Our client, a home decor ecommerce company, previously ran their own Amazon Ads. The retail giant’s advertising interface, Amazon Seller Central, makes it really easy to set up campaigns yourself – choose your products, set a budget, and let Amazon do the rest! This automated approach sounds easy enough, and our client was happy to see Amazon sales rolling in. That is, until she noticed the cost margins on these campaigns.
While their ideal cost margin (ad spend percentage of revenue) was in the teens, at the time we took over the account, the cost margin was over 40%! There was no time to lose. These automated campaigns were burning through ad spend while generating a poor ROI.
SEOM started by analyzing historical data (which was pretty limited since Amazon doesn’t provide detailed sales and revenue data over long timeframes, as we noted in this blog post). By pulling search term reports, we identified many broad search terms that were triggering our clients’ products.
Since we’ve been managing this client’s Google Ads for years, we know a broad search for “shower curtains,” for example, isn’t likely to result in sales at a strong margin. Style-specific keywords, such as ‘country shower curtains’ are much more targeted. Although style-specific queries have less search volume, they convert at a higher rate and therefore generate a stronger ROI.
We took this approach with our new campaign build outs, targeting keywords that relate to styles and colors. Our campaigns are all manual (not automated by Amazon), target exact and phrase match keywords, and leverage negative keywords to ensure quality.
The goal for our new campaigns was to hit our client’s target cost margin “in the teens.” After the first month running our manual campaigns, we hit an 18% average cost of sales (ACOS), and brought that down to 11% in month 2. For month 3 we’re on pace to maintain that 11% cost margin.
Now that we’ve established a profitable approach to this client’s Amazon Ads, we continue to add new product lines in order to drive more sales and generate more visibility for our client’s product offerings.
Automated Campaigns Cost Margin
SEOM Cost Margin Month 1
SEOM Cost Margin Month 2