With an annual gross profit of £171.95 billion ($225.15) billion, few businesses can claim to be as influential or successful as Amazon. For those in the eCommerce space, Amazon is an important platform to conquer. In April 2023 alone, the Amazon.co.uk website recorded 345.4 million visits – giving millions of reasons for eCommerce businesses to list their products on Amazon.
It’s not enough to just list your products on Amazon, however.
To truly make the most of the vast array of opportunities, you’ll need a clearly defined, well-thought-out advertising strategy. You need to spend enough to get your products in front of as many relevant shoppers as possible. But not too much that your ROI is too low to be sustainable.
Finding the sweet spot when budgeting for ads can be a difficult challenge for large and small companies alike. We’ve compiled this comprehensive guide to mastering ad budgeting for successful selling on Amazon to set you on the path to success.
From exploring common mistakes to discussing signs that indicate you need professional help and the benefits of seeking assistance, we’ve covered every aspect of budgeting for Amazon ads.
Common mistakes in Amazon ad budgeting
Allocating the appropriate budget to any ad campaign can feel like a minefield. To increase your chances of getting it right – and reduce the amount of cash you waste – be aware of these common Amazon ad budgeting mistakes:
1. Allocating uneven ad budgets: The impact on campaign performance
A common mistake many businesses make when working out budget allocation is failing to distribute their available spend effectively. An uneven budget allocation may prevent you from extracting the most sales from high-performing campaigns.
If a particular campaign is showing potential but hasn’t been allocated enough funds to succeed, you are limiting its growth and your sales opportunities. This issue is compounded if you’ve assigned too much ad spend to an underperforming campaign. Why? Simple. If a campaign isn’t using its budget, it isn’t delivering clicks and sales. That potential spend is just sitting there. Meanwhile, your stronger campaigns could be running out of budget.
If your ads turn off because your target spend is maxed out for that campaign, your ads will disappear. That leaves the playing field clear for competitor products to appear in search results and secure the sale.
2. Ignoring Performance Metrics: The Importance of Data-Driven Decision Making
Another of the most common Amazon ad budgeting mistakes we see is advertisers ignoring performance metrics. Without consistently studying campaign analytics, it’s impossible to make data-driven decisions. This means you’re operating in the dark and making campaign choices based on guesswork rather than verified user behaviour.
Metrics such as click-through rates, impressions, and conversion rates allow you to pinpoint what’s working well and where problems exist. They also allow you to be more confident when allocating budget, reduce wasted spend and prioritise the ads that deliver the best results.
3. Overlooking Competitive Analysis: Leveraging Market Insights for Success
Failing to undertake competitive analysis is another of the Amazon ad budgeting mistakes we see frequently. Studying what your competitors are doing can be a treasure trove of intel. And as a bonus, you don’t have to risk any of your own ad budget to do so.
You can conduct competitor analysis relatively easily. To identify competitors, simply look at the products appearing in prime ad spaces for your keywords.
Is the ad copy compelling? Do they incorporate engaging creative elements? Are they using keywords that you don’t have in your campaigns? Do they appear for searches undertaken at different times of the day? Look at their product pages, too and study their use of images, the text they share in bullet points and the descriptions they’ve published about their product.
Understanding what makes competitor campaigns work will allow you to create more successful ads and maximise your ad spend.
Signs you need help with Amazon ad budgeting
Do you need help to see a return on your Amazon ad spend? Perhaps your AcOS is still too high to be sustainable? Are your ad performance metrics lacklustre?
If you answered yes to any of those questions, you need some Amazon ad budgeting assistance. Here are some key signs that it’s time to bring a professional on board:
1. Inconsistent Ad Performance: Identifying Patterns and Optimisation Opportunities
Do your ads perform inconsistently? If it’s hard to tell from one week to the next how your ads will perform, a few factors could be at play:
– Missing target keywords: Like Google, Amazon wants its search results to be as relevant to the user’s search as possible. Therefore, if you’re not optimising your product copy with relevant, high-traffic keywords, or if you’re not using a variety of keyword match types, you’re never going to get the level of performance you expect.
– You didn’t include negative keywords: If you’re selling formal suits for men, you don’t want your product to appear when someone searches for casual menswear or formal women’s wear. Using negative keywords can help to cut down your wasted spend by filtering out those search terms that will never result in a conversion.
– You haven’t targeted long-tail keywords: Ranking for long-tail keywords, such as “formal men suits for a summer wedding”, is easier than ranking for keywords such as “formal suits”. So, if you’re selling your product in a popular category, long-tail keywords will allow you to target customers with a more specific idea of what they’re looking for, meaning your ad is more likely to convert.
– You aren’t considering seasonal demand. Look at your analytics reports. Can you identify clear peaks and troughs in performance? It could be that you’ve failed to factor in the impact of seasonal demand. If that’s the case, you risk not having enough ad budget set aside for those periods of the year when there’s a surge in consumer demand for your products.
Once you’ve identified why your Amazon ads aren’t performing as you would like, you can make the appropriate adjustments to your ad campaign. If you’re still struggling to determine what’s behind your underwhelming performance, it’s time to call in expert Amazon ad budgeting assistance.
2. High ACoS and Decreased ROI: Maximising Cost Efficiency and Revenue Generation
Another indication that you need Amazon ad budgeting assistance is a high ACoS (advertising cost of sales) and lower ROI (return on investment). ACoS is the main metric for determining how well your ad campaign is doing. It tells you how much you spend on ads to generate a return. The average ACoS for Amazon sellers is around 30-35%, but a good ACoS for your business will depend on factors such as your keywords, traffic levels and goals.
3. Limited Budget Hindering Growth: Scaling Campaigns for Success
We’ve all heard the saying, ‘You have to spend money to make money’. It’s an adage that’s particularly true for PPC campaigns. You need to assign enough budget so that your adverts are visible for as many relevant search terms as possible for the most lucrative portions of the day. But you don’t want to assign so much budget that it’s not sustainable and your ACoS is too high to turn a profit.
Simply throwing money at your ad campaigns isn’t smart. The best campaigns are lean and efficient and subject to constant strategic changes.
Finding the right balance and knowing when to scale means you can capitalise on sales opportunities sensibly and sustainably. If you’re concerned your budget is limiting your growth potential requesting Amazon ad budgeting assistance can help you make the most of your funds and optimise your campaign performance.
Benefits of professional ad budgeting help on Amazon
If you recognise any of the signs above, you likely need professional ad budgeting services. Help with budgeting can be far more beneficial than simply allocating a figure to an ad set:
1. Leveraging expert guidance for campaign optimisation
Identifying issues in Amazon ad campaigns and analysing the results can be mission impossible for the untrained eye. Additionally, many eCommerce companies don’t have the time or resources to allocate to this task.
Calling in support in the form of professional ad budgeting services also brings campaign optimisation benefits. Not only do you get help deciding what to spend and where, but you’ll also receive plenty of tips and suggestions to improve campaign performance, master your keyword targeting and refine ad copy.
2. Maximising cost efficiency and ROI with professional insights
An Amazon Ads specialist has specific experience within the Amazon ads ecosystem. They’ll know how to extract maximum benefit from every pound spent and understand a realistic ROI in your sector.
Experts can provide valuable strategies, including bid optimisation, keyword analysis, and budget recommendations to ensure every penny you spend works hard for your business.
3. Capitalising on market dynamics for enhanced performance
Consumer shopping habits and search trends are constantly evolving. Seasonality, general cultural trends, and even new search tools can all impact performance. Professional ad budgeting services naturally have their finger on the pulse of changing marketing dynamics. They have to. It’s their job. Your campaigns can benefit from that up-to-the-minute knowledge in a way that wouldn’t be possible if you were going it alone.
Tips for finding and choosing Amazon ad budgeting services
When it comes to finding ad budgeting services, these tips will help you find a trusted partner:
1. Assessing expertise and track record: Key indicators of proficiency
If you’re ready to get started finding ad budgeting services but don’t know where to start, begin with their track record. Ask to hear client success stories and see a few previous case studies to get a picture of their expertise. Other key indicators of proficiency include professional certifications and the number of specialist tools they can access.
2. Seeking client testimonials and reviews: Insights from satisfied customers
Another area to pay attention to is a company’s client testimonials and reviews. As with any professional service, review platforms can offer a clear window into what it’s like to work with a specific service provider. You can use sites such as Trustpilot and Google Reviews to learn more about the experiences other clients have had.
3. Evaluating pricing models and services: Finding the right fit
Finding ad budgeting services obviously comes with a cost, so you’ll need to consider the price of the service offered. Remember that in addition to paying for the help of an expert, you’ll also need to cover the cost of your Amazon ads campaigns. This makes a company’s pricing model an important consideration when deciding who to partner with.
Be wary of anyone much cheaper than other services you’ve shortlisted, as it could point to a lack of experience or suggest you won’t receive a personalised service.
Best practices for effective Amazon ad budgeting
Ensuring you get the maximum performance from your spend can be achieved by adhering to these Amazon ad budgeting best practices:
1. Setting clear campaign objectives: Aligning goals for success
Before launching a campaign, it’s important to outline your objectives and define your goals. Here are some questions to consider:
- Are you looking to increase sales?
- Is your aim to improve brand awareness?
- Will your ad campaign focus on the launch of new products?
Your overall objectives will determine your campaign strategy. For example, if you want to grow brand awareness, Sponsored Brands Adverts allow you to showcase several products. Tools such as Amazon Stores also provide options for telling your brand story.
2. Monitoring performance metrics: Data-driven decision making
Another of our favourite tips for those looking to follow Amazon ad budgeting best practices is to monitor performance metrics. After all, data is a key part of running a successful ad campaign. Here are some metrics to pay attention to:
- Impressions: Impressions are the number of times your ad is displayed. It does not, however, indicate engagement. You can view impressions on your AWS dashboard. This figure can be compared to metrics such as CTR, which will help you understand your ad’s success.
- Click-through-rate (CTR): The CTR indicates the ratio of clicks to impressions and shows how many individuals clicked on your ad. A high CTR is indicative that your ads are compelling and engaging.
- Cost-per-click (CPC): Another metric to consider is the CPC, which is how much it costs your business each time someone clicks on the ad. A low CPC to conversion rate ratio is desirable.
- Return on ad spend (ROAS): ROAS tells you how much money an ad campaign is generating in relation to the overall cost of the campaign. It can be calculated by dividing the total ad revenue by the total ad cost. It’s a key metric for uncovering the profitability of a particular campaign.
- Advertising Cost of Sales (ACoS): This is used to measure the efficiency of an ad. To calculate it, divide the ad spend by revenue, then times this number by 100. This number is the ratio of ad spend to sales and indicates how much money your ad is generating in relation to its cost.
- Conversion rate: The conversion rate is the percentage of people clicking on your advert who then take a desirable action, such as adding your product to their basket.
3. Conducting regular budget reviews: Adapting and optimising for success
Successful budgeting can’t be achieved with a set-it-and-forget-it approach. You’ll need to regularly review what you’re spending, where you’re spending it and what kind of results that spend is generating to set yourself up for success.
Amazon ad budgeting can be complex, but it’s a critical area to get right. It’s foundational to successfully scaling your business on Amazon. A lot goes into budget management, and it’s a task that is never done. You’ll need to consider your keyword selections, understand performance trends and regularly review campaign analytics. Following our tips will help you get to grips with your campaign finances and grow your sales.
Thank you for engaging with this comprehensive guide. Stay tuned for our upcoming Highway to Sell podcast on mastering ad budgeting on Amazon, available on Spotify from 20 July 2023.
If you’re like more information or help with mastering your Amazon ad budgeting, book a call with us today.