Amazon advertising has become the cornerstone for any brand looking to expand its reach and sales on the platform. With millions of products competing for attention, running effective campaigns is crucial to standing out. However, as brands increase their ad budgets in pursuit of more visibility and higher sales, costs can quickly spiral out of control. Statistics show that small brands spend 3 times more on Amazon ads than big brands. The increasing cost of advertisements is a great challenge to profit, and so sellers must adopt cost-cutting measures without harming their sales performance.
This blog will discuss actionable strategies that can help you cut Amazon advertising costs without selling less. Improving your Return on Ad Spend (ROAS) and ACoS to an optimal level with refined ad campaigns and data-driven techniques is the key.
6 Important Amazon Advertising Metrics to Consider
To successfully reduce costs, it is essential to understand the key Amazon advertising metrics that guide your advertising strategies. Below are the most important metrics to monitor and optimize:
1. ACoS (Advertising Cost of Sales): This measures how much you spend on ads to generate a dollar of revenue. A lower ACoS is often the goal for advertisers, as it directly impacts profitability. It's a critical indicator of campaign efficiency.
2. TACoS (Total Advertising Cost of Sales): This metric takes ACoS a step further by incorporating both organic and paid sales. It offers a broader view of your advertising efforts, impacting your total revenue, which in turn helps you balance paid and organic sales.
3. Click-Through Rate (CTR): This measures what percentage of impressions result in at least one user clicking on your ads. CTR may be an area to optimize by increasing your exposure to the exact audience you aim to reach, thus reducing possible costs.
4. CVR (Conversion Rate): This measures the number of clicks on your ads that eventually translate to a sale. A high CVR means your landing pages are persuasive, and your products meet customer expectations. Higher CVR decreases wasted ad spend and improves cost efficiency.
5. Impressions: Impressions refer to how often your ad is shown. A higher number of impressions can indicate good visibility but doesn’t always guarantee sales. Measuring this ensures that ads are reaching their target audience when they are in the market for your product.
6. ROAS (Return on Ad Spend): This metric calculates how much revenue you generate for every dollar spent on ads. The higher the ROAS, the better your profitability, meaning you spend less in comparison to your returns.
With these metrics in mind, you can continually refine your advertising strategy to optimize performance and cut unnecessary costs.
5 Proven Techniques to Lower Amazon Ad Spend
Now that you understand the key metrics, let’s dive into proven tactics that can help reduce your Amazon advertising costs while keeping sales performance intact, or even improving it.
1. Keyword Strategy Optimization
Keywords are the foundation of your Amazon advertising campaigns. Optimizing keyword selection can make a huge difference in cutting your costs while bringing in better results.
- Focus on Long-Tail Keywords: Long-tail keywords are more specific and, therefore, less competitive. They tend to have a higher intent to convert. Because they are less competitive, they generally cost less per click (CPC). Additionally, these keywords bring in more qualified traffic, which leads to higher conversions.
- Use Negative Keywords: Negative keywords allow you to exclude irrelevant search terms from triggering your ads. Adding negative keywords to your campaigns prevents wasting money on unqualified clicks. For example, if you sell high-end electronics, you might add "cheap" as a negative keyword to avoid targeting bargain shoppers who aren’t likely to convert.
- Leverage Keyword Match Types: Amazon offers different keyword match types—broad, phrase, and exact match. Broad match keywords give you wider reach, but they may attract irrelevant traffic, leading to wasted spend. Exact match keywords target highly specific queries, but they may limit your reach. A balanced approach is often best, using broad match for discovery and exact match for high-converting, high-intent queries.
Pro Tip: Tools like Amazon's Keyword Planner or third-party platforms like Helium 10 can help you identify profitable keywords for your campaigns. Use these tools to refine your keyword strategy and identify new opportunities.
2. Refine Bidding Strategies
Bidding strategies are a powerful tool to control your ad spend on Amazon. By utilizing the right bidding techniques, you can ensure that you're investing in the most profitable opportunities.
- Dynamic Bids: Amazon's dynamic bidding feature adjusts your bids in real time based on conversion likelihood. By using dynamic bidding, you can prevent overspending on clicks that don’t have the potential to convert into sales, thus ensuring you spend smartly and on high-value clicks.
- Set Bid Caps: Setting bid caps ensures you don’t exceed your desired CPC for any keyword. This way, you maintain cost control, especially when testing new keywords or refining your ad strategy.
- Dayparting: Dayparting refers to adjusting your bids based on peak shopping hours. By analyzing when your target audience is most active, you can allocate your budget more effectively, ensuring your ads are shown during high-conversion periods and not during low-traffic hours.
- Optimize Placement Bids: You can place more aggressive bids for placements where conversion likelihood is higher—such as at the top of the search results page. These placements have better visibility and conversion potential, justifying the additional expenditure.
Fun Fact: Marketers who adopt a data-driven approach to bidding report a 10-20% decrease in their CPC while maintaining sales volume. By strategically adjusting your bids, you can optimize placements and reduce costs.
3. Improve Campaign Structure
An organized campaign structure is essential for optimizing your Amazon ads. A well-structured campaign enables more precise targeting, better budget allocation, and easier performance tracking.
- Segment by Product Category: Grouping similar products into individual campaigns helps optimize bids and budgets according to each product category's performance. This segmentation allows for more targeted adjustments and reduces the chances of overspending on underperforming products.
- Single Keyword Campaigns: Separating high-performing keywords into dedicated campaigns ensures they receive the right attention and budget. With single keyword campaigns, you can adjust your bids, target ad schedule, and other settings for maximum efficiency.
- Ad Group Customization: You can run different ad groups for various types of keyword matches or product variations. For instance, separating ad groups for exact match keywords versus broad match keywords allows you to allocate your budget and bids based on the performance of each match type.
Pro Tip: Allocate more budget to high-converting items by segmenting campaigns based on product performance. This approach maximizes your ROI while reducing the cost of underperforming items.
4. Improve Product Listings
One of the best ways to reduce Amazon advertising costs is by improving your product listings. Optimized product pages have a higher chance of performing well, leading to better ad performance.
- Optimize Titles and Descriptions: Ensure product titles and descriptions are relevant to keywords while remaining clear, concise, and compelling. This optimization increases conversions and minimizes wasted ad spend.
- Use High-Quality Images: Images significantly influence customer trust and purchasing decisions. Use multiple, clear images to showcase your product from different angles and highlight its key features.
- A+ Content: Enhance your product detail pages with A+ Content, which includes rich text and images. This helps build customer trust and engagement, leading to higher conversion rates and reduced reliance on paid ads.
- Leverage Reviews and Ratings: Positive reviews and high ratings can significantly improve conversion rates. Address negative feedback promptly and strive for a 4-star or higher rating to boost consumer confidence and lower ad costs.
Stat: After working with 250+ brands, we've found that listings that are optimized can see up to a 50% increase in conversion rates (CVR), saving you money on ads due to their improved performance.
5. Performance Metrics Monitoring and Analysis
Constant monitoring and analysis of performance metrics are crucial for identifying inefficiencies and improving your Amazon ad campaigns.
- Weekly Reports: Regularly track key metrics like CTR, CVR, and ACoS to identify trends and areas for improvement. This allows you to adjust your campaigns quickly to avoid wasting money on underperforming ads.
- A/B Testing: Test different ad creatives, keywords, and bidding strategies to see which combinations yield the best results. A/B testing helps you identify the most cost-effective strategies.
- Automation Tools: Platforms like SalesDuo offer automated dashboards that track and optimize campaigns in real time. These tools save time while ensuring your campaigns stay on track and within budget.
- Search Term Reports: Analyze search term reports to find both high-performing keywords and unnecessary spend. By excluding low-performance terms, you can optimize your keyword strategy and limit wasted ad spend.
Result: Users of advanced analytics and automation software report a 15-30% decrease in wasted ad spend by better targeting and refining their strategies.
More Advice on Amazon Ad Optimization
- Seasonal Adjustments: Seasonal trends can significantly affect your ad performance. During peak shopping seasons like holidays or Prime Day, increase your ad budget to capture greater demand. During off-seasons, scale back to optimize your budget effectively.
- Leverage Amazon's Ad Types: Experimenting with different ad formats allows you to tailor your approach based on specific goals:
- Sponsored Products: Great for promoting individual products and boosting their visibility.
- Sponsored Brands: Useful for showcasing multiple products and building brand awareness. These ads appear above search results and increase visibility for your entire product line.
- Sponsored Display: Ideal for retargeting customers who have shown interest in your products but haven’t made a purchase yet.
- Engage Experts: Outsourcing your Amazon ads to agencies like SalesDuo allows you to efficiently optimize your campaigns through automation and data-driven decisions. These agencies handle the heavy lifting of advertising management, freeing up your time to scale your business without overspending.
Conclusion
Cutting Amazon advertising costs doesn’t have to mean sacrificing performance. By optimizing your keyword strategy, refining your bids, improving your campaign structure, enhancing your product listings, and leveraging advanced analytics, you can reduce advertising spend while increasing sales performance.
Ready to optimize your Amazon advertising? Schedule a call with SalesDuo today to gain expert insights and transform your ad performance into a profitable and efficient venture.
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About the Author
Badal Tharayil is a master of customer success, turning first impressions into lasting partnerships. Known for proactive communication and flawless onboarding, he’s the bridge between client satisfaction and operational excellence. Outside work, Badal loves exploring cinema, expressing himself on the dance floor, and staying energized through fitness pursuits.
