Amazon Prime Day: How to Optimize ads and Avoid Mistakes?

Prime Day advertising should be meticulously planned to outperform competitors also capitalizing on the event. The competition is fierce, and you'll need to fine-tune your Prime Day advertising campaigns for maximum ROI. By focusing on data-driven decisions, you can ensure your Prime Day advertising is not just another expenditure but an investment for exponential growth.

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So there are few things which are very important to keep in mind while organizing and planning your Amazon prime day advertising strategy during this day.‍

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Why you need to prepare for Prime Day 2024?

Understand Amazon advertising bidding mechanism

To understand why, here is a brief and quick introduction about Amazon advertising mechanism for you.

Amazon utilizes a second price auction model for its bidding products, which means there is a bidding system in the Amazon advertising console. When determining which products to display for a specific search term, Amazon conducts auctions behind the scenes. Many advertisers, sellers, and brands participate in these auctions by indicating the maximum amount they are willing to pay for each interaction with their ads, such as clicks or conversions.

For example, If there are three bidders participating with bids of $4, $4.5, and $4.2 respectively, the winner would be the bidder with the highest bid, bidder B ($4.5). However, bidder B would not pay the exact bid amount. Instead, B would pay the price of the second-highest bidder, which in this case is $4.2. This ensures that the winner pays a price just above the bid of the second-highest participant.

The second-price auction encourages amazon fba advertisers to bid their true value for the ad placement, knowing that they will only pay slightly more than the second-highest bid.

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Understand Sponsored Rank

A factor that makes the auction system more complex is sponsored rank. Sponsored products are impacted by sponsored rank. On Amazon Prime Day, the sponsored rank is determined by a formula incorporating three key elements.

1. PPC (Pay-Per-Click) bid

PPC is the amount advertisers are willing to pay for each click in their campaigns.

2. Estimated Conversion Rate

It reflects the average number of orders a specific product receives after generating the total clicks.

3. Product price.

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Challenges from Sponsored Rank

However, the challenge arises on this special day due to the dynamic nature of these elements. Firstly, the PPC bid needs to be adjusted because the cost per click (CPC) is what advertisers actually end up paying, and it can fluctuate during this period. As competition increases, advertisers may be willing to pay higher prices, influencing the CPC. You need to take that into account in your Amazon PPC strategy.

Now, let's break down this special day into two distinct periods

Pre-Prime Day period

People tend to hold off on purchases to anticipate Prime Day deals. Therefore, a few days before Prime Day, advertisers usually observe a drop in the CPC. This decline is due to advertisers being less aggressive with their PPC spending, as they have noticed lower conversion rates during this period. In the end, advertisers adjust their PPC management in their Amazon PPC software, or on the Amazon Ads platform.

During prime day

The CPC will be higher than the normal price in this situation. After Prime Day concludes, the CPC gradually returns to its normal level. So your PPC management is impacted by your Amazon competitors. To beat competition on Amazon, advertisers adapt their bids to align with the changing cost per click in order to maintain competitiveness.

The second thing changing is the conversion rate.

Amazon captures changes in user behavior during this special period. They employ features and algorithms to estimate the conversion rate accurately. For example, just before Prime Day, the conversion rate tends to drop as people browse and click without making immediate purchases. Amazon adjusts its estimation of the conversion rate to reflect this change in customer behavior.

The last challenge is the product price.

Many Amazon sellers offer special discounts or promotions on their products. As a result, the product price experiences fluctuations too.

With all three main components changing during Prime Day, it becomes much more challenging to adjust the PPC bid effectively. PPC management is an art!

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How the previous Prime Day helps your next step advertising?

Many people have accumulated experience and data from previous Prime Days and similar sales events like Black Friday. The question commonly asked is how to leverage that past experience effectively. There are certain aspects that can be reused and others that cannot due to the ever-changing market dynamics and competition.

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Estimate sale increase to be expected

By analyzing the sales patterns from previous events, you can gain insights into the fluctuations in sales volume. This information can aid in better inventory planning and sales velocity projections.

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Estimate PPC budgets

By examining past events, you can determine the budget adjustments made during those periods, whether you actively participated or gave up. This historical data can be used to estimate the budget required for your PPC campaigns, considering your specific category and products. However, it's important to note that these estimates are not 100% accurate due to the dynamics, but they do provide a foundation for planning. Don’t forget to assess your Amazon competitors’ aggressiveness as well!

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Not helpful for the PPC ads intensity

On the other hand, when it comes to PPC intensity and bidding strategies, it becomes challenging to reuse past data. The dynamics of the market and competition change significantly, rendering granular data less useful. Therefore, it is recommended to adapt your PPC strategy and bidding intensity specifically for each Prime Day event, rather than relying solely on historical data.

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How to adjust Prime Day Ad strategy?

Here's a step-by-step approach to handling your Prime day ad strategy:

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Start preparations two to three weeks prior to Prime Day

Keep in mind that this period may be a low-intent period compared to the average, although it may vary depending on your product category. For products with lower seasonality or those people buy regularly daily, the impact of Prime Day might be less significant. In such cases, consider decreasing your bids or ACoS targeting by at least 25% in your Amazon PPC tool to account for the lower intent during this period.

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Increase PPC intensity two days before Prime Day

This is when you should start preparing for Prime Day itself by increasing your bidding intensity. If you choose to participate and compete for Prime Day sales, you'll need to adjust your PPC strategy accordingly in your Amazon PPC software. However, if you decide not to participate actively, you can either maintain the reduced PPC strategy from the weeks prior or even pause it.

Making changes to your PPC strategy two days before Prime Day is crucial for several reasons following.

Firstly, it allows you to calibrate your bids and ensure that you are bidding high enough to compete effectively during Prime Day. Since the exact increase needed is uncertain, making adjustments and observing the resulting traffic can provide valuable insights and help you prepare for the event.

Secondly, this period serves as an opportunity to test the right bidding level. Many sellers make bid adjustments just before Prime Day, so using this time to increase your bids or ACOS targets by at least 50% can make you competitive and increase chances of capturing more visibility.

It's important to note that a 50% increase in ACoS targets doesn't guarantee a 50% increase in actual ACoS. The goal is to make a substantial increase that reflects in your bidding strategy and aligns with the competitive landscape.

By making these adjustments two days prior to Prime Day, you can fine-tune your bidding strategy and make further adjustments if necessary. It's an iterative process that allows you to optimize your PPC approach before the main event.

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Increase your daily budget by 100% the day prior to Prime Day

After adjusting your bid on Amazon two days before Prime Day, it's essential to also increase your ad spend. While you should always have safety budget caps per campaign or portfolio account, it's advisable not to remove the cap entirely. Instead, increase it by at least 100% compared to your normal average caps. Depending on your category and products, you may need to adjust this increase further based on your understanding of the market.

During Prime Day, it's crucial to monitor your performance closely. Keep an eye on sales, budget utilization, and make necessary adjustments if needed, If you notice that you're running out of budget or if sales are coming in strong.

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Decrease the budget and bids to normal levels

After Prime Day ends, it's recommended to decrease your budgets, budget caps, and bids back to normal levels. This step helps restore your advertising strategy to its usual state and avoids prolonged inflated spending.

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Exclude Prime day data

Lastly, it's crucial to exclude the data from Prime Day when analyzing your advertising performance. Depending on whether Prime Day went exceptionally well or poorly, including that data can artificially impact your numbers and mislead you. When reviewing campaign or product performance, particularly metrics like ACoS, ensure that you exclude the Prime Day period to maintain accurate and meaningful analysis.

Some mistakes to avoid in Amazon Prime Day ads

Some sellers during Prime Day are not doing the right calculation. This particularly applies when running deals and offering discounted prices. If the volumes are not significantly multiplied, it can negatively impact profit margins. Additionally, combining this with improperly executed or too much aggressive PPC advertising can harm your profitability. It's crucial to ensure you have adequate stock levels, accurately calculate the impact of increasing your overall spend, consider the discount you're offering, and determine if you will still be profitable or avoid significant losses.

Regarding this year's Prime Day, Amazon has not officially confirmed the dates yet, but it typically falls around the time of its July 12 birthday. Issues like increased competition and the usage of advanced tools by sellers can drive up the prices, especially for PPC advertising. Therefore, being aggressive with your PPC strategies can be a way, but ensure you do the calculations  and brand analytics to avoid mistakes. For products with smaller profit margins, it's important to evaluate if participating in Prime Day is worth it or if it's better to maintain campaigns at your usual levels.

If you have any further questions or would like to learn more about how m19  as a Amazon ppc optimization tool can assist sellers automate ppc campaigns, please visit m19.com

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