Strategic product grouping for Amazon Ads

When it comes to advertising on Amazon, product grouping plays a crucial role in shaping your advertising strategy. Whether you’re a new advertiser or looking to revamp your approach, understanding how to group products effectively can significantly impact the success of your campaigns.

What is product grouping?

Product grouping involves determining which products (ASINs) should be included in the same advertising campaigns. It is a fundamental decision that allows you to strategically align your advertising efforts.

To make informed decisions about how to group products, it's essential to analyze how your listings are structured. Are your products mainly standalone ASINs, or are there multiple variants living within a parent-child structure?

Both structures have pros and cons when it comes to product grouping. For example, if all variants are shown in the same Product Detail Page (PDP), grouping them in the same campaign can mean you benefit from consolidated reviews and you give buyers easy access to all available colors, sizes, or packs. The drawback of this approach is that only one variation will appear on the Amazon search results pages (SERP). 

On the other hand, having standalone ASINs (i.e., no parent-child variants) provides more placement options, potentially showcasing all the products in the SERP. This model can also be more advantageous later on when you may want to employ brand protection or competitor conquest strategies, as it will allow you to display more of your products. To determine the best structure, we recommend analyzing competitor practices and observing the general trends within your category.

It's worth noting that Amazon will ultimately determine which products within a campaign will be displayed for a given placement. Amazon's algorithm will prioritize and give more visibility to products that have been proven to drive more clicks and conversions. An understanding of Amazon's logic is at the core of the best practices and advanced strategies you can use to group your products and maximize your campaign effectiveness.

Best practices for product grouping

Effective product grouping impacts targeting precision, bidding strategy, budget allocation, and the overall success of different advertising strategies. Although we emphasize the importance of getting the grouping right, we also believe it shouldn’t be a complex and stressful task. Keeping things simple can have many benefits.

To do this, there are four best practices you should follow when planning your product grouping and campaign structure. By understanding and implementing these practices, you can invest your advertising budget more strategically, show the right products to the right audience and reduce wasted ad spend. Let’s take a look at these in detail. 

1. Attribute-based grouping

Products with similar attributes, features, or purposes should be grouped together to maximize click-through rates (CTRs) and conversion rates (CVRs). For example, variants of the same parent ASIN can often be grouped together because they share most features and address the same customer needs. The best way to check whether products have sufficiently similar attributes is to analyze their keyword targets. Do the products share the majority of keyword targeting? As a rule of thumb, if they share about 80% of targets, then they're a good match for attribute-based grouping.

2. Historical data-based grouping

Grouping products that display similar performance metrics allows you to allocate their budget more effectively and set a more profitable bidding strategy. For instance, grouping a product with a high CVR together with a product with a low CVR will make it very hard to adjust bids. While the first product could possibly afford more aggressive bids and still be profitable, the second most likely couldn’t.

3. Price-based grouping

Separating products into different groups based on price tiers, allows you to tailor their campaigns to specific customer segments and optimize return on ad spend (ROAS). This also allows for better control over bidding strategies. Let’s imagine the following scenario: you sell two types of headphones. The first is part of a premium line and costs $129. The other has fewer features and only costs $49. Although both products share many of the same keyword targets (e.g., headphones), we can expect them to serve different audiences, compete against different products and have different profit margins. 

4. Objective-based grouping

Create separate groupings whenever they have specific objectives, such as:

• promoting new products

• clearing inventory

• targeting different customer segments

• increasing brand awareness

Imagine you’re launching a brand new line of backpacks. In this case, your main objective will be increasing awareness. The main KPIs for this ad campaign will therefore be impressions and clicks, rather than ACOS. Grouping the new backpacks separately from your existing lines will allow you to bid more aggressively and allocate budget to these products to hit this specific awareness goal.

Advanced product grouping strategies

It is important to highlight that these best practices are general guidelines. The optimal grouping strategy for you may vary depending on your specific category, product range, and advertising objectives. You will have to assess which approach best suits the reality of your advertising environment. Running experiments is a great way to do this. You can regularly monitor and analyze the performance of campaigns, and make data-driven adjustments. Or, if these best practices don't seem to be giving you enough control, you can try switching up to a more advanced strategy.

The search term strategy

This is a data-powered approach to product grouping based on the keywords customers use when searching for products. This strategy involves:

• analyzing the search term data to identify common or relevant keywords that have high conversion potential

• categorizing products based on customer search behavior and intent. 

Why should you put so much weight on search term data? Because it provides the most valuable insights into how customers are searching for and discovering products. By reviewing this data, you can discover relevant keywords that shoppers are using to find products within your category, as well as find patterns of search terms that are consistently driving impressions, clicks, and conversions to your products. Probing the Search Term Report is like listening to your audience to better understand their behaviors and needs.

Let’s take a closer look at an example.

You’re aiming to better promote your line of Smart TVs (one Parent ASIN with three variants). All three variants share the majority of keyword targets and have the same built-in features. Additionally, profit margins among the variants are similar. As a result, all three products were originally grouped together. However, when analyzing the data in your Search Term Report, you spot a clear pattern in search behavior: the majority of shoppers use size-related keywords (e.g., 32 inches, 42 inches, 48 inches) when searching for Smart TVs. Interestingly, size is one of the few characteristics that differs among the variants. 

Based on this insight, you may want to consider changing the product grouping. Why? Once we know how customers are looking for products, we can tailor our grouping strategy to serve their specific search intent more effectively. The ultimate goal of a campaign is to display the right product in front of the right audience at the right time. If your audience is a shopper looking for 42-inch Smart TVs, we should avoid presenting them with a 32-inch TV!

The hero ASIN strategy  

While our best practices recommend grouping multiple products according to shared characteristics, it may serve you better in some specific scenarios to run single ASIN campaigns. 

If you identify that a certain ASIN outperforms others in terms of sales and conversions, this presents an opportunity to isolate it in its own campaign. This allows for a higher budget allocation and optimized bidding strategies, ensuring maximum visibility and capitalizing on the success of this hero product. Specifically, this ensures that this product is served each time a bid is won, while it also gives lesser-performing ASINs a chance to be shown too—in other campaigns

The seasonal products strategy

For ASINs that exhibit high seasonality or have distinct gifting appeal, running separate campaigns can prove more effective. By customizing advertising efforts based on the unique demands and characteristics of each seasonal product, you can optimize your bidding strategies accordingly. For instance, if you sell a mug with an "I love my mum" print, this product can be isolated to increase bids as Mother's Day approaches, maximizing its exposure during that relevant period.

Make informed product grouping decisions to boost visibility and drive sales

In summary, product grouping is a core building-block of advertising on Amazon, enabling advertisers to organize their campaigns strategically. By considering the best practices described above, you can create targeted campaigns that reach the right buyers and maximize your ROAS. Remember to analyze competitor practices and stay informed about the trends within your category so that you can make informed decisions about product grouping. With a well-structured and optimized advertising approach, you can enhance your products' visibility and drive more sales on Amazon.