How To Launch A New Product In Amazon Using PPC - Part 1

launching sponsored products Aug 17, 2020
launch product on amazon

We've lost count of the times sellers tell us “I launched my new product in Amazon but it didn't work”...Maybe you can relate?

So imagine being able to launch a new product on Amazon using PPC with confidence every time?

The truth is, understanding how Amazon works, in particular, the A9 search algorithm, is crucial to the success of Amazon product launches.

In this 2-part blog post, I’m going to share a very straightforward product launch Amazon strategy using PPC. 

But before we get into the nitty-gritty of the “how-to” launch Amazon product in next week's post, we're going to cover what you need to know about the algorithm, and how we can use this information to help us prepare for a successful PPC product launch.

Understanding The A9 Search Algorithm

Getting to the first page of Amazon’s search results is crucial for almost all FBA businesses because around 70% of Amazon customers never scroll past the first page of results.

Therefore, the aim of a launch is simple: to drive sales volume and velocity and build sales history through selected, targeted keywords to improve organic ranking (over time) and, ultimately increase overall traffic and sales. In other words, we are going to use PPC to influence ranking.

At the same time, we are increasing visibility and brand awareness as well as building an ongoing stream of product reviews for social proof.

In addition to sales volume, velocity and history, there are many factors that Amazon's A9 algorithm considers when ranking your product. These factors can be grouped into three (equally important) pillars:

  • Customer Satisfaction Factors
  • Conversion Rate Factors
  • Relevancy Factors

Let's look at each of these in turn, and more importantly, how they relate to preparing for a PPC product launch.  

As Benjamin Franklin famously said, “By failing to prepare, you are preparing to fail.” 

Preparing For A Successful PPC Launch

Customer Satisfaction Factors

Amazon's mission is "...to continually raise the bar of the customer experience..." and "...to be Earth's most customer-centric company." Remember this and you can't go far wrong.

Inventory

Staying in stock is always challenging, especially when you are first starting on Amazon. But the truth is, if you want to get to the top of the organic rankings and stay there, you must stay on top of your inventory levels

Amazon rewards sellers who keep a high in-stock rate because it minimises refunds and pre-fulfilment cancellations. They don't like it when their customers get upset because you are out of stock! Moreover, Amazon makes more money the more sellers sell. It's as simple as that.

Conversely, when you run out of stock, Amazon penalizes you. Your rank will drop because not only are you not selling, and therefore, have no sales velocity, but your competition is selling instead of you.

The result? Not only will you have to work hard to get your ranking back, your Cost per Click (CPC) increases too so it also ends up costing you more to get your ranking back.

Key takeaway: plan ahead. Make sure you have sufficient inventory in stock, or at the very least, an effective replenishment strategy, to allow for a surge in sales. We recommend anywhere from 45-90 days coverage at any given time depending on your lead times.

Conversion Rate Factors

Conversion plays a HUGE role when it comes to ranking. Not only does Amazon want to provide its customers with an exceptional shopping experience but as a business, it wants to maximise revenue per customer.

The best way to think about conversion is like this. If product A converts at 20%, and product B at 10%, and both have the same amount of traffic, which one do you think Amazon is going to rank higher? Product A - every time - because it will convert into twice as many sales. 

This is why you must have as high a converting product listing as possible and always be looking for ways to optimise it and improve it further.

Compelling Product Images and Copy

A compelling product listing is one that connects, builds trust and converts visitors into customers. This can be achieved through persuasive and compelling product images and listing copy. 

It's not enough to simply describe your product, you need to tell the customer exactly why your product is the one they should buy.

You need to focus on the benefits that your product provides; how it solves their problems and will improve their lives. It's also an opportunity to overcome any objections to buying that they may have

Reviews

Reviews are extremely important when it comes to ranking. Amazon typically favours those product listings that have good reviews over those with poor reviews. Why? Because products with higher review counts and star ratings are much more likely to have a higher conversion rate.

When launching product on Amazon, sellers are faced with the classic chicken and egg situation when it comes to reviews. After all, you have to make product sales to get product reviews!

That's not to say you can't start running paid traffic without any reviews. You just need to be aware that conversion is likely to be low and, therefore, your ads are likely to cost more as a result.

Key takeaway: try to get at least 5 solid reviews before seriously investing in PPC (more on that next week). In fact, Amazon advises having at least 15 reviews before turning on ads, so the more the better.

Price

Amazon customers are often looking for the best deals on products. You only have to look at the massive success and popularity of promotions and sales events like Lightning Deals, Deal of the Day, Prime Day etc. 

If you want to rank well in the search results then you must price your products competitively. Amazon wants to provide the best possible shopping experience for its customers, so an overpriced product (relative to your competitors) will cause Amazon to assume that your conversion rate will be lower and therefore won’t reward you with higher-ranking positions. 

Key takeaway: check out your competitors' prices and be conservative with your pricing. You can always gradually increase your price over time once you have shown Amazon that you have a great product with a high conversion rate.

Relevancy Factors

When it comes to ranking, relevance is everything. The algorithm's job is to find and display the most relevant products - organic or paid - that best match a shopper's search query. That's because Amazon knows that this is the best way to get customers to click and buy. So you need to prove to Amazon your product listings are relevant to your ads.

Keyword Research

You need to prove to Amazon your product listings are relevant to your ads so you need to know which keywords to launch on. But you need to choose wisely. 

Time and time again we see sellers trying to launch on expensive high traffic, typically short-tail keywords that they simply cannot afford e.g. "silicone spatula".

Here's the harsh truth. High volume keywords are vanity keywords. Your ads simply won’t convert against the top sellers whose products have thousands of reviews - at least straight out of the gate. Accepting this reality will save you a ton of money!

Instead, you need to find and focus on frequently searched yet highly relevant long-tail keywords that you can afford and get ranked for. That way you won't run out of budget before most people get a chance to click on your ad and buy.

Key takeaway: for brand new products, select 5-10 seed highly relevant keywords to get started. For existing products, use your Search Term Report to identify those keywords that are converting best for YOU. We'll come back to keywords next week when we cover campaign set up.

Listing Optimization

Next, you need to optimize your product listing ensure you get all those highly relevant keywords into your listing. The most important and valuable keywords should be in the product title, then the bullets, back end search terms and, finally, product description.

That way when you start advertising and people start searching, Amazon will show your listing to the people who want to buy.

Key takeaway: always make sure you are indexed for your main keywords before you start running paid ads.

Category and Sub-Category Selection

When setting up your product listing, make sure you select the most relevant category for your product.

How To Use PPC To Influence Ranking

Now that we have established the importance of Conversion and Relevenacy factors when it comes to Ranking, how does this relate to PPC/can we use PPC to influence rank when it comes to launching products?

In true 80/20 style, we focus on the metrics that matter: Click Through Rate (CTR) and PPC Conversion Rate.

Click-Through Rate (CTR)

Click-Through Rate (CTR) is how we can measure how “relevant” buyers think our ad is.

CTR is how many people saw your ad and clicked on it shown as a percentage and is calculated as follows:

Clicks/Impressions = CTR

The average CTR on Amazon is 0.4% so this is a good benchmark to aim for.

By continually optimising our CTR, we are indicating to Amazon that we are highly relevant for our chosen keywords and deserve to be given a chance to perform at a higher organic position.

How to optimize CTR

Keyword selection is crucial for your CTR. Additionally, your CTR is influenced by everything the shopper sees in your ad - main image; product title; the number of reviews and price - so continually optimizing these elements of your product listing will improve your CTR.

In addition, your fulfilment method i.e. whether you are FBA (Fulfilled by Amazon) or FBM (Fulfilled by Merchant) and whether you have any Amazon badges e.g. Bestseller, Amazon’s Choice etc. also impact your CTR.

PPC Conversion Rate

Your PPC Conversion rate measures how well your ads convert. In other words, how many people clicked on your ad and purchased.

Unfortunately, Amazon does not display our PPC conversion rate in Seller Central but it is simply calculated by dividing Clicks by Orders:

Clicks/Orders = PPC CVR 

The average PPC Conversion rate on Amazon is just under 10% so again, that's a good benchmark to aim for.

When we optimize for higher PPC Conversion Rate, we are showing Amazon that we can convert for our chosen keywords and so deserve a higher organic position.

How to Optimize PPC Conversion Rate

Your PPC Conversion Rate can be optimized by making your product offering as compelling as possible. This means ensuring your product listing - supplemental product images, bullet points and product description and/or Enhanced Brand Content (EBC) - are engaging and persuasive.

Key takeaway: A good Click-Through Rate and Conversion Rates will get you better PPC results every time and reduce your Advertising Cost of Sale (ACoS) over time. 

Conclusion

Understanding the factors that influence how Amazon ranks products, and how this relates to PPC, is crucial when it comes to launching any new product in Amazon.

You can then use this information to prepare and measure your launch. As a recap:

  • Have 45-90 days inventory in stock
  • Check you are competitively priced
  • Select 5-10 highly relevant, long-tail keywords to target
  • Ensure your target keywords are in your product listing and that you are indexed for them
  • Get a handful of reviews

You will need a healthy Click-Through Rate and Conversion Rates in order to both rank and stick. 

Next week we'll dive into the launch strategy itself and cover how to set up your PPC campaigns, how to set your bids and budgets and how to optimize for success.

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