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The 6 Cornerstones of a Successful Amazon Advertising Strategy

With the advent of the pandemic that pushed consumers to move to online spending, Amazon’s advertising business grew by 52% in 2020. This year, Amazon’s ad business in the US is expected to grow another 30%, surpassing $20 billion for the first time. In fact, a huge amount of space on Amazon search results today is occupied by ads. All this goes to show that Amazon as a platform has the capability to give brands just the push they need, as long as their advertising strategy is executed in the right means and ways. 

If you are looking for the pathway to success through a solid Amazon Advertising strategy, here are some pillars that you must focus on: 

1) Set your advertising budget based on business goals

Your business goals will directly determine your overall marketing strategy and help you define your advertising budgets. A good idea is to start working backwards from these goals, identify what stage of growth you are currently in, and then plan strategies accordingly. For example, you could be in any of the following stages at present:

  • Launch stage: You could be launching a new brand, new SKUs, or foraying into a different product category. In all these cases, the goal is to massively boost visibility for your products and garner traction. Hence, at this stage, your main focus should be on getting a consistent number of sales every day and compounding your impressions, rather than getting a low ACoS.
  • Growth stage: As and when your sales start to pick up momentum, you may need to scale up your ad spends and diversify. This could be when you have an established brand with some fast-moving products and want to get higher sales; or if you want to drive more sales through your under-performing products. Whatever the reason be, the goal here is to focus on higher revenues and establish yourself as a key player in your category. This would require you to put in higher investment as ad spends.
  • Maintenance or stability stage: You could have reached a stage where you do not wish to upscale further, but need to maintain a consistent level of sales and focus on your bottom line. In such cases, your main goal is to optimize your TACoS and get a better buck for your money.

Therefore, to determine what strategy works best for your business, you will need to get a complete picture of where you are and what your goals are. Your current product margins, your budgeted ads spends, your targeted RoI – all of these play a crucial role in defining a strategy for the foreseeable future. Want to know how? Let’s find out below.

2) Use a focused and targeted approach 

Though there is no one-size-fits-all approach, there could be two ways of looking at your ads strategy: i) you could either start off with a high budget, go super broad in terms of targeting, and then optimize your way down to focus only on those tactics that have worked for you. Or, ii) you could choose the other (more optimum) way round – starting off small and targeted, moving on to exploring what may work for you, and then gradually scaling up. Based on our experience of working with 50+ clients, we recommend going with the latter approach.

A targeted ads strategy will enable you to build campaigns in a more structured format so that you can methodically optimize them in the future. In order to do this, have a look at the below tips:

  • Do a thorough keyword analysis: Undertake detailed keyword research and identify highly relevant keywords that customers are searching for. Mine your search term data regularly to find the highest converting keywords out of these and negate those that do not work. Try to eliminate keyword overlap, and focus on quality over quantity. 
  • Research your competitors: It is crucial to identify the right set of competitors who are targeting a similar target audience as yours. Identify which competitors are taking the ‘prime real-estate’ on Amazon for keywords that are most relevant to you. Also, try to monitor what all ad types these competitors are using.
  • Capitalize on sale days & events: Focus on launching new advertising campaigns at the time of high-volume events and days like the Black Friday sale, to leverage the inherently high traffic on the platform.

3) Allocate budget for exploration

Once you have started to get momentum, it is time to get into the exploratory stage and try your hand at different strategies. There is no fixed recipe to get digital success through Amazon ad campaigns. You can start experimenting with broader targeting options like auto targeting, broad match and category targeting to expand your keyword pool. These test campaigns can first be run with smaller budgets, and eventually used to identify high-converting keywords for your manual campaigns. Hence, experimentation and exploration are key! Some ways in which you can do this:

  • Target competitor keywords: Try to identify which keywords your competitors are using to generate traffic. This may help you discover a new set of keyword opportunities. This can be done through various tools that offer reverse ASIN lookups.
  • Expand product targeting: Try to identify parallel products or products on similar themes to scale up. This can be done through a careful study of your market basket report to see which products do consumers usually end up buying together. 

A key point to remember here is to regularly monitor such exploratory campaigns and see if they are meeting the intended goals or not.

4) Utilize all advertising types 

The ultimate aim of advertising on Amazon is to understand the right balance between different ad types and matching them to your advertising goals. You can achieve this through:

  • Trying out various ad/targeting types: This means including a balance of: 
    • Sponsored Products ads which can help with scaling up, 
    • Sponsored Display ads which help you to get better reach and increased impressions, and 
    • Sponsored Brand and Video ads which can get you high returns and strong brand recall. 
  • Trying out different areas of targeting: It is also important to test the waters with various types of targeting. As mentioned above, keyword targeting, competitor product targeting and category level targeting are good tactics to try out. At the same time, you can also try to experiment with cross-selling and up-selling tactics on complimentary or similar product listings.

When you try out different campaign types, take into account their performance vis-à-vis the targets, and then scale up the strategy that works the best. 

5) Utilize the right bidding strategy

Not all your products have the same profit margin, and therefore, you cannot place the same bids for all keywords. The idea is to find optimal bids that will be high enough to have the potential of getting you sales, but also low enough so that you do not tend to lose money. 

In addition to keyword level and product level bids, Amazon offers sellers diverse bidding opportunities:

  • Campaign bidding strategies: Amazon offers three types of bidding strategy options: fixed bidding, dynamic up and down, and dynamic down bidding. This allows the algorithm to alter bids, based on the chances of converting. It is necessary to regularly monitor the effect of these bidding strategies on your campaigns to understand what works and what doesn’t. 
  • Placement level bidding: Placement modifiers are applied in conjunction with your bidding strategy. Again, depending on your goals and past performance, you can identify which placement will work for you and how aggressively you may need to bid on it. We generally see that Top of Search Placements deliver higher CTRs and conversions. 

The idea is to evaluate a bidding strategy, depending on your objectives. For example: your objective could be ‘sales-driven bidding’; or it could be ‘RoI driven bidding’. In both cases, the bidding strategy will vary a lot. Whatever the strategy be, it is crucial to regularly monitor and adjust bids based on your performance.

6) Expand your reach using Display Ads and Amazon DSP

As per a study by Amazon, 64% of shoppers use multiple channels to make a single purchase. Therefore, it becomes crucial to expand your presence across multiple channels to always keep your brand and products on the shoppers’ top of mind. Two options that you can capitalize on are Amazon Display Ads and Amazon Demand Side Platform. 

With display advertising, you can expand your reach beyond customers who are just actively looking for your products. Rather, you can re-target and re-engage relevant customers both on and off Amazon, across their shopping journey to complete the sale. In fact, sellers who combine Sponsored Products, Sponsored Brands and Sponsored Display Ads see a 3.8x increase in aggregate return on ad spend (RoAS)

Another solution offered by Amazon is DSP for programmatic ads. Sponsored Ads act as a great starting point for your advertising strategy when you want to increase sales. However, DSP can be used to meet various other goals as well, such as awareness, consideration or long-term brand loyalty. For example: for customers who have previously visited your product page, you can remarket to them on Amazon, where they are more likely to be in the purchase mindset.

All in all, when it comes to Amazon as an eCommerce portal, there is no dearth of opportunities, and you can find a target audience that can become your loyal buyers. All that matters is the way in which you strategize your advertising efforts and how flexible you are in adapting to the ever-changing dynamics of the marketplace.

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