Amazon PPC is an endless game where standing out amongst the competition in the largest global online marketplace means winning. Having an advertising expense of $11 billion back in 2020, Amazon’s ad spend is expected to increase 34% ($2.8 billion) each year. This statistic sheds light on several aspects of the situation such as the strictness of the ad competition on Amazon and the increasing amount of budget that brands and advertisers are now willing to pay just to score the top spot in the SERPs.
In today’s blog, we’ll answer some of the most important questions that almost every Amazon Store owner might ask themselves at some point:
“What’s the difference between spending on Amazon Ads for profit vs for ranking and visibility? How can I achieve success with each of them?”
Other than that, how do you know which one to prioritize? How do you get started?
Spending on Amazon Ads for Profit
While many would assume that spending on Amazon Ads for profit is simply a temporary way to get your products noticed by shoppers, this strategy is actually an investment with long-term benefits. The more your product ads become exposed, the more clicks and sales you’ll get along with organic placement boosts.
A fact that many people tend to forget is that Amazon’s PPC race isn’t a temporary sprint, it’s a relentless marathon with a variety of different strategies and difficulties. There isn’t a single strategy that works for everyone either. You’ll have to continuously depend on tools, metrics, and many other factors to determine the strategy that best suits your ad’s purpose, which in this case is to gain more profit.
Here are some great strategies you can try to improve your Amazon Ads for profit:
- Restructure your budget
Determine how much you want to and can spend.
There is no specific amount that you need to spend in order to guarantee a win with PPC ads campaigns. However, for beginners, many experts would advise using 10% of your total revenue to act as your initial budget. Break down that budget by using 5% on sponsored display ads, 20% on sponsored brand ads, and 75% on sponsored product ads.
You’ll also want to think about which products you want to advertise. Picking can be difficult as you may or may not know which of your products will sell the best yet. If you don’t have any idea yet, for good measure, it might be good to follow the same strategy that large retailers use: the 80/20 approach. This approach lets advertisers focus on the top 20% of their products first before feeding the rest of their advertising budget into other existing or new campaigns.
You also need to factor in your need to get a better amount of data to help optimize your campaigns better. Remember that with less Amazon PPC Ad spend, there will be fewer people to target, fewer places to help expose your brand to, and fewer opportunities for conversions.