Prime Day Strategy – How ACoS Can Drop Even With Increased Competition

What is Prime Day?

Amazon Prime Day is a shopping event that Amazon holds annually, typically in the second week of July. Prime Day is held in all markets and originally spanned a single day, but this year’s event is extended to 36+ hours. Despite the event itself spanning two days or less, traffic will increase before and after Prime Day.

During Prime Day, Amazon runs several promotions that drive large inflows of high-intent traffic to the site. While many shoppers look to score deals on Amazon merch, the inflow of traffic creates significant opportunity for 3P sellers as well – even those not planning to run promotions.

To take advantage of the increased, high-purchase intent traffic, we have several recommendations that will make your 2019 Prime Day a success.

Prime Day Traffic and Conversion Rates

Prime Day is heavily publicized and countless sellers are going to run promotions and ramp up their advertising spend. One of the most frequently asked questions we get is, “Is it worth advertising on Prime Day – won’t my ACoS be off the charts with the increased competition?”. While a valid concern, one of the trends we see is that conversion rate often increases at a higher rate than CPC during this period. While there is a high level of variance from product to product and category to category, the increase in conversion rates has typically offset the increase in cost per click, thus producing a lower ACoS.

Ignoring product selection and blindly increasing budgets and bids will likely achieve sub-par results, but selecting the right products and strategies can drive more sales and profitability. It can even allow you to take advantage of other sellers’ promotions.

Product Selection

To determine which products to offer coupons, lightning deals, or to increase ad spend, sellers should first analyze their inventory. If you have supply chain concerns and current sales velocity may put you out of stock for certain products, promotions and increased advertising during Prime Day does not make sense.

Next, if you are launching products or have a large surplus of inventory, you should consider a mix of coupons, lightning deals, and more aggressive advertising tactics to drive more sales volume for those products. When sales and ranking are your priority, not ACoS or RoAS, then Prime Day is an excellent opportunity to run promotions and ramp up your advertising to drive more sales.

Prime Day Promotions

If you choose to run promotions for some of your products, Lightning Deals are a great way to substantially increase sales velocity and reduce inventory levels. Consider submitting multiple products for Prime Day Deals to maximize exposure to your catalog.

If you have been considering a price drop, Prime Day is also a great time to trial using coupons instead. Shoppers actively deal hunt during Prime Day, so coupons can be the catalyst for turning what would be an impression into an order.

Regardless of promotions, we recommend continuing your advertising during Prime, and being more aggressive with certain products and campaigns.

Advertising Strategy for Prime Day

To fully leverage the increase in traffic and higher-purchase intent, we typically recommend a 20-100% budget increase, though we often recommend larger budget increases depending on goals. If you’re running promotions, keep budget open to ensure you are maximizing exposure.

For bid strategy, we recommend scaling bid increases based on performance. Your top performing keywords should be increased the most, and increases should be cascaded down. If you are planning to be very aggressive, we recommend increasing bids by 100% for keywords beating ACoS targets. If planning to take a middle of the road approach, increase bids by between 20-50% for top performing keywords. Increase bids for keywords with high sales velocity and an ACoS at or slightly above target by 10-30% depending on whether you are running promotions on the item. Finally, leave poor performing keywords static.  For a more detailed overview on general bid optimization, you can check out our bid optimization guide.

If you are conservative with your ad spend, at minimum, keep budgets and bids at current levels. Even though competition increases, it is highly unlikely you will achieve worse results around Prime Day. With static bids, you may see a drop in impressions, but the increased search traffic typically outpaces the increased competition, so most sellers should see higher traffic with minimal changes.

Targeting Strategy for Prime Day

One of the secrets to effective advertising during Prime Day is product targeting. If you aren’t running promotions, but have comparable listings to those that are, you can siphon traffic from their product pages using product targeting. While it is difficult to know which products will be promoted, you can ensure coverage by increasing auto campaign enhanced targets, such as substitutes and complements, as well as increasing bids for category targets. Product Attribution Targeting will net fantastic results for those with lower price points or superior products.

For keyword targeting, we typically shy away from generic Prime Day oriented keywords such as ‘prime day’ or ‘prime day deals’. The relevancy is low (so conversion rate is low) and competition is high (so CPC increases). Instead, focus on the top performing keywords within existing campaigns, as well as higher volume short-tail keywords that are relevant to the advertised products.

When to Start Advertising for Prime Day

Waiting until Prime Day to start ramping up bids and testing keyword mixes is a bad idea. Start gradually increasing bids at least 3 days before Prime Day so that you can analyze results and increase budget if necessary. If initial ACoS is high, don’t panic. While you can make minor bid reductions, conversion rates should improve on Prime Day enough that results will improve. Finally, don’t revert adjustments as soon as Prime Day is complete. Sellers often benefit from additional search traffic in the wake of Prime Day as shoppers return to the site to purchase products that caught their eye.

Want to make sure your campaigns are ready to go for Prime Day?  We’ll give you a free review of your PPC campaigns to let you know how you’re doing and any key areas to focus on.