This is #2 in a 7 part series entitled “The 7 mistakes people make with their Amazon Sponsored Ads / PPC.”
At the end of this post you’ll learn why you should (almost) never include more than one Product Ad in any given AdGroup. I’ll show you a very common example of how a sample seller could increase their profit 300% just by organizing their adgroups properly.
Whenever you create an advertising campaign in Sponsored Products, Amazon will ask you to do two things.
- create at least one adgroup, where you specify the keywords you want to target (in a manual campaign),
- Then they will ask you to specify at LEAST one product that you want to advertise for those keywords.
It’s a trick question, don’t fall for it. Just choose one. But first, a list.
Things that can be dirty:
1. Your pop.
2. Your south.
Things that should not be dirty:
1. Your AdGroups.
Here’s why, and it’s really simple:
You’ll have no idea which search term is making you money, for which product.
When you download your search term reports (you are downloading your search term reports, right?) they will tell you how many impressions, clicks, sales, etc you received for your product right?
They give you
And THAT’S it.
So, here are two easy scenarios where this becomes ruinous.
SCENARIO #1: Different PRICED Products
Let’s pretend you sell Dog Leashes. You create an adgroup, and you add the following two products.
- Campaign – Dog Leash
- Adgroup – Dog Leashes
- Rope Dog Leash ($10.99)
- Retractable Dog Leash ($34.99)
- Keyword: “Dog Leash”
What happens next is 10000 people log into amazon and type: Dog Leash, and of those 10,000 people some 50 will buy your dog leashes.
You’ll get a report that basically says
- Campaign – Dog Leash
- AdGroup – Dog Leashes
- Conversions – 50
With a number of individual reports for individual keywords.
Which leash did they buy? Which keywords were profitable? Which leash is good to advertise? Which one should you bid less on? Which one can you bid more for? Who knows? You sure don’t.
This is because you have a dirty adgroup. Meaning the reporting for each search term will consist of sales for the $10.99 product MIXED with sales for the $34.99 product.
If your PPC cost was $50 and you sold $500 in $10.99 leashes that would mean one thing, but if you sold $500 in $34.99 leashes that mean a different thing, especially if your profit margins were radically different.
Let’s pretend you make $25 for each retractable leash, that makes sense because of the higher profit margins, and you only make $2.00 for the $10, leash.
Selling $500 of retractable leashes using $50 of PPC means you generated $325 in profit.
Selling $500 of rope leashes using $50 of PPC means you generated $80 in profit.
That means for every $1 in profit you generate advertising for rope leashes, you would generate 300% more, if you’d spent it ONLY on the retractable leashes.
But since these sales are all mixed in the same dirty adgroup you have no idea how profitable this keyword is, for these two products, and you’ll never know that you can increase your profit by 300%, just by focusing on the more profitable product.
SCENARIO #2: DIFFERENT VARIATION PRODUCTS
“Well all of my products are the same price so this doesn’t really apply to me.”
Unfortunately, the same rules apply my friend.
It’s tempting to throw both of these leashes into the same adgroup, and why not? They’re both $11.99 so you’ll know exactly how profitable your search terms are. Let’s assume you make $5.00 per leash sold.
Imagine the following report:
Campaign: Dog Leashes
Adgroup: Dog Leashes
Clicks : 300
CostPerClick : ~ $.33
Revenue : $1199
PPC Spend: $100
Answer the following questions:
1. How much profit did you generate?
ANSWER: $400 ($5 per leash profit * 100 leashes sold – $100 Advertising Cost)
2. Which leash is your most profitable leash to advertise?
ANSWER: No idea.
It’s impossible, from this report, to know which of these 100 sales was the blue leash, and which was the black leash.
What if people were clicking on them an equal amount, 150 black, and 150 blue, but 100% of your sales came from people clicking on the black leash?
If you knew this, you could stop advertising the blue leash (or maybe stop selling it altogether) and cut your PPC spend 50%.
With just this one piece of information you go from generating $4 for every dollar you spend on PPC to $8. That’s a 100% increase in profit, just from knowing how your individual variations are actually performing, and you can only know that by separating them in your PPC Campaigns.
So. Keep your adgroups clean!