The greatest threat to profitability with Sponsored Products is inefficient advertising spend. This means paying for clicks that don’t convert into sales. You’ll want to make sure you reduce this as much as possible for best performance.
Adding negative keywords allows you to cut down on wasted ad spend by targeting your ads to the most relevant searches. Effective use of negative keywords also has the added benefit of improving conversion rate by reducing the number of ineffective clicks.
Negative keywords come in two types: phrase and exact. They should be used sparingly and after considering the following criteria:
- Relevancy: If a search term seems relevant to your product and is still not converting into sales, then you need to evaluate your product listing page. If your product listing page is optimized (all description text, bullet points, etc. are relevant to the product), you can also take a look at your competitors' offers, ratings and reviews.
- Impressions: You want to make sure a particular term has had sufficient time to run and generate impressions. While 2-3 weeks should usually present you with enough data, that time period may still not be sufficient if your ad has been ineligible or your product has been out of stock.
- Clicks: Using your organic conversion as a benchmark, you can determine whether or not a particular search term has an excessive number of clicks. If it normally takes 25 page views for you to generate one sale, then you might consider negating a term that has generated 50 or more with no associated sales.
- Spend: Set "spend with no sales" thresholds based on your product category. If you are in a saturated market with a large number of sellers and search traffic, it is not going to take you long to rack up spend due to a higher cost-per-click.
Next: Capitalizing on top performers