Amazon Sponsored Advertising – How to Optimise Your Way to a Profitable Q4

The days of the “gut feel” are gone.

In the 21st century, businesses that succeed do so by leveraging data.

The wisdom of being data-driven

A data-driven approach to business isn’t just a nice-to-have. It’s a means of recognising—and surmounting—our limitations as human beings, using to our advantage the universal truth that computers see things that we don’t.

Some of those computer-generated insights are so counter-intuitive that they make human intuition seem positively feeble. How many people would have guessed, for example, that liking curly fries is a strong predictor of high intelligence? Or that following certain brands means you’re more likely to be lazy?

In few domains are such data-driven insights more applicable than in Pay-per-Click advertising (PPC). Veteran eCommerce sellers might have cracked a wry smile at the examples above, knowing from experience that advertising algorithms have an often-uncanny ability to sniff out profitable keywords that the most gifted human intellect would never intuit.

Those insights aren’t just entertainment. They’re money. When it comes to PPC on Amazon, the same is true as is true of data science as a whole: if you’re not using it, you could be at a disadvantage.

And for Amazon sellers leveraging PPC, Q4 is crunch time.

With the busiest time of the year looming large—and adding into the mix the unprecedented complication of the COVID-19 pandemic—how can sellers ensure they’re prepared for the chaos?

How COVID-19 has changed the game

An entire library’s worth of books could be written about the economic effects of COVID-19 (and will, in all likelihood), but the key takeaway for eCommerce sellers remains a simple one: People are staying home more.

While some of this trend is accounted for by the lockdown rules themselves, it also reflects a longer-term behavioural change in the population at large. What started as a public safety measure has since ingrained itself more deeply into the international psyche as a mode of living. Coupled with the swathes of people transitioning to working from home permanently—a shift notably championed by Facebook and Twitter—it looks like this change is here to stay.

As you’d expect, this has ushered in a boom in all things household. Entertainment, gardening, interior decor and home gym equipment have been among those boats lifted by the rising tide, evidencing a new, more domestically driven economy—and one that’s likely to far outlast COVID-19.

What to prepare for in Q4

Yuval Ben Nun, Chief Operating Officer of sponsored advertising agency PPCwinner, suggests to clients that one size does not fit all—and that a successful Q4 is made during Q3:

“Launching your PPC campaigns now will give Amazon’s algorithm plenty of time to index your ASINs (Amazon Standard Identification Numbers), giving them more exposure during Q4.

Veteran sellers with data from previous holidays should look to the past to prepare for the future. While each seller will have their own unique approach to PPC, the one goal everyone should have in common is to prepare, prepare, prepare.”

Ben Nun adds that preparation also means holding as much stock as possible. We’ll address how to approach this in more detail later in, but the advertising specialist cautions sellers:

“If you’re about to run out of inventory, pause or slow your sales immediately. A stock-out will do far more damage to your business than the temporary hit to your sales volume.”

Q4 of 2020 is likely to exhibit other idiosyncrasies that set it apart from the pre-COVID-19 era.

The aforementioned boom in household goods, which could last well beyond the holiday season, will be part of the “background landscape” in a quarter when these goods traditionally surge anyway. These two factors are expected to work synergistically, fomenting a precipitous rise in the popularity of domestic niches which is comparable to previous years, but more pronounced. Sellers in affected niches beware: a commensurate surge in cost-per-click (CPC) is likely to be on the cards.

With all of this said, sellers navigating the white-water rapids of Q4 for the first time can justify a bit of optimism.

In an era which has seen untold numbers of businesses – untold numbers of industries, it might be fairly argued – wiped off of the map altogether, eCommerce has largely been a winning industry. More online orders have been placed, by more consumers, across more niches. This uptick is likely to endure as our civilisation acclimates to our new stay-at-home culture.

And of course, as with previous years, there’s plenty that sellers can do to prepare.

Q4-specific strategies

“How do I optimise my PPC for Q4?” is an impossible question to answer without answering the more generic question of “how do I optimise my PPC?”

We’ll therefore address the question on both levels, beginning with those need-to-knows exclusive to Q4.

Sellers will have more success by following a two-pronged approach, recognising that there’s no sense in implementing Q4-specific techniques without building them on a solid foundation that will yield results year-round.

When and how to run your Q4 campaigns

Launch now!

Ben Nun’s suggestions from earlier merits repeating: the best time to launch your Q4 campaigns is yesterday. The second-best time is now.

Time is your friend when it comes to ranking for your main keywords. Amazon’s algorithm gives more love to long-running campaigns, and sellers constantly hopping from one campaign to another can expect to pay for their fickleness with higher CPC and reduced rankings.

With so many corporate juggernauts spending big bucks to cash in on the most lucrative quarter of the year, your rankings are likely to take a hit as 2020 draws to a close.

Q3 is the time to prepare for that hit.

Firstly, optimising your PPC campaigns now could yield well-established rankings more likely to withstand the competition.

Secondly, it ensures that you don’t pay over the odds for those rankings. In what can very rapidly become a David vs Goliath situation—with competition from big corporates driving CPC up to margin-squeezing levels—attempting to improve your rankings during the heat of Q4 can be an expensive business.

Depending on your budget and appetite for risk, spending money to secure your rankings now could save you money as Q4 unfolds.

Take advantage of CPC fluctuations

We’ve mentioned Q4 can see skyrocketing CPC for keywords in domestic niches. There are two sides to this coin, as sellers in some niches, spooked by COVID-19, have been reluctant to spend money, sparking a drop in CPC.

Again, COVID-19 has amplified the historical precedent in these cases. Traditionally, keyword bids—and with them, CPC—tend to drop across a range of niches during Q3, giving switched-on sellers the opportunity to rank their ASINs at a lower cost.

This comes down to playing the long game. The best time to double down on your PPC is when the rest of the seller community are easing off, with the aim of benefiting from discounted CPC and ending up at the top of the rankings when the dust settles.

Note that this is heavily niche-dependent, and that there’s no substitute for doing your own research on whether this is a viable approach in your own case.

Equally importantly, keep doing your own research.

CPC has fluctuated erratically throughout COVID-19 as sellers have alternately eased off and doubled down on PPC, and profitable keywords can turn unprofitable (and turn back again) in a dizzyingly short space of time. The same niche can be a gravy train and a graveyard in the same week, so make sure your margin spreadsheets are kept up-to-date. Researching once and then ticking it off your to-do list simply won’t cut it here.

Inventory management during Q4

Avoid stock-outs at all cost

Earlier, we touched on the first rule of inventory management: Don’t run out of stock!

Your metrics will take a serious hit if you find yourself unable to fulfil orders, and this can be an expensive problem to repair.

The spikes and vicissitudes of Q4 make this a particularly important principle to bear in mind, since they often muddy the waters when it comes to forecasting sales accurately. Many an experienced seller has been caught off-guard by an unforeseen surge in order volume during the holiday season.

A second wave?

Rearing its familiar head again is the ubiquitous wildcard in the equation: COVID-19.

Murmurs of a second wave have become a routine backdrop to discussions of where the crisis is going to go next. So, if that oft- prophesied second wave does hit, what is Q4 going to look like for sellers?

Fortunately, unlike the early stages of the pandemic, we have some precedent to refer to in predicting how this is likely to play out. Industry commentators suggest that the effects of a second spike in COVID-19 infections would mirror what happened in March, when those sellers holding high levels of stock came out of the fray disproportionately better off.

Make sure you’re one of them this time around.

Inventory management can make or break your efforts as a seller—especially during the notoriously frenetic Q4, and especially with the possibility of a second wave of COVID-19 looming. If you’ve evaluated your costs and determined that you can afford to allocate more capital to inventory, you could benefit from a busy Q4.

Though beyond the scope of this article and carrying a fairly stringent set of entry requirements, getting into Seller-Fulfilled Prime prior to Q4 may be beneficial to you if you’re eligible.

Finally, be prepared with a third-party logistics (3PL) solution—ideally one that can deliver within 24 to 48 hours.

A second wave would likely prompt another round of shipping restrictions from Amazon, and in the event of another mass scramble to make last-minute 3PL arrangements, sellers with existing agreements in place could reap the benefits of more favourable terms.

The name of the game, once again, is preparation. Philosopher George Santayana famously proclaimed, “those who cannot remember the past are condemned to repeat it.” If that observation didn’t look prophetic before, it certainly does now.

Putting the emergency brakes on

If you do think you’re at risk of running out of inventory, Ben Nun’s suggestion is to pause or slow your sales before it’s too late. Your first ports of call in this situation could be to:

• Stop or reduce your advertising. “Whether or not it makes sense to call a complete moratorium on your PPC will depend on your existing inventory levels. Do this as a matter of priority if you’re approaching a major holiday, leaving enough of a buffer to weather the storm should a flurry of unforeseen sales occur.”
• Raise your prices. “This could guardrail you against finding yourself short of stock (albeit less predictably than slowing your advertising), while making up for much of the sales shortfall with higher profit margins. Tread carefully here, making sure not to run afoul of Amazon’s stringent price-gouging regulations.”

Today’s preparation is tomorrow’s profit

Now more than ever, Q4’s success stories are decided in Q3. If financially viable, preparing your entire inventory for Q4 could stand you in good stead, saving you the anxieties of micromanaging your stock.

Maintain a particularly vigilant watch over your numbers as the holiday season proceeds and aim to beat your competitors tomorrow by out-preparing them today.

A broader view: General PPC best practices

Much of what works in Q4 is every bit as applicable to the rest of the year. Following are some more general principles which should underpin your approach to PPC in its entirety, yielding greater profitability in Q4 and in the year as a whole.

When to drop a keyword

Hotly debated in PPC circles is the age-old question of when to drop a keyword. It’s a complex question, the answer to which far more resembles an art than a science.

Reducing this equation to a simple yes/no answer means considering a myriad of factors.

If you’re dealing with a new ASIN, conversion is inevitably going to be lower. Give it time to mature. The true strength of a keyword takes time to reveal itself, and only does so in tandem with the maturation of other factors; among them, review count and the weight that Amazon’s algorithm itself gives to older listings.

This process might be likened to “waiting for the ripples on a lake to settle before being able to see the bottom clearly,” as there’s no getting around the fact that patience is a virtue here.

Once you understand this principle, it follows logically that when managing older listings, you should be less forgiving of poorly performing keywords.

Such keywords are less likely to turn profitable once the underlying metrics have had time to solidify. Gold rushes rarely happen in old mines.

No-one can tell you where to set your budgets without an in-depth knowledge of your particular business, but as a rule of thumb, if the ASIN in question has been around for a while, you can more ruthlessly cull keywords which reach their budgets with few sales to show for it.

Finally, “if it ain’t broke, don’t fix it.” The stronger a keyword, the less sense it makes to tweak it. Approach profitable keywords with caution, applying only minor changes to the bids.

When it comes to the laggards,  more drastic adjustments can be considered in attempts to make them profitable, while exact phrases should only be excluded when including them would be actively harmful (i.e. they’ve consistently spent money without generating sales).

How to lower your ACoS

It’s a question as old as advertising itself: how do you get more sales for less money?

First and foremost, optimising your Advertising Cost of Sales (ACoS) starts with optimising your product detail pages.

One of the basic tenets of PPC is that there’s no sense in reaching a lot of shoppers with your ads if you’re just going to send them to a poorly optimised listing. “Filling a leaking bucket” is an apt analogy here.

Ben Nun provides some further guidance on how sellers can go about patching those leaks for good…

The dawn of video

“2020 has seen video become more ubiquitous on Amazon, with rumours of a broader roll-out in the coming months. Though not yet available to sellers who aren’t Brand Registered, video offers well-documented benefits for your on-page conversion rates, so be sure to take advantage of it if you’re among those who currently have the option.”

Optimise your Amazon listings

Before looking to more advanced fixes, be sure that you’re making the most of the existing real estate on your product detail pages.

A surprising number of sellers fail to take full advantage of the number of characters allowed in descriptions and bullet points. Every word is an opportunity to improve your conversions—not to mention an opportunity to rank in Google and drive organic sales—so “max out” these basics as a starting point.

A+ Content is another boon to Brand Registered sellers. The feature expands your listings to include a richer set of images and copy, improving on-page conversion rate by up to 10% as per Amazon’s own estimation. Notably, A+ Content also gives mobile users a more immersive experience by appearing above the fold on product pages.

Tailor your listings to upcoming holidays

Another of the “low-hanging fruit” improvements to be had in preparing for Q4, adding holiday-specific keywords to your listings can give your ASINs some extra juice. You can reap SEO benefits by incorporating phrases geared towards key special occasions (e.g. Hallowe’en, Thanksgiving and Christmas) into your sales copy as the respective holidays approach.

Consider also giving your listings a Christmas makeover as the season approaches. You don’t need to go overboard here. A little tinsel goes a long way, and all that’s required to make your images stand out is a sprinkle of Christmas-themed artwork to complement your product images.

Ignore the last three days

Ben Nun offers another piece of advice when it comes to keeping an eye on your advertising metrics:

“Amazon’s PPC reports account for a campaign’s full performance stats three days in arrears, so don’t worry if something looks odd when analysing your metrics for the last couple of days. More importantly, don’t make any snap decisions based on what’s likely a simple reporting error.”

Remember the 80/20 rule

Don’t diversify yourself into oblivion. Keep a close eye on which keywords are generating the bulk of your sales and nurture them.

The Pareto Distribution made famous by scientists and mathematicians (the dictum that 20% of the causes often generate 80% of the effects) rings true in the majority of PPC campaigns, with 20% of keywords often generating 80% of the sales, says Ben Nun.

The compulsion to “diversify” can drive overzealous sellers to sink an inordinate amount of budget into lacklustre keywords.

“Don’t put all your eggs in one basket,” while well-intentioned, is a maxim dangerously prone to being misapplied. To paraphrase legendary industrialist Andrew Carnegie: put all your eggs in a select few baskets and watch those baskets.

Never stop optimising

Long-term success in PPC is less about specific techniques than it is about assiduously making minor improvements and having the discipline to keep making them consistently.

Staple improvements include:

• Updating your bids continuously, depending on how they’ve been performing.
• Pruning keywords which are performing inadequately.
• Focusing the bulk of your ad spend on your most effective campaigns, and on your most profitable products.
• Using Amazon Coupons and Lightning Deals to spike sales

Also worth considering is PPCwinner’s One Word Campaign tool—an innovative approach to driving PPC traffic at a lower cost.

Above all, remember that optimising your campaigns, like gardening, is a job that’s never finished—only ever in progress. Data takes time to accumulate and attempting to rush the process is a false economy. Perseverance and discipline are more valuable assets here than technical brilliance.

Leverage your own data

While these guidelines are likely to benefit you regardless of the specifics of your niche, the fact remains that you’re the #1 expert on your own business.

Data is your friend. Try to analyse common themes from previous years, looking at your past successes and failures. If something’s worked particularly well for you in the past, it’s worth trying again.

Conclusion

Whatever your industry, your success as a business hinges on your ability to leverage data.

Futurologists like Google’s Ray Kurzweil point to a rapidly approaching era in which humans will achieve irrevocable symbiosis with computers. Others might argue that we’re already there. The reality is that in the world we inhabit, analytically literate businesses aren’t the successful ones—they’re the only ones.

The complex equation of Amazon PPC—further complicated by the ups and downs of Q4, and further still by an unprecedented rogue factor in the form of COVID-19—boils down, despite its complexity, to an irreducible core: the art and science of making your data work for you.

2020’s final quarter will bring with it challenges numerous and varied, but the businesses that come out ahead will do so, as they’ve always done, by cutting through those complexities to leverage their data more effectively.

As sellers navigate an eCommerce landscape that seems increasingly characterised by chaos, that enduring principle will continue to represent a beacon of stability—throughout Q4 and beyond.

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PPCwinner is a machine learning tool powered by AI, built for Amazon sellers, by Amazon sellers. To learn more about how to build your PPC campaigns effectively, schedule your free 15-minute consultation with Yuval Ben Nun from PPCwinner here. WorldFirst do not receive kickbacks or commissions from PPCwinner.

Co-author: Armine Ansari
Armine is an eCommerce Payments Specialist at WorldFirst. He started selling online five years ago and is on a mission to optimise eCommerce payments processes for fellow merchants across global marketplaces.

Co-author: Arabella Redford
Arabella is founder and CEO of Brand Dot. With a cutting-edge approach to content optimisation and conversion-driven marketing, she is passionate about driving brand success through voice assistants and voice-first consumer experiences.

Other blogs in this series:

• Amazon’s EFN And Pan-European FBA Programmes to End for UK Sellers: Everything You Need to Know
• Limited shipments, unlimited opportunity: How to handle Amazon’s FBA restrictions

WATCH our recent webinar: Amazon and PPC top tips – preparing for Q4!

Whilst every effort is made to ensure the information published here is accurate, you should confirm the latest information with the sources outlined above and consider your business needs prior to making a decision. The information published is general in nature only and does not consider your personal objectives, financial situation or particular needs.