November 15, 2023
By Augusta Aston and Jake Malowitz

Kickstarting Amazon's Flywheel for New Product Launches

A step-by-step guide on how to profitably sell net new products with a healthy PPC investment.

Launching new products and new variants can be a great way to diversify your catalog, and get a leg up on your competitors. But doing so without a data-driven PPC strategy can have more downside than upside for your bottom-line, and be a major waste of time and capital.

Here we’ll walk you through a three-phased approach to test, track, and allocate PPC spend effectively for both net-new ASINs and new variants, to maximize winning organic rank across the most relevant keywords.

So you can make your NPL strategy worth it.

Month 1 - Launch Phase - 100/0 Paid-Organic Split

Your major goal at the outset of launching a new variant or existing ASIN is overcoming Amazon’s black box relevancy hurdles. When you invest in PPC spend, you initiate the flywheel where, over time, your expected click-through rate (eCTR) increases and Amazon’s algo begins to favor your product organically, giving you the space to pull back on your initial PPC investment.

It sounds easy, so why do so many 3P sellers fail to get the most out of their PPC strategy? Let’s take a closer look at what you need to do at launch to set yourself up for success over the long term.

  1. Keyword Research: Get creative, be scrappy, and remember that only one variant can serve on a single keyword. To guide your research, think about how you and your customers search for your product. Use Amazon’s ‘Top Search Terms’ dashboard in Seller Central to evaluate search volume for specific KWs. And don’t be afraid to experiment. For example, try the spelling of “two” and the number “2,” add the word “bulk” even if your product is a 2-pack, copy the top clicked ASIN for a specific term into the ‘top clicked products’ search function to reveal keyword efficacy.
  2. Budget: Use your contribution margin as the driver of your ACOS / ROAS and TACOS guardrails. As we highlighted in Metrics That Matter, EBITDA equals your Contribution Margin less ACOS (Advertising Cost of Sales). When you have deep knowledge of your contribution margin and its drivers, you’ll have a clear understanding of how efficient your advertising needs to be to drive a profit for your new variant. That said, the overarching goal here is to get your flywheel moving on that new variant or ASIN. Yes, you want to implement budget guidelines but it’s also just as important to remain flexible and give yourself the space to adjust spend based on how your ASIN or variant is performing.
  3. Build New Campaigns: Marry your budget and keywords. Note, you’ll always want to establish an entirely net-new campaign for your new ASIN or variant. This allows you to isolate metrics in order to best measure growth, success and effectiveness. Do not add your new variant or ASIN within legacy campaigns, as you won’t be able to allocate spend on an individual basis, your metrics will get muddied within that broader campaign, and only one ASIN can serve a given keyword. Now let’s dig deeper into the “What” and “Why” for different varieties of PPC campaigns.

Your first-order goal here is to take the right, data-driven approach to build out a campaign foundation that can be used for the entire launch process, focused on keyword targeting across the most relevant search terms. Let’s take a closer look at that campaign structure, in order of priority:

  1. Sponsored Products: Without a doubt the most effective campaign structure to overcome Amazon’s black box relevancy hurdles. Now this may be expensive initially, but allocating roughly 80% of your upfront PPC dollars toward a Sponsored Product campaign targeting high-velocity keywords goes a long way to landing you in the top 3 - 4 spots on grid search, where about 67% of all Amazon conversions take place. As mentioned, this upfront investment will yield long term organic growth as well. Once you build that foundation of investing in your KWs, you’ll generate more clicks, impressions, reviews, and overall sales growth. In time, your listing will be high enough organically where you can pull back PPC dollars and reallocate funds towards other components of your trade spend. Additionally, Amazon recently announced that Sponsored Product ads will now automatically appear externally (Pinterest, BuzzFeed, and more), providing a deeper top-of-funnel benefit.
  2. Sponsored Brands: There are a few big advantages with Sponsored Brands. First and foremost, Sponsored Brands ads are banners that serve at the top of the search results page for a given search term. This is prime real estate that you want to own. Additionally, Sponsored Brands give you optionality for content. You can feature up to 3 products and include custom lifestyle imagery, giving your customers a better feel for what your brand is all about. Perhaps the biggest advantage here are “trade across” and “trade up” opportunities. Let’s take Natemia for example, a leading provider of organic baby products and a Brandable beta partner. Natemia’s catalog includes a variety of products, but its baby blankets are its top seller. How would Natemia move to diversify its sales? Trade across via Sponsored Brands. In the Sponsored Brands ad, Natemia can feature the item that the customer searched for, the baby blanket, along with their baby brush. Now the customer is incentivized to shop more, and possibly add that baby brush to their cart along with the baby blanket.
  3. Trade-up is a similar concept. Tough Cover, a brand with heavy-duty covers for outdoor equipment, sells a riding lawn mower cover at $32 per unit and an ATV cover at $55 per unit. By showcasing the riding lawn mower cover along with the higher ASP (average selling price) ATV cover in a Sponsored Brand ad, Tough Cover is incentivizing their customer that came for the $32 lawn mower cover to purchase a slightly more expensive product.
  4. Sponsored Display: This is a top-funnel play, geared toward targeting a broad base of consumers rather than aiming for immediate conversion. Sponsored Display ads can show up just about anywhere - in grid search, on your PDP or competitors’ PDP, or as a banner. Unlike Sponsored Products or Sponsored Brands, Sponsored Display ads are audience and product targeting based. Audience targeting provides the opportunity to target consumer demographics in the form of lifestyle, interests, life events, and in-market categories. Product targeting allows you to serve your ad on specific PDPs, whether that be your own detail page or a competitor’s detail page.
  5. Auto Campaigns: These only require a default bid, Amazon’s algorithm will then target keywords and products that are similar to the product in your ad. Auto campaigns are crucial when launching a new product as they can unlock additional targeting opportunities. Since auto ads serve both on PDPs and in-grid search, when pulling campaign data, you have the ability to see where you’ve been successful, from both a keyword and ASIN perspective. These learnings can then be applied to your manual campaigns where you can control bidding levers.

Month 2/3 - Optimization Phase - 70/30 Paid-Organic Split

Your campaigns have been humming along for about a month, and by now you should have a good sense of where you’re succeeding, where you’re coming up short, and where there are more opportunities. Here’s how you can optimize your campaigns to improve conversion rate, while transitioning to a slightly more balanced 70/30 paid/organic marketing split:

  • Rationalize Spend: Revisit the ACOS, ROAS and TACOS guardrails you established at the outset of your campaign. If your new ASIN or variant is starting to pick up steam organically, it may be time to consider recalibrating strategically. Bear in mind that the ASIN or variant is still in its infancy at 3 months, and will continue to require decent ad support. For example, your initial new campaign supporting a blue baby blanket registers a high-conversion rate, but you’d also like to launch campaigns to support the yellow baby blanket variant. Adjust your keyword bidding strategy accordingly to give the yellow blanket the opportunity to win the auction.
  • Troubleshoot for Conversion: Pause, and ask yourself the right questions to make sure that you’re on the right track:
  • Are my images clear, engaging, and informative? Is my title optimized for search? Are my PDP bullets concise?
  • Is my review count too low? Have I developed a pattern of negative reviews?
  • Is my inventory stock sufficient? Do I face a legitimate risk of going out of stock? Have I lost the buy box?
  • What do CPCs look like? Is the space crowded?
  • Am I bidding on the right KWs? Where am I seeing the highest delivery (impressions/clicks)? Can I overlay KWs from auto campaigns to manual campaigns to improve delivery?

Month 4+ Steady-State Phase - 50/50 Paid-Organic Split

It’s time to take stock, and look for pockets of efficiency where you can scale and measure the near and long term success of your launched variant or ASIN.

  • Track Organic Rank Improvement on a Keyword Basis: Monitor organic rank improvement to ensure you’re not cannibalizing organic sales. In other words, avoid bidding for slots above-the-fold if your organic placement on page 1 is high. Instead, shift dollars to best support lower organically ranked ASINs on top keywords to drive more efficient sales.
  • Lean In to Top of Funnel Tactics: If you’re fully saturated across Sponsored Products and Sponsored Brands campaigns, cast a wider net. We mentioned Sponsored Display and the benefits of audience targeting earlier on. Another option is activating Amazon DSP (demand-side platform), which allows you to run display campaigns both on and off Amazon at various points of the consumer purchase journey.
  • Test Conquesting: Bid directly on competitors’ keywords and PDPs through Sponsored Products and Sponsored Brands, stealing market share from competitors. Bear in mind that this may be a low success undertaking as most sellers protect themselves bybidding on their own PDPs, driving up CPCs.

This is a relatively high-level framework for running and executing a successful PPC strategy for a new variant or new ASIN. We’ll be getting more granular on campaign structure and campaign optimization over the next several weeks and months. Hopefully, this gives you an effective playbook you can use to start putting spend behind those new products.

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