Why Most Amazon Paid Advertising is a Money Pit

ppc mindset sponsored brands sponsored display sponsored products May 19, 2020

If it feels like you spend an enormous amount of money on Amazon PPC that doesn't get results, you’re not alone.

But the problem isn’t Amazon paid advertising; it’s how it's being talked about. With so much conflicting advice you try a little bit of everything hoping it will translate into revenue. 

But that’s the one thing that doesn’t happen. Before you know it, you’ve blown through your daily budget (again) with nothing to show for it. It’s frustrating. 

But it doesn’t have to be that way. In fact, you can get better results with Amazon PPC by keeping things simple and doing less, not more.

We're big advocates of the 80/20 rule, also known as the Pareto Principle which states that 20 per cent of your activities will account for 80 per cent of your results. 

We’ve been applying the 80/20 rule to how we run our client’s PPC campaigns from day one. Here are 3 ways you can apply the 80/20 rule to Amazon paid advertising to boost your revenue right away:

1. 80/20 Your Products

Most sellers think that they have to advertise all of their products. But this is not the case. It’s better that you focus your ad budget on your best performing, highest-converting products first. 

This is a far more effective use of your ad spend and will give you a better Return on Your Investment (ROI). Think about it, a product that converts at 20% will take half the number of clicks to generate a sale than a product converting at 10%. 

Longer-term, higher conversion rates, which mean higher Click-Through Rates (CTR), will lead to higher ad positions and lower Cost Per Clicks (CPC). 

 2. 80/20 Your Ad Types

There can be a lot of pressure in the Amazon world to ‘do all the things’ in order to be successful. From strategies to software, to events, there’s an almost constant fear of FOMO (fear of losing out) if you don’t use/buy/attend.

This is certainly true when it comes to Amazon paid Advertising. It’s tempting to experiment with the various ad types that are now available - Sponsored Brands, Display Ads, Video Ads and DSP - especially when you are made to feel like you are going to be at a competitive disadvantage if you don’t. 

The fact of the matter is, Sponsored Product campaigns account for 80% of ad sales on Amazon, and chances are they account for 80% of your ad sales too.

You’re far better off to dial in your Sponsored Product ads and maximise your sales with this ad type first before investing in the other types.

Otherwise, you’ll end up spreading your ad budgets too thin across all ad types with none of them performing to their full potential.

 3. 80/20 Your Keywords

One of the most common mistakes we see sellers make is overloading campaigns with lots of keywords. Again, this results in your ad budget being spread too thinly to be really effective.

Instead, focus on fewer highly relevant keywords. If you are starting a new campaign, testing new keywords can be very expensive at the start so focus your budget on just a handful of highly relevant seed keywords.

For existing campaigns, look at your Search Term Report and identify those keywords that are driving sales so you can focus your budget on those.

When it comes to PPC, relevance is everything and has a number of benefits including less wasted ad spend, higher conversion and a higher CTR, all of which will result in greater sales volume through your target keywords which all help to improve organic rankings.

Actioning these tips should help you to get the biggest bang for your buck, and result in some quick wins for you. As counter-intuitive as it may seem, less really is more!

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