Last Friday, I had the pleasure of joining Seller’s Choice for a Facebook Live interview about Amazon Prime Day Advertising strategies, the perfect ACoS, and the Amazon paid traffic life.
We previously set up a Facebook Live interview on May 18, but were faced with technical difficulties and were unable to connect.
The Classic Android vs. iPhone Debacle
Michael: How are you doing?
Andrew: Doing good, how are you?
Michael: Good. I cannot believe we finally got it going.
Andrew: Congratulations!
Michael: You know what, it’s a confirmed Android issue, ’cause I’m on an iPhone and it worked totally fine right now.
Andrew: So I will tell you though, the week after we tried this last … so for anyone who’s watching this, or is watching this in the future, we tried this a few weeks ago and we couldn’t connect. We don’t know what it was. And we were pretty sure it was an Android issue, because we usually suggest to use an App that you can only get on Apple, however the week after that failed attempt I asked the guy, I was like “what phone are you on?” He’s like “oh, I’m on an Android”. So. That’s not Android.
Michael: Oh man. You know it’s, I have a nice Android phone, I have no idea what happened. I’m trying to get a really good angle here. Here we go.
Andrew: Yeah, no worries.
Michael: Cool.
Andrew: Alright. So let’s do it.
Michael: Let’s do it.
Creating an Amazon PPC Software that Produces Results
Andrew: So Michael. CEO of Ad Badger.
Michael: That’s right.
Andrew: Tell us more. Go.
Michael: Yes. So it all started on a dark and stormy night many years ago. No. I have been doing paid traffic optimization for years and years. The better part of a decade now. And started freelancing in sort of late 2012, turned that into an agency in 2013, grew that agency to where we were managing almost 10,000,000 clicks a month. And basically we were doing AdWords optimization, Amazon PPC optimization (check out the similarities and differences here), and we were looking for a way to basically take all of the procedures that we had that we were doing manually for Amazon PPC and turn those into a piece of software. And that’s how Ad Badger was born.
So when we’re building Ad Badger, every decision that we make inside Ad Badger basically answers the question “What could you do with software if you were able to sit in front of your computer every single minute of every single day on Amazon PPC?” So when we’re making those decisions, it’s always how would you optimize bids if you were able to sit in front of your Amazon PPC account 24 hours a day? And that’s how we built our Bid Optimizer. What would you do with your search terms report? How often would you add negatives if you could sit in front of your computer every single day? And that’s exactly the thought process that went into building Ad Badger.
What Makes Ad Badger Different?
Andrew: Okay. So there’s a lot of PPC automation software out there, especially for Amazon. We won’t go into any names. So what differentiates Ad Badger versus anyone else that someone else can work with?
Michael: I think it really is the focus on that … so I am not an Amazon seller. I’ve never sold anything on Amazon. And actually anyone who works at Ad Badger cannot sell on Amazon as well. There’s just a sort of rule that we have. And really the small differences, and it’s a small difference but it compounds into big ways when you’re actually optimizing. So it’s almost like the process for good Amazon PPC is known. And I think that when you come to a tool with almost a decade of experience, you’re able to better directly get to the end result that a customer wants. So there’s no frivolous things we’re building inside Ad Badger that don’t help you get either more clicks, more revenue, or better ACoS, stuff like that.
So it’s really the time and attention that answers that question, what would you do if you could sit in front of your Amazon account every single day? And that’s exactly what Ad Badger does.
Andrew: Okay. So does it have the opportunity for sellers to go in and just place their one rules? Like I want this ACoS at all times. If I spend X and get X clicks then do this. Is that basically how that process works?
Michael: Absolutely. We wanted to, every time we build a tool we want it to have easy mode, where it’s sort of straight-forward, almost like hit a button, get the result that you want, and take the action in order to get the result that you want. So whether it be, so we’re actually building one of our tools right now, and this is exactly the way that we’re approaching it. The other thing I should mention too is we’ve only been in the game since January of this year. So I think we’ve done a lot in a shorter amount of time. But when we’re building any tool, we’re sort of saying what’s the 90% solution? What’s gonna be good for 90% of people? And then what’s the advanced mode that the personal who like really nitty-gritty wants to get into every single thing, what kind of customization and advanced techniques can we also provide those kinds of people? So when it comes to, if you take something like negative key word rules, scanning through your search terms and then picking out the things that you don’t like, that don’t perform well. Those are fairly standardized. The average conversion rate on Amazon PPC is 10%, which means that’s one sale every ten clicks. Which means if you go 20 clicks without a sale, you’re half as bad as the average. If you go 30 clicks without a sale, you’re three times as bad as the average. Even if you were to get a conversion of 21st or 31st click.
So you can sort of look at negative keyword rules in an easy mode way and know that if someone’s getting a search term with 20 clicks without a conversion, this is a bottom of the barrel type term, and you can apply these rules based off data that can really be helpful to a lot of people right out of the gate. And then you get people that are like well, you know, I’m okay with 20 clicks without a conversion if they’re cheap. So then they can set up customized rules that say things like hey, if it gets 20 clicks but the CPC is over a dollar, then you can get rid of it.
We want to be able to provide that level of customization for the advanced users.
My Thoughts on Prime Day
Andrew: Okay. Real quick. So a couple people have joined in. If anyone’s got questions feel free to comment. We’ll get to ’em. A few people have said hi. Chad Rubin, who is, I can’t see the face, so it’s either the CEO of Skubana and Crucial Vacuums, big seller on Amazon as well, or there’s another seller named Chad Rubin, I don’t know which one it is. It might be Skubana, as far as I know. Chad, if you’re watching, which one are you?
So, Michael. Thoughts on Prime Day that are coming up? How are you suggesting people to significantly raise their budget? Are you suggesting them to significantly raise their bids? What is your thought process behind what they think they should do, because I know if you set up those automated rules but then you have a massive influx in traffic, like people are about to have within the next month, that can get a little hairy on how it’s gonna react. So what do you believe the best process is there?
Michael: One of my fundamental beliefs about paid traffic is good paid traffic is good paid traffic no matter what. So it’s not so much like you abandon one strategy, and then on Black Friday or Prime Day or whatever day, you adopt a completely different strategy. Good paid traffic is always going to be good paid traffic.
You asked about budget. I would say for most people, the budget is always going to be, or always should be unlimited budget pending positive return. So when you look at something like that, should people have an artificially low budget, just limiting for the sake of limiting in the weeks or months before Prime Day, I would ask that person why. If you can do 10,000 in sales with a thousand dollar budget, why wouldn’t you ask yourself the question can I push this to $1,500 budget, and see if I can get even more sales. So I think good paid traffic always asks the question what can we do to get more sales. Can we increase the size of this account 20% over the next quarter?
So that’s my general thesis on budgeting. There’s a lot of good reasons to have a budget. Inventory, seasonality, all these different things. Profitability. Don’t increase the budget until you hit a certain profitability. And that’s exactly the way to do it. But really the question comes, Prime Day is happening. The first thing that I would say is do we have any historic data to learn from? So basically do we have data from last year to learn from? How much did our click increase actually kick up? Do we have data from Black Friday? Do we see how much it actually kicked up?
But in general, I always recommend a way bigger budget than you think you need, and then just capture all of the click volume for that. So I think a lot of times where people get nervous with a big budget, it’s like what would happen if I went into your Amazon account right now and added a zero to your budget? How would you feel if I did that?
Not only that, but if there’s a fear of like oh no, I don’t know what’s going to happen, then probably the campaign’s not configured that well. So really going in there and just. . . I guess that’s a good question. How would you feel if I were to ask you like hey let’s go into your account right now? If it’s at $100 a day, let’s go ahead and kick it to $1000 a day.
Andrew: Yeah. Well my thought obviously would be if it’s at your target ACoS, turn it up and let it go. Speaking of ACoS, of course, this has gotta be Chad Rubin of Skubana is asking, so I’ll let you answer this one first Mike, but what is the optimum ACoS?
Michael: Before I answer that, I just wanted to finish that thought of adding a zero to your budget.
Andrew: Go ahead.
Michael: So basically if people know that their account is well optimized, they’re always appearing for what they want, their bids are in the right place, they’re not overbidding, they’re not underbidding, then there should be no fear with being like let’s go increase budget. So that’s one thing. I would say if anyone’s nervous to double their budget on Prime Day, then that might be another issue. So if that issue does exist, then should you double your budget on Prime Day? Probably not. Because some other issue exists. So that’s where I think some of the good PPC is always gonna be good PPC. Anyway, Chad asked what is the optimum ACoS?
The Search for the Perfect ACoS
Andrew: Favorite question.
Michael: Which means there might only be one number that is perfect for everyone. So this is another thing. Like good PPC is always good PPC. Good ACoS for one person might be horrible for another person. Some people might have profit margins of 10%, some people might have profit margins of 30%. If both of these people have the same target ACoS, something is very wrong. So comparing one company’s ACoS to another is often comparing apples and oranges. Both of these people have different profit margins. It’s even possible that people have different priorities with their pay. Some people might want to increase their ACoS just to box out competition, just to maintain brand visibility on certain terms. So you know, if I’m Nike and I can bid on Adidas at a 70% ACoS, why wouldn’t I? I’m getting sales that were from a competitor’s search. Those are so much more valuable than just a. . . obviously I wouldn’t want a 70% ACoS on my own brand. Things like that.
So in terms of optimum ACoS, again this is another one of those things. I think my personality type is to never, like I never like to give out tips without talking about the overall strategy. What’s the real story here? So when it comes time to think about ACoS, it’s really what is your break even ACoS? So that’s the first place to start. What’s my revenue? What’s my Amazon fees? Why’s my cost of goods sold, taxes, whatever else I want to include in my cost, and then from there determine what is my break even ACoS is, and then working from there.
When you first launch a product depending on what bucket you’re in, you might be totally fine with a break-even ACoS for your first, until you get your first 20 reviews.
Here’s some guidelines for beginning to bid on Amazon PPC:
Read the full post here.
And then you bring that ACoS down over time. So in terms of what the absolute best ACoS is, doesn’t exist. It’s really what’s best for whatever a person’s business is. So starting with a break-even ACoS and then working your way down, and then I’ll even say to make it a little bit more complicated, you might have different ACoS depending on how much you’re spending. So when you’re spending very little, you might have a more aggressive ACoS target than when you double the size of the account. ’cause if you double the size of the account, and as long as it’s still in the size of your possibility range, you might be totally fine to double the size of your account but deal with a slightly higher ACoS.
That gets into the, sometimes you bid more aggressively to increase profit. Sometimes you bid lower to increase profit. It really depends on, a very complex answer. So really what’s the absolute best ACoS? I’ll say 30%. Just kidding.
Andrew: We got a number! So yeah, my thought is always, there’s such a massive correlation between PPC and organic. So we always, typically we’ll suggest sellers to aim what you’re comfortable with, figure out what your break even is, but then sit there for a few weeks, maybe a month tops, and then go where are my organic sales, where are we at overall, and then my thought is to increase it. What if we just aim for a break even on PPC. You may still see a significant return on the organic side.
Michael: Yeah.
Andrew: David said “I think I just fainted at 30% ACoS.
Read more about ACoS and Break-Even ACoS here.
Amazon PPC isn’t just numbers. It’s emotional too.
Michael: You know you just brought up, David brought up this incredible point, which is as much as we would like to believe the PPC is only numbers, pure numbers, no thoughts, it’s like such an emotionally driven thing for a lot of people. For a lot of people sometimes launching a product is their first product they’ve ever launched on Amazon, and sometimes running their first campaign is the first amount of advertising spending they’ve ever spent. So they’ll run it and they’ll see how they feel about it, as opposed to what is our break even, what is the actual goal of it, are we comfortable with hey, let’s run at a break-even ACoS and see how that influences organic. Studying that.
And then you’ll get other people on the other end of the spectrum that are like hey I know Amazon PPC influences organic. Here’s my break-even. I want to spend as much as I can, I absolutely want to spend as much as I can tomorrow at a break-even ACoS.
Andrew: Well there’s other things to take into account as well. You look at the lifetime value of a customer, and in some cases you have these Amazon sellers who are selling things that you have to purchase often, and if they do a subscribe and save in PPC that only reflects as one sale, but in reality they subscribed. Maybe they’re getting your product for the next six months. So you can actually look at what your cost of a new customer is versus what your ACoS is. So in some cases you may wanna even lose on your ACoS. But I know a majority of our sellers are sitting at like, they want to be, almost all of them seem to be like 20% or less. But I have some where their break even is 20% or their break even is 30% and they still wanna do like 40 or 50 or 60.
The Legend of the Dream Account
Michael: You know, I saw, someone came to us, they had an incredibly profitable account. It was the most insane account I’ve ever seen. They were spending like $1000 a day at like a sub-five-percent ACoS. It was the most amazing thing I’ve ever seen. So they were doing so profitably. And then I asked the question, wouldn’t you prefer that we bump this up to maybe spending $3000 a day at a ten percent ACoS? Like look at the profit. We have a tool where you can punch in your cost of goods, your profit per sale, and all these different things. It’s like you would make more profit at this worse ACoS, but the account is much bigger. And it took one or two conversations for them to be like oh yeah, this does make sense. We will make more profit if we increase our ACoS, but we also of course have to increase the size of our account as well.
Goodbye for Now
Andrew: Michael, I don’t want to milk any more of your Friday. I really appreciate you chatting with us. Ton of information. I know PPC, especially Amazon, we could sit here for days. But really appreciate it. Do you mind letting everyone know where they can find more information on Ad Badger, if they wanna reach out to you or any closing remarks? Go ahead and hit it.
Michael: Yep. Absolutely. Hit us up at adbadger.com. That’s the easiest way to find us.
Andrew: Short and simple. Love it.
Michael: Yeah, that’s right.
Andrew: Michael, appreciate. Thank you so much. If you’re watching we’ll have this up on YouTube, and this will stay on Facebook as well, so you can always come back and refer to it, and take some insight from Michael. Appreciate. Thanks guys. Have a good one. And we’ll see you next week.
Michael: Have a good one
Andrew: Bye.