Opportunity cost has been a threat luring over advertising accounts since the beginnings of online paid advertising. Having measurable KPIs daily is part of the appeal when running performance marketing campaigns, but what about the things we can’t see? How does an advertising professional know if the last optimization cycle costs the account lost impressions, clicks, and sales? How does one find a balance between ROI and visibility? Here are the five tips to ensure you don’t have your brand not reaching its full potential while optimizing for better ACoS. Keep reading to discover how to trim down wasteful spend.
Campaign Structure
Getting the campaign structure right is imperative to optimize your advertising performance successfully and eliminate bleeding keywords and customer search terms. The main rule of thumb to follow when setting up your campaigns is: you must be able to match the search query with the clicked SKU with great precision with as few clicks as possible.
This is the main reason single product campaigns are not only adding value — they are an irreplaceable tactic to match search queries and the ASINs that led to a sale.
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Note: You cannot pinpoint with 100% accuracy even with this campaign structure type. The Advertising Console and its reports will feature sales of other ASINs that the customer purchased from the same brand.
With this structure in place (note: some advertising professionals are taking this one step further by launching one keyword-one ASIN-campaigns), you can be comfortable optimizing by eliminating 0 sales targeting options since they won’t limit the visibility of other products in your brand portfolio.
Downbiding vs. Pausing of Underperforming Keywords
Keywords that don’t convert well are costing the account money. Your goal is to avoid wasteful spend. ACoS and ROI can be controlled by effective bid management. But the underlying question is how relevant is a keyword to the product it leads to? So it is imperative to check unit session percentage for the product as a whole and the conversion rate of a given keyword leading to the product.
After you’ve reviewed the data and put it into context by comparing it to your product margin, it is time to decide whether to pause the keyword or decrease its bid. How to determine when to pause vs. when to reduce bid?
To make things simpler, let’s consider these sequential steps:
- Choose a timeframe that looks back to the last time there was a significant change to the product detail page you are leading traffic towards.
- Make sure the time frame is long enough to make statistically significant decisions (rule of thumb: 30 days or more).
- If your product has a conversion for the given time frame, but ACoS is high, decrease the bid for the keyword.
- Also, if it has a conversion for the given time frame, but ACoS is too low, increase the bid for the keyword.
- And, if your product has 0 sales from that particular keyword, pause it.
The logic behind this reasoning is:
If a particular keyword has led to a sale for that product, you can optimize it by managing the bid and finding the best placement for the ad on Amazon.com and the best CPC that doesn’t hurt your profit margins. But if the keyword does not convert at all, bidding changes will rarely help.
Negative Keywords and Ways to Minimize Wasteful Spend
Nothing can hurt an account’s growth rate, like the misuse of negative keywords. There is a delicate balance between eliminating keywords not relevant to your listings and eliminating queries that can scale your account’s advertising efforts within a given context.
These are the key principles to keep in mind when using negative keywords:
- Negative phrase match type keywords should be as long-tail as possible. It will ensure you are only eliminating traffic from people looking for a specific product that is not related to your offering in any way.
- Negative exact match type keywords should only be the ones that don’t convert at all or are highly unprofitable.
- Isolating keywords (adding them as negative in the Auto campaign or the Manual campaign that harvested them before adding them as exact in the new campaign) should be avoided. If the new campaign has budget issues, it can limit the account’s performance. Using the highest bids for the exact match type of converting keyword should be used instead.
- Having a universal negative keywords list is a great way to minimize wasteful spend. Start by thinking about keywords that may be misleading but are not a good fit for your products.
Managing Main and Strategically Important Keywords
Many accounts have a list of main keywords that require an advertising budget, even if they don’t convert well at a given time. These may be the keywords identified for a product launch, which would help the listing get better organic placement along the way. Also, keywords that help an established product maintain its position and dominance. Or any keywords that have been identified as strategically important to the account.
When these keywords become unprofitable during a specific period of time, it is important to invest in them as little as possible. Do this to ensure that they serve their purpose (maintain your organic, for example) but not overspend. It’s part of trimming down any wasteful spend without affecting your growth potential.
Isolating these keywords by moving them to their own single keyword campaign will allow you to control the daily budget you’d like to assign towards them. If you combine this approach with Amazon’s portfolio feature, you can even set budgets on a monthly level. This should help you strategize on profitable and strategically important spend. For example, I will spend 20% of the budget this month on keywords with high ACoS but strategically important to me. I will assign the remaining budget towards campaigns operating with low ACoS.
Automation and Wasteful Spend
Many third-party advertising automation tools can be handy for ensuring your advertising campaigns are using their full potential. Practical use case scenarios of how these tools can help advertisers eliminate wasteful spend without hurting the account’s growth potential are:
- Setting dayparting rules to ensure days of the week where conversion rates are lower get less budget.
- Automated negative keyword harvesting to ensure only customer search terms that meet some clearly defined criteria are added as negative exacts.
- Share of voice analysis and dashboards allow advertisers to “see the big picture” and make sure their bids align with the category average CPC.
- Automated bidding and campaign budgeting rules to ensure that campaigns and targeting options that are profitable spend as much as possible on a given day.
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About the author
Stefan Jordev is the Director of Marketplace Strategy at Elevate Brands, which acquires consumer-leading Amazon brands and elevates them to their full potential. Stefan has over a decade of performance marketing experience. He is Amazon Advertising, Amazon DSP, and Amazon Strategy and Planning certified. His multidisciplinary digital marketing background includes Google Ads, Bing Ads, lead generation, and social media marketing.
