I turned off all my Amazon PPC and sales dropped...

[biophase]

but not by alot!

I just found this too interesting not to post. The numbers have been altered (because I didn't want to give away my revenue) but the percentages are accurate.

Here are the results from Feb 1-13 and Feb 14-26

Feb 1-13
Sales $100k. Sales from PPC $35000, cost $6700. ACOS 19%.
Average daily sales $7692.

From 2/19 to 3/2
Sales $88k. Sales from PPC $3000, cost $350. ACOS 11.5%.
Average daily sales $6769.

The reason there is $350 spent in PPC, is because I kept my banner ad running. I didn't want to shut that one down as it gets new customers.

So from Feb 1-13, 35% of my sales were from PPC. So when I turned off PPC on Feb 14, you would have expected my sales to be $65000 from Feb 14-26. However, instead of dropping 35%, they only dropped 12% to $88,000.

I actually profited more money without running PPC. Let's say my margins are 66%. So on the $100k, I made $100k - $6.7k - $66k = $27.3k. During the next 2 weeks, I made $88k - $350 - $58k = $29.6k.

There has to be a way for me to get more sales on top of these results. What if I turn on PPC but bid low? or totally change the keywords?

I mean if I am doing these numbers after PPC is turned off, shouldn't I be able to increase sales by 20%-30% of its current level when I turn it back on?

 

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[CareCPA]

but not by alot!

I just found this too interesting not to post. The numbers have been altered (because I didn't want to give away my revenue) but the percentages are accurate.

Here are the results from Feb 1-13 and Feb 14-26

Feb 1-13
Sales $100k. Sales from PPC $35000, cost $6700. ACOS 19%.
Average daily sales $7692.

From 2/19 to 3/2
Sales $88k. Sales from PPC $3000, cost $350. ACOS 11.5%.
Average daily sales $6769.

The reason there is $350 spent in PPC, is because I kept my banner ad running. I didn't want to shut that one down as it gets new customers.

So from Feb 1-13, 35% of my sales were from PPC. So when I turned off PPC on Feb 14, you would have expected my sales to be $65000 from Feb 14-26. However, instead of dropping 35%, they only dropped 12% to $88,000.

I actually profited more money without running PPC. Let's say my margins are 66%. So on the $100k, I made $100k - $6.7k - $66k = $27.3k. During the next 2 weeks, I made $88k - $350 - $58k = $29.6k.

There has to be a way for me to get more sales on top of these results. What if I turn on PPC but bid low? or totally change the keywords?

I mean if I am doing these numbers after PPC is turned off, shouldn't I be able to increase sales by 20%-30% of its current level when I turn it back on?

One theory I've heard recently:
If you're bidding on low-ACOS keywords, you're throwing away money. These are keywords you likely already rank for, so you're paying to acquire a customer who would have found you anyway.
Counter-intuitively, you may actually want to target the mid- to high-ACOS keywords to get customers that wouldn't otherwise see your product (especially a product like yours that is likely to have repeat customers).

Not to mention (as you probably already know), Amazon weights a non-PPC purchase much higher than a PPC purchase when determining rank.

Plus, there are people who are searching for your product that will click your ad instead of your non-ad listing, simply because they don't know or don't care that it costs you money.

The downside is that currently 4 out of the top 5 products for a given search are Sponsored. I assume this will soon be all 5, which means you'll once again need to run PPC to appear above the Amazon-syndicate blogs.

 

[TKDTyler]

I did the same experiment last year with my product - found the same thing. I ended up doing an adjusted ACOG spreadsheet looking at pure organic sales vs advertised sales as a function of PPC in Amazon.

I found total sales decreased, but organic sales increased (as expected) when I turned off PPC - this lasted until my sales rank dropped off from volume.
I started employing a part time PPC strategy to keep my sales rank up within an expected range, but maximize profitability across time.

Honestly, It was kind of time intensive to keep track of because I never got around to automating it, but if you have the bandwidth to monitor and track your items weekly (which I should do, but am time limited), it’s completely worth it.

 

[steelandchrome]

I'm all retail arbitrage on my amazon stuff but I have everything at 3 cent bids and a max budget of $5 per day and I do get more sales through PPC even at that low rate than non advertised listings. Since people are already searching for my items Amazon would rather take my .03 and show my listing over those not advertising even if my price is a bit higher... Not sure how that would translate on your stuff but FYI for anyone interested. My ACOS is 5.36% YTD.

 

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[Rabby]

I don't know much about amazon ppc because I don't use paid advertising. But I've always wondered if ppc "captures" clicks you already have because it appears above your organic result. In other words, the user searches for your product. You appear in sponsored results, then organic results. User clicks the sponsored result because they don't know/care if you paid for an ad. If there was no paid ad from you, they would scroll past the competitors they don't want and click your organic listing. Something like that.

 

[amp0193]

In my hyper competitive niche, I would run ads full blast to get to #1 spot in search. Then I would turn off ads for a few days until I dropped to #2. Then I’d turn them back on again.

Sales weren’t any different on the days I turned it off. But they definitely were when I started to drop rank. Dropping rank is a negative spiral... at least it is in a highly competitive commodity market.

A low bid strategy may work well in your case. Boosting sales a bit to offset any lost sales and prevent rank decrease over the long term.

 

[JasonR]

There has to be a way for me to get more sales on top of these results. What if I turn on PPC but bid low? or totally change the keywords?

I would think about allocating that PPC spend to another channel like Google. Which is what we're doing more of this year.

I suspect, due to the nature of your business, you don't need to play the ranking game on Amazon as others in your space would.

Not to mention (as you probably already know), Amazon weights a non-PPC purchase much higher than a PPC purchase when determining rank.

Do you have a source for this? It's news to me.

----------
With my supplement company I used to cap our spend. I found once you ranked high, you wasted a bit of money on Amazon PPC. I would still spend some as I wanted to maintain my rankings.

With my current business, since Amazon is not a main focus, we actually don't rank well, but we have a lot of inbound links to our Amazon listings. I sure wish we ranked higher, but it's not a focus of ours because I have no desire to compete with the cheap, Chinese crap. So, we do spend significant amounts on Amazon PPC, but we do cap it.

I've actually been spending less on Amazon PPC this year and allocating that cash towards Google PPC and SEO. I think this will, in the long run, pay off. There always seems to be spillover from external traffic into Amazon's platform - which makes sense given their market share.

 

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[CareCPA]

Do you have a source for this? It's news to me.

People who do millions a year on Amazon and pay lots of money/spend lots of time keeping up with all the advertising/ranking strategies.

Sorry, that's really as specific as I can get. Amazon's ranking algorithm is a secret, of course, but this is the latest info I've heard.

 

[QDF]

I found total sales decreased, but organic sales increased (as expected) when I turned off PPC - this lasted until my sales rank dropped off from volume.

This is what I've always found. PPC helps you maintain a higher sales volume and higher rankings. Once you turn off your PPC, you will benefit from these higher rankings for a while until your reduced sales volume eventually brings your rankings down a little.

On the flip side, by running less ads or turning ads off, you are also leaving those ad placements available for other "competitors" to boost their sales volume and rankings as well.

It's all a balancing act like others have mentioned.

I've run almost no ads, and I've ran very aggressive ads for periods of time. Usually not a huge difference in profit.

It ultimately comes down to this imo...

Let's say you can achieve basically the same profit with and without ads. If your profit is basically the same, and with ads, you are able to reach let's say 25% more customers, wouldn't you rather have that higher market share? Especially if you have a great product and great brand that drives repeat sales and word of mouth. Think of your business and your brand long-term.

Recently, I've averaged a few hundred ad spend per day over the last 6 months or so using Quartile, which allows you to set a specific ACOS, and they adjust all of your campaigns to hit that number, and it works surprisingly well. I usually stay in the 20-25% ACOS range, but I'm going to try dropping it below 10% to see how my bottom-line is affected.

On a side note....

For anyone spending a decent chunk of change on ads, do yourself a favor and get a good rewards credit card. There's a couple out there with bonus categories for advertising (AmEx Business Gold, Chase Business Ink Preferred), where you can earn 3-4x points per dollar. You will rack up a lot of points quickly and can travel for free.