If your ecommerce business sells on the world’s largest online marketplace, you know how important Amazon ads are. Successful Amazon advertising campaigns can drive clicks, sales, and reviews. This helps your product outrank competing products on key search terms, creating a cycle of competitive advantages for your Amazon store.
Unfortunately, marketing is one of the first expenses to get cut during slower times. As economic conditions impact demand and consumer spending, it’s tempting to offset a potential decline in sales by turning off ad campaigns. In this post, we’ll show you why cutting your marketing spend might be a big mistake.
The cost of turning off Amazon ads
When you cut your ad spend, you will likely lose your position in search results. As soon as you do, your organic traffic starts to decline as well. The good news is that it takes less time and money to get back your ranking than you may think. In most cases, a few strategic Amazon ads can quickly put you back on top.
One of the biggest mistakes ecommerce businesses make is thinking of Amazon ads as a short-term investment. Yes, they require an initial spend to get started, but once you’re up and running, they can be quite cost-effective. In many cases, Amazon ads are the most efficient way to drive traffic and sales to your listing. Over time, consistent campaigns will help you hold off competitors who try to make short-term investments to take market share for their listings.
If recent news about Amazon revenue forecasts has you rethinking ad spend, think twice before turning off campaigns. Maintaining your investment in Amazon ads can help you grow and maintain your product listings.
A recession hurts your competition, too
According to JungleScout’s 2022 Amazon Advertising Report, return on ad spend decreased sharply in 2021. If you’ve consistently invested in various Amazon advertising campaigns, you’ve likely felt this effect in recent years. Competition for “page one” listings continues to increase, which often cuts into your return on ad spend. But it’s important to remember that Amazon ad spending, when executed correctly, still returns far more than you put in.
Since it doesn’t provide the immediate revenue influx of years ago, it’s a natural reaction to turn off campaigns when times get tough. But remember, your competition is feeling the pinch as well. A recession can often play out as a war of attrition, and this is almost certainly the case in ecommerce. If consumers spend less, there will be less room to survive for listings after page one. This is the perfect time to step up your Amazon ad game and take market share. By maintaining or even increasing your ad spend, you can steal valuable search traffic and sales from your competitors.
This will not be the first recession or valley in consumer spending. But history tells us that cutting marketing spend is a mistake in a difficult economy. If you can strategize your ad spending and content, you can find new customers, solve their problems, and build stronger loyalty to your store or brand.
Test, measure, and optimize before you cut marketing spend
You have two goals when it comes to maintaining your marketing spend: First, optimize your campaigns. Second, generate the cash flow required to pay for them.
Many Amazon sellers manage the inventory, suppliers, shipping, logistics, and customer support themselves. Maybe there’s a small team, but there’s usually not much extra bandwidth to dive deep into marketing campaigns. If cash gets tight, you’ll need to allocate the time it takes to maximize each campaign. If you’re using an agency, you may want to cut the agency before you cut the campaigns. You can try using Amazon PPC automation software to help you stay competitive while lowering your costs.
And before you start pulling levers, take the time to understand campaign performance. Amazon gives you lots of options—sponsored products, sponsored brand ads, and sponsored display ads. You might mix and match options with different listings, and you might vary your spend based on historical demand. You can also choose manual or automatic targeting, and you have different options for bidding strategies. Amazon provides an overview of various ad types here. Over time, performance data for all of your varying options will reveal your highest return on ad spend. This will help you decide where to reduce spending, and where to invest.
Okay, so I need Amazon ads. How do I pay for them?
If you’re like most ecommerce businesses, cash flow can be tight. So how can you afford to keep Amazon ads running during a recession?
Okay, your campaigns are optimized—gold star. If you advertise strategically, you know there will be significant returns on your investment. But you need the cash up front in most cases. One option is to secure funding to cover the cost of Amazon PPC campaigns. This can be a great way to keep your campaigns running while you wait for the sales to come in.
There are funding options designed specifically for ecommerce businesses to support inventory, advertising, and growth. If you can project a significant return on your ad spend, it may be worth financing your campaigns to maintain healthy cash flow.
The bottom line
During a recession, Amazon ad spending is a huge opportunity for growth. So if you’re not currently running ads, now may be the time to start. And if you’ve been thinking about cutting your ad spend, find time or help to optimize those campaigns or your competition could push you out of your listing positions.
For help managing your cash flow or funding your next campaign, Viably can help.
Malik McCray is the founder of Simpliworks, the 1-click promotion platform for new and emerging eCommerce businesses. Malik brings over 5 years of experience as an Amazon Seller and online marketer scaling brands from 0 to 7 figures. With Simpliworks, Malik has a mission to make selling online as easy as buying online.