Amazon FBA | PPC + Sponsored Ads – Some Basic Numbers You Need to Know

Hey, what's up guys? This is your boy David with No Rev Limits, and I'm back with another session, spittin' [slang for sharing] some knowledge I'm out here in Korea right now I have a nine-hour layover, and I said, "You know what? Why not shoot some video footage?" So, I'm just going at it

Just free forming it right now It's kinda feels good I like it So, instead of being like all, you know, proper sitting in the office with the camera in front of me – man i'ma just wing it right now, try to spit some knowledge There's a lot of stuff that's been on my mind

I'm enjoying it right now I'm just gonna have fun with the videos I realized that if I just shoot the videos wherever I am, whatever I'm doing, it just – it's easier I can upload It's more natural

So, I'm just gonna go for it like this You know what I mean? Anyway, I'm out here in Korea – layover I'm just trying to spit some knowledge Give me a second while cross the street Alright guys, I'm alive still

So, here we go PPC has been on my mind for the last few weeks and for good reason Pretty much – I talked about this in another video, but I'm gonna just gonna give some different knowledge here – but just to give you kind of a little summary of what was going on, you know, I was selling between 50 and 100 units a day of my product and I wasn't taking home enough profit My profit margin is 40 percent Okay? That means if I sell my product at $10, I take home $4 profit at the end of the day

Now, that is before any advertising costs, which we're going to talk about Okay? So, I was bidding the incorrect way, and I was losing all my profit Most of my sales are actually coming organically, but I was still getting between 20 and 30 percent of my sales from PPC, because I'm still in the ranking process But, I was spending so much more on my PPC that I was losing my profit Alright guys? I'm going to show you how to avoid that

Okay? Or at least give you enough information so you can identify what you need to focus on to avoid spending too much So, here's the thing guys So, here's PPC 101 Okay? Amazon PPC – or pay-per-click ads, sponsored ads – is where you start bidding on specific search terms that customers are searching for to find your product Okay? You typically start this off in the beginning when you're doing ranking and other things right now

There's there's some high level tactics I'll talk about later, but really you need to be running PPC for your product because this is going to help people find your stuff Now, you can spend a lot of money if you do this thing the incorrect way and I have I spent over $30,000 on PPC in a year and that completely crushed any hopes of me making a profitable product Okay? Because I was doing it wrong So, sorry about the noise

I'm not sure if you can hear that So, here's the thing – here's a couple numbers that I want you guys to pay attention to Give me a second The music here is pretty crazy right now You can see all these stores behind me

They're just playing all their music, but hopefully you can still hear me So, there's a couple things that you need to pay specific attention to when you're looking at PPC, or when you're talking about doing PPC Numbers – these are what I mean by things You're ACoS Okay? You're A cost is your average cost of sales

Okay? That means, how much does it cost you – bidding on PPC – to make to make a sale on your product? So, for example, let's say that your average cost is fifty cents – or your cost per click, CPC – is fifty cents, and you get ten clicks That means you spent $5 Okay? Now, let's say you got ten clicks, and you got one sale Okay? So, that one sale – let's say you're selling a twenty dollar product So, you spent $5 to make $20 in revenue

That means you're ACoS is going to be 25 percent You follow me? Now, why is that important? So, let's think about this Let's say that your item cost 10 bucks I'm gonna simplify this here Your item cost $10

As far as your sales price Let me rephrase that Your selling price for your item is ten dollars Okay? For every item you sell, you make $4 profit Okay? That much is kind of hard to do on $10, by the way, but that means your margin is 40 percent

Okay guys? Your selling price is $10 $4 profit to your margin is forty percent So, when you're looking at running ads you want to make sure that your ACoS is 40 percent, or lower, in most cases There's always caveats and high level strategies, but we're going to talk about the basics here – PPC 101 So, you want to make sure that you're ACoS – average cost of sales – is 40 percent or less

What that means is, you're going to be running that campaign at break-even That means you're not losing money, but you're not making money Okay? Or profitable – so, if there's 20 percent, that means that you're running it at about half your margins So you're still taking home money That means that campaign is profitable

I'll run that all day, every day Average cost of sales – your ACoS Okay? That is the amount that you spend divided by the amount of revenue that you pulled in for that campaign Okay? Now, then you also have CPC, which is your cost-per-click You're gonna get – Amazon's going to give you estimates when you're looking at PPC

You're gonna see estimates on, like, 36 cents a click, a $150 a click I've had cost per clicks that are upwards of $3, which is crazy by the way, but some very competitive, fun products So, that's your cost per click That means every time a person, or unique individual, clicks on your ad it will cost you that amount

Okay? Cost per click Then you have your ACoS – I've already talked about that You have your span, your revenue Those are pretty self explanatory Right? So, let's say your budget is $20 and your cost per click, on average, is 50 cent's

That means that you can do 40 You can have 40 clicks before you run out of budget for that campaign Okay? A good conversion for your campaigns I – I would say, in my experience, should be 20 percent or more I say this because that's typically what you want to convert for your product anyways, but if you're bidding on specific terms that exactly describe your product, that means that you should be very highly targeted in the people – or in the search terms that people – that you're bidding on So, that means you're gonna find a product that they want and customers are more inclined to purchase

Okay? So, if for some reason, your conversion for your ads is very low, that means that maybe you're either bidding too much, bidding too high Your page is not – the detail page is not optimized or you're bidding on the wrong search terms So guys, the ones that don't really explain your product Okay? So, those are the key terms that you want to pay attention to, and the key numbers, when you're talking about running ads Okay? I'm not going to get into what search terms you want to bid on and setting up your campaigns, etc

But, when you start running PPC, these are the numbers you need to pay attention to Understand your margin Okay? That's going to help you understand what your ACoS needs to be Okay? Once you understand your margin – let's say for this example it's 40 percent – your ACoS needs to be 40 percent or lower I say 40 percent or lower because if I'm not losing money then it is a good campaign because I am getting more sales – thus helping me rank – and I'm not losing money

That means I can do this all day, every day and still do it Keep doing it, and if it's profitable even better Okay? But, that means that you're max – if your break even – that means you're maximizing, in most cases, the amount of sales that you're going to get through your PPC, which is good The more sales, the better It's going to help your BSR – best sellers rank – and everything else

Now, I wouldn't necessarily keep running at that You do want to make some profit, but if you are getting a lot of organic sales, you know, maybe running it a break-even is not a bad thing Or, you can lower it to like maybe half your margin – say 20 percent, for example So, that's the biggest thing to really pay attention to is managing your spend, and the way that you manage your spend is by managing your bid amount, understanding what keywords that you want to bid on, and also, make sure you understand what your budget is going to be Okay? If all your sales are coming from PPC, that means you just launched your product

You want to be very, very careful about your budget and spend I know you want to get sales, but don't go out there and have, like, a thousand dollar budget bidding crazy and spending all this money because you're going to lose a lot of money I'm speaking from experience, guys I've spent $20,000 on 3 products in pretty much 8 months in 2017, and let me tell you it was a problem Okay? Alright guys, so, I've got to start heading back to the airport, but I hope you found a little bit of that information helpful

Okay? If you did, you know, smash that like button Hit subscribe I'm gonna be putting out more videos I think I'm gonna do this free form video You know this is great

I'm out here in Korea We got people walking around Probably they're gonna be crazy, though But, I don't know This is really cool

I don't have to have any stress or pressure of having everything so scripted I'm off the cuff, and it's honest information about my experiences, guys I'm trying to help you, because I made mistakes I made a lot of mistakes, but things are going well, and I'm telling you why they're going well, and I want to help you guys out So anyway, smash that like button

Hit subscribe Follow me on the next session, guys, and I'll see you the next video Peace!

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