Would you like to estimate how much your Amazon Sponsored Brand ad campaigns can earn?
Here’s a simple rule of thumb I use that helps estimate the revenue potential for Sponsored Brands, based on my experience spending ~$3M and generating ~$30M from Sponsored Brands on Amazon.
For most companies, the revenue potential for Sponsored Brands is 40-80% of Sponsored Product sales.
So all you need to do to get the specific number for your company is to:
1. Login to Amazon Advertising
2. Filter campaigns by Type: Sponsored Products in the main tab. The filter button is grey, and you can find it by the orange Create Campaign button, on the other side of the filter text field.
3. Look at the sales for the past year and see what your average monthly sales are from Sponsored Products
4. Multiply by 40%-80% to get a range of what you can earn using Sponsored Brands.
Note: This assumes equal ACOS (Advertising Cost Of Sale = Spend / Sales). If you’re willing to have higher ACOS on one ad type, clearly this rule isn’t relevant.
Note: This also includes advertising both in Sponsored Brand text and video ad campaigns.
I realize many of you are wondering what projects to prioritize for the next 12 months. Hopefully seeing that there’s huge potential value here helps you make this a top priority.
Alternate Method to Forecast Your Sponsored Brands Sales Potential
If you aren’t doing even Sponsored Product ads, what can you do to estimate your potential for Sponsored Brand sales?
You can look at this using the Total ACOS aka TACOS metric. TACOS is defined as total ad spend / total revenue (including revenue not driven by ads).
Depending on your average price point, your TACOS might be typically between 4-30%. So if you have $100,000 in sales, your TACOS would usually be between $4,000 to $20,000. The main factors that determine where your TACOS lies in the range are your
- price points – you can look at three bands that cover most industries: below $50, $50-$100 and over $100. Higher price points have lower TACOS
- conversion rates – the higher you convert, the less you pay per order
- competition on Amazon – the easier it is to get into a niche, the more competition, the thinner the margins and the higher the TACOS
I’d love to hear more about your own experience with this – email me and share your experience. DG@011AdsforBrands.com