2021 Advertising Case Year in Review
BUSINESS CHALLENGE & RESULTS
The client is a licensee of brands such as Disney, JOJO, LOL, Spongebob, Lucas Film and sold within the apparel category. Ad sales in 2020 were $351,345. The client was experiencing issues with poor profitability starting January of 2021 at a 26% TACOs.
Through a combination of budgeting, keyword harvesting, ASIN harvesting and use of bid optimization software’s we were able to increase ROAS by 347.5% from January 2021 to December 2021, and bring TACOs down to 6%, while increasing PPC sales by 259% YoY.
TERMINOLOGY INTRODUCTION
TACOS
TACOs is Total Advertised Cost Of Sale,
TACOs = Total Sales/AD spend
TACOs is a good measure of overall ad spend on the account relative to sales in general a TACOs above > 20% is considered aggressive/high, we generally target this level during a product launch. A TACOs of 10% or lower is our target for more mature products and will be profitable for most sellers.
ROAS
Return On Ad Spend ROAS, is a measure of how many sales are generated per dollar of ad spend ROAS = AD Sales/ AD Spend
Bid
The maximum amount amazon is allowed to bid on keyword targets, product targets, or any other targets.
CPC
Cost per Click, is the cost we are paying per click.
CTR
Click Through Rate, The ratio of how often shoppers click on your product ad when displayed. This is calculated as clicks divided by impressions.
CLIENT RESULTS
We took over the Clients account in February of 2021, our first change after taking over the account was adding campaigns for all SKUs, the client had 62 SKUs total and only 32 were being advertised in addition the SKUs that were being advertised were not utilizing all the match types available. We created Broad, Phrase, Exact, and Product Targeting ad groups for all campaigns. You can see the sudden jump in Spend during February as a result of these changes. With the additional ad spend we increased YoY total sales in 2020 from $749,200 to $1,926,057 in 2021 a 157% increase YoY.
January – June
We grew advertising and limited wasteful spend by (1) Using our bidding software which connects with Amazon’s Ad’s API and made daily changes with a Machine Learning algorithm that adjusts bids with a weighting of factors including conversion rates, current bids, CTR, target ROAS, seasonality of the keyword, and CPC. (2) Harvesting new targets by using monthly search term reports and moving targets from our Auto Campaigns -> Manual Campaigns.
July – December
In July our clients goal shifted from maximizing revenue to focusing more on ad profitability, being a licensee meant we had to deal with licensee fees and other expenses leaving a tight margin. By pausing weak ad groups, negative matching low converting search terms, and using campaign & account level budgets. Implementing these changes, resulted in ROAS nearly doubling with an increase from 6.285 to 11.418 an 81.7% increase in ROAS.
CONCLUSION
To achieve client success in PPC it is critical to review client’s goals on an on-going basis and pivot strategies from top of funnel to lower funnel if there is a shift from growth to profitability. Additionally implementing machine learning software and leaning on our wide range of benchmark data we can outperform our competition and increase ROAS despite average CPC going up in a wide range of categories. Having fully developed keyword and ASIN rich PPC campaigns is crucial to avoid falling behind the competition in organic ranking and drive continuous sales growth while defensively maintaining top of page placements for established SKUs.
Alex H.
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