Five golden rules for successful advertising campaigns on Amazon

by Daniel Skoda, Managing Partner at adlicious

Giving brands and products visibility is one of the central challenges for every marketer. There is hardly a more suitable advertising environment for this than where both generic and explicit information is requested, processed, and presented to the user: in search engine results. By comparison, Google is miles ahead of all competitors as a search engine, with a market share of 87.66 percent. However, current US studies show that, despite Google's impressive market dominance, product searches have more frequently started on the online retailer Amazon since 2018. Amazon offers vendors and pro-sellers almost identical options for managing performance campaigns within the still-separate user interfaces of the Advertising Console and the DSP. Sellers and vendors can run Brand Ads (formerly Headline Search Ads) at the top of search results, at the bottom, or on the side of the search results page, as well as Amazon Sponsored Products. Vendors can additionally place Product Display Ads in particularly prominent spots on the detail pages of their own and third-party products. These advertising formats allow marketers to make products and brands visible at key points and achieve awareness, engagement, and sales goals. For some advertising formats, meeting specific conditions is a prerequisite for running ads. For example, to run Sponsored Product Ads, advertisers must have won the Buy Box for the corresponding product. Versatile targeting options, which allow for targeting based on data from one's own CRM as well as transactions, user profiles with In-Market and lifestyle segments, set the platform apart from other channels. Sponsored Brand Ads are particularly well-suited for creating visibility, precisely because generic searches—where no brand or product preference yet exists—can be targeted specifically. To maximize campaign success and consistently achieve high ROIs, there are five golden rules.

‍1. Align your campaign KPIs with your advertising goals

‍To assess whether an Amazon campaign is achieving its desired effect and to efficiently identify optimization potential, it is first necessary to clarify the purpose of the advertising, how best to compile the measurement and control criteria, and what importance to assign to them. To increase brand awareness, reach within the desired target group is best evaluated using the following KPIs:

• Impressions, Frequency Cap (FC)
• achieved contact frequency (e.g., measured via a separate/proprietary ad server)
• Visibility
• Brand Safety
• Target group reach (measured with external tools)

The golden benchmark for measuring the success of sales is conversions, which can be displayed in the Amazon Advertising Console (formerly Amazon Marketing Services) or the Amazon DSP, depending on whether it is an internal or external shop on Amazon. Predetermined tracking windows for clicks and views are only taken into account in the DSP. In addition to Amazon's own attribution, it is possible to integrate external tools for success measurement in order to manage campaign optimization individually. Since 2019, Amazon has also offered "new-to-brand" metrics for targeted new customer acquisition. These allow advertisers to determine whether a purchase was made by an existing or a new customer (no purchase within the last 12 months). The new metrics include:

• Total number of purchases and sales from new-to-brand customers
• Purchase rate of new-to-brand customers
• Cost per new-to-brand customer

2. Use keywords and targeting strategically to achieve more visibility

‍Amazon offers advertisers a range of targeting options, ranging from product-related variants such as ASINs (Amazon Standard Identification Numbers) to interests (lifestyle targeting) and keyword targeting. The targeting options in the DSP include product categories such as garden, sports, or pets; in-market segments (e.g., users who are in the process of buying clothing); lifestyle segments (e.g., cycling enthusiasts); and other segments, including those of a sociodemographic nature, as well as geotargeting. Keywords primarily serve to make brands and products visible in the results of relevant searches. However, anyone who thinks that keywords for search ads should always describe the product and brand as precisely as possible is under a misconception. In fact, generic keywords are particularly well-suited here. Shoppers who are searching for a specific product category—such as writing pads—in a brand-neutral and product-neutral way, rather than searching directly for "Brunnen writing pad" or "college notebook student DIN A4," offer advertisers great potential to stand out with their brands and products. In addition to manual conception, automatic campaigns are a valuable source for new keywords. They achieve better results than external tools and are easy to set up. Caution is advised here, however; without manual evaluation, results can vary. The technology is simply not yet at a point where, once set in motion, it generates optimal results continuously. Therefore, it is important to use this option in moderation and always evaluate new keywords for their profitability. If performance is good, the keywords can be transferred to the manual campaign where it makes sense. Established brands should also use defense campaigns with brand-related keywords to maintain market share against smaller competitors or Amazon's own private labels. Keywords for direct competitors can also strengthen one's own position. For example, if Nike places its products in the context of similar Adidas products, it can influence the purchasing decision in favor of Nike.

‍3. Keep a constant eye on performance and optimize in a goal-oriented manner

‍The bidding strategy should definitely be aligned with the objective. It is advisable to work with differentiated campaigns that use fixed bids to increase brand awareness and dynamic bids (up and down) to achieve sales. Amazon's bidding algorithm automatically optimizes according to the probability of conversion, although it is also advisable here to check CPCs regularly and not rely blindly on the algorithm to achieve optimal performance. By comparison, Amazon Ads offers more efficient campaigns and thus a cost advantage over search engines like Google, whose primary goal is generating clicks rather than conversions, as is the case with Amazon. Marketers should be aware of how the bidding algorithm works and the differences from other advertising platforms in order to manage campaigns with maximum performance. When measuring the success of Sponsored Brand Ads, Amazon only distinguishes between "Top of Search" placements and "Other" placements (the page as well as two options below the search results). The performance of "Top" and "Other" placements can differ massively. Impressions are generated regardless of the ad's position, but they do not lead to clicks and conversions in the same way. A placement below the search results is logically less performant than a Top of Search placement for the same number of impressions. A cost driver can lurk here, because the low click-through rates (CTR) of an "Other" placement also push down the average CTR. As a result, the relevance of the ad material determined by Amazon drops, and costs rise. In principle, Amazon offers advertisers simple and meaningful measurement options. In particular, by mapping the entire purchasing process on one platform, it enables easier success measurement than, for example, the combination of Google Ads and one's own online shop. However, Amazon only provides a portion of the data, and user information such as demographic data, keywords, or geo-data—which the advertiser collects themselves in their own shop—is missing. Amazon is limited to data such as purchasing behavior, return rates, and conversion rates collected on the website itself. Even as Amazon continues to expand its targeting, advertisers currently still have more versatile options available with Google and its differentiated analytics.

‍4. Test, test, and test your campaigns

‍The foundation for results-oriented campaign optimization is intensive A/B testing of ad elements. Amazon Sponsored Brand Ads offer the ability to test and adjust elements such as the header image, headline, and more. When testing, you should focus on testing one variable at a time across multiple campaigns, observe the changes for at least two weeks, and evaluate them against your campaign goals. These ad elements should be tested for performance:

• Header image
• Headline
• Products (ASINs - Amazon Standard Identification Numbers)
• Number of products
• Product order
• Landing page / Brand

5. Check profitability and avoid rigid campaign setups

‍Amazon uses the Advertising Cost of Sales (ACoS) to relate advertising costs to revenue, allowing for direct conclusions about advertising effectiveness. Along with ad quality, conversion rate, CTR, reviews, and ratings, the ACoS influences the relevancy score. Naturally, brand keywords perform better than non-brand keywords when measuring ACoS. Therefore, you should always separate brand and non-brand keywords to prevent false conclusions and to carry out the necessary optimizations. Good things take time! Consistently high-performing campaigns gain a high relevancy score over time, which can favor the allocation of ad space during the bidding process. For this reason, you should give campaigns time to perform, regularly optimize bidding, analyze campaign data, and keep an eye on both Amazon promotions and the competition.

‍This article first appeared on Internet World Business.