The Amazon Rainforest is full of symbiotic relationships… and so is the Amazon Marketplace!
Much like the capuchin monkey and the flower, organic search and paid search live in mutual harmony, working together to grow your total traffic and sales. Until you’ve mastered the art and science of paid-organic symbiosis, you will never reach your full potential as an Amazon seller.
What’s the Difference Between Organic Search and Paid Search?
Almost every Amazon SERP (Search Engine Results Page) has two types of listings:
- Organic listings
- Sponsored listings
Organic product listings are those which appear naturally on the Amazon SERP because Amazon’s A9 algorithm determined those products were the most relevant to the customer’s search query.
Sponsored product listings are advertisements that appear above the organic listings on the Amazon SERP because their sellers were willing to pay to give their products a boost. Sellers only pay for their ads if they get clicked (hence, the name “Pay-Per-Click” (PPC) advertising).
Amazon’s ranking system for organic and sponsored listings is a bit complex. To find out how that system works and how to optimize your listings, you’d have to check out our other post.
Organic vs Paid Search… Which is Better?
Ah, the question that’s been asked for generations, sought by sages. The answer has eluded us until now, and the Badger reveals it to you: neither!
Really, it’s the wrong question to ask. We shouldn’t think in terms of “organic vs paid search” as if the two are against each other. The two listing types should work together to increase your overall traffic and conversions. Come to think of it, organic and paid traffic have to work together to be successful.
Organic traffic increases paid traffic, and paid traffic increases organic traffic.
Think of organic and paid traffic as star-crossed lovers whose moods affect each others’ overall happiness. Kind of like Romeo and Juliet. The Montagues and Capulets might try to keep them apart, but organic and paid optimization belong together.
The Hidden Cost of Organic Traffic
While it’s true organic traffic gets “free” clicks, it isn’t totally free.
Organic listings appear below Headline Search Ads and get interwoven with Sponsored Product Ads (see all the Amazon ad types and their position in the SERP). To rank on the first page organically, you need to pour a lot of time (and sometimes money) into optimizing your product listing.
The Hidden Benefits of Paid Traffic
If your product is new or struggling to get to the top of the Amazon SERP, paid advertisements can take you there. Amazon PPC helps your products gain visibility and increase sales, which not only means more revenue in your pocket, but it also contributes to a better rank organically.
Because your product itself gets an overall boost, paid traffic can help your organic listings achieve:
- Best Sellers Rank (BSR) improvements
- Best Seller badges
- Amazon’s Choice badges
- Better product rank (both paid and organic)
- Brand recognition
Check out this article by Single Grain to learn more about Amazon’s A9 Ranking Algorithm.
The Paid-to-Organic Contribution Ratio
Many Amazon sellers miss the importance of this metric. Knowing how much of your revenue is coming from paid traffic versus organic traffic is critical to developing a robust business strategy.
How to Calculate Your Paid Traffic Contribution
- Open Campaign Manager
- Set the timeframe you want to measure
- Write down your sales (these are your PPC sales)
- Click the “Reports” tab at the top
- Click “Business Reports”
- Make sure you select the same timeframe as before!
- Write down your Ordered Product Sales (this includes both PPC and organic revenue)
- Divide PPC Sales by Total Sales
- Multiply by 100
- There’s your percentage contribution of Paid Search revenue!
How to Calculate Paid-to-Organic Ratio
The paid:organic ratio compares paid contribution to organic contribution.
Once you’ve calculated your paid contribution (see steps above), simply subtract that number from 100 to find your organic contribution.
Example: if your paid traffic contribution was about 20%, that means organic traffic contribution was 80%. Your paid:organic ratio would look like this:
This means that for every $1 of paid search revenue, organic search made $4 of revenue.
What’s the Average Paid Traffic Contribution?
From my experience working with Amazon PPC customers, most successful sellers earn 30-40% of their total sales from paid search.
It would be a missed opportunity to neglect PPC, especially in crowded niches where organic ranking is competitive and top spots are limited.
If your ratio is closer to 10:90 than 40:60, there’s a good chance that you missing out on 30% extra revenue, not to mention the organic benefits.
I’ve said it before, and I’ll say it again:
Paid traffic drives organic traffic.
Paid traffic earns your product a higher sales velocity, which in turn gets you:
- Better organic ranking
- Best Seller badges
- Amazon’s Choice badges
- BSR improvements
- Brand recognition
In fact, the organic benefits of paid traffic are so good that many advertisers target over 100% ACOS for their campaigns–the ROI is made up in their organic listings!
How to Use the Paid-to-Organic Traffic Ratio to Scale Your Business
A lot of sellers notice that when they scale back their PPC campaigns, their organic traffic takes a hit as well. That being said, you should try to stay within the 20:80 to 40:60 range (or 20%-40% paid traffic contribution).
What should I do if my PPC contributes to less than 10% of total revenue?
I’m glad you asked. I’d start by cranking up your PPC so that you reach your break-even ACOS. If you want to be really aggressive, you can even go above your break-even ACOS in hopes of winning it all back by reaping the organic benefits.
Hitting your target ACOS can be tricky. That’s why we built a tool that automagically hits your target ACOS every time, with every keyword.
What should I do when launching a new product?
Another great question! For brand new products, it’s not a bad idea to target a 90:10 paid-to-organic ratio. This is just to get the ball rolling, and we’ll scale back to the 30:70 range once we gain some velocity.
A big initial PPC push is like putting rocket boosters on your product. It’s short-term, costly, but effective. You’ll be sailing through the stratosphere in no time.
The Bottom Line: Organic and Paid Search Belong Together
Like Romeo and Juliet, organic and paid search belong together. Even though they come from different families, they work together toward a common goal: increasing overall sales.
I leave you with this infographic explaining the complicated relationship of paid and organic search on Amazon:
See you next time!