Imagine your Amazon store as a meticulously designed stage, with PPC advertising serving as the spotlight. When this spotlight fails to focus precisely—or worse, shines in the wrong direction—even the most captivating performance will struggle to attract an audience. Over the past year, rising Amazon advertising costs and the introduction of new ad formats have left many sellers grappling with increasing Advertising Cost of Sale (ACoS). This article examines the practical experiences of five seven-figure brands in optimizing their Amazon PPC campaigns, offering data-driven solutions to common challenges with the ultimate goal of reducing Total Advertising Cost of Sale (TACoS) below 10%.
Series Overview
This article marks the first installment in a three-month Amazon PPC optimization series. Subsequent pieces will explore the following topics:
- Current Account Performance and Objectives (May 1, 2021): Analysis of existing PPC campaign performance and establishment of clear optimization targets.
- Sponsored Products Strategy, Experiments, and Results: Detailed examination of Sponsored Products approaches with empirical validation.
- Sponsored Brands Strategy, Experiments, and Results: Investigation of effective brand promotion methods with supporting data.
- Sponsored Display Strategy, Experiments, and Results: Exploration of Sponsored Display advertising potential and comparative strategy analysis.
- Selecting the Optimal Amazon PPC Software: Evaluation of leading PPC management tools with practical recommendations.
- Three-Month PPC Performance and Target Outcomes: Summary of optimization results and assessment against initial objectives.
Benchmark Establishment and Goal Setting
Before commencing optimization, we established clear benchmarks using twelve months of historical data (February 28, 2020 - March 1, 2021). Initial analysis revealed ACoS ranging from 19.5% to 34.5% across five brands, with aggregate ACoS between 7.2% and 15.8%. While these figures appear reasonable at first glance, deeper examination identified TACoS—calculated as ACoS multiplied by PPC sales percentage—as the critical metric. Our target TACoS of under 10% was already exceeded by two brands.
More concerning was the upward ACoS trend in recent months, attributable to rising Amazon PPC costs, seasonal factors, and suboptimal campaign management. For example, one brand demonstrated:
- January aggregate TACoS: 17.4%
- February aggregate TACoS: 12.1%
While seasonal sales declines and inventory shortages affected these months, the ACoS increase remained notable. Importantly, TACoS escalation primarily stemmed from rising ACoS rather than declining PPC sales percentage—the latter actually representing a positive signal.
Three-Month Amazon PPC Objective: Sub-10% TACoS
Our core three-month goal focuses on reducing aggregate TACoS below 10%. Achieving this requires both ACoS reduction and organic search ranking improvement. For instance, with a 40% PPC sales percentage, maintaining ACoS at 24.9% or lower would achieve a 9.9% TACoS.
Enhancing PPC Performance: Ten Key Questions
We will address the following critical questions through systematic testing:
1. Sponsored Products: Optimal Placement and Bid Adjustment Strategies
- Placement Performance: Which placement (search results top, search results other, product pages) performs best? Should top-performing placements receive dedicated campaigns?
- Bid Adjustments: Do bid adjustments prove effective? If so, which strategy (dynamic bids-down only, dynamic bids-up and down, fixed bids) works best?
- Product Category Targeting: Does product category targeting demonstrate effectiveness?
- Variant Selection: Should ads target only top-selling variants or all available variants?
2. Sponsored Brands/Sponsored Display: Creative Formats and Landing Page Selection
- Video vs. Search Ads: Do Sponsored Brands videos outperform top-of-search brand ads?
- Video Production Quality: Can rapidly produced, low-cost videos achieve strong performance?
- Landing Page Optimization: Should Sponsored Brands direct traffic to custom product search pages or brand storefronts?
- View Remarketing: Can view remarketing generate profitable Sponsored Display campaigns? How does it compare to other options?
3. Amazon PPC Software: Selection and Evaluation
- Software Capability: What constitutes the most powerful Amazon PPC software currently available?
- Software Value: What represents the most cost-effective Amazon PPC software currently available?
Conclusion
Through rigorous examination of these questions, we aim to significantly enhance advertising effectiveness and achieve our sub-10% TACoS target. Subsequent months will emphasize Amazon's newer ad formats—particularly Sponsored Display and video ads—integrating them into comprehensive PPC strategies. Continuous testing and optimization should yield brand-specific solutions for success in Amazon's competitive marketplace.