Using Amazon sponsored ads to grow sales on Amazon is crucial to being a successful Amazon seller. Here is the Catch 22: when you first create a product listing that doesn’t have any sales history, the listing is not going to be ranked anywhere close to page one of search results, meaning that the listing won’t be able generate any sales on its own (because it won’t get any traffic). But, if the listing doesn’t generate any sales, then it’s not going to move up in the search result rankings (a.k.a keyword rankings), meaning it could forever be stuck in the back of the search results and not generate any sales.
Luckily, there’s way a off of the sale-killing island that is the back of search results, and it’s Amazon Sponsored Ads. We like to think of this process as Amazon Sponsored Ads flywheel, and it works like this: create Sponsored Ad campaigns (we’ll have more on the specific strategy we use when creating ads in another post) to general paid sales initially, which will slowly improve keyword ranking, which will lead to organic traffic, which will lead to organic sales (which will lead to more organic traffic and more organic sales). While you start out with almost 100% of your sales coming from paid traffic, you should end up with a healthy balance of paid and organic sales once the ads are operating at full efficiency (more on this in another post).
You can check out the video I made showing how this Sponsored Ads flywheel works here.
That seems easy enough, right? Well, yes, if you know how the process works and are patient. Where most brands get into trouble is 1) not spending enough money on these crucial Sponsored Ads and 2) not giving the ads enough time to generate sales and set the flywheel into motion. Let me clear: these ads are most likely not going to be profitable in the beginning. As I will discuss in a post detailing PPC optimization strategies, we need to give the campaigns time to identify profitable targets, which takes time (and which also means they are going to be targeting a ton of non-profitable targets until we are able to clearly identify them and weed them out). Also, because the campaigns are algorithms, they need time to gather data and become more efficient on their own. Finally, as the listings acquire more reviews (which also takes time), they tend to convert better, leading a further reduction in ACOS (Advertising Cost of Sale, which is a metric Amazon uses to describe the cost of acquiring a sale).
The bottom line is that setting this process into motion takes time and money, but is nevertheless critical to long term success on Amazon. It is one of the most significant investments that you should make in your Amazon listings, and failing to do so will likely mean that you aren’t giving your listings a chance to succeed.