Amazon Ads ACOS Optimization - All use cases covered

Introduction

 If you are seller on Amazon, you already know the importance of measuring the success of your brand/ad campaigns to help optimize your future campaigns for maximum benefit. In this comprehensive guide, we will help maneuver into the legion of Advertising Cost of Sales (ACOS) and help you discover the factors involved in optimizing your Amazon ad campaigns. Without further ado, let's delve into the world of ACOS and get the basics out of the way first. In this guide, we will talk about: 

1. What is ACOS and ROAS? 

2. Choosing the right ACOS 

3. Few metrics you need to know in relation to ACOS 

4. What is Optimization – Why is it required? 

5. Factors involved in ACOS and methods to optimize them 

6. What are the key metrics that govern ACOS and how do you optimize them? 

7. Scaling up Spends/Increasing SOV/Increasing GV’s within a brand’s ACOS tolerance 

8. Scenarios and Recommended Actions 

9. Practical use cases

What is Amazon Ads ACOS? 

It is the percentage of Ad Spend. Advertising Cost of Sales = (Ad Spend/Ad Revenue) X 100 Sales 

Note: Your Ad Spend is the cost incurred to make sales for a certain amount. For example, if you are spending 200 USD on ads, and gain 1000 USD worth of sales. ACOS will be calculated as 200/1000 * 100 = 20%. This is a great way to understand the effectiveness of a campaign because the lower the ACOS (percentage of ad spend for sales), the higher is the efficiency of the ad.

What is ROAS? 

Return on Ad Spend (ROAS) is inverse of ACOS ROAS = 1/ACOS For example, if you are spending 200 USD on ads, and gain 1000 USD worth of sales, then ROAS is 1000/20 = 50. Therefore, the higher the ROAS, the higher the efficiency of the Ad. 

Based on competition, product prices, ad product mix, Cost Per Click (CPC), Click Through Rate (CTR), Conversions (CVR) and many more factors, ACOS or ROAS can vary from brand to brand. It is important to get your advertising goals right. As a brand you probably focus on one of these three things when you put out on Ad: Increasing sales Increasing visibility Increasing profit (long-term) - usually for established brands While we understand that all these three combined is the goal of any brand, it becomes very important to have specific goals for each Ad that is released, so there is a steady growth in profits.

Metrics you need to know:

Bid: Higher your bid, the better Ad slots you get on Amazon search or product pages. If your bid is lower, your ad can still receive one of many other ad placements throughout Amazon website. 

Impressions: The number of people that see your Ad (increases likelihood of the product being bought). An important factor to note here is that for sponsored ads, impression is counted if the ad was loaded, not necessarily viewed by the customer. This means that if the search page loads and your ad is on the bottom of the page. Even if the customer only scrolls until mid-page, your impression will be counted.

Clicks: The number of clicks you get on your ad 

CTR (Click-Through-Rate): Clicks / Impressions. This helps you understand how relevant your targeting is. Higher the CTR, the more relevant the ad is 

CPC (Cost-per-Click): The true price of the auction and the amount spent on every click gained. During bidding, you can set the highest amount you are willing to pay for your ad.

Ad Order: Purchased product after clicking on the ad. 

CVR (Conversion Rate): Orders / Clicks, measures how convincing your ad was to convert a customer to purchase the product 

Ad Spend: Clicks x Cost Per Click. This is the amount invested in ads.

Sales: Orders x Average Selling Price to understand sales driven by ads. 

Amazon ROAS (Return on Ad Spend): Sales divided by total Ad spend. This helps you understand how well your ad is doing. 

Amazon ACOS (Advertising Cost of Sales): Sales divided by ad revenue expressed as a percentage to understand how much of the sales were done through ads.

What is Ad Optimization and why is it important?

You might not always know the right ads to run and the right audience to target right off the bat. This is where optimization comes in. It includes researching which products to advertise, creating a good ad copy, finding the right keywords to target and ultimately deciding the right bid. You have to focus on maximizing desired factors and minimizing undesired ones.

By regularly optimizing the campaigns help you achieve: 

1. Improved campaign performances 

2. Optimized utilization of the budget

3. Reaching the original goal of when the ad was formulated

Amazon ad automation tools: With the increasing cost of advertising, it is essential that ad spend is managed effectively. Tools like Atom 11 can give you an edge over other advertisers as it not only helps you automate bid optimization and search term optimization, but also brings in retail parameters with ads. Other platforms that help with Amazon ad automation include Pacvue, Perpetua, and Scale insights. Along with automation, these platforms also help with analytics and reporting.

Factors involved in ACOS and methods to optimize them 

Let’s look at some important factors involved in improving ACOS and how you can improve ACOS: Factors involved in optimization: Advertised Products, Keywords, Bids, Budget, Campaign Structure, Retail parameters

1. Advertised Products 

The most important parameter in optimizing ads is advertised products. What product you choose to advertise has the highest bearing in determining ad performance. Choosing top selling ASINs (Amazon standard identification number) means you can get the highest return on investment on advertising those ASINs.

For ex. In the image given below, we can see 2 cases. In case 1, the advertiser spends equally on Band A (top selling), Band B (medium selling) and Band C (bottom selling) ASINs.

In case 2, a simple shuffle in % spend on top selling ASINs improved ACOS as well as impact of ads on total sales. 

Another important parameter is the grouping of advertised products. Do not advertise non-relevant product ads together in one campaign. Group your products based on product type, product line, product series or product band etc. It also helps to ensure more nuanced grouping based on keywords. For product targeting (Individual ASINS) & SD, separate campaigns for each main competition ASIN that will be targeted. This helps with: 

• Aligning keywords relevant to that product group 

• Allocating budgets as per product group, keyword type etc. for maximum ROAS 

• Closely monitoring performance for the best optimization techniques.

Recommended practices

Create new campaigns with each keyword types for better results as budgets can be set separately for each keyword type Advertise your best-selling products with good ratings to drive up your sales Use sponsored brand and sponsored product deals of the day, lightening deals etc. This will help you rank higher in placements due to the deal badges Ensure that your detail page has high resolution images. List out the features of your product clearly and concisely.

2. Keywords

70% shopping on Amazon happens via search. Customers put in words in the Amazon search bar to search for products. How well you know the right keywords to optimize your product will determine where your ad will appear. It is important to know your keyword strategy to finally increase awareness and sales of your products.

Keyword relevance

Choosing the most relevant keywords helps drive visibility and in promoting the brand. The best way to find relevant keywords for your products is by setting up an automatic campaign and letting Amazon drive views to relevant keywords and products. Another way to find relevant keywords is through keyword research tools like Helium10. What keyword you select to target your customers is as important as the match type you select.

Branded vs. Others:

1. Branded: Broad /Phrase match type can be used with caution by using the negative keywords to avoid irrelevant impressions

2. Generic & Competition: As it is generally costlier (higher average cost per click & cost per acquisition) for generic and competition targeting, Phrase / Exact match type can help generate impressions for the most relevant traffic.

3. Negative Keywords: When using broad and phrase match type, adding negative keywords to your campaigns from the start will help you optimize the campaign faster, as there will not be spends for clicks for irrelevant searches.

Match Type

Keyword match type is the relationship of the keywords used in the ad campaigns with the keywords used by the customers on the search queries. It is important to align your match type to your business strategy for the best outcomes. Match types also depend on the kind of targeting you have exercised (manual or automatic) Let’s quickly go through the types: 

Manual targeting match types 

1. Broad match: It offers broad exposure to customer queries according to the context. This match type offers your ad broad exposure to customer shopping queries. For example, the keyword “shoes” might match search queries for ‘sneakers’, ‘cleats’ ‘trainers’ etc. 

2. Phrase match: Although more restrictive than broad match, as in this case the search query should contain the exact phrase or sequence of words, it might result in better ad placements. However, on sponsored ads, if the search query has the meaning of one of the keywords mentioned, it can match. 

3. Exact match: The search term must exactly match the keyword or sequence of words in order for the ad to show. However, it also includes close variations and plural of the word. 

Automatic targeting groups Automatic targeting is available only for Sponsored Products. 

1. Close match: Ads are shown if the search query is closely related to the keywords/product. For example, if the product is “blue men’s running shoes”, the ad will be shown for queries like “running shoes” and “men’s shoes” 

2. Loose match: Ads are shown for loosely related search queries. For example, if the product is “blue men’s running shoes”, the ad will be shown for queries like “men’s sneakers”, “training shoes’ etc. 

3. Substitutes: Ads will be shown on other product pages that are similar to your product. For example, if your product is “blue men’s running shoes”, the ad will be shown on product pages that are selling “red men’s running shoes”, or other “blue men’s running shoes” etc. 

4. Complements: Ads are shown on pages of products that complement your product. For example, your product “blue men’s running shoes” will be shown on the pages of “blue men’s socks”. 

Recommended practices: 

Maximum 20 keywords per campaign is the ideal amount. Choose keywords that are specifically relevant to your product so when the ads are shown based on the match to the search query, the chances of sales are higher. Ensure that your keywords reference metadata is present on your advertised product's detail pages 

Negative keyword match types: Search term negation allows you to exclude showing up for irrelevant search queries (allows you to optimize ad campaigns well). For example, for your product ‘blue men’s running shoes’ you can ensure that people who search for ‘red training shoes’ don’t get your ad. This helps weed out irrelevant impressions.

3. Bids

Bids play a vital role in your ad’s placement on the page (top of the search, bottom of the search page, details page etc.). You must bid for the maximum cost per click (CPC) you are willing to pay for that particular ad. Here is a detailed blogpost on bidding strategies for Amazon Ads. 

Recommended practices: 

Bid higher for well-performing and relevant keywords and reduce the bids on other keywords Utilize bidding strategies like ‘up and down’, ‘down only’ ‘fixed bids’ as per your campaign.

4. Budgets

Campaign budget is the total amount of money you are willing to spend on all keywords of the campaign, in a day. The campaign budget is there to ensure that you do not overspend on your campaigns. But it is important the campaign is budgeted enough money to last an entire day. Budget your campaigns so that they can last until midnight Pacific time. This will ensure that you are not missing out on any traffic that your competitor is. Campaign budgets can be optimized during the day using dayparting strategies. 

5. Campaign Structure

This does not have an impact on your campaign performance but has a high impact on how you manage your campaigns. Ensure that important information is included in the campaign structure. Here is a detailed blog post on how to manage campaign naming structure for Amazon ads. 

An ideal campaign name should contain: 

• ASIN number (for single ASIN campaigns) or Sub-category Name (for multiple ASIN campaigns),

• Objective of the campaign ex. Catch All, Ranking, Brand Defense, Competitor Target,

• Ad type ex. SP, SB, SBv, SD.

• Targeting Type ex. Branded, competition, generic OR phrase match, exact match.

For ex. "ASIN number" | SP | Target Type | "Campaign Objective"

Recommended practices:

Use common naming convention for campaign names for easier monitoring and analysis of the campaign performance. Suggested naming convention is:

"ASIN number" | SP | Target Type | "Campaign Objective"

6. Ad copy

Some ad types, like sponsored brands and display allow the use of custom creatives. This is a great way to bond with your ideal customers and give them bespoke experiences about your product.

• Ensure that ad copy is within Amazon’s guidelines. The moderation team is likely to reject the creatives where the main image does not have the true brand logo, sure make sure you check before uploading.

• Use Amazon brand stores as landing pages for sponsored brand campaigns, make sure it has the content of the products you are advertising 

• If 1 ASIN is not in stock, it is likely that the “Landing page not available” will appear after you have gone live with campaign which is why including more ASINs (at least 5) on the landing page will ensure that there is no interruption to the visibility of the ad.   
            

7. Retail Parameters

Retail parameters like inventory, pricing and competition pricing impact ad performance more than anything. Here is a quick poll that reveals how industry veterans feel about retail signals on ads:  

To ensure that you are running optimal ads, you should be: 

• Pausing ads when you are low in stock. You can either pause ads W.r.t units in hand or days in hand. You can do this with simple rule based system on atom11. 

  
  

  

  
  
  

• Go aggressive when pricing is low: You should be increasing bids when you are discounting certain products. This is intuitive during large events like BFCM, but not during the year when you are running promotions.

• Go aggressive when competition increases their prices

Optimization Techniques

In this section, we will look at recommended practices to optimize different type of Amazon ad campaigns:  

Automatic Campaigns

1. Automatic Campaigns (Sponsored Products) 

Automatic campaigns can be optimized by altering bids for match types as mentioned earlier – close match, loose match, complement and substitutes. We can also leverage placement bid percentages (top of search, product detail pages etc.) and bidding strategies.  

Recommended practices: 

1. Bids: For close match, bids can be increased and for loose match, bids can be reduced (because chances of conversions might be less), thereby reducing the ACOS. If the ACOS stays higher after reducing bids for loose match, you can pause the bids for loose match altogether. 

2. Placement level bids: If ACOS is higher, you can reduce the bids or set it to 0%, or if the ACOS is low, you can increase your bids. 

3. Bidding strategies: For most brands, dynamic bids work well. In particular, ‘down only’ bidding strategy. 

4. Search terms reports: Refer to these for keyword trends, after sorting the report in descending order of spending. If there are keywords that have low ACOS compared to the category benchmarks, add these keywords to the manual campaigns (if they are not already present). If there are irrelevant search terms being targeted in your SP campaign, add them to the ‘negative phrase’ match type and reduce spend on unnecessary impressions.    

b. Keywords/Product Targeting (Sponsored Brands and Sponsored Products) 

Sort your ‘Spends’ column in descending order in the targeting report. Check the maximum spend the corresponding ACOS, refer to the next section for further recommendations on this. Search term reports can also be used when keywords are targeting in broad/phase match type (manual campaigns) to recognize what is the actual term the ad was displayed for and to know what keywords should be added to ‘negative word’ match type if ACOS is high and targeted keyword is irrelevant.

Recommended practices: 

1. Keyword match type: Check which keywords have high ACOS. If in broad, pause in broad and add the keyword to phrase match and if that keyword is in phrase match, add it to exact match. If the keyword turns out high ACOS even in exact match type, the keyword can be paused. 

2. Missing keywords: Keep updating your keywords and see if any more relevant ones can be added for better results 

3. Targeted ASINs/sub-category: Ensure that the targeted ASINs are similar price range, and check price range filter and brand filter for subcategory targeting – this will help understand which is/are the competition brand(s).      

1. Bids 

 Mastering Amazon’s bid system is one of the ways that can help you maintain your ad spends and ACOS on Amazon. By combining the right techniques under the right circumstances, you can dominate your competition, and maximize your conversions smartly. 

When do you lower your bids? 

• If ACOS is too high, reduce the bids for target keywords to reduce cost-per-click.

  • If CPC/Bid ratio is > 0.6, change bid by small %

  • If CPC/Bid ratio is < 0.6, change bid by large %

• For the keywords where the spend is high, with no sales, lower the bids close to minimum or pause it. 

When do you increase your bids?

• If ACOS is lower than the category benchmark, increase the bids of target keywords/ASINs (this will increase the number of impressions and drive the sales up).  

  • If CPC/Bid ratio is > 0.6, change bid by small %

  • If CPC/Bid ratio is < 0.6, do not change bid

Set the percentage range up to which the bids need to be increased/decreased as per your discretion based on the campaign performance. For example, Keyword/ASIN bids can be increased to 40 – 50% where ACOS < 3% to further drive sales. Bids can be reduced by 30 – 40% where ACOS is > 12%.  

Recommended practices: 

1. For Sponsored Products: ‘Dynamic bids – down only’ works for most brands.  

2. For Sponsored Brands: For placement level bid for ‘other placements (apart from ‘top search’). If more investments are made to the ‘other placements’ at higher ACOS, you will have to reallocate more budget to the top search placements.

Here’s how you do it: 

• Switch off automatic bidding in campaign settings 

• Under bid percentage, set it to the percentage at which the bids need to be decreased. This will result in lowered CPC when ads are displayed at other placements. 

• Increase individual bids for keywords/ASINS in the campaign if they have lower ACOS, so that you will get higher share of impressions and lower ACOS through ads serving in top of search. If it is the opposite scenario (where the ACOS is lower on other placements, then increase the bid placements for other placements)      

Reallocation of budgets: 

• If ACOS is lesser, reallocate the budgets to reduce overall ACOS.  

• Generally, a 30:70 ratio for automatic to manual budgets work well for brands 

• Completely pausing automatic campaigns due to their ACOS is not recommended, as you might miss out on essential search trends and important keywords. 

Creatives and Landing pages

Creatives and Landing pages provide a bespoke shopping experience to your customer. Let's see what kind of parameters need to be optimized in these cases:

• Main/Hero Image: The main image must be the true brand logo. Using true brand logo, makes the creative taller and more prominently displays the brand logo as well as the product. This helps customers easily identify what the product is about and the associated brand. Any other main image other than true brand logo, will lead to ad rejection by moderation team, due to updated ad policy.

  • Hero ASINS – Ensure the 3 Hero ASINS are the highly customer star rated ASINS/bestselling ASINS. As per internal analysis, on an average 53.80% of units sold is from the 1st hero ASIN, 25.30% is from the 2nd ASIN and 20.90% is from the 3rd hero ASIN.

• Landing pages: It is best to use Amazon brand stores as landing pages for sponsored brand campaigns. You can set up the campaign for the main page of store or other sub-pages to match the content of the products that you are advertising.

  • New landing page (Simple ASIN Landing Page): The order in which you add the ASINS is the order in which the ASINS will appear on the landing page, hence add the most highly customer star rated ASINS first. To avoid “Landing Page not available” error message after campaign is live, which generally arises if at least 1 ASIN is not in stock with buy box, try to include at least 5 ASINS on the landing page, which will ensure there is no interruption to ad visibility.

  • Amazon Brand Store: You can divert traffic to either main page of the Brand Store or sub pages.

  • Product Collections – Promote multiple products from a landing page of your choice (homepage/subpages). Hero Tiles can be upto 3 products on the landing page.

• Amazon Ad Copy:

  • Create clear, engaging headlines:

  • Include the brand name in the headline along with product type for higher relevance as headline is considered as one of the key factors for relevance in an SB campaign. Example: Bose Headphones: Superior Sound, Powerful Bass

Recommended practices:  

• Have a focused product list 

• Use deals page as landing page as this will help drive up sales 

• Make sure your best-selling and/or highly rated products are visible on the landing page 

• When on a landing page, brand store is used, ensure that the link is directing customers to the mentioned products’ pages (which are in sync with the targeted keywords) and not to your homepage or some other random tab

Promoted ASINs 

• Advertise bestselling products and products with 3.5+ stars to continue driving sales to highest rated products.

• Promote deal ASINS: Use Sponsored Product and Sponsored Brand to advertise deals of the day and lightening deals and the ads will automatically feature the deal badges in search results placements. Products displayed in stores will also automatically display feature deal badges

• Detail Pages: Brands invest in advertising to drive customers to the product detail pages, so suggest brands to ensure detail pages have high resolution images, major product features are all listed etc. This will help maximizing conversions.

b. Optimizing Sponsored Display

Recommended practices: 

1. Make separate campaigns for each main competitor (Product Targeting – Individual Products). This will help you optimize your ads to the well-performing campaigns as opposed to when different brands are targeted through a single campaign.

2. You can expand product targeting by including 10+ suggested individual products to target (as applicable). Under ‘Product targeting – category', use price and brand refinements to understand targeting which competition brands work well.  

3. Target products of similar price range or the products that are at a slightly higher range. Add 3+ suggested categories (as applicable) with refinements (price, brand etc.) 

4. Advertise 10+ ASINs within a campaign if applicable Add the custom headline and logo (it is a best practice) – this will ensure that all sponsored display ad sizes are viable in your campaign. Monitor and adjust your bids regularly 

c. Optimizing Sponsored Brands: Video Ads 

Recommended practices:  

1. Although each video campaign can only be linked to one ASIN, you can make sure that the video includes all your best and highest rated products. The complete details of the products (ASIN name, rating, rating count, price, discount etc.) have to be shown in the video.  

2. ASINs with deals and discounts, with prime badging and great quality images and copy are likely to lead to conversions.  

3. Through video ads, you can:

   1. Advertise best-selling ASINS, ASINs with high ASP (Average Selling Price) to upsell, newly launched ASINs to drive visibility and so on. 

   2. Create multiple campaigns based on nuances in categories of the product (with relevant keywords). For example, under headphones, there are variants like ‘wireless’, ‘in-ear wireless’, ‘on-ear wireless’ etc. Each of these variants can have a campaign of their own to increase the click through rate and conversions.  

   3. Make sure that the ASIN is always in stock as the ad will pause otherwise. 

Here are a few targeting strategies you can use: 

Keyword targeting: 

1. The main criteria for relevance in SB-Video is that the KWs used should be derived from the linked ASIN title, hence, make sure that the ASIN title includes the relevant critical KWs. For e.g. if the ASIN title is - Berkley PowerBait Fishing Soft Bait, Sizes, and Shapes, majority of the impressions will be received on KWs derived from the title such as ‘Berkley’, ‘fishing’, ‘bait’, ‘powerbait’, ‘fishing soft bait’, ‘fishing bait’, ‘soft bait’.

2. In case of competition targeting, keywords should include at least 2 words from the linked ASIN title of the competition brand name when competition targeting is done. To scale up impressions, use exact/phrase/broad match types for keywords derived from each ASIN title. Add negative keywords to avoid unnecessary impressions and high ACOS. 

3. Product and category-based targeting: Target your ads for specific ASINs and categories (refine them by price, brand and star reviews). Monitor and create campaigns around successful ASINs and categories. 

4. The ASIN targeted ads are eligible to show when the #1 organic result is the ASIN targeted.

5. The category targeted ads will be eligible to show when the #1 organic result matches one of the ASINs in the target category.  Bidding Strategy: Start bids around the average CPCs observed in Sponsored Brands.

6. Monitor the impressions to scale up the bids and keep optimizing until you gain visibility on page 1.      

Key metrics that govern ACOS and how to optimize them?

As per above formula, Amazon ACOS depends on:

• Click Through Rate (CTR) 

• Cost Per Click (CPC) 

• Conversions  

Let's take them one by one and figure out how to optimize them:

1. Increasing Click Through Rate (CTR):

CTR helps you ascertain how relevant and attractive your ad is for that specific search query. A change in CTR impacts your ACOS directly because even if you manage to increase your CTR, the conversion rate might not correspond, meaning your ACOS would have increased. 

How can you improve your CTR? 

1. Targeted keywords: Use the missing keywords tool and check if all the keywords that should be ideally targeted are present in the campaign. 

2. Targeted ASINs/Subcategory: The ASINs you target in your campaigns should be similar or only slightly higher in price range. 

3. Product details: Make sure all the product details like title, star rating, images, price are thorough and accurate. 

4. Specifically for Sponsored Brands:

   1. Custom images: Creating niche custom images for your brand can help tell your brand story and engage visitors. It can have imagery representing your brand, or your product in use etc. This is more likely to generate shopper interest than just posting the logo as the main image. 

   2. Headline and Copy: Make sure your brand is represented in a witty and catchy way and the copy for your product’s ad creative stands out. We had a detailed conversation with @Fatos Fatin, MD of Maxamaze, content optimization company, on Premium A+ Content. Watch this detailed conversation on our YouTube channel! 

   3. Top of Search displays: These displays usually receive 2 times more CTR than other placements so try to win more impressions through ‘top of search’ displays. You can analyze the difference in CTRs through the placement report. Use brand name and product type in the headline itself for best results. If you put a low-rated ASINs on your ads, the customer might not even click on it or even if they do, a conversion is less likely to occur. Ideally only ASINs with over 3.5 ratings should be used as the hero ASINs in a campaign. If you do not have any such product, simply do not include any ASINs in your ad creatives.

   4. A/B testing: It’s always recommended to consistently monitor what kind of ads are working for your brand/product. For example, you can run a campaign with a custom image and one without, and check which performs has higher CTR. Similarly, you can run campaigns with hero ASINs and without hero ASINs and see which performs better. 

   5. Retail aware ad automation tools: Retail aware advertising automation tools help you run effective ads by combining the necessary data and making smart decisions. This will help improve your click through rates drastically. For example, they will allow you to pause ads when inventory is low or avoid PPC cannibalization. Ad automation tool, atom11, is one of the only tools in the market that is retail aware. 

How to reduce your Cost Per Click (CPC) 

Not to be confused with bid, CPC is the amount paid for each click on the advertisement (whereas a bid is the maximum amount advertisers are willing to pay for their ad placements).

How to optimize CPC?

1. Monitor and continually optimize bids based on ACOS performance of the targeted keyword, product etc (i.e. increase / decrease your bid if you’re below / above your target ACOS)

2. Direct budgets from high to low ACOS campaigns

How to increase Conversions (CVR)

Following practices can help improve Conversion:

1. Improving product detail pages - high resolution images, major product features are all listed, A+ content, videos, answering customer questions etc

2. Competitive Pricing of products

3. Promoting bestsellers

4. Increasing bids on high conversions keywords/target products (ASINS) and reducing bids on low converting keywords/target ASINS.

Scaling up Spends/ Increasing SOV/ Increasing GV’s within a brand’s ACOS tolerance

Check the following pointers:

1. Present on all Ad Types - If campaigns are setup for all ad types and keywords. (Auto SP, Manual SP & SB (Keywords + Product Targeting), SD, SB - Video.

2. Targeted Keywords/Product Targeting – If all the keywords that should be targeted, are present in the campaign by using missing keywords tool. Check if key ASINS are also targeted. You can randomly check for top searched keywords on the website and see if the brand’s ads are visible, if not visible you can share screenshots. Pi Search Performance report can be used to identify top searched keywords for which brands ads are not displayed and suggest the brand to target relevant keywords among the list. Example for JBL

3. Bids: Bids and Placement Bid% are competitive. If there is more potential to increase the bids.

   • SP Bidding Strategy – Can move to “Dynamic Bids –Up and down” if ACOS is in control or if brand is looking only for visibility.

4. Campaign Budget - Check for campaign out of budget status in Atom11 or in dashboard.

   • If previous day’s campaign spend is close to the budget set, then budgets can be increased. System generally stops campaigns when it can estimate that the spend will cross the budget set for a particular day.

Scenarios and Recommended Actions

Please refer to the below table and correlate the brands goals and actions to be taken.

Practical Use Cases:

1. Improving CTR

If a brand, Brand A, is promoting premium products (>300$) and has lower CTR SB than category benchmarks. How can you improve CTR to match category benchmarks:

Brand A’s campaigns and reports are to be analyzed and following recommendations can be shared:

1. Keywords – We need to inspect the keywords and what match types are used in targeting. Brand A is using generic keywords in phrase match, leading to impressions on keywords such as "laptops under 100$", i.e. budget laptops which are not relevant to brand A’s promoted product’s price range. Also there are impressions on irrelevant keywords such as laptop case, laptop cover, as negative keywords were not included in the campaign. So to make the targeting more precise, we can recommend brand to use keywords in exact match type and cover all keywords that are relevant to promoted products price range and features.

2. Product Targeting - Category – Check if the brand is targeting relevant price range and brands who have similar products. Brand A is targeting entire category without using brand and price filters. We can suggest them to use price and brand refinement, to target other premium laptops ASINS. This will also help us understand which competition brand targeting is giving us returns and we can scale up on and vice versa.

3. Placement – Placement report is recommended to be referred to along with keyword reports. Looking into the placement report, we can see that the CTR is 2.5x when impressions are won on top of search placement but currently brand A is only winning 4.91% impressions on top of search. Brand A needs to bid more competitively by increasing individual bids by 30 – 40% on important keywords. Conv (1.55x), ROAS (1.91x) too is better on Top of Search, than other placements.

4. Creative/Images – Check if the main logo is a brand logo and if Custom Creative is being used. When main logo is brand logo, the creative is 2x taller and the first hero ASIN is clearly visible. We have seen experiments where custom creative has shown to increase CTR by 15%. Custom creative helps draw customer’s attention to the ad.

5. Hero ASINS – It is important that the hero ASINS are best star rated products in creative. First hero product which is most visible to a customer when viewed on mobile, is 3 star rated, brand A can utilize the 4 star rated product as hero ASIN.

6. Headline – Headlines need to be compelling and include keywords associated with promoted product. Brand and product name in headline increases ad relevance score, which will in turn lead to a better ad ranking. Brand A’s headline is currently the product tagline. Brand A can experiment with Headlines which call out offers, product features, running alongside campaigns with just product tagline and measure CTR impact. We have generally observed campaigns with offer related headline have a CTR of 1.3x than other headlines.

2. Scaling Up Investments:

Brand B in Wireless had consistent investments month on month but brand had further potential to increase investment, given that their ACOS was lower than category benchmark. How do we scale up the brand’s investments?

1. Present on all Ad Types and Targeting Options Available – Examine if brand is present in all ad types and utilizing all targeting options, auto SP, SP & SB Keywords, product targeting (ASIN and category), SB Video and SD. Highlight in case they are not present in any of the above.

2. Keywords – Check the type of keywords brand is present on/identify relevant keywords they are not targeting. Brand was present on their main branded keywords and some generic keywords; we identified keywords which the brand was not targeting among top 300 branded and generic keywords and recommended that it be included in the campaign. We can also share screenshots of competition brands targeting Brand B’s keywords.

3. Product Targeting – Some brands avoid competition targeting as the ACOS is generally on higher side. However, we have experimented and observed that utilizing product targeting for competition targeting results in lower ACOS than keywords targeting. ACOS with PT was 3 – 5% while ACOS with keyword targeting was around 6 - 8%. So we can suggest brand to utilize product targeting – category and ASIN to make the targeting as specific to the price and features of Brand B. This can not only increase investments but also help scale up investments in an optimized, scalable way.

4. Bids – Correlate bids to category benchmark and placement report. Highlight that brand B’s aCPC is lesser than category even though its ACOS was much lower than category benchmark. By reviewing placement report, we can note that even at slightly higher aCPC, the brand was able to get 2x ROAS in top of search placement. Hence suggested to scale up bids on top of search placement in SP and individual bids in SB. However, since SB ACOS was higher in other placements, the brand can be advised to lower bid% for other placements in campaign settings, while continuing to have more competitive bids to win more impressions on top of search.

5. Budgets – Check campaigns where >80% of budgets were consumed previous day and recommend brand to set higher campaign budgets for campaigns with ACOS as per tolerance. Can highlight potential lost sales/orders/ no. of hrs. they were out of budget.

6. Promoted ASINS – Research if the brand is promoting not only newer launches but even slightly older products which are still available on the amazon website.

3. Lowering ACOS

Brand C of Audio category, had seen rising ACOS in their true wireless segment (> USD 500). How can we handle this scenario?

1. Keywords – Examine the keywords used. There were many non-true wireless keywords or very generic keywords such as headphones, earphones, where usually products sold are of ASP < 1500. However, some of the very specific true wireless keywords of all buckets branded, generic and competition were not included in the campaigns. Identify 150 True wireless keywords which brand could target in exact match type. The deeper the keyword (keywords apart from top searched) the lesser is also the competition (lower aCPC) and lower ACOS.

2. Match Types – Keywords were in phrase match type, which led to targeting keywords which were not very relevant to true wireless headphones. Hence to make targeting more specific, keywords are to be added in exact match type, making sure to cover all the relevant keywords.

3. Product Targeting – PT is very useful for premium segment as you can target products of specific price segments. Brand was relying more on keywords than PT, hence they were suggested to scale up on PT for competition targeting, by targeting brands with products of similar price point or higher price point, as we have seen lower ACOS and wider reach through product targeting.

4. Automatic SP – Lower bids on targeting which have higher ACOS. Refer search term report and identify keywords to be added in negative (keywords which are irrelevant)

5. Bids – Some of the keywords had high bids, but low sales/high ACOS. Hence suggestion was to lower bids on non-core keywords by 50% and if within 3 – 4 days, there is no improvement to pause such keywords. Similarly, we need to balance it out by increasing bids on keywords with low ACOS. Some keywords had spent significantly but gave no sales. Brand was asked to pause non-core keywords and operate at lower bids on core keywords where ACOS is on higher side.

6. Placement bid% - Top of search SP had lower ACOS, so setting a higher bid% can help. Lowering SB “other placement” bid, due to higher ACOS can lower aCPC and bring down ACOS.

7. Placement – Scan placement report to see which placements have lower ACOS. Increase/Decrease bid% and individual bids as per placement performance.

8. Promoted ASINS (SP) – Check Ads Tab to see if there are certain products/ variation of products having higher ACOS and significant spends, can recommend brand to pause such products if possible, so that the lower ACOS/good performing promoted products utilize the budgets.

9. Budgets – Move budgets towards better performing campaigns and ensure good performing campaigns do not go out of budget.

4. Brand Awareness + Target ACOS

Brand D is a growing brand in the audio sector and has < 0.3 % of branded searches on platform and also limited marketing budgets currently. They want to understand how best to drive brand awareness and yet maintain a tolerable ACOS for their newly launched wired earphones, priced at INR 800. Possible solution here?

1. Keywords – Brand D was targeting keywords related to true wireless, bluetooth earphones, wireless earphones etc which are not relevant to their product (wired earphones). Brand can focus on very refined generic keywords such as wired earphones, wired earphones below 1000 etc, Customers searching generically are more likely to not have decided on the brand of the product, so it would be easier to acquire new customers through generic targeting. However, since there is high competition among brands for generic targeting, which may lead to higher aCPC, Brand D can focus on keywords even beyond top searched, long tail, more specific keywords relevant to their product features, as there will be less competition, which will incur lower aCPC and better conversion and ACOS.

2. Match Types – Keywords were in broad match type, which led to targeting keywords which were not very relevant to wired earphones and also targeting competition of all price ranges. Hence to make targeting more specific, keywords are to be added in exact match type, making sure to cover all the relevant keywords.

3. Product Targeting – Brand can utilize product targeting (ASIN and Category) to target other competition brands of similar price range and feature. Campaign should be monitored and optimized with 3 days of data. Post a week, brand can then increase focus on competition targeting where they get lower ACOS and pause the targets where ACOS is high/no sales.

4. Bids – Brand should bid competitively on very relevant keywords/ competition products, so that they win as many impressions on top of search, as this will ensure high visibility and we have observed better CVR and ACOS in top of search placements.

5. Budgets – Move budgets towards better performing campaigns and ensure good performing campaigns do not go out of budget.

6. Auto SP – This targeting works well for low ASP products, so starting an auto sp campaign with low bids and budgets initially and optimizing and scaling up budgets will help brand gain visibility and lower ACOS.

5. Maintaining ACOS as per tolerable limit, even when scaling up investments

Brand E in Clothing category has increased its daily investment by 2x, however this has led to an ACOS increase from 8% to 15%. Brand wants to maintain ACOS within 10% even with increased investments. We identified that the aCPC had increased to 2.5x, post scaling up investments as brand had been bidding very aggressively on all keywords/target ASINS. The brand had also increased budgets across campaigns, even which weren’t performing too well. Following steps can be suggested to the brand to scale up investments efficiently

1. Campaign Structure – Structure campaigns as granularly as possible, such as by gender, product type and keyword type. Example Men’s Jeans, Women’s Jeans, Women’s Dresses etc. This will help gain product level performance insights and we can refine our bids, budgets, targeting further, as per performance.

2. Keywords – Brand needs to focus on keywords which is already performing well (ACOS < 6%) and increase bids by 50 – 60% on such keywords, instead of increasing bids on all keywords, irrespective of the performance. Also apart from top searched keywords brand can target keywords beyond top 100 keywords, as these keywords will have lesser competition, thereby they can clear at a lower aCPC and get better conversions. E3. Product Targeting – Category Brand can use price and brand filter, to be very selective of the products that would be targeted. Focus on targeting competition brand products, where our conversions are better, which will help reduce ACOS

3. Product Targeting – Individual Products – Select and target products that are very relevant to our product selection and price.

4. Bids – Increase individual keywords/ASIN targeting bids to 50 – 60%, where ACOS <6%. Monitor the performance for a 3 days and where keywords/ASINS are continuing to perform well, increase bids further, as long as they perform optimally. Increase bids from 30 – 40%, where ACOS is between 6 – 9%. For newer keywords and ASINS targeted, start at bids of INR 10 – 15, and then alter as per performance.

5. Budgets – Scale up budgets of campaigns, where performance is within ACOS Tolerance, instead of all campaigns. Ensure campaign with ACOS <8% have sufficient budgets at all times.

6. Promoted ASINs – Ensure to promote bestsellers/3.5+ star rated products. In SP and SD, pause ASINs which have low star customer ratings, so that ads are served for good customers rated products/bestsellers, and conversions are better.

6. Reducing ACOS in a category with low benchmarks:

Brand F operates in PC and PC accessories category. While they are an established brand in PC category, they are new to PC Accessories category and expected the ACOS of PC and PC Accessory category to be similar, however they were surprised to see the PC Accessory category operate at an ACOS 10% (5x of PC) and their ACOS was trending at twice that of the category ACOS (20%). What suggestion can be shared to this brand to bring their ACOS in control?

1. Campaign Structure – Brand had added all the accessories (mouse, keyboard, backpack) into 1 campaign and targeted keywords of all accessories and of all keyword types (branded, generic, competition) in this campaign. It is very important to create separate campaigns for each product type and each keyword type, as it helps align the right target keywords/ASINS for the promoted product, monitor performance by product type and target keyword type, as well as allocate budgets as per performance of the campaigns.

2. Keywords – Ensure maximum coverage on branded keywords, followed by covering priority generic and competition keywords.

3. Match Types - Generic and competition keywords need to be in exact match, so that we avoid targeting keywords which may not be relevant to the promoted product. Example if mouse if INR 1500 and we use mouse in broad/phrase match type, it can target keywords such as mouse under 500 and since customer is clear on their budget being < INR 500, it is difficult to get a sale or conversion, which will increase the ACOS.

4. Product Targeting – Since many of our products are priced at a premium, utilizing product targeting is key to ensuring we are targeting ASINS of similar price range. Utilize “Category” targeting and target brands of similar price range and choose ASINS of similar price range for targeting through “Individual Product” targeting. When you have products of budget (<1000) as well as premium segments (4000+) for a single product type, such as a backpack, create 2 separate campaigns, as the more granular the campaign, the easier it is to monitor performance and take actions on bids, budgets etc.

5. Bids – Bid at 3x of category aCPC for branded and very relevant generic and competition targeting. This will help us win more impressions on top of search, where CTR and conversions are generally 2x. For all other targeting, bid at 1.5x of category benchmark and then alter bids as per performance.

6. Budgets - Ensure branded campaign does not run out of budget and there is sufficient budget to last through the day. Allocate more budgets towards campaigns performing better than category average (<8% ACOS).

7. SB Landing Page – We need to direct the SB campaign to the deals page on the brand store, instead of homepage where there is many layers, before customer scrolls to the products section. This will help reduce drop rates, increase conversions and lower ACOS on SB campaigns.

8. Promoted ASINS (SP) – Post 1 week of the ads being live for SP & SD, check Ads Tab to see if there are certain products/ variation of products having higher ACOS and significant spends, can recommend brand to pause such products if possible, so that the lower ACOS/good performing promoted products utilize the budgets.

9. Auto SP – Set up separate campaigns for each product type, so that we can get keyword trends of the particular product. Start with low bids and budgets initially and post optimizing, you can scale up the budgets.

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Appendix:  

SP: Sponsored Product 

SB: Sponsored Brand 

SD: Sponsored Display 

CTR: Click Through Rate 

CPC: Cost Per Click 

ACOS: Advertising Cost of Sales 

CVR: Conversion 

Note: Values such as spend, investment, sales and CPC are in USD