Generally, you want to use 1 SKU per AdGroup. Here’s why
#1. If you mix SKUs with different prices, you won’t know how profitable your search terms are.
#2. If you mix SKUs with different variations, you won’t know which ads are most effective to advertise.
For a more detailed explanation of why these two things are true, and why they matter, read the long version, here.
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PPC: The 7 mistakes people make with their Amazon Sponsored Ads – #2 Dirty AdGroups
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?
Wrong.
They give you
1. Campaign.
2. AdGroup
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
- Products
- Rope Dog Leash ($10.99)
- Retractable Dog Leash ($34.99)
- Keyword: “Dog Leash”
Great. Right?
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
Impressions: 50000
Clicks : 300
Sales: 100
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!
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PPC Tip #1 TLDR – Budgets
If you like brevity:
- Make sure you have either an overall budget set (that value is Daily), or that you’ve counted up all your campaign budgets.
- Separate you campaigns by profitability, at the very least ONE for your most profitable and a second for your NOT QUITE SO PROFITABLE keywords.
- Check your budget regularly. If you are hitting your cap you’re probably doing something wrong.
If you want more explanation, check the longer version of this post here:
Or if you need help with your campaigns, reach out in the comments.
PPC: The 7 common PPC / Amazon Sponsored Ads Mistakes- #1 Budget
This post is part 1 in a series of 7 posts all about the, you guessed it, 7 most common mistakes people make with their sponsored ads/PPC strategy*. Once you’ve read these posts you will be ahead of 99% of Amazon sellers.
*Strategy is a generous word, because a lot of people’s PPC “strategy” is the same strategy you might use when trying to get a spider off your back. A lot of screaming. A lot of flailing. A lot of panic. Auto Campaign.
(There might actually be 8 or 9 posts, Amazon recently released some updates)
In your defense, it’s okay. PPC is mind numbingly boring, and I can’t promise to make it less boring, but so far we’ve talked about spiders and I feel like if you google “PPC” and “Spider off your back” this page is going to be the only hit, so that’s a start.
So the first thing people mess up with their PPC?
TOTALLY SCREWING UP THEIR BUDGETS
Budgets are so complicated that even though it’s #1 of the 7 things people screw up, there are actually three different kinds of mistakes people make. So this numbering system is already sort of a mess, but it’ll be fine. We’ll get through it together.
So here’s sub-mistake #1 of mistake #1. Catchy.
Budget Mistake #1 – No Overall Budget Caps
If you learn NOTHING else from this post, please, learn this. Set a daily budget cap for your entire campaign.
It’s this easy.
- Log into Seller Central
- Click Advertising
- Click Campaign Manager
This # is the most you can spend on your sponsored ads. Please note this # is daily. So if it’s set to $125, your monthly spend will be ~30*125 ($3,750).
An interesting thing about Amazon is that it will almost always spend your money, and this number is an average.
A lot of sellers make the mistake of thinking if they set their daily cap to $125, then they will never ever pay more than $125 a day on advertising,
This is wrong.
The truth is, that with a daily cap of $125, Amazon makes sure that, over the course of a month, you never spend MORE than $125 on average per day, over the entire month.
This means that if on days 1-29, you’ve spent *only* $20 on advertising (out of a possible $3,750), Amazon will try it’s best to spend $3,730 on the final day of the month.
That’s right. You could spend $3,730 in advertising in one day, which would make your -average- spend $125.
So, if on days 1-29 you have spent a grand total of $20, Amazon will try its best to spend $130 on day #30. Because, much like you, Amazon loves money.
Question: What does this button do?
If you are very sure of what you’re doing you can click the button on the left which turns off global limits.
If you turn this off, Amazon will *only* use your Campaign Budgets to manage your advertising spend.
A lot of sellers make the mistake of turning this setting off, and then having 40 campaigns, each with $20 budgets. This is an easy way to get a $24,000 (40 campaigns x $20 budgets x 30 days) bill from Amazon at the end of the month.
This leads to the next budget problem, which is also a structural problem but I’ll include it here because money, right?
Budget Mistake #2 – Mixing Your VERY PROFITABLE and KINDA PROFITABLE keywords.
I was listening to a podcast from a leading, and boring, ‘guru’ in the PPC space and she or he started off by saying “You probably want a budget of $50-$200 on your converting campaign” and I had two thoughts back to back.
Thought #1.
“Wow what an interesting choice to deliver this content with as little excitement or intonation as humanly possible, ensuring that I am both confused and bored and maybe a little sad inside, I wonder why she or he chose to do that? Did I fall asleep? I think I may have also fallen asleep. Wow.”
Thought #2.
“Wait why would you only have one converting campaign and give it a unified budget?”
The idea of having a “converting campaign” is like this.
Imagine there are three people in front of you. Each of them says “Hey, if you give me money, I’ll give you even more money back until I run out.”
(This is actually how PPC works).
You give a dollar to person #1, and he gives you back $2. Cool. So you give them a bunch more.
You give a dollar to person #2 and she laughs and gives you back the shiniest nickle you’ve ever seen.
And then you give a dollar to person #3 and she gives you back $20.
If these 3 people were standing in front of you, how much money would you give to person #1? Person #2?
How much more money would you give to person #3?
Person #1 (+$1)/Person #3(+$19) are both considered “Converting” because you made money on those deals.
Person #2(-$.95) is considered “Non Converting” because you lost money on that deal.б
Mr. PPC guru suggests that you should set up your campaigns so that you give $50+ a day to person #1 and person #3, and let them split it.
This is fine if you don’t like money.
If you like money, mixing these campaigns is безглуздя, which if you don’t speak Ukrainian will just look like nonsense, and if you do speak Ukrainian, it will still look like nonsense. Either way, mixing these two “converting” keywords in the same campaign is nonsense, just absolutely senseless. And yes, cents-less, you make less cents.)
The problem is that by lumping all of those keywords into the same campaign means that Amazon will *indiscriminately* give $50 to person #1 and person #3 until you’ve spent all $50, and maybe person #1 is just quick on the draw, and way faster at spending your money than person #3.
The best thing to do is to separate your “awesome keywords” and your “pretty good” keywords into two different campaigns with two different budgets.
Now, this is a rabbit hole, of course. You could make an infinite # of campaigns for infinite numbers of profitability, but if you even just split it so that your top 20% of performers go in one “bucket” with its own specified budget and your other 80% go in another, this can have a massive effect on how much money you make, simply by leaving more room in your budget for your most profitable keywords.
Which brings us to
Budget mistake #3 – NOT CHECKING YOUR DAILY PPC SPEND
Here’s the thing. If you are spending 100% of your daily budget on PPC you’re probably making a mistake. That means that Amazon _could_ have spent more money, but didn’t simply because you put a cap.
Which means, assuming you have profitable keywords in your campaigns (and under most circumstances you should almost *exclusively* have profitable keywords in your campaigns) that means you didn’t spend money on profitable keywords because you ran out of money.
Let me rephrase that more simply because it bears repeating:
Hitting your daily budget probably means you didn’t turn money into even more money.
Hitting your daily budget means you turned off the magical money making machine.
*Yes there are weirdo scenarios where you might not need to spend on PPC because you’re already ranked #1 for all of your keywords etc etc, so why spend to be #1 in paid search and organic, because maybe your PPC spend is cannibalizing your organic spend but this only applies to like 1 out of a million people and that guy’s name is probably like Richard or Steven or something and no one likes him anyway because who gets to be #1 for all 20,000 of their search terms? No one and I bet Richard/Steven didn’t think to A/B test to MAKE SURE that ALL of their terms were cannibalizing, nope, they didn’t unless Richard/Steven was showing off, and no one likes a show off, Richard/Steven, NO ONE.
So, check your Amazon PPC spending regularly, not necessarily every day, but definitely at least once a week, and more frequently after you make any changes. If you are hitting your budget caps every day then you are doing something wrong.
It means you either are
1. Losing money on unprofitable keywords.
2. Not making as much money as you can on profitable keywords.
Maybe Both.