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Top 5 Ways to Increase RoAS with Amazon Advertising

Top 5 Ways to Increase RoAS with Amazon Advertising

Every business has a unique goal in managing its Amazon advertising services and paid search campaigns. Some organizations want to increase brand impressions so new customers are introduced to their brand on the top of the funnel in awareness campaigns.  While other companies want to increase their CTR rate, which focuses on existing customers learning product features and increasing conversion rates. Then there are organizations that strictly look at the bottom line and focus on strategies to increase RoAS on Amazon, also known as “Return on Ad Spend.”

Here are some basic optimization strategies for increasing your RoAS:

Calculate RoAS by taking sales revenue and dividing it by Ad Spend.

For example, using the table below, for Brand1 that would be $25,113 / $5,005 = $5.02.

So basically for every 1 dollar that Brand1 is spending, they are getting $5.02 back in return.  Pretty simple huh? Well, it should be.

How to Calculate RoAS

Create your own Amazon brand store for your business.

Showcase your products exclusively without any annoying ads from your competitors. You can then drive sponsored ads, brand, and product listing ads directly to your store to and drive shoppers with your own unique URL.

Balance brand and category targeted campaigns

There are 2 types of campaigns which we typically setup. The first one is, “Brand Targeted Campaigns,” where we go after brand related keyword. For example, if you company is Nike, your keywords would be: “Nike Shoes,” “Nike apparel,” “Shoes for Nike.” Basically, every keyword will have your brand name in it. This campaign targets your existing customers or people who know and are familiar with your brand. It usually has a higher ROI.

The second type of campaign is “Category Targeted Campaigns” which broadly go after broad keywords like, “running shoes,” “black shoes,” “fitness apparel,” etc. Typically, they have a lower ROI, simply because the keywords are so broad that too many competitors are going after these same keywords.

The key is to have a balance of both Brand and Category keywords so you can target both new and existing customers. Look at the example below and see Brand1 has a higher RoAS of $5.01, compared to the lower RoAS of $3.07 for Brand5.  On the other hand, if you look at the Chart 1, Brand 5 has 188k revenue, compared to only 56k from the Brand1.

Having a balance of Sales Revenue and Brand targeted keywords is the key in getting a healthy return for your investment.

Return on Ad Spend

The beauty of Amazon Advertising is that you can transparently see your ad spend, sales and ROI. And If you are getting a 5x return on your money, that is a great return your money.  Imagine if you went to your bank and put in $10,000 and get $50,000 back on your certificate of deposit, would you invest more?  Of course, that’s a no-brainer.  If you utilize the tools and optimization strategies with Amazon Advertising, you can get 3x, 4x, even 10x returns as many of our clients have with Search Engine Markets.

Keyword optimization strategies

Utilize keyword optimization in the Amazon reporting analysis to discover how your customers are behaving on your brand store and your campaigns. In the chart below, check out “keywords we advertise” versus the “keyword customer types in.” The difference is the discrepancy from what we think the customer wants, versus what the customer is thinking and typing in to search your product and buy.  Search Engine Markets lets you visualize the insights of customer behavior so that you can wisely allocate your Ad budget on keywords that convert to help increase your sales and your return on your money.

In this example, you can see that campaigns named with 65 inch and 85 inch need to be optimized.  As this campaign is set to broad match, it allows people who type in “black 65 inch poles”, which have nothing to do with television, click on your ads and cost money for every click. This can be a total waste of your ad budget.

Campaigns

Drive traffic to your Amazon brand store

Finally, increasing return on your investments is a great concept but keep in mind, that should not be your entire goal. Amazon only gets their data from a 7 or 14-day last attribution window, based on if you are on seller central or vendor central.  So, if a customer started their research, but converted after 7 days of their research, their sale would not even count. Having a balance of driving new prospects to your brand store along with brand targeted keywords is the key for a healthy RoAS. 

To learn more, visit Search Engine Markets to offer you more insights on increasing your sales profitability and return on your hard-earned investments.

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