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Getting Started with Amazon Ads: A Guide for Budget-Conscious Brands

– Written by Jess Chapman, e-Comas & Xuan Xie, m19

Ask anyone who knows anything about selling on Amazon and they’ll tell you: you can’t make money on Amazon unless you pay for advertising. 

It’s one of history’s most competitive marketplaces. As well as the fact you’re sharing the space with dozens of brands selling the same types of product as you, Amazon has designed the platform to make shopping as easy as possible for customers - meaning they’ll often only see a handful of the options before buying. 

For small businesses, without the brand recognition of bigger competitors, advertising on Amazon is even more important. It’s your best chance of getting your product in front of your target audience. And there are ways to advertise, and to measure your advertising, that ensure it’s cost-effective and worthwhile. 

Invest £5,000 in Amazon Ads and you’re likely to see not only a healthy ROI, but exactly how and why your investment has performed. 

The trick is to strategise. 

This blog will cover:

Understand Your Goals and Audience

Advertising on Amazon works best if you have a strong strategy to work to.

First, define your objectives. What do you want from your ad campaigns? Simply more purchases? Better brand awareness? Or are you hoping to gain more repeat customers? 

You also need to identify your target audience. Knowing who your customers are on Amazon can help you determine the best audiences to target in your ads, and the pathways you can take to reach them. 

For example, you can use data to find out if your customers are coming to your products through DSP ads, TV ads or Sponsored Brands, or a combination - but we’ll look at that in more depth later. 

Conduct Keyword Research

Keyword research is vital for selling on Amazon. The more relevant keywords you include in your listings, and advertise against, the more successful your adverts are likely to be. 

While you can probably think of 10-20 relevant keywords for your ASIN, keyword research tools will find you hundreds more, and rank them by how relevant they are to your products and your competitors’ products. The relevance of your keywords should even help you write your listings’ bullets and descriptions. 

When advertising on Amazon, the most high-converting keywords should take priority - but keyword research tools can also help you find more unusual keywords to use that give you an edge over the competition. 

Our favourite keyword research tools are M19, Helium 10 and Jungle Scout. 

Optimise Your Product Listings

You can do the best keyword research in the world, and you can spend thousands advertising your Amazon products, but without optimising your listings to maximise conversion, you won’t see the return on investment. Shoppers might land on your listings and be put off by poor product descriptions and bad-quality photos. 

Optimising your product listings is one of the simplest ways to improve your ad performance. 

There are five areas to concentrate on for each listing: the title, images, bullet points, description and A+ content. 

These are our top tips: 

Start with Automatic Campaigns

The best way to start advertising on Amazon is with automatic campaigns. 

These allow Amazon’s algorithm to assign relevant keywords to your Sponsored Products campaigns. It’s great for gaining an understanding of what targeting works best for your products, and data on which keywords to use. When you have sufficient data you can move on to manual campaigns, which give you greater control over keyword targeting and bidding. 

Once you’ve established your auto campaigns, there’s no need to turn them off. We recommend minimising the budget, but always having auto campaigns in the background for keyword gathering.  

Tips for Automated Campaigns in the Early Stages

Other Tips for Automated Campaigns

Once you’ve established automated ad campaigns, making the most of the insights and data they offer could be important. However, managing and optimising ad campaigns can be time-consuming for many small to medium sellers, especially those less familiar with Amazon advertising.

This is why utilising automated Amazon PPC software can be a great solution. Take M19 as an example: by leveraging AI automation and machine learning, we support sellers in managing daily budgets and achieving desirable ACoS targets without manual management. Additionally, you can track your keywords, ASINs performance and ad reporting in real time, so you can improve performance while saving time and effort.

Monitor and Optimise Performance

It’s easy to set up Amazon ad campaigns and then let them run without further attention. But this leads to wasted ad spend: to get maximum efficiency from your ad campaigns, it’s important to keep monitoring them and optimising them. 

The most popular metrics for monitoring your ad campaigns’ performance are: 

Besides tracking these four metrics, we recommend looking into these strategies:

Optimise Your Amazon Advertising Budget

Crafting a reasonable advertising budget is crucial for selling products on Amazon. Ad budgets not only impact your ad performance but also directly affect your profit margins. Using the example of selling phone cases, let’s see how to calculate your Amazon advertising budget and provide optimisation tips.

Calculate Ad Campaign Break-Even Point (BEP) Max Bid

The BEP max bid is a crucial factor in setting your advertising budget. It represents the maximum amount you’re willing to pay per click without incurring losses. The calculation formula is:

BEP Max Bid = Average Gross Profit - Conversion Rate * Average CPC

Assuming you sell phone cases on Amazon with a $5 gross profit per unit, a 3% conversion rate, and an average CPC of $0.15, your ad campaign BEP max bid would be:

BEP Max Bid = $5 - 3% * $0.15 = $5 - $0.045 = $4.955

In actual sales, you’ll have both organic orders (generated through non-ad channels like Amazon Search or recommendations) and ad-driven orders. If your organic order is 40%, your actual max bid could be closer to $0.3-$0.4.

Optimise Your ACoS

ACoS (Advertising Cost of Sales) is a vital metric for measuring advertising ROI. Lowering ACoS implies more efficient ad budget utilisation and improved profitability of your campaigns. Generally:

ACoS = Ad Spend / Sales Revenue

In other words, ACoS = CPC * Conversion Rate / Average Order Value

To optimise ACoS, consider these strategies:

Allocate Budget Wisely

Amazon offers a good range of advertising solutions. And different Amazon ad products suit different brands, ASINs and budgets.

Amazon’s ad products include: 

Finding the best ad solutions for your product means you can allocate your budget more smartly. Your advertising will be more efficient, and your ROAS will be higher. 

We use data to do this: use the client’s specific goals to decide which range of advertising options to try, then monitor their performance over time, and hone in on the best-performing ones. Start small, with Sponsored Products and Sponsored Brands. 

Keep experimenting, monitoring and tweaking - a winning formula won’t necessarily perform forever. 

Further down the line, a more sophisticated approach is to use AMC to see which advertising combinations perform best to move shoppers towards a purchase, and allocate budget based on that.

Track and Measure Results

We can’t overemphasise that to have success with Amazon advertising, you need to keep an eye on the data and watch what happens. 

Tracking and measuring your ad campaigns is the only way to ensure they’re performing well and doing what they’re supposed to do, whether that’s growing your new-to-brand sales or pushing up brand awareness.

Amazon offers its own advertising dashboard with campaign visibility and analytics tools, so you can easily see how your ads are performing. 

Then there’s AMC, which is accessed via API. AMC converts reams of anonymised data into really useful insights, showing you the effect of your ads on shoppers through every phase of the marketing funnel. 

For example, AMC can tell you if shoppers are more likely to buy after seeing a certain combination of your ads, or whether they start searching for brand keywords after being exposed to a certain campaign.

You can also use an agency. At e-Comas we offer our in-house Compas dashboard, which connects dozens of different datasets across our clients’ eCommerce, social media and advertising platforms to help them make informed data-driven decisions for their business.  

To learn more about how we can help you set up, monitor and manage your Amazon Advertising campaigns using m19 and more, reach out to us today!