Amazon, a platform that has revolutionized the retail industry, is a battleground for sellers vying for visibility, sales, and market dominance. Patience, strategy, and a keen understanding of metrics such as conversion rates and ACOS (Advertising Cost of Sale) are key to gaining a competitive edge. It's a game of numbers, but it's also a game of wits.
Every click, every search term, every conversion rate tells a story. It's a narrative of customer behaviors, preferences, and decisions. The art and science of leveraging these data points can make the difference between a thriving business and a struggling one. It's not just about generating sales, it's about understanding the 'why' behind every sale.
While we strive for profits, let us not forget the importance of breaking even. It's not always about the chase for profits, especially during product launches. Breaking even can sometimes be a win in itself. It's a stepping stone, a foundation upon which you can build your empire.
But remember, there's no ACOS without sales, just as there's no victory without struggle. The NPACOS (Net Profit Advertising Cost of Sale) serves as a stark reminder of this reality. It's a gauge of your advertising effectiveness, a measure of your resilience, and a testament to your determination.
As we venture deeper into the heart of the Amazon marketplace, let's remember that success isn't just about survival, it's about thriving. It's about making data-driven decisions, understanding our customers, and above all, remaining patient yet persistent in our pursuit of success.
Here's to the journey ahead, may it be filled with learning, growth, and prosperity.
Tips for effective Amazon sellers
- Be patient and strategic in a highly competitive market. Set a higher threshold for your campaign.
- Monitor your account’s average conversion rate. If your account has an 8% conversion rate, it means roughly one sale is made every 12 clicks. Evaluate any search term that generates more than 12 clicks without a sale.
- Always consider your break-even ACOS (Advertising Cost of Sales) when running your advertisements. Aim to not lose money on your advertising.
- Use the NPACOS (Net Profit Advertising Cost of Sales) as an alternative threshold when there are no sales.
- Regularly evaluate the performance of your search terms and add non-performing ones to the negative list.
Optimize Amazon Search Terms for Better Sales
“Search Term Isolation” is a methodology for managing search terms and is very important for your Amazon advanced search in the Amazon search engine.
You can watch a video about Search Term Isolation here
What is Amazon Search Term Isolation?
- Each search term appears only once per match type (no duplications)
- Every new term is created in Exact, Phrase, and Broad
- Each term is added to negative exact and negative phrase respectably.
The new terms we create can come from keyword discovery tools. For example, tools and search engine optimization software such as Helium 10 or from our auto campaigns or from existing Broad and Phrase keywords. This is key for Amazon advanced search.
Main Guidelines
When relying on our own Auto, Broad and Phrase, you should follow the relevant recommendations to hit it in the Amazon search engine:
Search terms with sales – above Target ACOS
These are relevant search Amazon search terms that led to a sale and have an ACOS above our Target ACOS.
Recommended actions:
- Move the search term to exact – bids should be managed in exact.
- Add the term to negative (in the original ad group) – to prevent duplicates and free up budget for additional discovery.
- Set the exact keyword bid to the lower of the source keyword bid and the Amazon suggested bid.
- Create new broad and phrase keywords and set their bid to the Amazon suggested bid.
- Add a “Negative Exact” to the Phrase keyword and “Negative Phrase” to the Broad keyword.
Search terms with sales – below Target ACOS
Search terms with sales are relevant search terms and are considered competitive.
Recommended actions:
- Move the search term to exact – bids should be managed in exact.
- Add the term to negative (in the original ad group) – to prevent duplicates and free up budget for additional discovery.
- Set the bid to the higher of the original bid and Amazon suggested bid.
- Create new broad and phrase keywords and set their bid to the Amazon suggested bid
- Add “Negative Exact” in the Phrase and “Negative Phrase” in the Broad
Search Terms Without Sales
Search terms that have not generated sales should be evaluated based on their clicks and spend. They should be turned off (added to negative) once they cross a certain threshold. The threshold varies based on different conditions:
- The product life-cycle stage – during launch phase we should set it higher than during maturity.
- Advertising budget – if we don’t have a big budget we would not want to identify under-performing terms as early as possible so we might want to set a low clicks threshold.
- The competitive landscape – in a highly competitive space we might decide to be more patient and set a higher threshold.
Typical thresholds can be:
- The account average conversion rate. If your account is converting at 8% on average it means that you generate a sale every ~12 clicks. Any search term generating more than 12 clicks without a sale should be evaluated.
- The break-even ACOS. Most Amazon sellers do not want to lose on their advertising (this is not valid during product launch) therefore they consider their break-even ACOS as the threshold for adding a term to negative. Considering there isn’t an ACOS when there’s no sales we can use the NPACOS.
So when should we add a search term to negative?
We should only add a search term to negative once we are convinced it is not relevant to our product or has wasted a significant portion of our budget.
Remember: Broad, Phrase, and Auto are used for keyword discovery and when a search term is using up the ad groups budget it is preventing or limiting the discovery of additional search terms thus we should either turn them off by adding them to negative or move them to an exact state and reduce their bid so we don’t completely “kill” them.
