How to Reset Your Amazon PPC After Q4

The thrill of higher revenues in Q4 can be exhilarating. It’s easy for sellers to enjoy the rewards of increased traffic during this time of year. But buyers don’t have the same spending habits in Q1 which means you need a different Amazon PPC optimization strategy heading into January.

You don’t want to leave your PPC campaigns running and hope for the best. Instead, you need to re-set your PPC to prevent wasting ad spend and to maximize the return on your ad dollars.

In this article, I’m going to break down a simple 5-step process for re-optimizing your Amazon advertising campaigns so you can start your Amazon PPC off on the right foot in 2022.

Step 1: Review Your Targets

During November and December, it’s not unusual for sellers to expand the number of keywords and targets in their campaigns to pick up extra holiday sales.

Auto campaigns tend to do very well during this time too because Amazon is looking for more ways to put your ads in front of customers and sell more products.

However, it is essential to reevaluate your keywords and refine your targeting so you can refocus your ad budget post-Q4. That way,  you can prevent wasteful ad spend and reallocate your ad dollars to what’s converting now to get the most out of your ad dollars.

Archive holiday-specific keywords

If you have any specific Holiday-related keywords in your campaigns (or maybe a dedicated Holiday campaign) now is the time to pause them if you haven’t already done so:

• Go to the ‘Targeting’ tab inside Campaign Manager
• Enter any holiday-specific keywords e.g. ‘Black Friday’, ‘Cyber Monday’, ‘Christmas’ etc, or gift-related keywords e.g. ‘gift’ or ‘gifts’ in the search bar
• Select all keywords that meet these criteria
• Use the ‘Bulk actions’ drop-down menu and select ‘Archive’

Archive keywords with 0 or 1 sales

You can also use the Targeting tab to identify keywords with no or one sale:

• Go to the ‘Targeting’ tab inside Campaign Manager
• Select ‘Last 60 days’ for the date range
• Filter by orders using the drop-down menu
• Select ‘less or equal to’ and enter ‘1’
• Select all keywords that meet these criteria
• Use the ‘Bulk actions’ drop-down menu and select ‘Archive’

Now that you have removed Holiday-specific keywords that are no longer relevant and those keywords that are generating no or low sales, it’s time to identify which keywords are relevant and convert them into sales. This is where you want to focus your ad budget. But more on that in Step 3.

Step 2: Reset Your Bids

During Q4, the increase in shopping activity leads to higher than normal conversions, with conversion rates increasing by anywhere between 50-100%. As a result competition for paid real estate increases with sellers willing to spend more to cash in on those increasing conversion rates. Those higher bids lead to increased Cost per Clicks (CPCs).

As soon as January rolls around, that high buyer intent drops dramatically. Buyers don’t have the same spending habits and tend to purchase more conservatively. As a result, conversion rates drop and if you don’t lower your bids to allow for this drop in conversion, your Advertising Cost of Sale (ACoS) will rise. Here’s a simple formula you can use to do that:

First, you need to calculate Revenue Earned Per Click:

Total revenue/number of clicks = Revenue Earned Per Click

Now you can calculate your Maximum Bid:

Maximum Bid = Revenue Earned Per Click X Target ACoS%

Using this calculation, your bid increases as conversion increases or as in this scenario,  decreases as conversion decreases. When it comes to decreasing your bids back to what they were prior to the holidays, we recommend that you do so gradually.

Step 3: Reset Your Budgets

To make the most of the huge increase in traffic and customer demand during Q4, sellers typically increase their budgets to support all-day visibility so their campaigns are ‘always on’ to take advantage of the sales uplift.

After Q4, to avoid overspending on your Amazon PPC campaigns, you need to lower your budgets to focus your ad dollars only on what’s working.

At The Account Level

While there is no one-size-fits-all approach for determining optimal PPC spend on Amazon,  we’ve found that a good rule of thumb is for your budget to be approximately 10% of your total revenue.

Using this as a guide means that as your sales grow, your budget will increase at the same rate. By using this 10% method as a measuring point you can ensure that your budget never gets out of control.

At The Keyword Level

We are big fans of The 80/20 rule, also known as the Pareto Principle which states that 80% of results come from 20% of actions.

When it comes to Amazon PPC, the 80/20 rule often shows up in ways such as 80% of sales coming from 20% of your campaigns or keywords. This is where you should focus your ad budget to maximize return on ad spend.

To do this, you need to download a Search Term Report:

• Go to the ‘Measurement and Reporting’ tab in the Advertising Console
• Select ‘Reports’
• Select ‘Create report’
• Select ‘Campaign type’ (in the below example, we are selecting ‘Sponsored Products’)
• Select ‘Search term’ for ‘Report type’
• Select ‘Daily’ for ‘Time unit’
• Select ‘Last 30 days’ for the ‘Report period’

• Select ‘Run report’
• Click ‘Download’

Open up the spreadsheet and sort and filter your Search Term Report report by 7 Day Total Sales data to find which keywords are relevant and convert into sales post-holidays.

Admittedly, this is somewhat arbitrary, but as a general rule of thumb, you are looking for search terms with multiple sales (we recommend a minimum of 3 for new accounts, more for aged accounts) at an above-average Click-Through Rate (CTR).

Your CTR is the percentage of people that see your ads and click on them; it indicates how relevant your ad is to a shopper’s search query. The average CTR on Amazon is 0.4%, so you use this as a benchmark.

Focusing your ad budget on fewer but better-performing keywords will give you the best opportunity to see a return on your Amazon PPC ad spend because it:

• Improves the relevancy of your ads which will send more traffic to your listings;
• Boosts your PPC conversion rate so can generate more sales for the same ad spend;
• Brings the costs of your ads down over time

Like with your bids, when it comes to decreasing your budgets, we recommend that you do so gradually.

Step 4: Review Negative Keywords

One of the most powerful Amazon PPC strategies to prevent you from wasting your ad budget, irrespective of the time of year, is to use negative keywords.

Negative keywords are the opposite of positive keywords. You use negative keywords to block keywords that don’t convert or are not relevant to your product to prevent wasting your budget and decreasing your conversion rate which in turn hurts your ACoS.

There are two match types when it comes to negative keywords:

• Negative Exact Match: Using this match type will restrict your ad from showing for search queries that have the exact phrase or is a close variant of it.
• Negative Phrase Match: Using this match type will restrict your ads from showing for search queries that have the complete phrase or are a close variant of it.

We like to use negative exact match keywords for those search terms that are somewhat relevant but for whatever reason just do not convert for your product. When it comes to negative phrase match keywords, we like to use these as single words for non-relevant searches. Let me explain.

One single word negative phrase match keyword can eliminate dozens of irrelevant search terms. For example, let’s say you sell a nylon scrubbing brush. In the Search Term Report below, we can see there have been multiple occasions where our ad has been clicked on when someone was using the word “silicone” in their search, resulting in $171 of wasted ad spend.

If we were to simply add the single word ‘silicone’ as a negative phrase match keyword to these campaigns, we can eliminate all of these clicks and wasted ad budget instantly. Not only that, this will improve your CTR and conversion rate and, therefore, your overall campaign performance. This strategy alone could save you thousands of dollars in wasted ad spend!

In addition, you can also add any of those high spend targets with 0 or 1 sales that you identified in Step 1.

Step 5: Review Placements

If you are adjusting bids by placement, you need to review your Top of Search and Product Page placements and lower your bid modifiers to reset your bids accordingly. Bid modifiers are used to boost Top of Search and Product Pages bids.

When it comes to dynamic bidding campaigns, it’s essential to understand your ACoS. That’s because the best way to know when to dial-up or dial down bid modifiers is to know your target ACoS for the campaign. We recommend targeting a breakeven or better ACoS.

To figure out how to calculate your maximum bid,  all you need to do is use the same easy formula outlined in Step 1:

Maximum Bid = Revenue Earned Per Click X Target ACoS%

Conclusion:

Amazon Advertising can be complicated at the best of times but it can be particularly tricky as you try to adapt to the changes in shopping activity and sales velocity from Q4 to Q1. I hope you find this 5 step process helpful and that it makes your Amazon PPC’s transition from Q4 to Q1 a smooth one.

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