Digital Marketing

The Ultimate Guide to Amazon PPC Advertising

Amazon pay-per-click (PPC) advertising allows merchants to gain visibility and to thrive amidst cut-throat competition. This platform has evolved into one of the most powerful marketing tools to enhance discoverability and increase sales for Amazon sellers. Essentially, this platform makes it easier for you to display your product before 310 million active Amazon users. And when a user chances upon the ad and clicks it out of curiosity, advertisers will have to pay a fee — hence the name, pay-per-click.

There are plenty of ad networks today, but here’s why merchants prefer to invest in Amazon PPC campaigns:

  • Reaches buyers, not viewers. What’s great about advertising on Amazon is the audience. People don’t roam the platform to window shop. Those who linger on the site search for products they intend to purchase.
  • Boosts sales of all your products. Sponsored ads are a great way to tap into millions of potential buyers. As visibility improves, you’ll be more likely to make or increase sales.
  • Improves organic rankings. When sales increase because of the PPC campaign, the products’ organic search ranking will improve.
  • Measures performance. The campaign comes with tools that help vendors measure the success of their ads. It will let you know which products are doing great and which keywords are effective.

Amazon Guide Featured Image

How to create an Amazon PPC campaign

Before going into the best PPC optimization practices, let’s try to understand the basics of Amazon’s paid search campaign, starting with how it works.

Amazon comes up with a list of products that are relevant to users’ search queries. In the search engine results page (SERP), you will find that sponsored ads are mostly mixed with organic results. You can tell them apart by subtle markers, such as small signs that say “sponsored” or “ad.”

Sponsored ads may appear at the top or bottom part of the SERP. At times, they cover the right column of the page. They may also pop up on individual product pages. Sellers who want to have better ad space will have to pay for it by bidding on the right keywords.

1. Select products to advertise

Amazon Sponsored Ads

Before you can launch a campaign, you will need to select the products you intend to advertise. You can choose a few items or promote your entire line. Ultimately, it depends on your marketing strategy and your business goals. But do know that whenever you choose to hold back on advertising, your competition won’t.

Once you’ve selected the products, divide them into categories so you can direct relevant traffic to your listings. Let’s say, you have a clothing line and you intend to advertise as many products as you can. Group them into categories such as Women’s workout pants, Women’s jeans, and Women’s dresses.

To make your products even easier for consumers to find, you can break them down into specific categories according to style or type of material. Grouping products with the same search terms offers greater keyword relevancy. It also improves keyword discovery.

2. Choose your campaign type

amazon ppc campaigns

One of the first things you will have to do when you set up a campaign is to name it. For the sake of ad management, you can follow this format: Product + Ad Targeting Type. Amazon allows you to run two campaigns for each product, automatic and manual targeting.

  • Automatic targeting campaign

For this or any campaign, Amazon’s algorithm comes up with all the keywords based on your listing’s content and your competitor’s. Since keywords are produced automatically, this campaign can be quite easy to set up. However, that lack of control might also put you at a disadvantage. Sometimes, Amazon generates keywords that aren’t relevant to what you’re selling, which leads to wasted ad spend.

By investing in clicks that won’t turn into conversions, you’re wasting resources and you don’t get to improve sales. But there is a way to go around this problem. You must list down what’s called negative keywords, ones that you won’t be bidding on, and include them in the campaign.

TIP: Use Amazon’s Search Term Report to identify negative keywords. Once you’ve compiled a list, upload them to the ad group.

  • Manual targeting campaign

As the name suggests, this campaign entails manually adding keywords that will be used for bidding. Manual targeting has three keyword match types, which are:

  1. Broad match: With this keyword match type, your ads will run on relevant variations of your chosen keywords such as synonyms and other related forms. Since the search query doesn’t have to be an exact match to your keyword, this setting allows you to promote beyond your target audience and reach more Amazon users.
  2. Phrase match: This type has a more targeted reach compared to broad match. It shows your ad only to shoppers who use the exact keyword phrase or close variations of it, even if it includes a few words before and after the phrase. Word order, however, is essential to phrase match, which means your ad won’t appear if an additional word is placed in the middle of the keyword phrase.
  3. Exact match: For your ad to appear, the shopper’s search query needs to match the exact keyword. Only minor misspellings and plural forms are accepted.

TIP: To optimize visibility, use all three keyword matching options offered by the Amazon PPC campaign. That means each keyword group must come in all three targeting types.

For example: Women’s workout pants Broad, Women’s workout pants Phrase, and Women’s workout pants Exact.

If you aren’t too confident to run a manual targeting campaign, it’s okay to rely on Amazon’s algorithm. Since automatic targeting has a wider reach, it can produce high-quality data over a period of time. That data can tell you what the most profitable keywords are, which you can then use to set up a manual campaign. When in doubt, you can also use tools like Google Keyword Planner.

3. Choose your bid

A bid refers to the maximum dollar amount that you’re willing to pay per ad click.

As previously mentioned, ad placements aren’t created equal. Sponsored ads appear on various parts of the SERP, and some are definitely more visible than others. To acquire the spots that are more likely to lead to a click and eventually a sales conversion, you will have to outbid competitors.

Amazon actually provides suggested bids when you’re launching a campaign. This dollar amount is what’s needed to win the ad auction, and it is derived from the total number of competitors and their bids.

When you launch a campaign, you will be given an option to activate the Amazon Bid+ feature. This will automatically raise your default campaign bid as well as your ad group bid by at least 50%. If you win an auction using Bid+, your ad will be displayed on the top row of the SERP.

Do note that cost-per-click (CPC) will increase when you use Bid+. Your daily budget, however, won’t. The amount will remain fixed until you set new changes. When you do enable Bid+, you must consider its usage before coming up with a daily budget. This way, you won’t burn through your budget at one go.

4. Set up a budget

amazon ppc campaigns

You only need $1 to set up a daily budget. As you prepare your first campaign, take into account the number of keywords you need and the ideal starting bid. For example, if you have 40 keywords and the optimum starting bid per keyword is $0.75, then your daily budget should be $30.

40 (keywords) x $0.75 (starting bid) = $30.

With this method, you should be able to display your ads effectively and efficiently.

How to calculate the ideal ACoS

It is crucial that you know how to calculate your Average Cost of Sale as it helps you avoid losses. Here are the variables you need for the computation:

  • Product Selling Price (i.e. $30)
  • Cost of Goods (i.e. $10)
  • Fulfillment by Amazon Fees (i.e. $10)
  • Miscellaneous fees (i.e. $2)

To calculate the ACoS, subtract the cost of goods, FBA and miscellaneous fees from the product selling price. With the given numbers, you have an $8 profit for each sale. To compute the ACoS threshold, simply divide the net profit from the selling price: $8/$30=0.26. That means you can still profit from campaigns that have 26% ACoS or less.

By comparing the actual ACoS to your target number, you can also optimize CPC bids. Here are a few pointers:

  • Lower your bid when your ACoS is greater than your target number to check if you can decrease ad spend without affecting sales.
  • Raise your bid when your ACoS is lower than your target number to test if it’s possible to expand ad reach.

Key takeaways

Now that we’ve covered all the basics, it’s time for you to work on your ad campaign. Plan everything ahead if you’ve yet to launch one. Feel free to use tools such as Google Keyword Planner to aid you in setting up the campaign. Finally, don’t forget to maintain it. Optimize and refine your campaigns on a weekly basis to make sure all your products are staying visible and competitive.

AdStage Team