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Advertising on Amazon Generates Revenue Even at Low Spending Levels

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Advertising on Amazon Generates Revenue Even at Low Spending Levels

Spending even low amounts on Amazon Sponsored Product ads generates revenue for sellers, Teikametrics found when analyzing the results of its customers. But that assumes sellers employ a well-executed, data-driven strategy. “Companies of any size in any niche can see growth by advertising on Amazon,” the company concluded.

In a chart of monthly ad spend in its report, for example, it shows that companies who spend between $100 – $1,000/month on Amazon Sponsored Products see an average of 18.8% in ad-driven revenue.

“When it comes to a platform as large as Amazon, there’s a natural reticence about smaller companies thinking their investments will be enough,” Teikametrics wrote in its report. “This data shows that that mindset is a fallacy. Even at the smallest band of advertising spending, there is clear evidence that any Amazon ad spending will yield some sort of positive fruit. This means that companies of any size in any niche can see growth by advertising on Amazon. However, this only occurs with a well-executed strategy.”

One critically important factor to finding success with advertising is the choice of keywords.

“Anyone in the SEO world could tell you how choosing the right keyword is the root from where the entire campaign sprouts. With Amazon advertising, it’s a similar situation, where bidding on the wrong keywords can hurt not only conversion, but also increase costs.

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“One major issue that tends to happen is that sellers don’t apply a data driven approach to finding the most effective search terms for their products before converting them into keywords. Often times, bidding on keywords closely tied to the product is enticing. This makes some sense on paper.

“If you are trying to advertise birthday candles, you would want to try and bid for birthday candles as a keyword. However, these general keywords tend to be both expensive and competitive. It’s difficult to maximize advertising performance if you spend too much of your budget on expensive keywords that haven’t had proven success. At the same time, constantly bidding too low will yield minimal results.”

It’s also important to continuously optimize ad campaigns. “Even a campaign that starts strong needs constant adjustments, like adding effective search terms from automatic to manual campaigns as keywords, halting low-performing keywords, and refining top performing keyword match types.”

Teikametrics posted the results of its analysis on its corporate blog and links to an interesting article, “Five Mistakes Brands Make When Using Amazon Advertising,” available on Content26.com. That article also advises sellers not to employ a “set it and forget it” ad campaign strategy. “It’s important to adjust keyword bids, pausing low performing keywords and introducing more effective ones.”

Services for optimizing ad campaigns with a data-drive approach aren’t free, however, meaning low-volume sellers who don’t anticipate being able to support growth may be on their own. The cost of Teikametrics service is found on this page.

A spokesperson said Teikametrics Flywheel was a managed service and called it the perfect option for those looking to combine powerful algorithms with expert campaign management. “Pricing for Flywheel has a base fee ad and percentage of ad spend billed monthly. There are different tiers of pricing: entrepreneur, professional, and premium based on seller ad spend. The pricing for Flywheel is designed to move with sellers so we grow with them, if they have a slow month they pay less. “

And, he noted, “Flywheel is an advanced software, not just ad optimization – it shows overall business profitability metrics by connecting both Amazon MWS & Sponsored Products API’s. All ad optimization features have been upgraded from previous Teikametrics software and are available in Flywheel.” And he noted sellers can opt for a free trial.

Article updated on 2/12/19.

Update 2/14/19: Article update to reflect that Flywheel software is priced with a base fee plus a percentage of ad spend, not revenue.

Ina Steiner on EmailIna Steiner on LinkedinIna Steiner on Twitter
Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

One thought on “Advertising on Amazon Generates Revenue Even at Low Spending Levels”

  1. That stands to reason, since Amazon hides yoiur listings under ” buy new and used from these sellers” unless you have the buy box.

    They then shake you down like the mafia and demand money for your products to be seen, on top of the money you already pay to list and get visibility.

    This trend is sickening and no seller should stand for it.

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