Introduction to penny campaigns and why should you have them

Penny campaigns on Amazon

You don’t have to be a PPC expert to make an auto campaign on Amazon. Campaigns like these can help you get steady and slow increase of sales. Especially this one type - penny campaigns. 

You should always have in mind that Amazon is a huge playground on which people tend to play different games in order to win. This platform has around 200 million visitors a month and a rising number of retailers who want to sell their products at all costs. They can all offer the same product but the winner will be the one with the lowest price, better reviews and less competitive opponents. 

Of course, PPC advertising plays a huge role in selling nowadays so advertisers resort to different solutions. One of these solutions is the type of auto campaigns -  penny campaigns:

Penny campaigns Amazon

How auto campaigns work?

By using auto campaigns you leave everything to Amazon. How? Well, all you have to do is to decide on your budget, choose your advertised product and adjust bid. When you do this, Amazon’s machine learning system does the keyword research. The system searches for keywords which fit into the category of your advertised product, similar categories or keywords from your product title.  

Good sides of auto campaigns

The great side of auto campaigns is that you can use the keywords collected in the Search term report for making manual campaigns. Amazon monitors the clicks, impressions and sums the entire traffic for your campaigns and this process lasts about 4-5 work days to get the right numbers. You can use these campaigns for different tests, for example A/B testing of prices. This way you won’t invest a lot of money and effort and you will have the right idea what to do next with your advertising strategy and where to allocate the budget. 

Not so great sides of auto campaigns

As you can assume, these campaigns also have some downfalls. The shortcoming of auto campaigns is that you don’t have the control over the traffic as with manual campaigns. Autos help you find new search terms that can be very relevant, but also the ones which won’t bring you any profit. So the best option is to use both manual and auto (penny) campaigns with lower bids and budgets.

Penny campaigns - do they work?

One of the strategies sellers use is the penny (nickel) campaign. These campaigns have just one ASIN in one ad group with the lowest bid possible. Usually the bid goes from 2 to 10 cents, depending on the niche. 

Since penny campaign strategy escalated among advertisers, we tested it and we got some interesting results. We made Sponsored Product campaigns with lower budgets (around 10$ daily per campaign) with bids from 0.02$ to 0.05$ and sometimes 0.10$ depending on the traffic. What we’ve learned is that by choosing these bids, there is no guarantee that you will get traffic for each product or that you will get traffic at all.

 

Penny campaigns Amazon

Examples of penny campaigns

 

When the penny campaigns trend exploded in May, we wanted to try them out and made a Sponsored Product campaign with minimal spend which resulted in more than $100 in sales and ACoS below 1%. This graph can bring us to the conclusion that in the long run, penny campaigns can bring you steady sales with minimal investment. 

In penny campaigns, like in regular auto campaigns you should check the Search terms and negate irrelevant words and ASINs for which you don’t want to show up.

 

Penny campaigns Amazon

 

Except Sponsored Product campaigns, you can also make Sponsored Display penny campaigns. You just need to follow the same procedure - low budgets and low bids.

Penny campaigns Amazon

 

Here is an example of a Sponsored Display penny campaign where we managed to, with a minimal spend, get more than 20 orders for our client and achieve a low ACoS - 1.61%. This resulted in significant sales ($444.22) since we invested only $7.15! 

Should you use these campaigns?

If you are a novice seller, you should definitely use auto campaigns no matter how much money you plan to invest in advertising since these can show you what your visitors search for and how to turn them into customers.  As you can see from these examples, penny campaigns can bring you significant sales with minimal spend. 

The main question is are you aiming to be one of the best sellers on Amazon who invests a lot into advertising or do you satisfy with being an average seller with steady but lower sales? Depending on your niche, you can get some good results. Especially if you combine them with regular auto campaigns and you don’t have a lot of competitors who are stealing the sales from you. From our experience, penny campaigns can get you hundreds of orders with ACoS from below 1% up to around 20%. Spend and therefore the risk is minimal, and they are definitely worth a try.

About the author

 
Katarina Krstic is a PPC specialist at Sellers Alley. She has 4 years of experience in PPC advertising and during that time she had a chance to work on strategies for big clients, managed over 4 millions of keywords on just one ad account, organized and managed campaigns on accounts with high spend and profit. Amazon and Google AdWords certified.

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