Have you reached a point where your ROI diminishes with Amazon PPC advertising? Running Amazon ads has resulted in very high conversion rates for your campaigns, allowing you to spend less on Amazon PPC without sacrificing sales.

Everything this piece covers

  • What should I do when I reach the point of reducing returns in Amazon Ads?
  • How to effectively reduce Amazon PPC budget?
  • Can I Lower My Amazon Advertising Spending Without Losing Sales?
  • Can “Cannibalization” be solved in Amazon ads?
  • How to reduce bids while staying on top of Amazon Ads?
  • How to adjust Amazon campaigns to the point of diminishing returns?
  • Keep Up With Trends With Your Amazon PPC advertising

 

How to effectively reduce Amazon PPC budget?

If your ad spend and ACOS are rising without your market share increasing, your PPC campaign has reached a point of diminishing returns.

Your initial response will likely be to reduce your Amazon PPC spending whenever you start to see declining returns from your Amazon advertising. You want to close the gap and stop the loss of your advertising budget. However, you must do it correctly rather than arbitrary budget cuts, which could harm your advertising.

When reducing your ad costs, you should use your advertising spend strategically. To overcome a 20-foot obstacle, you don’t jump 40 feet into the air. To clear the bar, you must jump just high enough. It also holds true for Amazon marketing.

 

Can I Lower My Amazon Advertising Spending Without Losing Sales?

Consider that you are in the top spot on paid and sponsored searches for this keyword and that you are paying $2k per month on it.

Can you cut your advertising expenses by 20% without suffering a drop in sales and organic rank? Simplified: Yes.

However, before cutting back on your ad spending, you should consider how your top keyword has performed over time. If your term has continuously performed well over time, you may lower your ad budget without suffering a drop in sales or your position.

We advise against using this strategy if your term has only been effective for a few weeks.

 

Can “Cannibalization” be solved in Amazon ads?

Cannibalization in Amazon PPC usually happens when you have competing efforts that are at conflict with one another.

 

 

This can appear in Amazon PPC as your paid search competing with your organic rank. Consider the scenario where you are generating sales and you have a high organic ranking. Then you begin to run advertisements. Now some of these sales will require payment from you.

Will it be worth it?

It is difficult to quantify this cannibalization, so it is also complicated to resolve. Data-driven is less important than visual.

When you run a search, you can see your advertisements and the sales that are coming in from the ads.

But without running advertisements, it’s impossible to predict how well you’d do. We’re hoping for more metrics so we can measure and solve cannibalization in Amazon advertising.

 

How to reduce bids while staying on top of Amazon Ads?

How would you assist a client who wants to lower their bids after obtaining the top spot naturally and through advertising?

How many products, on average, are found on the first page of an Amazon search for a certain keyword? How many of those appear in organic search results? How many appear in the paid search results? How you modify your clients’ bids will depend on these statistics.

You would want to make sure your client is ready for a rocky trip because it would initially be difficult. However, if a customer currently holds a strong position in the top product and keyword ranks, they may be able to increase profitability by reducing PPC spend.

However, if they were spending $100 a month on a keyword as opposed to $3,000 a month, there would be little potential for PPC spend decrease, therefore their expenditure would have to be higher.

There would be a $500 monthly savings if the monthly bids were decreased from $3,000 to $2,500. The savings quickly add up when you multiply that by the amount of keywords you are bidding on.

 

How to adjust Amazon campaigns to the point of diminishing returns?

A few months ago, an KTG client was spending roughly $50k USD a month on Amazon PPC advertisements and he intended to spend $40k to $45k instead.

They already had the top spot in both organic and sponsored rank. They wondered if they could cut their monthly spending without having a negative effect on organic sales. If they were in sponsored rank number 2, what would happen? Would they continue to have the top organic ranking?

Bojan initially reacted by opposing this action and advising the customer to remain in sponsored rank one. But in order to get into the second spot in both organic and sponsored rank, the customer wanted to lower the ACOS by five points. They would adjust the ACOS slightly if they moved into position three.

Each week, we monitored the keyword’s organic position. An intriguing experiment was conducted!

Bojan claims that if he were to repeat the process now or give you advice on how to do it, he would check brand analytics to determine the conversion share per keyword because, logically, you might be in the organic rank no. 2 position and yet generate the most revenue. You can verify this with brand analytics.

 

The top search phrases are shown in the Brand Analytics data screenshot. By click share, you’ll see that the keyword in third place has a higher market share than the one in second. They don’t line up as you might expect them to.

Returning to Bojan’s customer, they managed to lower their ACOS without having an impact on sales.

Please note that we do not recommend this course of action for everyone. Take care when doing it, if you have to.

 

Keep Up With Trends With Your Amazon PPC advertising

Your ad spend and conversion rates may significantly change if you can identify when your Amazon advertising efforts have reached a point of decreasing returns and take action to fix them.

The techniques described in this blog post should be able to help you solve low-return campaigns and return your Amazon advertising campaigns to profitability.