Ask a business owner what keeps them awake at night, and most people will mention profit in their response; growing a company means constantly looking for new ways to increase margin.
Profit doesn’t always have to be big to make a difference, though.
Many businesses – especially if you’re just starting up – are seeking even small gains, if it just means increasing market share. But, whether you’re chasing incremental growth or huge leaps, achieving your profit goal means not only enhancing sales, but making sure the techniques you’re using to boost them don’t drain your budget.
If you’re selling on Amazon, one way to effectively increase brand exposure and generate new sales quickly is to launch a pay-per-click (PPC) campaign, as it gets you into the search results for Amazon customers who may not have found your product organically.
However, as with any marketing activity, you need to be smart about how you spend your PPC budget to ensure your investment translates into profit; it’s all too easy to throw money at advertising without yielding the best results.
If you’re concerned about making sure your Amazon PPC campaigns are profitable, here are some things to consider…
Amazon PPC Budget: Speculating to accumulate
Budget is critical to profitable Amazon PPC, as you won’t get the results you desire if you don’t have enough resources behind your campaign.
But, this doesn’t mean you have to put unlimited budget into pay-per-click advertising; the amount you should be willing to spend will depend on a number of factors, including:
1. The price of the item you’re promoting
2. Your sales targets
3. The profit margin you expect to achieve per item
To achieve your Amazon profit goals, you need to decide what you think is the maximum amount you are willing to spend per advert click.
Some industry experts have developed complex formulae for working out the best PPC campaign budget, advising that multiplying the price of your promoted item by 2.5% provides a good guideline estimate.
However, it’s very much up to you how you want to set your budget.
If you’re keen to get good momentum behind a product – for instance, if you’re launching a new product on Amazon or your item is highly seasonal – you may wish to increase your investment.
Equally if you’re new to PPC and just want to dip your toe in the water, you may want to set a more conservative campaign budget initially.
When you’re running an Amazon PPC campaign, you have to set a daily budget.
The minimum is $1.00, and recommended budgets go from $10-$75 a day. What you spend really depends on the product, the competition, and the cost of the keywords that you’re bidding on.
A good rule of thumb to estimate costs is the 2.5 Rule, which means that the keyword you are bidding on shouldn’t cost more than 2.5% of the sales price.
Amazon’s Seller Central portal has some useful advice on budget setting if you need more support. Don’t forget that you can adjust your budget as you go along, so it might be good to experiment with a few options until you find your ‘sweet spot’.
Amazon PPC keywords: Choose your words wisely
Once you have an initial budget set, the next step in your journey to profitable Amazon PPC is to choose your campaign keywords.
But ,when it comes to pay-per-click advertising, not all words are created equal.
Some keywords generate a lot of traffic because they are common search terms, but these aren’t always the best options to choose – for a number of reasons:
1. Competition is tough – lots of Amazon sellers will be running campaigns around these keywords
2. The price tag is high – the more popular a word or phrase is, the more you’ll have to pay to feature in search results for that term
2. CTR is low – more popular keywords tend to be broader search terms, which means you won’t always match customers’ product expectations
What many Amazon Sellers find is that investing time in finding less common keywords can actually be a better approach. The more specific you are with your keyword or phrase, the smaller the number of searches is likely to be, and therefore the cheaper the average bid size. However, the more closely it matches what potential customers are looking for, the greater the likelihood that they’ll click on that advert – and ultimately buy your product.
When it comes to PPC profitability, sometimes small is beautiful. Making money through Amazon PPC campaigns is not about appearing in loads and loads of search results; it’s about appearing in the RIGHT ones, that will ultimately convert to sales. A keyword search tool can help you develop an initial list of options.
Choosing niche keywords may generate a smaller volume of traffic, but if more people buy when that term is searched for, then it’s more valuable to your business. Plus, if you can create successful campaigns for a number of specific terms, when you add the sales from each of those keywords together, the profitability of your PPC investment begins to add up.
Not only that, but a bonus of choosing less competitive keywords with a lower average bid cost is that your budget tends to go further than allocating it to highly priced popular keywords.
Amazon PPC Campaign Nurturing
Amazon PPC campaigns can be a bit like growing plants; if you put the seed in the ground and let nature take its course then you'll get a flower, but if you take care and look after the shoot then you're going to get a better, brighter bloom.
There are two ways you can approach PPC on Amazon:
1. you can launch an automatic campaign, where Amazon makes all the decisions on your behalf, OR
2. you can run your PPC activities manually
You can read more about the merits of each approach in our recent blog post about launching your Amazon product using PPC.
Some sellers opt for automatic PPC campaigns under the impression that they’ll yield the best results because Amazon technology is in charge, but this isn’t always true.
One of the major flaws of an auto campaign is that the merchant isn’t in control, so you’re not choosing how the budget is being spent, or which keywords are being added or removed.
To maximize profitability, you need to be calling the shots, and this means having manual control over all the decisions being made.
However, some sellers worry about the amount of time and knowledge this may require.
To find the best of both worlds approach, there are PPC management tools coming onto the market that allow you to automate aspects of manual-style campaigns, while still remaining in the driving seat at all times.
There are significant benefits to choosing this approach, including:
You can keep a close eye on which keywords are converting best and therefore driving profit – and the right technology will bring these to your attention
If a set of keywords are doing well, you can use a PPC tool to discover similar keywords that might also yield profitable results
On the flip side, if certain keywords aren’t doing the job they are supposed to, you can put an automatic stop on non-profitable keywords so you’re not wasting time and energy on terms that don’t convert well for your products
You can automate actions based on campaign performance, so that positive changes are made without you having to physically instruct any actions
You can access clear analytics on the performance of each campaign to see the impact of the decisions you make – whether that’s changing keywords or adjusting your budget
The biggest thing to remember when it comes to campaign profitability is that Amazon PPC is an iterative process.
You need to constantly refine your strategy to keep finding new growth opportunities.
However, with a PPC management tool on board, this refinement journey doesn’t have to take up a lot of your time; once you’re up and running, a good piece of tech will help you optimize your PPC campaigns in 15-30 minutes’ work a day.
Basically, the length of your coffee break!
Don’t throw spaghetti; make pasta
Whether you’re about to embark on Amazon PPC for the first time, or you’re already using it but aren’t getting the results you want, the key thing to remember is that you get out what you put in.
If you treat PPC like throwing spaghetti against a wall and just hurl a load of budget at it to see what sticks, you're not likely to come away with a huge amount of profit to show for your investment. [tweet this]
Ensuring Amazon PPC is profitable is more like making perfect pasta from scratch.
It relies on paying close attention to your keyword performance, making continual improvements to get rid of the words that don't work well, and spending your budget intelligently to chase margin over volume. And investing in the right tools to support this effort can significantly speed the process up, and positively impact the results you get.
As we mentioned earlier in this post, PPC management technology can help you to achieve profitable Amazon pay-per-click campaigns, while reducing the resource and expertise you personally need to be responsible for. And the good news is that they don’t always cost the earth.
JudoPPC is a brand-new AI-based tool that we’re launching very soon, which uses Artificial Intelligence to do the work of a PPC expert on your behalf.
It is goal focused, which means if your primary objective is to generate profit, all activities will be formulated with this objective in mind.
JudoPPC makes smart recommendations to improve the performance of your campaigns and drive greater profits, without you having to relinquish control over your Amazon PPC campaigns. And you can analyze profitability through an online dashboard, with all the reporting tools you’ll need in a single place.
Be first in line to use JudoPPC for your next campaign: join our early access list today.