In the jungle, positioning gives you an advantage. You want to be at the top of the food chain, but in order to that, you must know how to get there. I’m talking Amazon Ad Rank, badgers.
In order to be visible to customers on Amazon, you need to optimize your ranking and appeal to the all-knowing organic A9 algorithm that Amazon uses to rank seller’s products. I am super pumped to dive into how rankings work on Amazon, and how to improve your own Amazon Ad Rank. It all comes down to the survival of the fittest.
First, let’s talk about Google AdWords
Why look at Google AdWords on an Amazon PPC Blog?
AdWords is Google’s ad serving solution. Google changed the game with their unique cost-per-click and ad ranking auction system. AdWords has decades to perfect its advertising platform. Instead of reinventing the wheel, Amazon has been borrowing many elements from AdWords in their own platform. Keyword match types (like broad, exact, and phrase), as well as negative keywords, and their ad auction system.
What made AdWords so unique was how they organize their advertisers on their search engine results page. In order to make the platform viable for advertisers of all sizes to compete, they introduced something that has been copied by both Facebook, BingAds, and Amazon: Ad “Quality” as a component of Ad Rank.
We’ll talk about ad rank and ad “quality” and how it relates to Amazon Ad Ranking.
How AdWords Ranks Ads
Google’s advertising makes $32.2 billion in revenue per year. When it comes to PPC advertising, Google has it figured out. What is particularly unique is that ads on Google aren’t monopolized by a few huge corporations. Any business with as little as 100 bucks can get involved in AdWords. In fact, there is a way for their 100 dollars to go much farther than their competitions – even getting twice the amount of clicks for the exact same cost as their competition.
The first note to realize is that Google Ads (and Bing, and Amazon, and Facebook Ads) is not a straight-up auction. In other words, the first position is not necessarily owned by the person who is willing to bid the most. While your Cost Per Click (CPC) bid is part of the ad ranking process, it’s just one piece of the puzzle.
Google looks at two factors to determine its ad ranking: the CPC bid and the Quality Score.
CPC Bid: The maximum bid for a keyword
Quality Score: How useful and relevant your ad is to the customer
Combine both CPC Bid & Quality Score, and you’ve got Ad Rank.
Ad Rank = CPC Bid X Quality Score
Now how does Google define “quality” when it comes to ads. You’ll see Google use lots of synonyms like “relevancy” or “experience”, but it all comes down to a primary metric: Click-Through-Rate.
If an advertiser creates clickable ads on their platform – more clickable than the competition – then AdWords views that ad as one of high quality. One that provides users with an experience they like enough to click on the ad. AdWords gets paid, the advertiser gets charged, and the user finds what they’re looking for. This is the way AdWords defines relevance.
Basically, AdWords reward the most clickable ads because that’s how Google makes its revenue. Since AdWords’ advertisers have to pay for every one of their ads that are clicked on, Google further incentivizes to serve that ad more often. The formula is simple:
More Clicks on an Ad -> Better Experience for Users -> AdWords Makes More Money -> AdWords Rewards that Advertiser with higher ranking and cheaper clicks
If you’re an advertiser serving ads that no one clicks on, you will be viewed as a low-quality advertiser, and end up being penalized by AdWords. This prevents huge corporations from bidding sky-high bids and jumping to the top spot.
High bids don’t mean good ad ranking:
Don’t get carried away with the bidding. If your Quality Score isn’t high, then it doesn’t matter how much you bid.
If Raccoon bids $5 and his quality score is 5 and Badger bids $4 and her quality score is 7, Badger will win the auction.
- Raccoon’s ad ranking would equal 25 ($5 X 5 = 25)
- Badger’s would equal 28 ($4 X 7 = 28) and Badger would be ranked higher and get more clicks
This ad ranking system that incentives advertisers to create clickable ads with cheaper clicks, better positions, and more traffic has been borrowed by Facebook Ads, BingAds, and even Amazon.
How Amazon has Evolved Google’s Ranking
How Amazon ranks its own ads is very similar, but they do have different motives for their ads. Google wants to present ads that are closest to what is entered in a search query. Amazon wants to present ads that the searcher is most likely to buy. This key difference extends the idea of what is defined as a “Quality” Ad.
Amazon doesn’t use the term Quality Score, however, they use the same idea: combining a number of factors to influence the ranking of an ad. Amazon’s ad ranking algorithm takes in many factors when making your product visible and breaks the factors up into two categories (sounds familiar?):
- CTR (click-through rate) history
- Conversion rate
- Overall sales
- Product title
- Search terms
- Seller name
How to improve your Amazon Ad Rank
Let’s first take the two main factors in finding your performance key metrics: CTR and conversion rate.
There are many ways to improve those:
- Optimize Images
- Amazon wants your images to be compatible with its zoom feature. Aim for 1,000 X 1,000 pixels or larger. On top of that, make your images the highest quality possible.
- Product pricing
- Simple supply and demand, my friend. You want a better price than your competitors to create more sales.
- Great product descriptions
- Your customer wants to know what they’re buying. If you’re being vague about your product, the chances are the customer will move to a product page that has a better description.
- Customer service
- If the customer has a bad experience, they will most likely give you a low rating and possibly a bad review.
So now that you’ve done everything you can to improve your CTR and conversion rate, you should feel comfortable to increase your bidding.
Of course, there are pros and cons of increasing your bidding.
- Increased visibility
- Increased traffic
- Increased sales
- Higher cost-per-click
- Higher ACoS (Ad Spend / Total Sales)
The Badger’s Prediction
Looking into my crystal ball, I have some predictions:
- Amazon will combine all the factors that make for a good ad ranking and put a name to it, just like the Quality Score on AdWords.
- Amazon has historically been private about how they rank ads, but I predict the eCommerce giant will release a comprehensive list of ways to increase your ad ranking. For now, this is the closest thing I’ve found.
Like I said, ranking high on Amazon is all about survival of the fittest. Taking into account all the factors that the almighty A9 algorithm likes will increase your ad ranking and help you gain more sales.
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