Within every Amazon campaign, there are two opposing yet balanced forces at work, the yin and yang of Amazon PPC. We know them as optimization and expansion. Mastering both of these is key to knowing how to optimize on Amazon.
With expansion, you have a larger ad spend, but you gain more clicks and conversions. When focused on optimization, you garner fewer clicks and conversions, but it’s easier to maintain a conservative budget. Ultimately, it’s a trade-off, and you need to strike a balance between the two to grow your campaigns while stretching your budget.
Here, we’re assuming you have clearly defined goals for what you want to accomplish in your campaigns. If you don’t yet, take some time to write out a clear, well-defined goal for your Amazon PPC.
Without further ado, let’s define Amazon PPC optimization and expansion, how they differ, and typical methods you would use for each.
Amazon PPC Expansion
Expansion in Amazon PPC is exactly how it sounds: through the increased use of resources, you grow your campaigns and, if everything goes to plan, reap greater sales and gain momentum.
One Amazon PPC expansion activity is looking at the scope of your account and all of its campaigns and asking yourself if anything is missing. The tried and true method of doing this is looking at your search term report. From there, you can find where you should advertise and create new campaigns or double down on your top breadwinners. This is considered the best and easiest way of expanding because you base your Amazon PPC expansion decisions on actionable data.
There are two different directions you can go when adding missing components to your portfolio. You can either expand further into what you already have and snap up some latent opportunities there, or you can break into an entirely new ad type, targeting strategy, etc.
Right now, the easiest win is likely Sponsored Display. Not many sellers use it to its full potential if at all, and it opens the door to remarketing to customers virtually everywhere they go on the Internet rather than being confined to Amazon. If your account is ready for it, consider experimenting with Sponsored Display. If not, make sure you max out your Sponsored Products or Sponsored Brands skilltree, taking advantage of all the different campaign and targeting options before you graduate to the next ad type.
Amazon PPC Expansion Budgeting
If your campaigns are performing well, but are constantly hitting the ad budget ceiling, maybe it’s time to raise that ceiling up a little bit. By raising that budget, you allow your already well-performing campaigns to rake in even more sales. You also get the added bonus of more actionable data.
If you have an ad that only has the budget for one click, you’ve essentially wasted the money spent on getting that click, since it’s given you no actionable data. The more clicks, conversions, and impressions an ad accrues, the better your reports are at painting a picture of that ad’s true effectiveness.
That being said, always adjust your budgets on an incremental level. If you put the pedal to the floor and let your campaigns run wild, you might end up with a lot more ad spend than you bargained for.
Expansion-Style Bid Optimization
Bid optimization is an Amazon PPC expansion activity when the focus is click volume. If you are under your target ACOS on a keyword or ad group level, experiment with bid increases on your A-list keywords to see if they rake in even more orders.
Though this doesn’t apply to all keywords, you might have some keywords that were lower-performing when you first took them for a spin, but can do some serious numbers if given a second chance. If your listings have seen significant changes since the last time you used that keyword, like improved listing optimization or more reviews, consider giving those keywords another try. It might be that they just needed the right conditions to truly shine.
Contrary to what some might believe, adding new keywords to your campaigns is an expansion activity rather than an optimization activity because you spend more money by doing so.
If your whole campaign is under its target ACOS, increase your testing by adding more keywords and keyword testing. We recommend our RPSB strategy for finding new all-star keywords while staying at a reasonable ACOS.
Just like with budget tweaking, make all of your bid changes incrementally. By doing this, you can find the exact bids for your keywords that deliver the best ROI. The same philosophy also applies to adding more keywords. If you use a keyword research tool that gives you 1,000 viable keywords, pick only the top 10 to 100 best results.
Amazon PPC Optimization
The easiest way to describe how Amazon PPC optimization differs from expansion is that its main focus is on subtracting rather than adding. You would want to favor optimization-based tactics when you have keywords or targets that didn’t respond well to expansion-style tactics or when you’re over your target ACOS.
If you choose to focus on Amazon PPC optimization, your focus turns from what’s missing to what isn’t working. Maybe you have specific targets or ad groups that use a disproportionately large chunk of your total ad spend relative to the results they provide. Another possible scenario is a product just not performing well as a certain ad type. Whatever the case, this is the time to cut back so you can save ad spend and lower your ACOS.
ACOS-Lowering Bid Optimization
Bid optimization is often considered an optimization activity when it is done after exceeding target ACOS. You want to lower your bids bit by bit to get back to that target ACOS. You might even find out in the process that some ads are better off with lower bids and perform much better in rest-of-search!
You will notice as your bids decrease that your clicks decrease as well. Ideally, you get more clicks and conversions per dollar of ad spend. For example, if over time you lower your budget from $100 to $50, you’re doing well if you go from 80 clicks to 50 clicks.
Amazon PPC Optimization Through Negatives and Pausing
Another Amazon PPC optimization activity that virtually every Amazon seller does is finding and curating negative keywords and negative targets. Scanning your search term report for unwanted search terms and adding them as negative keywords is often the easiest way to trim unneeded ad spend. It gives you greater control over where your ad spend is going and allows you to funnel some of that money into your better performers to get more conversions for less cash.
Also, Ad Badger’s negative keyword tools take 99% of the work out of managing negative keywords. Just saying.
Pausing wasteful ad spend is another popular Amazon PPC optimization tactic. Either put misbehaving keywords and targets on ice completely or set their bids as low as they’ll go until you can revisit them later.
Keep in mind that pausing a keyword that has only gotten one click or a couple of clicks might not be the best idea. You need a sufficient amount of data for a keyword or search term before you consider pausing it or adding it as a negative.
Combining Amazon PPC Optimization and Expansion
The key to making the most of Amazon PPC optimization and expansion is keeping the two in synergy. Yeah, yeah, it’s a corporate buzzword that’s been used to death, but just hear us out for a second.
You can easily be performing expansion activities in some ad groups and optimization activities in other ad groups at the same time. You always want to be expanding and optimizing on some level and have a clear understanding of which one you’re doing and why.
The idea is to not make big, sweeping changes, but rather do a little bit of expansion or optimization at a time. Over time, this will fall into a kind of cycle; you optimize a little bit, then you expand a little bit, and so on. This will help you stay as close to your target ACOS as possible while still growing and exploring new opportunities.
Some situations might require a heavier focus on one side or another. For example, for new product launches, you want to lean in on expansion to give that product the head start it needs. On the other hand, for your long-running successful products, you will typically favor optimization. Even then, you can still benefit from performing both types of activities in these scenarios.
Referring to refining and maintaining your Amazon PPC campaigns as “optimization” only tells half the story. In reality, it’s a balance between optimization and expansion.
With Amazon PPC expansion, you spend more, but reap greater rewards. In expansion, you look at your campaigns to see what is missing. Typical expansion activities include adding new keywords to your campaigns, raising bids and budget limits, and testing new ad types or bidding strategies.
On the other hand, Amazon PPC optimization takes a more conservative approach, lowering clicks and conversions for the sake of saving budget. Activities characteristic of optimization in Amazon PPC include adding negatives, creating or tightening budget restrictions, and lowering bids when a campaign is over its target ACOS.
Ideally, you will find yourself using expansion and optimization activities at the same time. Do a little bit of optimization at a time, then a bit of expansion, almost like course-correcting to stay at your campaign’s target ACOS. In some situations, you might lean more one way or the other, but creating a balance between the two is essential.
For both, make sure you have enough data to make an informed decision, make all changes incrementally, and keep your eyes on your most important metrics.
Now balance your optimization and expansion activities and achieve Amazon PPC enlightenment!
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