If we’ve learned anything during a totally unexpected Q2, it’s that where there are challenges, there are also opportunities. And while we hope that most of the year’s biggest challenges are behind us, the biggest opportunity for Amazon sellers and vendors is yet to come.
Amazon merchants are heading into what we’re calling: The Q4 of the Century.
What Makes Q4 2020 the “Q4 of the Century”?
2019 – A ‘Typical’ Year
To get our bearings, let’s start with a typical year.
Looking at the ad revenue trend in 2019, we can easily identify the most important selling periods, which are the deal days.
In fact, each consecutive deal day last year broke Amazon’s previous selling record. On the books, Cyber Monday remains the biggest shopping day in Amazon’s history so far.
And, in addition to those sky-high single shopping days, you’ll notice a tremendous revenue boost in December after Cyber Monday. Ad revenue between the 4th and the 20th is likely to be 90% higher (and up to 113% higher during select days mid-month) compared to an average month’s revenue during the same period. Keep this in mind as we forge ahead. This phase will prove indispensable to a successful Q4 PPC strategy.
The Coronavirus Effect: What Has Been Different in 2020?
Now, let’s have a look at 2020.
The trend so far reveals two major differences:
- We are missing out on the sales and ad revenue boost from Prime Day.
- Around March, there is a significant increase in ad revenue, which can be explained by the “coronavirus effect”:
Since the coronavirus, ad revenue growth is exceeding YoY expectations, in tandem with Amazon’s overall growth this year:
YoY Ad Revenue Exceeds Expectations After COVID-19
The Q4 of the Century: Predictions
Finally, this means we can predict the following for Q4, a.k.a. The Q4 of the Century:
Want to learn more about Prime Day – and how you can make the most of it? Find our updated definitive guide here.
In sum, we expect super-strong deal day performances with shorter periods of “shoppers fatigue” in between.
Moreover, there is very likely to be a continued trend of:
- a greater volume of sales – translating in much more ad revenue up for grabs
- better CPCs and Conversion Rates
- Better ad efficiency, i.e. lower ACoS and higher ROAS
All in all, this spells a huge opportunity for brands selling on Amazon.
How Advertisers Can Optimize Their Amazon PPC Strategy for the Q4 of the Century – in Three Steps
So how can brands on Amazon get the most out of this extraordinary opportunity?
1. Maximize your reach across all ad types
An overview of the sponsored ad real estate on the search results page and product details page highlights the huge opportunity that brand owners have to serve their product to the right audience.
If you’re only using one kind of ad, you’re not only missing out on sales but are giving up space to your competitor. Overall, be sure to have a strong presence to make the most of the available real estate.
2. Optimize your campaign structure and targets
The right campaign setup is critical to make the best use of all ad formats and to apply their unique strengths into a coherent Amazon PPC strategy.
Amazon Sponsored Products
First, let’s have a look at Sponsored Products.
Sponsored Products are a superb performance marketing channel and the most important driver of revenue and profit for advertisers on Amazon.
We recommend the following campaign setup for each product (or set of similar products):
- Automatic campaign – Research: This campaign is for researching new search terms (keywords and ASINs) to target in your manual campaigns. To find new search terms analyze the search term report on a regular basis. Add converting search terms as targets in your manual campaigns.
- Category campaign – Reach (and research): Category targeting can be very useful to get a large number of impressions and potential sales very quickly. The search term report of category campaigns can also be used to research new ASINs to target. Create a separate campaign just for category targeting to be able to control the budget for it precisely (budgets are set on the campaign level).
- Manual campaign – Performance: Create:
- one ad group for broad match keywords,
- one ad group for exact match keywords, and
- one ad group for ASIN targets.
Manual campaigns have the advantage of precision. You can choose a specific set of targets and optimize your bids for each target – making your ads more efficient. Add converting search terms from your automatic campaign or category campaign as broad keywords or ASIN targets to your manual ad groups. Then, add top performing search terms from your broad ad group to your exact ad group. Having confidence in the performance of your ‘exact match’ targets means that you can finetune your bids accordingly.
Find more information about Amazon Sponsored Products Setup and Strategy here.
Amazon Sponsored Brands
You might think of Sponsored Brands as a branding exercise or as a way to direct shoppers to your Brand Store. While those are both worthwhile uses of the format, Sponsored Brands can also be used as a performance channel.
Tip: Use the top performing keywords and ASINs from your Sponsored Products campaigns for your Sponsored Brands campaigns.
In general, Sponsored Brands is a good way to advertise your brand as a whole, or your top performing product lines or products. The key question around Sponsored Brands is choosing the right ad format for every use case or goal and A/B testing (your ad format, ad creative, and landing pages etc.) to optimize performance.
The available ad formats are:
- Product Collection Ads
Product Collection Ads showcase selected products. They link directly to the advertised products or to a customized landing page showing a product collection.
- Store Spotlight Ads
Store Spotlight Ads do just that – highlight and link directly to different categories of your brand store.
- Video Ads
Video ads, of course, give users the chance to utilize video assets and highlight specific products instead of a product set or store.
With Sponsored Brands now appearing on Product Details Pages with more than ever targeting options (keywords, category, and ASIN) now is a good time to dive in if you have been so far putting it off.
One of the most effective ways to use Sponsored Display ads is targeting specific ASINs on Amazon so that your product ads may appear under the Buy Box on the product page of the targeted ASIN.
Tip: Add top performing ASINs from your Sponsored Products campaigns to your Sponsored Display campaign or create a category campaign with Sponsored Display to research new ASINs to target.
Additionally, Sponsored Display offers remarketing campaigns that let you reach prospective shoppers off Amazon without investing in a full blown Amazon Display ad campaign.
3. Amazon PPC Strategy: Optimize your bids
Optimizing your bids throughout the Q4 is absolutely essential if you want your PPC strategy to help you make the most of the Q4 of the Century.
On deal days, revenue growth is likely to surpass even significant increases in ad spend. In other words, RoAS is high – despite an increase in CPC.
Other predictable shopping phases (see the next chart) to look out for are:
- Shoppers Fatigue: shoppers fatigue following Prime Day (meaning the period following Prime Day in which RoAS will be slightly worse than average),
- Holiday Preparation: seasonal holiday shopping which begins to ramp up in November,
- Christmas: high volume Christmas shopping in December, and
- New Years: a sharp drop off towards new years.
Here’s how you should optimize your bids for these days and phases:
- On Prime Day, increase bids by at least 25%, especially for your products with deals and for your higher ticket items as we’re likely to see an especially high ASP.
- For between one week and ten days following Prime Day, decrease your bids to avoid wasting ad spend during the “shoppers fatigue” period.
But, take care to monitor this closely: RoAS recovery is sharp – meaning it’s likely to go from below to above average quickly.
- As we get closer to December you’ll want to gradually increase your bids as CPCs in the market rise, to cash in on an increasing CvR.
- On Black Friday, we recommend you increase your bids by 30% and on Cyber Monday by 25%, especially for your products with deals. RoAS is high and likely to hit an annual high on Cyber Monday.
- Then, Black Friday and Cyber Monday mark the beginning of the serious shopping season – we’ll see a gradual increase in CvR and revenue through mid-December. If there is any post-deal-day shoppers fatigue here, it isn’t likely to last more than one day. So consider increasing your bids and/or keeping them high until as late as the 20th of December, when you should start decreasing your bids gradually until Christmas.
- Then, decrease significantly between Christmas and the New Year, when both conversion rate and RoAS are likely to hit an annual low.
We’ve talked a lot about how to optimize your campaigns during this unique time. If you have lingering questions about structures and strategies – not just during the Q4 of the Century but in general – we’d recommend starting here.
Conclusion & Key Takeaways
What do post COVID-19 conditions and the Q4 of the Century have in common?
Successful players in both circumstances are distinguished by their ability to increase investment and reach where it counts, adapt quickly to changing opportunities.
From an Amazon PPC strategy standpoint, that means:
- Maximize and diversify your reach across all ad types
- Make sure that you have a robust and flexible campaign structure and continuously optimize targets (keywords and ASIN targets)
- Optimizing your bids dynamically and based on expected trends
In the case of the Q4 of the Century, with a flurry of deal days occurring during the biggest shopping quarter of the year – optimization must be done daily.
Can all of this be done manually? Absolutely, it is possible – just as it’s possible to cut your own hair. But would you choose to do so when it matters most – like before prom, or your wedding?
Terrible analogy aside, whether the DIY-way will yield optimal results will depend on how much time you can afford to invest and the level of expertise you already have.
With Sellics Advertising, you don’t need either. With a combination of rules-based and AI automation, we take care of optimizing your campaigns – both targeting and bidding.
Want to simply know where you stand before you get started? We have a tool for that. Find out where crushing it and where to cut the fat, with our (free) Sellics Benchmarker.
Let us know how you intend to prepare for the Q4 of the Century in the comments below!