How to Save up to 50% on Sponsored Products AD Cost on Amazon!

When you launch a new product on Amazon, you have to have a plan in place for how you’re going to promote it. It’s usually not enough to just create a listing, unless the competition is very small, so you need to drive traffic to your listing on your own, to get those first sales & reviews in.

The fastest and easiest way to do this is via Amazon’s own Pay Per Click advertising system – called Sponsored Product Ads, where you can quickly create paid advertising campaigns and start driving highly targeted traffic to your listing.

Some people recommend that you don’t do sponsored ads from day one and that you should first get at least 3-5 product reviews in. I can only partially agree to that as from my experience, you can successfully run ads, make sales and even make ad campaigns PROFITABLE with a brand new listing, with no reviews in place.

It will depend on the product’s price though as if you sell something more expensive, you can expect to have very low conversion rates if you run ads to a listing with no reviews. But if your item sells for less than £20-£30, you should definitely start running sponsored product ads from day one! As with such cheap items, basically impulse purchases, people are obviously more open to making that purchase compared to products that cost say £100+.

Here’s the thing – you have to accept that your ads most likely won’t be profitable for at least the first few weeks as it takes time for Amazon’s system to optimise your auto ad campaigns and it will take time for you to optimise manual campaigns too.

If your listing/product is really good and the conversion rate is high, you can aim to break even! If you can break even on ad spend in the first week or two (meaning you don’t make any profit nor loses), CONGRATS! This means that when you optimise your ads, you will be in for a healthy profit.

But you can do even more! Here’s one little trick that I used to save almost 50% in sponsored product ad costs when I recently launched a new product…

So I launched a product and created both Auto and Manual campaigns (for the most obvious keywords), just like I usually do. Then of course, as with any new product, I constantly checked sales throughout the day as well as the ad spend to see how it was performing.

Basically from the first day of running ads I was breaking even – I was spending roughly £100 in ads per day and made a profit of £100 per day which I was very happy with, as I knew it meant that when I optimise my campaigns, this will instantly turn into a very profitable product.

But here’s what I noticed within a few days – that around 80% of my sales for the product came within the time period of roughly 6-7AM till 5-6PM. So during the day time.

During that time I sold about 10-12 units and spent £50 in ads. Then in the evening I would only get 2 or 3 sales but I still spent ANOTHER £50 in ads!!!

Obviously this meant that I was already making a good return on my ads run during the daytime but making hefty loses on ads run during the evening!

It’s very difficult of course to pinpoint the exact cause of this as on Amazon we don’t have in-depth analytics data like we can have on our own website, via Google Analytics, but my theory is actually very simple:

• Most people use their mobile phone to shop during the day and in mobile view/app– product reviews are actually not that prominently placed compared to the desktop website. Try it yourself – in mobile those reviews somehow don’t feel that important in search results! But when you look at search results on the desktop site, you somehow avoid all the listings with no reviews and are instantly attracted to listings that have reviews.

 

• During the day time people are in a hurry and don’t have that much time to analyse listings/products. They just need that item – they do a search on Amazon – if they see what they’re looking for, they make that purchase!

 

• In evenings people switch to tablets/laptops and go into “research” mode. They have more time on their hands, they can slowly compare products and even click on your ads several times in various places which means you accumulate ad costs quickly but the conversion rate is lower which results in a much lower ROI for ads.

 

• The product was more aimed towards women, even though men do also buy it. What I saw is that during the day the majority of customers were women while in the evenings, more men showed up. Obviously there are many stay at home mums who shop during the day and it seems that they make those purchase decisions much faster and the fact that there were no reviews for the product was not a big problem for them.

These are all my guesses of course, not scientifically proven facts, but I hope you agree that it does all make sense, right? I think the biggest factor really is the difference in how search results and reviews/stars look in mobile devices compared to tablets and laptops. And the fact that during the day people are in a rush and they make buying decisions much quicker.

Whatever the reason, I wasn’t complaining! 🙂 I simply paused my ad campaigns each evening at around 6pm and resumed them the following morning. This way I saved almost 50% in ad costs over-night and made my sponsored products campaigns profitable instantly.

Now that the product has 10+ reviews in, I do still see that the ROI for ads is much lower in the evening BUT I no longer pause my ads as I know how important it is to keep running ads even at break even or a small loss to maintain sales velocity, which directly affects our organic rankings. But that’s a whole other story for a different time.

So – the lesson to take from this is – you should also monitor your sales and ad spend throughout the day when you launch a product and see what kind of pattern there is. I would wait for at least 3-4 days of data to see if there’s a pattern at all as maybe for your product, there isn’t one.

It also could be that for your product you actually get better sales during evenings or say mornings. I don’t know that as you need to test this!

I know what you might be thinking now… test, test – it’s not that easy to test things, especially if you can’t check sales during the day due to work commitments. Well in this case it’s actually SUPER simple!

You need to go to Reports > Business Reports > Sales Dashboard (it should show up by default).

There you need to set the CUSTOM data range for just one day! It can be yesterday or any other day you want to analyse but pick just one day so you get an HOURLY sales graphic like this:

And there you can clearly see how sales are distributed over the day! You can simply write this data down or even download the CSV file which will show how many sales you have made each hour.

Then do the same for previous days – at least 3 or 4 days so you eliminate random situations. I also wouldn’t include weekend sales into this experiment as on weekends in general sales are lower and do not represent the workweek situation, which is where the majority of sales come in.

Unfortunately there’s no such report on ad spend during the day – hour by hour – at least I haven’t found it yet (if you have, please share this info down below in the comments block) so you have to login to your seller Dashboard at least 3 times a day – morning, midday and evening so you can write down what you’ve spent on ads at that time, for at least the 3-4 days you’re testing. There’s a slight delay in ad spend reporting but it’s not that big of a problem with this method as we’re just looking for trends here.

But even if you have a full time job, I’m sure you can login to your seller account 3 times a day to take screenshots – it will basically take just 10 seconds of your time. Then at evenings, when you’re back home, you can analyse how your ad spend is distributed throughout the day and how it compares to the HOURLY SALES data you get from Amazon.

For me this is super easy as I spend most of my day in front of a computer and can check sales every 5 minutes if needed.

I’m sure there is software that can do this task/monitoring for you BUT I really don’t think you need to complicate things here – even more, spend money on a tool that will do this quick task for you. I actually have A LOT to say about all the Amazon software/tools out there and I will create a separate post about it next week, so stay tuned for that!

So don’t buy a tool for this task! Simply check your ad spend at least 3 times a day (taking screenshots with your mobile phone is the quickest way to do this), or if you can – more frequently, and just use your brain to analyse this simple data! 🙂

What you’re looking for is similar trends to what I saw – 80% of sales coming during the day time while only 50% of ad spend attributes to that period. If you just make 2-3 sales a day, most likely you won’t be able to draw any conclusions but who knows – maybe all those 2-3 sales come in at evenings while you spend half of your ad budget during the day? You’ll never know if you don’t try this out!

OK, that’s it for today’s post! I really hope this helps people when they launch their first products on Amazon’s marketplace. I would LOVE to hear back on what your results are on this! So please go out, check your sales/ad spend and share your results with us via the comments box below this post.