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The Amazon PPC Profitability Experiment (Updated 2/29/16)

NOTE: This experiment has or will have multiple updates so, if you have read previous updates in this experiment make sure start reading where you left off last time! Use the table of contents below as a guide:

PPC Experiment Updates

Use the links below to jump down the page to the newest update!

  1. Update #1 – Results from my 3 Day Automatic Campaign + Running Campaign to Collect More Data
  2. Update #2 – Results from the 8 Day Campaign to Collect Data

Welcome to The Amazon PPC Experiment

I mentioned I was going to be doing a Amazon pay per click experiment in the last case study update and today I will be giving you all of the details behind this experiment. I am really excited about doing this because you will be able to follow every step that I take to try to make my PPC campaigns profitable. You will be able to see what works and what doesn’t, which will be a good learning experiences for both myself you.

I am in no way an Amazon PPC expert and only have a small amount of experience with the campaigns, so this will be a good way for me to learn the ropes while you all follow along.

You are probably still a little confused as to what this whole thing is and what I will be doing, so let’s hop right into it and let me explain what exactly this experiment is all about.

You can also watch the introduction video to this PPC Experiment below:

The Main Idea Behind this Experiment

I have already touched on this but I will dive a little deeper.

The main idea behind this experiment is for me to document every step that I take to turn my Amazon PPC campaigns profitable. That’s the gist of it.

I am a firm believer that Amazon PPC is HIGHLY underutilized right now and this is a bummer because it can be a game changer for your business. I think the main reason why it is so underused is because most people don’t even want to deal with learning PPC and feel like it is too complicated.

My hope with this experiment will be to distill that myth and make the process as simple as possible for everyone. In my opinion, the best way to accomplish this is to do a step-by-step live experiment where I try to make my own campaigns profitable and you can follow along.

That is the whole idea behind me doing this experiment. I want to show people that running profitable PPC campaigns is not that hard and you will be surprised of the benefits from learning the PPC ropes.

How this Experiment will Unfold

The plan for this experiment is for me to continually update this post every 1-2 weeks on the progress I am making on my PPC campaigns. Like I said, I will be doing this live and real time. That means I will have to come back and keep updating the post as I continue to make progress.

I will NOT be sharing the actual keywords I am targeting with my PPC campaigns and I will keep my product, exact niche and keywords hidden. The hardest thing with going this route is being able to still giving you guys as much value as possible without reveling my product keywords. I am hoping that the most valuable part of this whole experiment will be the process that I use for testing and optimizing campaigns because you then can use the exact same process for your own products. I hope that makes sense!

This is how I am thinking it will unfold:

I will run new campaigns every 1-2 weeks and I will come back to share the results that I got. I will then explain how I will use these results to further optimize my next PPC campaigns. I will keep doing this until I can fully optimize my campaigns to a point where I will be turning a solid profit with a select few campaigns.

For example, the first week I may run an auto campaign and then come back and share the results with you all. I will explain my results and how I will use them to optimize my next campaign. I might take the winning keywords from the auto campaign and throw them into a broad match campaign for 1-2 weeks.

I will come back after those couple of weeks and share with you what happened, including if I made or lost money. The profitable keywords will move onto the an exact match campaign for 1-2 weeks and then I will do another update.

Do you see the main idea behind this experiment and how they will be continued to be updated?

I have no idea how many updates there will be or exactly how I will do each update. I just wanted to give you all the basic idea I have for these update so we are all on the same page moving forward. I’m sure everything will make more sense as I continue on and post new updates! 🙂

Let’s get started!

Why Amazon PPC is Important to Your Business

Most people do not bother to learn how to properly utilize the advertising tools that Amazon allows you to use as an FBA seller, which in turn hurts just about every aspect of their business. In the sections below, I will highlight some of the benefits of using advertising within Amazon. You will see how each benefit is related to each other and how PPC defeats the “catch 22” that comes with selling on Amazon.

The Catch 22 of Selling on Amazon

This is something that I haven’t seen anyone talk about and I feel like it’s very important to know as a seller on Amazon. Amazon uses a highly sophisticated algorithm to help rank products within their marketplace and to provide the customer with the best possible results for their search.

The main goal of Amazon is to put relevant products in front of people’s eyes so that they will find what they are looking for and make a purchase. Keep this in mind as you are reading through this section.

One of the main ways that Amazon determines if a product is relevant for a specific search term is to look at the conversion rate of the product.

To illustrate this idea let’s take a look at an example:

For this example, let’s say that I am a seller of computer keyboards and sell an extremely high quality keyboard. This keyword comes with all of the bells and whistles and has a ton of positive reviews.

Our competitor in this market sells another computer keyword but, it looks terrible and doesn’t have any of the features that my keyboard has. Not to mention that it all of the reviews are negative for this product too.

Let’s say that the main keyword we are trying to rank for is “computer keyboard”.

Our product, which is of high quality and has a ton of good reviews, has a conversion rate of 30% when people use the keyword “computer keyword” to find our product. Our competitor who is selling a much lower quality keyboard only has a 5% conversion rate for the keyword “computer keyword”.

Out of these two products, which one do you think Amazon will determine to be the most relevant product for the search term of “computer keyboard”?

Of course they are going to choose my product that is converting at 30% for that search term. It is very easy to determine that my product is the result that people want to see when searching for “computer keyboards” and Amazon will place my product higher in the search results than my competitor.

This same concept applies to all of the keywords within Amazon. So the main goal of any Amazon seller is to have a high converting product for the keywords that you want to rank for.

Now that we understand that concept, the most logical question is “How do we have a high converting product?”

There are two ways to make sure that you product listing converts at a high rate(assuming your product is high quality, which it should be):

  1. Have a fully optimized product listing. This means high quality pictures, descriptive bullet points and a detailed description
  2. Have social proof (aka positive reviews)

You have full control over optimizing your listing and you have no excuse to have a crappy product listing. On the other hand, you do not have full control over receiving positive product reviews(to an extent).

To get product reviews you will first need to make sales. Without anyone buying your product you will not have anyone to leave you a review. So to get reviews you will need to make sales. More sales = More reviews

BUT

To make sales you need reviews!

See how this can be a catch 22? Take a look at the diagram below that I have put together that outlines the “catch 22” of selling on Amazon:

Amazons Catch 22 other

Product sales, reviews, high converting listings and keyword rankings all rely on one another. To get one you will need the other and vice versa for all of them.

To get product sales you will need keyword rankings within Amazon, to get keyword rankings you will need a high converting listing, to have a high converting listing you will need product reviews, to get product reviews you will need sales. Now we are back at sales! It’s a viscous cycle.

You will need to get your product into this cycle to have success on Amazon and more importantly, to maintain success. The best way to get your product into this cycle is to start making sales. Making sales will kick start this cycle and lead you to getting reviews, high converting listings and keyword rankings. Which in turn will lead back to more sales.

This is where Amazon PPC can be extremely beneficially to your business. PPC campaigns will allow you to start making sales and kick off this cycle for your business.

PPC + Follow Up Emails = Sales + Reviews

I have been talking about the combination of PPC and follow up email sequences for the past couple of updates and I am a firm believer that they are a great combo! The PPC provides the sales and then the email follow up provides the reviews for your product.

Both sales and reviews are crucial to having success on Amazon, like I outlined in the catch 22 of selling on Amazon.

I have been using SalesBacker for my follow up emails and I have been happy with it so far. I will be continuing to use SalesBacker with these upcoming PPC campaigns as well.

Amazon PPC Lingo

Before we get into the nitty gritty details of this experiment, I think we should make sure we are on the same page in terms of the different lingo that will be used throughout this experiment.

Campaigns – These are where you will set the details that you want to test. For example, one campaign might target “Silicone Baking mat” and another campaign might target “silicone cooking mat”. Each campaign will be different and I will be referring to campaigns a lot throughout this experiment.

Automatic Campaigns – Amazon will automatically choose the keywords for you to target based on your product listing information such as the title, bullet points, description and keyword search terms. You will still control the bid price and daily budget but all of the keywords will be chosen by Amazon.

Manual Campaigns – With these campaigns you will choose the keywords that you want to target with your ads. You will have a couple different options for how to target these keywords which are explained by the terms below.

Exact Match Keyword Campaign – Using exact match keywords for your campaigns will make it so your ads will only show for the EXACT keywords that you want. For example, if you put in “silicone baking mat” as your keyword then you will only show ads when people search for the exactly “silicone baking mat”.

Phrase Match Keyword Campaign – Phrase match keywords are keywords that contain a certain phrase but can have modifier words before or after the main phrase. For example, your keyword in a phrase match campaign may be “silicone baking mat” and then your ad could appear for keywords such as “large silicone baking mat” and “silicone baking mat waterproof”. No matter what, “silicone baking mat” will always appear in the keyword in that exact word order.

Broad Match Keyword Campaign – This type of campaign will give you the biggest variety in keywords. Any keyword or keywords that you put into this type of campaign will be able to be arranged in any order to create new keywords. Also, synonyms can be used in place for your keyword if Amazon sees it as necessary. An example for this campaign would be if you input “silicone baking mat” as your main keyword then your ad could be shown for keywords such as “baking mat silicone”, “large silicone baking mat red”, “blue baking silicone mat” or “extra large baking mat that is silicone and plastic”. You get the idea. Your ad could be shown for any search term that contains your keyword.

Negative Keywords – This is fairly new to Amazon and this option will allow you to optimize your campaigns by eliminating certain keywords from your campaign. For example, let’s say you are running a campaign that has 10 different keywords and one of them is doing terrible but the rest are turning a profit. With negative keywords you would be able to get rid of that bad keyword and keep the rest of the good ones. This is very handy!

Search Term Report – This is a report that you can download from within Amazon Seller Central account that will display all of the stats for your PPC campaigns. We will be using this type of report for the majority of this experiment.

Average Daily Budget – You will come across this term when you go to create a PPC campaign and need to set your campaign budget. It is important to know that this is the AVERAGE daily budget for your campaign which means you will set the daily budget that you want to spend based on a 30 day average. For example, if you set a $10/day budget then that tells Amazon that you are willing to spend a total of $300 throughout the 30 day period ($10 * 30 days). So one day Amazon may spend $20 and the other they may spend $2, however, over a 30 day period it will average out to be $10/day.

ACOS – You will see this metric used a lot when people are talking about how good or bad a campaign is. ACOS stands for “Advertising Cost of Sale” and is calculated by dividing your total spend by the total sales. For example, spending $1 in ads which resulted in $10 of sales would result in a ACOS of 10%. The lower the percentage the better!

I am sure there are some that I am missing but I will keep updating this list as I come across different terms to know.

The Start of the Experiment

Alright, now that I have outlined why I think Amazon PPC is important and the benefits that it can bring to your business, it is now time to begin this experiment!

The Goal

The main goal that I am trying to accomplish is to find keywords and campaigns that are the most profitable to run for my products. I want to test out a ton of different keywords and see which ones not only convert the best, but also have the best ROI.

By the end of the experiment, I am hoping to be able to find at least 3 different campaigns that I can turn on and make a profit at scale. This means that I want to have a campaign that I KNOW will make a profit so I will be able to spend as much money as I can and still make my money back. For example, I am hoping to reach a point where I know that if I spend $2,000 on a campaign that I will make $4,000 back from it. This way I can scale everything.

Those numbers are just an example but, you can see where I am coming from. The only way I will be able to find these profitable campaigns is by testing and optimizing my campaigns until I find what works the best.

The whole testing and optimizing part is what I want to document and share with you all so you can follow the same process with your own products and PPC campaigns. I will not be sharing my exact keywords with you all but, I will make it easy to follow along and learn from.

The Plan of Attack

With the help from Brian Johnson, the owner of PPCScope.com and an Amazon PPC expert, I have been able to put together a solid plan of attack that I will be following. The plan is laid out below:

  1. Validation(3 days) – This is the very first thing I will be doing with my PPC campaigns. I will be running an auto campaign for 3 days to fully understand how Amazon views my listing. The keywords that Amazon chooses to advertise for will tell me what they think my listing is about. I will move onto the next step ONLY when the keywords that Amazon chooses for my campaigns match up to the correct keywords.
  2. Collect More Data(7 days) – Next, I will continue to run an auto campaign for 7 more days to collect even more data on those keywords. I will use this data as the starting point for my whole PPC strategy.
  3. Test Converting Search Terms(1 week+) – Here I will take the search terms that performed the best from the auto-campaign we ran and place them in their own campaign. Any search terms that made 2+ sales will move onto this part of the testing. I will take the search terms that made at least 2 sales and place it into a broad, phrase and exact campaign for each keyword. This way we can test which type of campaign converts the best for each search term. There is a lot more detail that goes into this section and I will cover it more in depth when I get to it.
  4. Continue to Optimize the Campaigns(Forever) – After we find the keywords and campaign types that convert the best we will continue to optimize. We will stop the campaigns that are losing money and continue the ones that are making money. We could also keep testing different search terms and trying to find obscure long tail keywords that may convert like crazy. Test, test and test some more! You should never stop testing when it comes to Amazon PPC.

That is the basic outline for how this experiment will unfold. However, once I actually start running my PPC campaigns and testing, I may change some things. I just wanted to share with you the general plan that I have for this experiment. I will dive into the how-to aspect of things once I get to it myself.

Part 1 – Validation

Alright, the very first thing we should do before we start dumping money into our PPC campaigns is validate our listing with Amazon. We need to make sure that Amazon views our product listing correctly and will place our ad in front of the right buyers.

We don’t want Amazon to show our ad for keywords that will not convert, this will only waste money and kill the conversion rates of the listing. For example, if we were selling a “computer mouse” and Amazon placed an ad for the keyword “mouse trap” how well do you think we would convert? The answer is not very well!

That is why we need to make sure our product is placed in the correct category and shown for the correct keywords in Amazon before we start pumping cash into our ads.

How do we go about validating this? Keep reading!

How to Validate your Amazon Product Listing

It is very simple. All we are going to do is turn on the auto campaign for 3 days and collect some data. We will use this data to determine if Amazon is viewing our product correctly and showing our ads the for the correct keywords.

I will quickly run through how to set up this 3 day auto campaign below:

Step 1:

Create a new campaign within the “Campaign Manager” section of Seller Central

start-auto-campaign

Step 2:

On this page you will fill out the details for your campaign. When naming the the campaign make sure to make it something descriptive so you will remember it. Once you start to have multiple different campaigns you will thank me!

I put $25 as my “Average Daily Budget” for this campaign. I am thinking this is enough budget to allow for enough data to be collected over 3 days. Remember, even though I set my daily budget to $25/day that doesn’t mean that it can’t go over $25 because this budget is based on a 30 day average.

The “Start” and “End” date are picked to allow this campaign to run for 3 days. You could always just end the campaign manually after 3 days but I like to schedule the end date so I don’t accidentally forget about it.

This last part is important, make sure to choose the “Automatic Targeting” option. This will tell Amazon to target keywords to advertise for based on our product information. This means Amazon will look at our products title, bullet points, description and back end search terms to determine what our product is about. Your product title and the back end search terms are the most important.

Check out the image below for more instructions:

auto-camp-setup-1

Step 3:

We are now on the last step and have just a couple more things to fill out!

The first things we need to do is choose a name for this ad group. I went with “1st Validation”. Next, we need to choose the default bid (maximum bid) for our campaign. I chose $1.25 for my campaign, I don’t know if this was the best price for my max bid but we will find out!

Lastly, select the product that you are running this campaign for. After you are finished you are done!

auto-camp-setup-2

Step 4:

Success, your ad has been sent to Amazon and will live shortly!

success

Now We Wait 3 Days

Now that we have the auto campaign started we will let it run for 3 days. This will allow us to collect enough data to determine if Amazon views our product correctly.

The settings that I chose for the auto campaign, specifically the daily budget and maximum bid, are based on my best guess. I have no idea if a $25 daily budget and a $1.25 max bid that I chose are the best amounts to choose. However, this is an experiment and you will learn from my mistakes and from my successes. This will be the first little test 🙂

Also, I am not expecting to make a profit from this auto campaign. I am only doing this to collect data, not turn a profit at this point. Once we collect the data we will dump it into an Excel Spreadsheet and see how Amazon views my listing. I will go into how to do this in the next update.

Wrapping up the Introduction

Alright guys and gals, that is going to be the end of the intro post. I have covered all of the details regarding this experiment as well as set up my first auto campaign. We now have to wait 3 days for the auto campaign to run and then I will be back with an update on how that turned out. You should expect a new update in 3-4 days from now.

Also, remember that all of the updates will be done WITHIN this post. So ever single new update will be written in the same article. I want to do this because at the end of this experiment there will be a full how to guide and experiment for Amazon PPC for people to follow.

Thank you all for reading the first part of this experiment and I will see you all in a couple of days!

UPDATE #1 – Results from 3 Day Auto Campaign + Collecting More Data (2/7/16)

I am back with the first update in The Amazon PPC Experiment!

In this update I will be showing you how my first 3 day automatic campaign turned out and I will be breaking down the results from it as well. If I am satisfied with the results then I will be moving onto the next step of the process, which will be running the auto campaign run for 7 days to collect more data for me to work with.

Alright, let’s see the results from the first auto campaign!

The Results from the 3 Day Automatic Campaign

Check out the video below to get the full breakdown of the results from my auto campaign + how I am interpreting my data:

If you don’t want to watch the video then you can get the majority of the same info by reading below!

Here are the stats from the 3 day auto campaign:

validation-test-results

As you can see, pretty good stats for an automatic campaign that has not been optimized yet.

I was able to spend $74.08 and makes $259.87 in sales, which turns out to be an ACOS of 29%. Even though this is awesome to see, turning a profit or having a good ACOS is not the main objective of this first campaign.

Remember, the main objective with this first campaign was to validate our listing with Amazon. This means that we wanted to make sure that Amazon was showing our ad for relevant keywords before we start spending more money on the campaigns.

Was my Listing Validated?

The way that we will validate our listing is to look at the top 10 search terms that got the most impressions from our 3 day auto campaign and determine if those keywords are related to our listing. To be able to see this data from the campaign, you will need to download it from Amazon and open it up into an Excel file.

Below is a very quick walk through of how to get this data into Excel:

  1. Go to Seller Central Homepage
  2. Click on “Reports” and then choose “Advertising Reports” from the drop down menu
  3. Select “Search Term Reports”
  4. Click on “Request Report” and wait for it to download. Then download it to your computer. It will be in a text file.
  5. Open up Excel. Go to the “Data” tab at the top and choose “From Text” in the upper left hand corner
  6. Find the text file you just downloaded from Amazon
  7. Boom! You are ready to go

Once you have all of your data into an Excel file we can now start interpreting the data! The first thing you should do is sort the impressions from highest to lowest. We want to look at the top 10 keywords with the most impressions.

Below you can see all the data from my first campaign, the impressions are sorted from high to low (I am not showing my actual keywords and instead just numbered them):

top10-impressions

When we are validating our listing with Amazon the most important metric to look at is the # of impressions. The reason why the number of impressions is so important is because those are the keywords that Amazon thinks are the most relevant to our listing. We know this because Amazon showed our ad for those keywords the most.

Now that we are looking at the 10 keywords that got the most ad impressions, we now need to look through each one of them and determine if they are relevant or not.

Luckily for me, my first campaign proved that Amazon is viewing my product correctly and knows that it is related to the correct keywords. All of the 10 keywords were related to my product.

Now that I have validated my listing I can now move onto the next step of the process, which is collecting more data.

What if my Keywords were not Relevant?

If you ran a 3 day auto campaign and you found that the top 10 keywords with the most impressions were not related to your product listing then you will need to make some changes.

The two most important places to make these changes is the title of your listing and the back end search terms. Take a look at the top keywords and see what keywords are missing that you know should be in there. Also, find the keywords that are NOT related to your product that are in the top 10 and try to remove them.

Use this information to make the changes in your title and back end search terms. If there is a certain keyword that you know is a major keyword for your product then make sure it is somewhere in your title and back end search terms. This will tell Amazon that the keyword is very important to your listing.

Make all of the necessary changes to your title and back end search terms and then run another 3 day auto campaign. Collect the data again and see if the top 10 keywords are relevant to your listing this time around. You need to keep making changes and running 3 day auto campaigns until you have made sure that Amazon knows what your listing is about before moving onto the next step.

Did I Make a Profit?

Even though I didn’t care if I made a profit or not with this first campaign, it would still be nice!

Let’s take a look at the stats and see if I was able to make some money from this auto campaign:

validation-test-results-statsonly

I made a total of 13 sales (13 * $19.99 = $259.87) from PPC. Out of the $19.99 sale price, $8.50 is profit and $11.50 are the combined fees of manufacturing, shipping and Amazon FBA fees. Knowing all of this info we can now calculate if I was able to turn a profit.

Total Revenue: $259.87

Ad Spend: $74.08

Cost of Goods Sold: $149.50 (13 units sold * $11.50 in fees)

Total Expenses: $223.58 (ad spend + cost of good sold)

Total Profit: $36.29 (total revenue – total expenses)

A whopping $36 in profit

Even thought it is small, I am actually pretty pumped about it because I was expecting to lose money. So the fact that I was able to validate my listing with Amazon AND turn a profit is pretty cool!

Increased Keyword Rankings

Remember the “Amazon Catch-22” I was talking about earlier? Well, we can see that in full effect here. After running my PPC campaign for 3 days and increasing my sales velocity I was able to increase my keyword rankings for multiple keywords. Check out some screenshots below:

kw-rankings1

kw-rankings2

So as you can see there are many benefits to running PPC ads for your products! I am interested in seeing what kind of increases in keyword rankings that I will get when I run PPC campaigns for a longer period of time.

Wrapping up Part 1

The first part of The Amazon PPC Experiment is been completed. I have successfully validated my listing with Amazon and it is now time to start kicking things into gear. The next step of the process will be to collect more data so that I can use that as a starting point for all of my testing and optimizing.

Let’s hop into the next part of the experiment.

Part 2 – Collecting More Data

Now it is time to start collecting more data so that we can optimize and test our campaigns for the best ROI. The way that we are going to go about collecting this data is fairly easy, we are just going to run the same auto campaign that we used for validating our listing for another 7-10 days. That’s it.

There will be some small changes to the campaign for this next part but, it will still be an auto campaign.

Why do We Need More Data?

We are running this campaign for 7-10 days to collect more data on the keywords. We want to find the keywords that convert the best and lead to the most amount of sales. Basically, we want to get a look at what is working vs. what isn’t so we can maximize the profits for the future campaigns.

After we run this campaign for 7-10 days we will look at the keywords that generated 2+ sales and transfer these keywords into their own campaigns for further testing.

Why 2+ sales?

Because when a keyword has more than 1 sale it shows that the sale wasn’t a fluke and that the keyword is generating recurring sales. This is important.

The basic idea behind collecting more data is to find the keywords that are working and only focus on them in future campaigns. We want to stop paying for ads for keywords where our money is being wasted. We want to make sure that we are only spending our money on ads that we know will convert.

How to Collect More Data

Like I said, we are going to run an automatic campaign for 7-10 days. I have already walked you though how to setup an automatic campaign so I will not be walking through each step again. However, I will show you how I have my campaign setup.

I created a new campaign and this are the settings I have for it:

collect-data-campaign

You might notice that I have increased my daily budget from $25 to $30, the reason behind this was just because I want to collect as much data as I can. I set this campaign to run from February 7th to the 14th, which is 8 days. I think that should give it enough time to collect a good amount of data.

Also, make sure to choose the “Automatic Campaign”

Below, you can see the settings for the next page:

collect-data-bid

I have also increased the default bid to $2.00 for this campaign. In the last auto campaign the max bid was $1.25 and I decided to up the bid so that I can make sure that I am able to collect as much data as possible. That is the whole point of this campaign, collect as much data as possible!

After that page is finished, the campaign is ready to go

success

Now we are ready to start collecting more data.

Let it Run for 8 Days

I am now going to let this campaign run for 8 days. Once again with this campaign, I am not worried about making a profit. It would be nice but, I am mainly focused on collecting as much data as I can on the different keywords. The more data that I have to work with will result in better decisions I when it comes to testing and optimizing.

End of the 1st Update

That is going to bring us to the end of the first update in The Amazon PPC Experiment. So far, this has gone very well and I am excited to see how this next campaign turns out. The next update will come after the 8 day campaign ends and I will be back to let you know how that turned out.

The next update will be a big update because I will be looking through all of the data and choosing the keywords that I want to keep testing and optimizing. Also, in the next update I will start worrying about turning a profit with my PPC campaigns.

See you all in around 2 weeks with a new update! Sign up below to make sure that don’t miss any future updates.

UPDATE #2 – Results from the 8-day Data Collecting Campaign (2/29/16)

It has been around 20 days since the last update and things haven’t quite gone the way I had hoped in the last campaign. Mainly because I got some poor results from my 8 day auto campaign that was supposed to collect data for me.

You will see the full results and analysis of the campaign in a second but, I made just about the same amount of sales in this 8 day campaign as I did in my 3 day campaign. That’s pretty bad!

What is the reason for the poor results?

There has been a lot of talk about Amazon making some changes to their PPC algorithm and many people were seeing major drop-offs in their PPC performance. I am thinking that this had a lot do to with the poor results I saw.

So with that being said, let’s get into the stats from this campaign and I will be explaining my plans moving forward with the new Amazon PPC algorithm changes.

The Results from the Collecting Data Campaign

If you remember from the previous updates, the plan with these 8 day automatic campaign was to collect as much data as possible so that I could find the keywords that were converting and place them into their own campaigns. I also wanted to find the keywords that were sucking up my ad budget and remove them from future campaigns.

In simple terms, this campaign was supposed to help me optimize my PPC campaigns and find the keywords that would provide the best ROI.

Below are the stats from this campaign:

stats

I spent around $232 and only made $339 back in sales, this is pretty poor. This is even worse if you compare these stats to the 3 day auto campaign that I ran in the 1st update. In the 3 day auto campaign I only spent $74 and made $260 in sales.

So you can see the huge drop off in this second auto campaign. What is even weirder is that the campaigns were both automatic, so I had no control over what keywords Amazon showed my ad for. These two campaigns were practically exactly the same in terms of the settings but, the results differed greatly.

Now, we have to remember that the main point of this campaign was not to make a profit. The main point was to collect as much data as possible so that I could further optimize the campaign. However, without that many sales it is hard to make use of the data.

Dissecting the Results

The plan was to run this 8 day campaign and then put the keywords that made at least 2 sales into their own campaign for further testing and optimizing. Let’s see what we got from the campaign:

excel-stats

After 8 days, there were only 2 keywords that produced at least 2 sales. Pretty bad. I was expecting to have at least 5-10 different keywords with at least 2 sales.

Since the results were so bad, I will not be using this data to further optimize my campaigns. Even though the campaign didn’t perform as I had expected we can still learn from it.

The Worst Performing Keywords

Below is a screenshot of the keywords that used up the most amount of my ad spend:

worst-adspend

The rows highlighted red show the worst performing keywords. These two keywords accounted for a good chunk of my total ad spend and they performed horribly. The top keyword performed a lot worse then the second keyword, however, the second keyword only had one sale but it resulted in two items being purchased. I would consider this somewhat of a fluke.

The next screenshot is looking at the keywords with the worst click through rate (CTR):

worst-ctr

These 6 keywords all had a CTR below .15%, which is pretty bad! The CTR looks like a good indicator of whether or not my ad was shown for relevant keywords or not because these low CTR keywords resulted in a very small amount of sales. Also, a decent amount of my total ad spend was wasted on these keywords. I may want to try and avoid these keywords in future campaigns.

The Best Performing Keywords

Below is a screenshot of the keywords that had the best ACoS:

All of these keywords above have an ACoS below 40% and are by far the best performing keywords from this campaign. The keyword that is highlighted seemed to be the best overall keyword because it had a good amount of impressions and clicks and still led to 2 sales. This is an indicator that this keyword will continue to perform well and the results weren’t a fluke.

The next keywords I want to take a look at are the ones with the best CTR:

best-ctr

Each one of these keywords had above a .50% CTR and had at least 100 ad impressions. Even though they had a good CTR, most of these keywords never led to a sale. This is probably due to the fact that each keyword only had 1 or 2 clicks.

What Can we Learn?

Not a whole lot to be honest. There just isn’t enough data to work with that would help me be able to decipher a good vs. bad keyword. The main problem is that it is too hard to tell what results were random and which ones will be able to consistently perform.

We just need more data to be able to know these things. I would have thought this 8 day campaign would have provided us with a ton of data to work with but, with the new PPC algorithm it looks like that wasn’t the case.

This campaign isn’t a complete waste as some keywords performed very badly with a ton of impressions and clicks, which shows me that they will continue to perform poorly.

How Much Money did I Lose?

As a refresher, here are the results:

stats-new

This campaign resulted in 17 sales of my product. Each sale has a profit margin of $8.50 and expenses of $11.50 when sold at $19.99, which all of these sales did. Now we can start calculating:

Total Revenue: $339.83

Ad Spend: $232.77

Cost of Goods Sold: $195.50 (17 units sold * $11.50 in fees)

Total Expenses: $428.27 (ad spend + cost of good sold)

Total Profit/Loss: -$88.44 (total revenue – total expenses)

All in all, this campaign ended up costing me around $88. This isn’t terrible and I would be perfectly fine with losing $88 if the campaign was able to give me enough data to work with. Unfortunately, this campaign didn’t provide enough data for me to act upon for further testing.

What’s Next?

The way I see it, I have 3 different routes I could take:

  1. Wait for Amazon’s PPC algorithm to settle down so that I can understand what is still working and what isn’t
  2. Run another auto campaign in hopes of gathering more data
  3. Run a manual campaign with all of the keywords from the auto campaign MINUS the keywords that performed poorly in hopes of both returning a profit and gathering more data

The first option, which is waiting this new algorithm change out, is probably my safest bet.

However, I am going to take a chance and see what kind of results I can get from option #3. I will be doing a manual campaign that has all of the keywords from the auto campaign minus the keywords that didn’t do well.

This will allow me to test some stuff out and show you all what may or may not be working with the new algorithm change. It’ll be interesting to see what kind of results I will get from this.

Part 3 –  Collecting More Data but with a Twist

In this next part of the experiment the main goal will still be to collect more data, but this time with a slightly more optimized campaign. The reason I still want to collect more data is because I don’t have enough information about the keywords that are converting well.

The ultimate goal is to have a campaign setup for each keyword that is converting well and providing a positive ROI. I can’t find these keywords until I can collect enough data to determine the good vs. bad keywords.

So in this 3rd part of the experiment I will be running a campaign that is slightly more optimized than the recent auto campaigns that I have ran. We will see what happens!

The New Campaign Setup

This new campaign is going to be a manual campaign this time around and I will be choosing the keywords that I show my ad for, instead of letting Amazon choose like they have been in the first two auto campaigns.

I will be putting the keywords that performed the best in the 8 day auto campaign and the 3 day auto campaign all into a broad match manual campaign. Basically, I will be using the data from both auto campaigns I have ran so far to find the keywords that have performed the best for this new campaign.

How I am Choosing the New Keywords

I dumped the data from my first and second auto campaigns into Excel and sorted all of the keywords by the low-high ACoS. This will show me all of the keywords that have performed the best so far. Check out the data below:

acos-sort

The rows highlighted green are the keywords that I will be putting into this next manual campaign. The couple of red rows at the top of the spreadsheet were ASIN keywords so I will not be using them.

I am going to copy all of the keywords highlighted in green, remove the duplicates and paste them into the new manual campaign. There are a total of 15 keywords that I will be targeting.

Is choosing my keywords target based on a small amount of data and ACoS ideal?

Not at all. I would have rather had a lot of data to work with and and stuck with my original plan of choosing the keywords that had 2+ sales. Unfortunately, that wasn’t really possible and I have to make due with what I do have. It’ll be interesting to see how this unfolds!

Manual Campaign Settings

I will now walk you through how I will be setting up the new campaign. The first step is laid out below:

settings-1

Remember, I am using the manual campaign this time which means I will be inputting my own keywords. I will be doing that in the next step below:

settings-2

I copy/pasted my keywords into the campaign. Also, I selected the “broad” match type as well as opting for a default bid of $1.25. After that, I pressed submit and my ads are set to go live March 1st and run for a week.

Now, We Wait

Now that I have this campaign ready to run for one week I will be waiting for it to complete and then I will be back with an update on the results. I have no idea what to expect from this, it could be good or it could very bad. We will find out!

If this campaign doesn’t end up doing very well then I may have to consider pausing this PPC experiment until Amazon’s new PPC algorithm gets figured out. However, we will cross that bridge if we get to it. For now, let’s wait a week and see how this campaign does!

Make sure you don’t miss the next update by putting in your email below to informed when the new update goes live.

Comments

29 Comments

Att

Great, methodical step by step guide that anyone can follow. Keep up the great work!

Josh
Josh

Thank you! I appreciate the comment

Josh

Gary VanSickle

Very informative post, very interested to see how your results pan out. I just started PPC for the heck of it on my first product, don’t really have a clue what I am doing but by Acos is 12% and getting daily sales with zero reviews. I selected Manual targeting – perhaps I should not have.
Nice work Josh!

Josh
Josh

Hi Gary,

Thanks for the comment! ACOS of 12% is amazing, especially with zero reviews. It sounds like whatever you are doing is working and I would keep doing that.

Josh

issac

Very clear mind road,tons of useful information!! Looking forward your next update.Just as you said ,PPC is very powerful and underused tools,I will also start my campaign ASAP.
Thanks for sharing again.

Josh
Josh

Sweet 🙂

Thanks for the comment and it’s good to hear that you are looking forward to future updates!

Josh

Bas

“I will move onto the next step ONLY when the keywords that Amazon chooses for my campaigns match up to the correct keywords.”

What will you do if there are many unrelated keywords?

Rewrite your listing?

Josh
Josh

I will readjust my listing title and back end search terms. If there are a couple of main keywords that I know about and weren’t being advertised for then I will add those keywords into my title or back end search terms. Then re-run the auto campaign for 3 more days

Greg

Hi Josh,

I’m going to mirror your experimental method on my own listing to see how my results match yours!

Cheers! I’m looking forward to this experiment, as I agree that PPC is considered a ‘black art’…

Josh
Josh

Awesome, it will be cool to see how it turns out!

Make sure to let me know how it goes for you

Josh

Mazhar

Hi Josh,
Excellent work, very informative. One question, how many total clicks you get with a budget of $25 daily & $1.25 pay per click. OR can you tell how many hours $25 lasted in a day?

Josh
Josh

Hey Mazhar, good question!

I got a total of 90 clicks during this time and I usually ran out of budget sometime during the middle of the day

Thanks for the comment

Josh

Gary VanSickle

Hi Josh
This comment you made regarding a keyword with 2+ sales “transfer these keywords into their own campaigns for further testing”.
I don’t see the benefit of that besides the data you may collect. Am sure you have a good answer for that.

Also, you mentioned PPC will help you increase your ranking for keywords. Would that help your rank with a “Click” or just a “Purchase” – or both?

Thanks Josh and nice update!

Josh
Josh

Hi Gary,

The idea behind transferring the winners from the auto campaign into their own campaign is so that I can find out the exact keywords that are converting. For example, if in the auto campaign the keyword “silicone baking mat” made 2+ sales then I would move it into a phrase campaign. This way I could see which variation of “silicone baking mat” was converting the best. Maybe “large silicone baking mat” was converting very well and “small silicone baking mat” was eating up my budget. I could make “small silicone baking mat” a negative keyword so that my ads would not show for that keyword. It is just a way of optimizing the keywords to the fullest extent.

As for your other question, making sales will help your rankings.

Gary VanSickle

That makes a lot of sense!

Josh
Josh

Awesome!

Terry

What software do you use to see your keyword rankings?

Josh
Josh

It is Amz.one!

Josh

Jackie Nathaniel

This is Great…I am studying the material now.

Gary VanSickle

Yes me too, never heard of that one

Josh
Josh

Thank you Jackie

Josh

kate green

when the course can update ? really very good .

Josh
Josh

Working on the new update now!

Josh

elis

great info

is there video # 2 for the second part?
can you explain how do you choose your listing kw in the first place ? are you using adwords ?
merchant word or other tools, what are your parameter to decide what kw goes to the title and which in the search kw ?

Mark

Hi Josh
Thanks so much for this update Im am holding at tha exact same stage my ppc is costing me a furtune and almost not converting to sales
I cant wait to read your next uptade as Im stuck in that same processs
all the best

Chris

Josh,

Did you start this experiment with zero reviews for the product?

Would you recommend turning on PPC before any product reviews?

Thank you so much!

Chris

Josh
Josh

Hi,

Good question! No, I had around 125 reviews when I started this. I would suggest having at least 10 reviews before starting PPC just because it will help a lot with conversions

Josh

Francheska

So how is it going with the experiment? What was the result? Would you be updating soon?

Thanks!

Josh
Josh

Hi,

I have paused the experiment for now. I’ll update it again once I start advertising again

Josh


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Josh

Hello and welcome to my site! My name is Josh Shogren and I am 21 years old. Follow along as I try to turn my passion into paychecks.

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