In this episode, host Josh interviews Ritu Java, CEO of PPC Ninja, about effective Amazon PPC management. Ritu shares insights on healthy PPC-to-organic sales ratios, TACoS benchmarks, and the importance of budgeting based on net margin. She cautions about the complexities of sponsored display ads and stresses the need for regular account audits. Ritu also recommends The Goal by Eli Goldratt, highlights ChatGPT as a productivity tool, and suggests following Kevin King for e-commerce insights. The episode concludes with Ritu offering a free PPC audit and sharing her contact details.

Chapters:

Introduction & Guest Background (00:00:00)
Josh introduces Ritu Java, her background, and expertise in Amazon PPC and e-commerce.

Healthy PPC to Organic Sales Ratios (00:00:58)
Discussion on what constitutes a healthy PPC to organic sales ratio, with examples from different product categories.

TACoS Benchmarks & Profitability (00:03:04)
Explains TACoS (Total Advertising Cost of Sales), how it changes over time, and guidelines for setting targets.

Calculating Net Margin and TACoS (00:06:07)
Breakdown of how to calculate net margin, relevant costs, and what a reasonable TACoS percentage looks like.

Budgeting and PPC Management Takeaways (00:08:08)
Three actionable takeaways: budgeting for PPC, being cautious with sponsored display ads, and performing regular account audits.

Book Recommendation: The Goal (00:11:26)
Ritu recommends "The Goal" by Eliyahu Goldratt and explains its impact on understanding business bottlenecks.

Productivity Tool Recommendation: ChatGPT (00:13:14)
Ritu shares ChatGPT as her favorite productivity tool and describes how she uses it, especially for Google Sheets formulas.

E-commerce Influencer Recommendation (00:15:09)
Ritu recommends following Kevin King for his innovative ideas and influence in the e-commerce space.

How to Connect with Ritu Java (00:16:23)
Ritu shares how listeners can contact her for audits, masterminds, and follow her content online.

Episode Wrap-up (00:16:48)
Josh thanks Ritu for her time and insights, closing the episode.

Links and Mentions:

Tools and Software
"PPC Ninja": "00:00:50"
"ChatGPT": "00:13:14"
"Google Sheets": "00:14:05"

Books
"The Goal by Eli Goldratt": "00:11:31"

People
"Kevin King": "00:15:09"

Contact Information
"Email (ritu@ppcninja.com)": "00:16:23"
"LinkedIn (Ritu Java)": "00:16:23"

Transcript:

Josh 00:00:00 So today I'm super excited to introduce you all to Ritu Java. Ritu has started her e-commerce journey as an Etsy seller over ten years ago. She is the CEO of PPC Ninja, a software tools and services provider managing Amazon ads for six, seven, and eight figure brands. As someone who is really passionate about data science and advertising, Ritu has dozens of PPC mastermind programs, workshops, and webinar and has even trained hundreds of Amazon sellers on PPC. She has shared her knowledge on over 100 podcasts, webinars, blogs and conferences including the Prosper Show, Global Sources Summit, Powwow, the Billion Dollar Seller Summit, and many more. So with that introduction, Ritu, welcome to the show.

Ritu 00:00:50 Josh, thank you so much for having me. I am super excited to be here and to talk all about PPC today.

Josh 00:00:58 What is what would you recommend from the hundreds of accounts that you viewed. The sellers that are using your platform and software. What do you see right now is a healthy balance of PPC sales to organic sales for an established brand.

Ritu 00:01:14 Yeah, and I think it's very dependent on the category. Some categories are so saturated that 60, 40, 60 PPC and 40% organic is becoming the norm. For example, just to give you an example from the pet space just so crowded, like especially if you're, you know, selling any kind of like, dog toys or, you know, pet products and things like that. there's so much competition there that, you know, 50 to 60% coming from ads is pretty normal. Like, there's no chance you can compete with mainland Chinese brands with just organic. They've already got 20,000 reviews and more like, how can you, you know, how can you even compete? Begin to compete with that, right? So the ads become your only way, your only chance of being seen. And that leads to the 6040 ratio. But in some of the other categories where it's a little bit more, you know, difficult for anyone to imitate you or to provide services that, you know, require human, you know, intensive work like support or whatever, like after the fact, it's probably still okay to get like 40% from, ads and 60% from organic.

Ritu 00:02:37 So let's say research heavy products or products that require or have a good margin. Right? Have a good margin, that are not so easy to imitate those categories. You're still seeing quite a healthy ratio. So it totally depends on the category. I would recommend just making a note of that number today and just watching it over time. Because just baseline it and then you'll see whether it's going up or down.

Josh 00:03:04 Yeah that's good input. And on that note, while we're talking about metrics, what do you see as a healthy tacos percentage for an established brand. And I'm sure it changes based on what category you're in. For sure, if you're supplements, you're playing a much longer term game and you're playing on subscriptions and repeat customers. But let's say for an average brand, right, that has, you know, one time customers more often than not. What do you think is kind of the ballpark tacos number to ensure that they're they're healthy and competitive across the board?

Ritu 00:03:39 Yeah. So that's such a great question.

Ritu 00:03:41 Really $1 million question. So okay, here's what I think of tacos. Now your tacos is going to be different at different stages of your journey. So you know when you are starting off your tacos, needs to be competitive with the market. You can't be looking at tacos as a profitability metrics. It's more of like, what's the maximum I can afford to spend in order to get this business off the ground? But then as time progresses and you start to see, you know, revenue coming in, flywheels working, everything is going fine. Then you start to tweak the, you know, the tacos target a little bit to kind of make it more profitable. so I think, it's a kind of, it's a calculation that I, look for at three points. So I look at spend. I look at revenue and I look at profits. Right. So initially, when you're just starting off, you know, even the smallest amount of spend will result in a drop in profits. You know, you're starting off.

Ritu 00:04:54 You're spending money on ads. All of that is eating into your profits. But at a certain point the the spend as you increase your ad spend, it's actually going to generate revenue for you. Right. So what's the sweet spot when those two lines kind of cross over? that's the target tacos that is going to shift with, with, you know, the maturity of your of your account. So, we do say that the guideline is we don't want to spend more than 50% of net margin for your for your advertising. So I guess if you can keep that just general rule of thumb in mind, you should be fine. so no more than 50% of net margin. eventually you want...