Case Study

Captain BI helps seller reduce ACOS and increase sales with sponsored ads

A Shenzhen, China, seller that specializes in outdoor, household, and pet products has been entrenched in the digital retail industry for many years. Their products sell well in Europe and North America, however, when the seller first started expanding their business to Amazon, they lacked operational experience, particularly in ad optimization.

To gather the ad performance of each product on different sites, the team spent time and effort downloading and analyzing various reports. Due to this manual process, they were unable to detect problematic advertising campaigns in a timely manner. This resulted in poor advertising performance and stress about the future performance of new products.

In 2021, the seller began a partnership with Captain BI, a software-as-a-service (SaaS) company that aims to improve operational efficiency for small and medium-sized businesses. Captain BI is best known for developing a data analysis tool that connects with the Amazon Ads API and the Selling Partner API. This tool helps sellers refine their advertising operations in the Amazon store. By combining this tool with Sponsored Products ads, Captain BI felt confident that they could help.

Challenge No. 1: Exceeding ad spend

In late 2021, the Shenzhen seller launched a number of new products. However, due to the large volume of new products and ads, the team couldn’t adjust their advertising strategies fast enough to keep up with ad spend. In just one month, their ad spend exceeded ¥200,000 ($27,500), the sales volume was unsatisfactory, and overall advertising cost of sales (ACOS) remained high, around 35%.1

Solution No. 1

To quickly locate underperforming ads and adjust strategies to optimize ACOS in a timely manner, the seller began using the product diagnosis function developed by Captain BI. The function helped the operations team efficiently identify abnormalities based on the product’s data performance. Captain BI also used the Amazon Ads ASIN matrix to classify and group products based on sales history and product life cycle to guide ad operation decisions for each product.

Using this tool, the seller set a diagnostic goal: optimize all advertising campaigns with ACOS above 20%, and set a weekly frequency to push all unqualified advertising campaigns to the operator through WeChat.2 As a result, the team was able to shift most of their resources from finding advertising issues to adjusting key advertising strategies, which boosted their productivity.

Challenge No. 2: Misuse of Sponsored Products

The seller had adopted suggestions from an unqualified training institution, and enabled search ads and all other targeting methods as soon as the new product was available, but there was no data accumulation. This strategy had brought many impressions and clicks in the short term, but due to the fierce competition in categories, ad conversion was never improved and the ACOS remained high.

Solution No. 2

After targeting some low-performing advertising campaigns, the seller found that the keywords that brought clicks were not relevant to their products and did not result in purchases. For example, for many new products, the conversion performance of Sponsored Products ads will be relatively better during the initial advertising period. Due to this realization, the seller closed all advertising campaigns with low conversion rates, accumulated some high-performing keywords and product placements through Sponsored Products, and then applied them to Sponsored Brands and Sponsored Display. The seller also found that for some new personalized products, the conversion performance would also improve if the Sponsored Brands video ads were launched along with Sponsored Products.

quoteUpWhen you start creating ads for new ASINs, certain advertising products will be suitable for different categories. But overall, I think Sponsored Products is the primary way to advertise new products.quoteDown
— An outdoor category seller on Amazon

Final results

With the help of Captain BI and their product diagnosis tool, the seller’s new product advertising campaign performance improved markedly after three months. In total, ACOS dropped from 35% to 10% in 2021, the conversion rate doubled, and sales from advertising increased 5x.3

1-3 Captain BI, China, 2022.