No data, no mastery. Let’s prepare BlackFriday with Amazon Ads

Black Friday and Prime Day are some of the biggest sales events for Amazon sellers. Many decide to stop their advertising campaigns on these days to avoid the high costs of CPC. In this article, you will find out how you can use Amazon Ads to make the most of Black Friday.

Similarly to PrimeDay, Black Friday is one of the biggest sales events of the year yet Amazon sellers hesitate to participate

Prime Day sales, which took place in July of this year, were not only an opportunity for prime members to purchase discounted goods but also an opportunity for Amazon sellers to scale brand awareness and revenues. However, as the popularity of the event skyrocketed, ads’ competition for the best-sponsored rank has turned into a devious bidding war with cost-per-clicks (CPCs) reaching all-time highs (figure 1).

In this article we focus on the sellers’ side, helping them decide whether or not they should increase their ads spend and take a chance on Black Friday. We cover different insights on how to prepare for and triumph on Black Friday as well as two reasons to keep your ad campaigns up and running.

Book your front row seats in advance for Black Friday

Black Friday is a golden ticket towards establishing a dynamic and respected brand, but this ticket does not come cheap, it must be earned through elaborate preparation before and during Black Friday. At this point, it is worth mentioning that when advertising Amazon’s products, sellers auction a pay-per-click (PPC) bid for the highest sponsor rank but the bid is only a third of the pie. In reality, Amazon uses a mix of PPC bids, conversion rate and product price to allocate sponsored rank. Under severe competition, during events such as Prime Day or Black Friday, those three will fluctuate (usually, PPCs and conversion rates increase whereas product price decreases).

The fluctuations can have a massive impact on profit. This is why preparation is key because your bidding strategy and pricing must be changed with the growing competition to guarantee better returns. It is only after such careful planning that sellers can take on a chance on Black Friday. But how should they prepare?

Collect and train your data for Black Friday

Usually, sellers have already experienced yearly sales events like Prime Day or Black Friday and have even collected data on how their product categories are impacted. Preparing for Black Friday boils down to: how should they leverage past data for future events? The quick answer is to filter between the reusable and non-reusable data.

Let’s discuss three recommendations:

Avoiding reusing data about PPC intensity and biddings ACOS. Such granular data is influenced by various elements likely to change that will not be useful for the following events.

Observing how much sales fluctuated during Prime Day will be a good indicator of future increases in Sales (figure 2). This will help sellers understand sales’ velocity for their specific category so that they can better optimize their inventory.

Evaluating the level of change in the PPC budget. Looking back on sales events, sellers would know if they ran out of budget or not, and by which margin. Therefore, sellers will accordingly increase or decrease their PPC budget and ads campaigns’ caps.

Overall, keep in mind that the first two recommendations are simple estimates for inventory and PPC budgets. However, even if the dynamics evolve every year it is worth taking on a chance on Black Friday and using past data as it is a solid starting point to measure the movements in customers’ behaviour across specific product categories.

Play with your PPC strategy so as to ace Black Friday

After carefully studying collected data from past sales events, sellers might follow five steps to adjust their PPC strategies for Prime Day.

A couple of weeks before Black Friday, decrease PPC bids or ACOS target by at least 25% this is primarily due to the fact that for most categories, mainly less seasonal ones, this is a low intent period.
Then two days before Black Friday, go back to your ad campaigns and calibrate your PPC intensity according to competitors and analyse data (i.e. bids or target ACOS). This is an optimal time to calibrate because sales have not launched yet but traffic and start to climb (figure 2). Since we cannot be 100% sure about the necessary increase during such sales events, the two days margin is used to test if the increase in intensity is getting enough traffic or not. As a rule of thumb, we have seen an increase of at least 50% in ACOS target or PPCs’ bids. However, it does not mean that the ACOS will be higher by 50% but simply that the bidding strategy is very aggressive with higher CPCs.
Increase the budget cap. Even though sellers must always-always have safety budget caps per campaign or portfolio accounts, we recommend increasing it by at least 100% compared to normal.
Check one day prior and continuously during Black Friday if your bids and budget caps are well adjusted so as to make adjustments when they make sense.
After Black Friday. First, remember to decrease the budgets and bids to normal. And second, ignore Black Friday data for your day to day campaign analysis. This data can be highly misleading as it is not representative of your usual ACOS or performance.

Good News: Black Friday means more sales and at the same ACOS

After analysing our data on Amazon sellers and we concluded that events such as Prime Day and Black Friday are worth the shoot for two reasons:

The first is that sellers obtain the same amount of Ad Sales for every dollar spent. Their Advertising Cost of Sales (ACOS) remained more or less flat compared to previous months which means that spending was as efficient as before but with increasing sales in volume. In the US, our customers’ ACOS averaged 34% before sales and stayed constant during Prime Day (34%) and Black Friday (32%).

The second reason is that the conversion rate improves, especially in the European marketplaces. This means that your likelihood of getting sales for each impression is higher. In the US, this trend does not fully materialize, with conversion rates remaining steady on Black Friday and slightly decreasing on Prime Day. Although CPCs are increasing (figure 1), the efficiency of your advertising remains constant during these peak periods. Overall, conversion rates are improving in Europe while reaching a plateau in the US so sellers spend more on advertising but generate more sales, at the same ACOS.