How brands can work to optimize for additional conversions with Sponsored Products

September 16, 2022 | By Gabriella Kursman, Marketing Manager

With our clients, we find that vendors who don’t advertise across their entire assortment often miss out on unknown potential. We’ve seen many Amazon vendors discover that their top-selling products in the Amazon store are different from those in other stores, because audiences differ between them. Advertising across the assortment ensures we’re optimizing for conversions that exist within specific keywords or product types.

When looking at Vendor Central, we consider profitability or net pure profit margin [PPM]. Understanding our net PPM has defined how much we consider advertising and what products we promote. For Amazon vendors with larger ASIN assortments, we sort the ASINs in the catalog to identify products with potential to perform well. Since these products are often on tighter budgets, we look for items that have the potential to drive purchases. If we see products or keywords with higher conversion rates, we move them into other areas of the marketing funnel for testing. One of our keyword-targeting strategies includes broad-match modifier campaigns. These strategies allow us to leverage broad matches and arrange keywords in any order with the ability to add a qualifier that requires specific keywords. This unlocks a lot of strategic keywords.

We use our best-performing products for upper-funnel brand awareness and brand-building activities. In long-tail assortments, we like to put them into buckets. The first bucket is for hero products. These are top-selling products with high reviews that have plenty of inventory. We promote these Sponsored Products ASINs with a focus on top-of-search impression share, which tells us how we’re performing against impressions our ads are eligible to serve on and helps us ensure we’re optimizing conversions vs. CPC [cost per click]. The second bucket is for testing new products that might perform well. We don't necessarily push them high in awareness, but we might utilize remarketing to test the consideration stage of the funnel. The third bucket is all about profitability. We set an advertising cost of sale [ACOS] goal for products that either consistently run out of stock or are not top sellers.

My recommendation is to test Sponsored Products on a smaller budget first. We’re firm believers that advertising on Amazon can help Amazon vendors better understand performance for their assortment of products. However, it’s important to understand your KPIs and the goals for each of your campaigns. The most common mistake I’ve seen with my clients is being hyperfocused on ACOS. We find that measuring total advertising cost of sale [TACOS] is a better metric for not only your profitability, but also for potential account growth. As sales increase, you can reinvest more into your campaigns without lowering margins. When you’re hyperfocused on ACOS, you may only see a small portion of the total picture. Customers can interact with your brand numerous times before purchasing.

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