.
Of the 100+ brands we’ve analyzed, we see sellers taking a variety of approaches to PPC.
Some sellers throw as much money as possible behind a handful of high-volume, hyper-competitive keywords. Other sellers take a more sophisticated approach that focuses on ACOS or TACOS targets based on their ASINs’ profitability. Some sellers in less competitive categories hardly run PPC at all.
Thrasio has an entire marketing division dedicated to PPC on a global scale. Here’s our approach.
Thrasio’s PPC Playbook
Thrasio runs PPC to specific ACOS targets we set at an ASIN level based on each product’s profitability. Typically, we use PPC campaigns to generate profit and support the ranking of our ASINs.
Setting the right targets for an individual ASIN takes extensive analysis. It’ll take time. PPC campaigns are often trial and error. It’s critical to know your goal for the ASIN or brand at the outset of building your strategy.
A winning PPC strategy is not something you can just throw money at—you can’t set it and forget it. To be fruitful, you’ll have to continue adjusting and tweaking as part of your ongoing operational tasks.
6 Tips for Dominating PPC
1. Understand Your Objectives
Figure out what you’re trying to achieve with your PPC strategy to put a plan in place.
Your approach to PPC will depend on your category, your price point, your margins, the lifecycle of your ASIN, and more.
Thrasio has a standard PPC structure we generally use, but we don’t have one strategy for all our brands, says Thrasio’s senior director of Amazon advertising, Brian White, “Our competitive advantage is that we are able to test a variety of PPC strategies, we are large and diversified enough that we can absorb the risk that comes with testing PPC at scale. This allows us to continually approve and identify the best PPC approach for a brand or ASIN based on its category, lifecycle, or other factors.
Getting the perfect PPC strategy for your brand is an investment in money and time that will depend on your category, competition, margins, COGS, ASIN lifecycle, short and long-term business objectives, inventory, supply chain lead time. Only you can decide what’s right for your brand.
In some aggressive strategies, a seller’s PPC may not be profitable, but their overall ASIN might be. If that fits into your business plan, then count it as a win.
2. Keyword Isolation
Set up a PPC campaign structure that allows you to isolate the performance of individual keywords. Isolation allows you to invest in your PPC budget intelligently by bidding on the keywords that generate the most return. Separating each keyword’s performance and honing in on exact matches will help you align bids and budgets according to your goals.
3. Basket Analysis
Explore what other products people who are buying your brand are also buying. If you’re selling yoga mats, it’s probably a good idea to run sponsored ads on listings for yoga blocks also. Make a point to look through Brand Analytics for these sorts of insights regularly.
4. Context is Key
If you’re selling picture frames, and you’re driving PPC to the term “frame,” you’re probably wasting a lot of money on ads appearing in front of people shopping for bed frames. To make sure the right shopper sees your ads, you need to download the terms people are searching for and make sure you’re eliminating those from your ad spend.
5. Adopt Early and Often
When Amazon launches a new ad type, they’re testing it. Neither FBA sellers nor even Amazon knows how well this ad type will perform, so the clicks can be cheaper and the competition less than on more established ad types.
When Amazon released Sponsored Brand Video, we saw CPCs were roughly 20% lower than other ad types in the first few months.
6. Don’t Hold Yourself to a Budget
We know this sounds counterintuitive, but we’ve seen sellers limit their earning potential by being complacent with too low of a marketing budget.
You need to think differently about indexing for PPC search terms than you do when writing for SEO. Don’t look at the keyword itself, but instead look at the return on the keyword. While there is value in making sure that the keywords you index for fit your product’s context when bidding on keyword types, you need to budget your ad spend to fund more of the exact keywords than the broad keywords. When PPC is working for you on Amazon, you need to be maximizing your investment in that strategy, not saving for a rainy day.
If you’re already dialed in to your target objectives, but your company’s growth has stalled because you don’t have the time or money to push it further—that’s one of the main reasons FBA sellers reach out to us. We do have the resources, and we’d love the opportunity to take the reins while you benefit from your business’s growth.