The 12-Point Comprehensive Guide to Amazon PPC (2019 Update)

This post was originally published on September 8, 2018. We update it regularly to ensure all information is fresh and accurate. Last update: May 21, 2019.

If you recently heard “pay-per-click” advertising and thought you heard “paperclip” advertising, you might be new to this whole PPC thing.

You might even be intimidated by the million abbreviations that accompany PPC, like CPC/CPM, ACOS, NTB, and CVR . But don’t fret! The Badger is here to help you kick ROAS with your Amazon Advertising.

Here’s everything you’ll find in this 12-Point Comprehensive Guide:
 
  1. What is Amazon PPC?
  2. An Overview of PPC Advertising
  3. Is Amazon Advertising Worth It?
  4. Organic Sales vs. PPC Sales
  5. Seller Central vs. Vendor Central
  6. Enhanced Brand Content (EBC) vs. A+ Content
  7. Automatic vs. Manual Campaigns
  8. The 3 Amazon Ad Types
  9. Keywords & Match Types
  10. PPC Strategies for Beginners
  11. Advertising Cost of Sales (ACoS)
  12. How to Get a Better Ad Rank

What is Amazon PPC?

Amazon PPC (Pay-Per-Click) is an auction-style system in which advertisers bid on keywords. When an Amazon customer performs a search for a product, the sellers with the highest bids on relevant keywords win the auction, and their product ads get listed as a “Sponsored Products.” Advertisers only pay the bid price if their ad gets clicked (hence, “pay-per-click”).

Ariana loves PPC, we asked her.

Because PPC is an auction, you will only ever have to pay one cent more than your competitor for the ad placement. 

That is, if you bid $3 for a keyword, but your competitor only bid $1, Amazon would only charge you $1.01 for the ad placement. But remember, Amazon sellers only pay when their ad gets clicked, not every time it appears in the search. 

An Overview of PPC Advertising 

Paid traffic has an interesting history. It’s been around since 2000 and is both a science and art for many online businesses. It all started with Google AdWords (now called Google Ads). If you’ve done a Google search in the past 20 years, chances are you’ve seen some ads in your search engine results. In 2012, Amazon Advertising came into play by allowing vendors and sellers to show off their products on Amazon’s site.

An in-depth infographic explaining the differences and similarities between Amazon PPC and AdWords.
Here's everything you need to know about the difference between Google Ads and Amazon PPC. Save it, share it, love it.

While Amazon Ads and Google Ads have different missions in life, they are close cousins. 

Amazon wants to present customers with ads they’re most likely to buy. Google wants to present searchers with ads they’re most likely to click on. Amazon bases their ad rank on profit, and Google bases their ad rank on CTR. 

If you’re interested, you can read more about the similarities and differences of Google Ads and Amazon Ads

Is Amazon Advertising Worth It?

Yes, advertising on Amazon is totally worth it and the number one way to increase traffic to your product.

This one of the biggest questions we get on PPC forums. Our CEO, Michael, said in an interview with Seller’s Choice, “One of my fundamental beliefs about paid traffic is good paid traffic is good paid traffic no matter what.”

What’s special about Amazon is they already have the visitors. Why would you start with an off-Amazon site and try to generate traffic to a brand new site when Amazon is where they customers are hanging out? Additionally, Amazon visitors are ready to make a purchase when visiting the eCommerce site. In 2016 Bloomreach reported 55 percent of consumers begin their search on Amazon when they are looking to make a purchase. Amazon gets over 2.3 billion visitors a month, you just have to get their attention.

The crazy thing is advertisers are just now realizing the power of Amazon advertising.

Kiri Masters of Bobsled Marketing said in a previous post for us, “I would say that brands are finally realizing the importance of PPC on Amazon. Many are shifting budget to this platform in favor of other PPC platforms like Facebook and Google. An analyst from Atlantic Equities predicts that Amazon will quadruple their revenue from advertising by 2020.”

Check out this video on the importance of Amazon ads:

Play Video

Organic Sales vs. PPC Sales on Amazon

Like any search engine marketing, there are organic sales and paid advertising sales. Organic sales on Amazon are sales generated by product listings that customers found without advertisements and found organically without any help. PPC sales are the opposite where the customer found the product through an advertisement. Organic listing and PPC ads are displayed and ranked differently from each other. Here’s a full post on organic vs paid traffic on Amazon.
Organic vs Paid traffic on Amazon
The red boxes indicate paid traffic and the prouducts underneath represent organic search results.
Typically PPC sales usually make up 10-30% of Amazon seller’s total sales. If organic sales are $1k/day, they should expect $100-300/day in PPC sales conversely, if someone is doing $1k/day in PPC sales, they’re probably receiving $3k-10k/day in organic sales. A couple of weeks ago, Michael sat down with paid specialist from Quiverr to discuss the ratio of organic traffic to paid traffic.

Seller Central vs. Vendor Central

There are two selling platforms for Amazon sellers. Seller Central is for first-party sellers. Think of first-party sellers as mom and pop stores. Vendor Central is for third-party sellers. Think of third-party sellers as bigger companies. Vendor Central has more ad options than Seller Central and access to Amazon Marketing Services and Enhanced Brand and A+ Content. Here’s a full infographic comparing the two:
Get to know the difference between Seller Central and Vendor Central

Enhanced Brand Content (EBC) vs. A+ Content

Amazon Marketing Services or AMS is available to vendors and provide the option for A+ Content. Sellers in Seller Central have the option for Enhanced Brand Content. These two types of services allow sellers to spice up their ads and gain the attention of customers

A+ Content — Available in Vendor Central through AMS, this feature gives you the option to add images, creative sales copy, and charts as a means to convince customers to buy from you.

Enhanced Brand Content — Like A+ EMC, Enhanced Brand Content allows you go deeper with your product descriptions. This is a free tool that can be a window for customers to look into your brand.

Here’s a full comparison of Enhanced Brand Content vs A+ Content:

Amazon EBC vs. A+ EMC

Automatic vs. Manual Campaigns

When you log into Seller or Vendor Central, you are prompted to create a manual or automatic campaign. I’ll get into which strategy is better for beginners a little later in this post, but for now let’s go over the differences and similarities:
Infographic comparing manual and automatic campaigns in Seller Central

The Three Amazon Ad Types

Sponsored Brand Ads – Appear as a banner at the top of the search engine results page (SERP). This ad type is primarily for top-of-the-funnel customers, giving your product the opportunity to grab a customer’s attention before they precisely know what they want.
Headline Search Ad on Amazon
Here's an example of what Headline Search Ads look like

Product Display Ads – Appear on product detail pages and only available in Amazon Marketing Services (AMS).

These ads are used to sway customers away from a competitor page or appear on related product pages. They are mainly for bottom-of-the-funnel customers.

Product Display Ad for Amazon PPC
Here's an example of Product Display Ads

Sponsored Product Ads – Appear on the SERP and Product Detail Page.

This ad type is by far the most popular on Amazon and appears in every step of the customer journey. They’re so awesome, I wrote a love poem about them (please don’t think I’m weird, though).

Here's an example of Sponsored Product Ads

Amazon PPC Keywords & Match Types

When creating an ad campaign, you will need to choose the keywords you want to bid on (note: each “keyword” can be more than just one word). Then, if a customer’s search term matches up with your keyword, your ad qualifies to display in front of the customer.

For every keyword you choose, you will also need to select a match type. You have three types to choose from:

  1. Exact Match: Your ad will only show in front of the customer if their search terms match your keyword exactly (with the exception of plurals and slight mispellings).
  2. Phrase Match: As long as the customer’s search terms contain your keyword phrase (without being broken up by other words), your ad will qualify. 
  3. Broad Match: The customer’s search terms just need to contain all the words from your keyword (but they can be in any order).

That’s an extremely brief overview of keywords and match types. If you want to learn more, check out our complete guide here.

Negative Keywords

If keywords are the search terms you want to show up for, negative keywords are the terms you don’t want to show up for (check out The Complete Guide to negative keywords). Negative Keywords can help you avoid wasting ad spend on irrelevant or unprofitable search queries. Amazon’s algorithm will only let your product show for relevant terms, so don’t worry about adding every keyword you can think of as a negative keyword.

Negative keywords have only two match types: phrase and exact.

 Get More Amazon Basics With Our Free Amazon Seller Starter Kit!

Amazon PPC Strategy for Beginners

Now let’s get to the good stuff. Starting to sell on Amazon can be daunting, but it won’t be after you’re done reading this guide. 

It’s tempting to bid too high in an attempt to get fast returns, but that strategy is doomed for failure. 

Why You Should Start With Sponsored Products

What is an Amazon Sponsored Product?

Remember when I said Sponsored Product Ads are the most seen ads on Amazon because they show up at every point in the customer journey?

Use Sponsored Products when starting out to get the best return on ad spend (ROAS).

Sponsored Product Ads can appear below Headline Search Ads, to the right of the SERP and on product detail pages. With Sponsored Product Ads, you can reach the most customers and reach a high conversion rate (around 10%). In Sponsored Product ad campaigns you can even retarget customers on third-party sites.

Here’s literally everything you need to know about Sponsored Products.

All About ACOS (Advertising Cost of Sales)

What Is ACOS?

To understand ACOS on Amazon, start with this video:

Play Video

What Does ACOS Mean?

ACOS stands for Advertising Cost of Sales.

What is the ACOS Formula?

ACOS = Total Ad Spend ÷ Total Sales.

What is the Average ACOS?

The average ACOS we see for Ad Badger users is 30.4%, but keep in mind that’s because they use a Amazon PPC tool to tame their ACOS.

What’s my target ACOS?

Before I answer this question. Figure out your Break-Even ACOS first.

Play Video

Once you know what your Break-Even ACOS is, you can decide what Target ACOS you need to earn a profit and which ACOS results in a loss.

How to Lower ACOS

When you’re given the option to bid on your first campaign, you may not have any idea what to bid on. Use the Inch-Up Method when beginning your Sponsored Products Campaign.

Play Video

What to Do If Your CPC Is Too High

You can simply calculate the perfect bid every time. Yes, there is a formula you can use to find the perfect bid for your keywords according to your target ACOS.

 

Amazon Bidding Formula:

Average Order Value x Conversion Rate x Target ACOS = Your target CPC (and therefore your Bid)

We even wrote a post with a free bid calculator included!

Check out this video that goes more in depth on bidding the perfect amount:

Play Video

How To Get Your Amazon Ads to Rank Higher

We wrote a whole post on this topic, but let’s review.
Amazon Ad Rank Explained

Amazon’s ad ranking algorithm or A9 is attracted to ads that have a history of selling, thorough descriptions, and plenty of reviews.

Amazon uses performance and relevance metrics to determine ad quality. 

Performance Metrics: CTR, Conversion Rate, Overall Sales

Relevance Metrics: Product Tiles, Description, Search Terms, Seller Name

Amazon isn’t fully transparent about how it ranks ads, but given Amazon took a lot from Google Ads, we’ve concluded this is the closest to how Amazon determines ad rank. 

We always recommend Amazon sellers to focus on their product detail page optimization before advertising in order to get the best result. If your detail page isn’t set up correctly, you might get bad reviews for being misleading with your description or 

How to Get Reviews on Amazon

The best way to get good reviews on Amazon is to provide a good product, be patient, and be transparent with your product descriptions. Customers don’t like when they pay for something they didn’t know they were buying. We do not support incentivized reviews because it’s against policy and Amazon will suspend your account and prevent you from selling on their platform.

But, here are some ways to fight bad reviews on Amazon.

Choosing Your Amazon PPC Software and Tools

Here are some things to look at when choosing your Amazon PPC software:

  • Support

When it comes to your ad spend and profit, you want the best support to answer any questions you have to give peace of mind.

  • Minimize Wasted Spend

Controlling wasted spend on Amazon ads influences your profit and overall ACOS for your campaigns. No one wants to spend money they don’t have to. Look for an Amazon PPC tool that prioritizes reducing wasted spend.

  • Bid Optimization

The best way to avoid wasted spend is by bidding the perfect amount every time. This means bidding the perfect dollar amount to ensure you win a keyword and don’t go over your daily budget at the same time. Bidding is the hardest thing to do. Imagine if you could sit in front of your computer every day and bidding based on your conversion rate, cost of good, and Amazon trends. Find a software that does that for you.

  • Keyword Management

Keyword research is also essential to great Amazon PPC campaigns. Positive and Negative Keyword automation can really take your account to the next level of profit and ad ranking. Find software that automates keyword research to discover what keywords are most successful for your product.

If you wish to compare, check out Ad Badger’s features when deciding on what Amazon PPC software to use.

Play Video

Welcome to the Jungle

There’s your crash course on Amazon Advertising. 

The jungle is yours now, young badger. It’s time for you to rise to the top of the PPC food chain.

 

If you’ve read this far, you must really like us! We’re flattered 🙂 

If you want, you can try taking our our Amazon PPC Automation Software out for a spin. 

Sign up for your 30-day free trial of Ad Badger today!

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