Amazon Sponsored Products: the basics for brands on Amazon

More than half of US product searches now begin on Amazon rather than Google, according to several surveys of shoppers over the past two years, and Amazon's own ad business is growing fast enough that analysts are starting to treat it as a third platform alongside Google and Facebook. For a brand, the practical consequence is that organic rank on Amazon is driven by sales velocity and conversion, and advertising is the most direct way to generate the sales that lift organic rank. Ads on Amazon do not just sell; they compound.

There are three ad formats today:

• Sponsored Products, available to third-party sellers in Seller Central and to vendors through Amazon Marketing Services (AMS). Keyword-targeted, pay per click, shown in search results and on product detail pages.
• Headline Search Ads, the banner at the top of search results, for vendors and for Brand Registry sellers. Keyword-targeted and good for brand terms and category terms.
• Product Display Ads, vendor-only, targeted by product or interest rather than keyword, shown on competitor detail pages.

This article is about the first, which should get the majority of the budget for most brands.

An ad sends a shopper to a product page. If the page does not convert, the ad bills you anyway. Check these before launching:

1. Buy Box. Sponsored Products only show when you hold the Buy Box. If you share a listing with other sellers, win it on price and fulfilment first.
2. Title. Brand, product, key attribute, size or count, within Amazon's category limits. Keyword-stuffed titles hurt conversion and can be suppressed.
3. Images. At least five, main image on pure white at 1000 pixels or more so zoom works, lifestyle and detail shots behind it.
4. Bullets and description. Benefits first, specifications second, in plain language. Enhanced Brand Content (sellers in Brand Registry) or A+ pages (vendors) lift conversion measurably on considered purchases.
5. Backend search terms. Fill them with relevant terms you did not fit in the copy. No competitor brand names, no repetition.
6. Reviews. Below about 10 to 15 reviews, or below a 3.5-star average, ad conversion falls off sharply. Use Amazon's review request tools and the early-reviewer program; never buy reviews, which violates Amazon's terms and is being enforced.
7. Price and Prime. Fulfilment by Amazon with Prime eligibility converts better. Make sure the price is competitive with the first page of results for your main keyword.

Amazon's campaign tools are far less sophisticated than Google AdWords, so simple structures are an advantage.

One automatic campaign per product or tight product group. Amazon chooses the keywords and product placements from your listing content. Bid at or slightly below the suggested bid, set a modest daily budget, and let it run for two to four weeks. Its job is research: the Search Term Report tells you exactly what shoppers typed before buying.

Manual campaigns for the terms that convert. Every week, pull the Search Term Report, take any term with sales at an acceptable ACoS and add it to a manual campaign. Sponsored Products support broad, phrase and exact match. A workable structure is one ad group per product with exact-match terms, and a separate ad group for broad and phrase terms to keep discovering variations.

Negative keywords in both. Amazon added negative keywords to Sponsored Products relatively recently, and they are still underused. Add any search term with many clicks and no sales, and any term that signals a different product, as a negative phrase or exact. This is where the first real savings usually come from.

Brand terms in their own campaign. Bids on your own brand are cheap, convert extremely well, and protect the top of the results page from competitors who are already bidding on your name. Keep them separate so they do not flatter the ACoS of everything else.

Set the target before you bid. Work out your margin after cost of goods, Amazon referral fee (typically 15 percent), FBA fees and shipping. That margin is your break-even ACoS. Then decide what you want from each product:

• Profit now: target ACoS at roughly half to two-thirds of break-even. For many brands that lands at 15 to 30 percent.
• Launch or growth: accept ACoS at or even above break-even for four to eight weeks to build sales rank and reviews, with a date to review it.
• Clearance: bid aggressively on everything until stock is gone.

Adjust bids weekly, not daily. Amazon's reporting lags by one to three days and attribution runs on a seven-day window, so daily tweaks chase noise. Raise bids on exact-match terms converting below target, cut bids by 20 to 30 percent on terms well above target, and pause terms with 20 or more clicks and no sales. Bid+ can raise your bid by up to 50 percent for top-of-search placement; turn it on only for proven exact-match terms.

Keep daily budgets high enough that campaigns do not run out by noon, which is a common hidden problem. If a campaign is hitting its cap every day at a good ACoS, that is a signal to add budget, not a success.

Amazon's advertising reports give you impressions, clicks, spend, sales and ACoS by campaign, ad group, keyword and search term. Three things to add:

• Total sales alongside ad sales. The real goal is lifting organic sales. Track total units per product next to ad spend. If ad spend rises and total sales do not, something is wrong with the listing or the price.
• TACoS, ad spend as a share of total product sales, which many sellers now track as a healthier long-term measure than ACoS alone.
• A weekly search-term review. Thirty minutes a week moving terms into manual campaigns and adding negatives is the whole discipline. Skipping it is why most accounts drift.

• Launching ads on a weak listing, then concluding advertising does not work.
• Running automatic campaigns forever without harvesting the terms into manual campaigns.
• No negative keywords, so the account pays for every vaguely related search.
• One campaign for the whole catalog, which makes the Search Term Report impossible to act on.
• Judging after three days. With the reporting lag and the attribution window, wait at least two weeks before drawing conclusions.
• Ignoring stock. Ads on a product that goes out of stock lose the sales rank you paid to build. Pause ads when inventory is low.
• Bidding on competitor brands blindly. It is allowed, but conversion is usually poor and ACoS high. Test it as a separate campaign with its own budget.

We start with discovery: a listing-by-listing review, margin analysis to set the ACoS target per product, and a look at the existing Search Term Reports if there are any. The plan covers listing fixes, campaign structure, budgets and the weekly review routine. Build means rewriting the listings and images where needed, setting up the campaigns and negatives, and creating the reporting that puts ad spend next to total sales. Then we improve every week, harvesting terms, adjusting bids and feeding what shoppers search for back into the product content. The work connects brand, growth, web and technology: the product story, the paid media that carries it, the listing that converts it and the data that proves it.

A representative engagement is the e-commerce work we did for a consumer brand that sold well on its own site but had let its Amazon listings and advertising run unattended. We rebuilt the listings with new photography and copy, restructured a single sprawling campaign into automatic, manual exact and brand-defense campaigns per product, added negatives from months of wasted search terms, and set ACoS targets from the actual margin on each item. Spend stayed roughly flat while attributed sales rose substantially, and the organic rank of the main products improved enough that total Amazon revenue grew faster than ad-driven revenue, which is the result that matters.