Sometimes your product doesn’t fit into the norm of the “standard build”. Sometimes it’s bigger, bolder, and well outside the box. Sometimes you need high Average Order Value products.
If you’re the kind of Amazon seller who’s listing a 20 ft Christmas tree for $20,000 or a log cabin kit for $47,000, you’re going to need a totally different set of strategies to manage your PPC ad campaigns.
These products have a high Average Order Value(AOV) but because they’re so expensive, they typically have low conversion rates too. These situations can be tricky to handle on your own.
Luckily the Badger is here to keep your CPCs down and provide you a set of principles to conquer these types of products once and for all.
Here’s what we’ll be covering:
- How high AOV, low conversion products break the norm
- Extending your reporting time-frame
- How to compare to account averages
- Using the search term report to find keywords for high AOV products
How High AOV, Low Conversion Products Break the Norm
Let’s start by reviewing regular bid optimization first for products under $100. In these cases, you’d generally know your Revenue per Click (RPC) and multiply it by your Target ACOS (TACOS) to get your max bid.
For example, if you’re generating $100 per 100 clicks, your RPC would $1. Then you decide on a TACOS of 33%. $1 * 0.33 = $0.33. Thus you’d want to pay a max of 33 cents for your clicks. Pretty simple, right?
However, would the same process hold for a $20,000 item? Let’s find out.
The first issue we run into is if a certain keyword converted on it’s very first click. That’s an RPC of $20,000. If your TACOS is 50%, we apply the previous formula ($20,000 * 0.5) to get a max bid of $10,000. Whew! I don’t know about you, but I would not want to be bidding $10,000 for a click, and that’s assuming 100% conversion rate too.
Because this is such a high ticket item, it’s conversions will be slow, and it could take some time before you can estimate an accurate conversion rate. What happens if your item converts once a month? Every 3 months? That could be a lot of waiting.
Furthermore, search term reports, keyword target reports, and bulk sheet downloads all only give you up to 60 days of data. If your conversions are spaced out over months, these reports won’t accurately capture that data.
As you can see, there are a lot of problems when you use standard PPC methods on these high AOV products with low conversion rates and high CPCs.
Fortunately, there are ways to combat these issues and control your PPC destiny. Let’s jump right into how to solve these situations.
Extending Your Reporting Time-Frame
Before we can make any kind of bid calculations, we need to gather data on these products properly. Since the reports only store up to 60 days of data, we’re going to get a bit crafty to extend our reporting time-frames using Excel.
Step 1: Download your search term report once every month or 2 months.
Step 2: Add every new search term report you download to your old one. The goal is to create one master search term report that spans multiple months.
Step 3: Create pivot tables to combine duplicate search terms.
Step 4: Analyze your keywords over this extended time-frame to get a more accurate picture on the number of clicks you’ve been receiving.
Since these products convert more slowly, by extending the time range, you can increase the amount of data you have and make more precise optimizations.
Additionally, it prevents premature pausing. On 30-day time scales you might think your product is performing poorly if you get no conversions but paid $3,000.
However, the year-long picture might reveal that it gets 1 conversion every 6 months and that these are huge $20,000 sales. By extending your time-frame, it could stop you from potentially pausing a really good ad.
Collecting more data reveals what’s really going on with you product. With this extra data, we can now try to perform bid calculations.
How to Compare to Account Averages
In an earlier section we talked about how your RPC could be insanely high if you converted on your first click. How do we guard against this? The answer lies in account averages.
The first thing to do is to figure out your account’s average conversion rate. Simply use that search term report report from before and take your Total Orders / Total Clicks to get your average Conversion Rate (CVR).
For high AOV products like these, that average conversion rate is usually around 1 – 5%. So if your product has a keyword that comes out to a hot start of a 100%, 50%, or 25% conversion, know that this isn’t going to last forever.
So we’ll calculate our RPC with this factor instead to account for the true nature of this product and not it’s hot start.
We’ll apply a new formula of Average Conversion Rate * Sales Price = RPC.
Let’s use this new formula and see if it gives us a better CPC than the standard method did. If our average conversion rate is say 2% and our AOV is still $20,000, then 0.02 * 20,000 = $400. Then do $400 * 0.5 = $200, which is our bid price. Boom! $200 is a much more reasonable CPC than $10,000.
We’ve solved all the issues we outlined previously, but is there a way to optimize these products to increase profits? With our handy search term report, The Badger’s come up with a technique.
Using the Search Term Report to Find Keywords for High AOV Products
With products like these, the best thing you can do to boost profits is to increase the number of converting keywords. You got a 100? The next question to ask is how to get to 150, or 300.
We only want the keywords that are actually converting, so any ol’ keyword won’t do. The method is to look through that master search term report you generated and start targeting the ones that have earned conversions in the past, typically 2 or more.
These keywords have a proven history of converting, so you want to target them and any variations as exact match terms. This will allow you to keep your bids low while still appearing for your best converting search terms.
Once you’ve got everything set up, don’t be discouraged if you’re seeing a keyword with hundreds of dollars of ad spend with no conversions yet. Remember, it’s always good to compare it to your average conversion rate before you consider dropping or pausing it.
This strategy takes some time, but once you’ve got it down, you’ll drastically increase the number of keywords that are directly bringing conversions with lower bids than your competitors.
High AOV products can be a headache to deal with even with years of PPC experience. To ensure you’re not accidentally wasting hundreds or thousands of dollars on unnecessary ad spend, we recommend you follow these guidelines:
- Always combine your search term reports as they come so you can extend your data collection time-frame.
- Compare your conversion rate to the account average and adjust RPC accordingly.
- Use your master search term report to build an arsenal of converting, low bid keywords.
Now you can advertise your high AOV, low converting products on Amazon in peace. Badger out.
Discover Us on our PPC Den Podcast
If you prefer learning via audio, we cover this same info in the podcast episode below. You can also find us on your favorite streaming platforms like Apple, Google, Spotify, and more!
- 3:51 Regular bid optimization for a standard product
- 4:47 Real products with high AOVs
- 8:47 Expensive products lead to expensive CPCs
- 10:21 What if you only convert every 3 months?
- 11:58 Extended time-frame
- 16:09 Compare to account averages
- 19:52 Using search term reports to find keywords
- 22:40 What to do when things do convert?
- 24:06 Only do RPSB if you rake up 2-4+ conversions
- 25:25 How applicable are these strategies to you?
- 26:55 Keep these products in separate ad groups
- 28:56 Check our Ad Badger PPC optimization tool