In Part 1 of how to scale your Amazon business using Amazon advertising, we're going to review 5 strategies that will help you to do this. Also, you'll discover several fundamental building blocks that should be in place as a starting point in your journey to successfully scaling your Amazon business.
Foundational Practices that Facilitate Scaling
- Make sure you have enough inventory to scale. It's critical that you maintain enough inventory as you scale so that you can meet the demands of your online shoppers as it grows, without being in danger of running out of inventory. Running out of inventory on Amazon means losing sales, losing Amazon search ranking, and losing to your competitors.
Bonus Tip: Chinese New Year is right around the corner, and sellers need to have their production orders submitted well in advance. Manufacturing facilities typically go on extended leave to celebrate. Calculate your Q2 needs in the fourth quarter of the preceding year to ensure you don’t find yourself out of stock due to production delays.
- Make sure you know your True ACoS (the Ad Spend Margin Impact) on a SKU-by-SKU level, and across your entire account. The emphasis should be on making sure that the scaling you are doing with your Amazon advertising campaigns are really paying off. Look at the Ad Spend Margin impact or True ACoS. The True ACoS is a measurement of how much your advertising is impacting the profitability of your SKUs. It is recommended that the range for this is somewhere between 6% and 15%. Always keep in mind that there’s isn’t much point in scaling if your ACoS climbs significantly, eating deeply into your profit margins.
- Have a dedicated budget for each of your SKUs and portfolios. As you scale, you want to make sure you have allocated budgets for the launch of new products as well as for your current SKUs.
- Set aside time on a weekly basis to create/optimize your PPC campaigns and to identify new opportunities to expand upon. In order to scale, you must make time to identify opportunities for new revenue streams, and then continuously optimize campaigns in order to reduce wasted Ad Spend.
- Track your progress. Monitor the data and metrics of your Amazon business. Analyze your keywords, ACoS, Impressions, ROAS, customer orders, cost-per-click, etc., to gage the health of your business over time.
- Track the meaningful metrics. As you start to scale, it is crucial that you track the various metrics that have a meaningful impact on your business. These would include average cart value, returning customer rate, new to brand orders, ROAS, click through rate percentage, and ACoS.
- Study your audience. Use your Brand Analytics to learn as much as possible about your audience’s online habits, demographics, what’s in their carts, etc. Also, look through your Search Term Report to see what they are actually searching for. This will help you to create better ads as you scale your business.
- Ongoing conversion rate optimization for your listing and storefront. Small incremental increases to your conversion rate that occur consistently over time are the foundations upon which to scale your Amazon ads.
5 Strategies for Scaling Using Amazon Advertising
- ACoS Scraping – This is done by consistently going into your Search Term reports and finding the search terms and ASINs that have converted. You will then use them across all of the other ad types. Your automatic and research oriented campaigns will start to feed all of the other campaigns. ACoS Scraping reveals what is actually converting, so that you can use this information to scale.
- Run single keyword campaigns – Check your search term report to identify a search term that is converting extremely well. Use this keyword to create a single keyword campaign. Unlike when there are multiple keywords inside of a campaign, a single keyword campaign allows you the flexibility to tweak the performance of one keyword in multiple ways (use placement modifiers, Dynamic bidding, use of various match types, etc.).
- Adjust your bidding strategy. Test out all of the bidding options available to you to see which one will give you the best situational results. Traditionally, most Amazon sellers start with Dynamic Bids, Down Only (the traditional Amazon bidding system). However, sellers looking to scale, should also take advantage of Dynamic Bids, Up and Down (if a click is likely to result in a sale, Amazon will increase your bid by up to 100% for 1st-page search result placement or 50% for all other placements. If a click is less likely to convert, Amazon will reduce your bid by up to 100%).
- Uncap your budgets were applicable. This is important to do because if you have a campaign with a low budget that is performing well, by uncapping the budget for that campaign, you give Amazon more freedom to show your ads whenever they can.
- Carve out weekly time for brainstorming sessions on how to creatively edge ahead of your competition. Spend time each week in the pursuit of brainstorming ways to improve such areas as your headlines, custom images, and videos so that you better attract potential customers, which can lead to increased sales. Be sure to search for inspiration outside of Amazon, look at your reviews (use what customers are saying about your products in your headlines), study competitors (what are they doing well that can be modeled), uncover common search phrases used for your products. These activities will definitely help you to scale.
Amazon advertising is a vital tool in helping any seller to scale their Amazon business, but it isn't designed to be set up and forgotten. To successfully scale your Amazon advertising (and business), sellers must be ready for marathon cycles of research, analysis, testing, tweaking, and monitoring. But smart and effective scaling is the key to growing your business over time.
Scaling your business using Amazon ads is a crucial step towards making your brand a household name. But there are a lot of moving pieces to consider and implement. If you suspect that you may have missed a critical piece, our experts can work with you to make sure that everything is 100% on track, while freeing you from the daily grind.
Schedule a call with us to discuss your Amazon advertising needs.
Read Part Two of This Blog Series.
Entourage: Software to Scale Amazon Ads and Results Driven Management.