If you recently heard “pay-per-click” advertising and thought you heard “paperclip” advertising, you might be new to this whole Amazon 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:
- What is Amazon PPC?
- An Overview of PPC Advertising
- Is Amazon Advertising Worth It?
- Organic Sales vs. PPC Sales
- Seller Central vs. Vendor Central
- Enhanced Brand Content (EBC) vs. A+ Content
- Automatic vs. Manual Campaigns
- The 3 Amazon Ad Types
- Keywords & Match Types
- Amazon PPC Strategies for Beginners
- Advertising Cost of Sales (ACoS)
- 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” in the search results. Advertisers only pay the bid price if their sponsored product ad gets clicked (hence, “pay-per-click”).
Since Amazon PPC campaigns are auctions, you will only ever have to pay one cent more than your competitor for the ad placement in the search results.
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 results. In 2012, Amazon PPC Advertising came into play by allowing vendors and sellers to show off their products on Amazon’s site.
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 its ad rank on profit, and Google bases its 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 Amazon 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 the 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 its revenue from advertising by 2020.”
Check out this video on the importance of Amazon ads:
Organic Sales vs. Amazon PPC Sales
Like any search engine marketing, there are organic search sales and paid search sales. Organic sales on Amazon happen when a customer discovers and purchases your product without you sponsoring that product for better placement on Amazon’s search results. To optimize your organic sales, you want to focus on Amazon Search Engine Optimization (SEO).
Paid Search or Amazon PPC sales happen when a customer discovers your product through an advertisement on search results. Sponsoring your products with Amazon Ads is the fastest way to get your product to the top of Amazon’s Search Results Page (SERP) so that you can generate more traffic. However, PPC campaigns can get complicated so you might want to read more.
Here’s a full post on organic vs paid traffic on Amazon.
Typically, Amazon 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 Amazon PPC sales. Conversely, if someone is doing $1k/day in PPC sales, they’re probably receiving $3k-10k/day in organic sales.
Seller Central vs. Vendor Central
There are two selling platforms for Amazon sellers: Seller Central and Vendor Central.
Seller Central is for third-party sellers. Think of third-party sellers as small business owners who sell their products directly to customers on Amazon’s website. These sellers can also choose to personally ship products to their customers, or let Amazon fulfill their shipping method, earning their product the Amazon Prime badge.
Vendor Central is for first-party sellers, usually larger businesses that sell directly to Amazon, and then Amazon sells to its customers. Because vendors are selling directly to Amazon, their product automatically receives the Fulfilled by Amazon (FBA) Prime Badge.
Here’s a full infographic comparing the two:
Automatic vs. Manual Amazon Campaigns
When you log into Amazon’s Advertising Campaign Manager in Seller or Vendor Central, you will see the ability to “Create New Amazon PPC Campaign.” When you do, you’ll be prompted to create either a manual or an automatic PPC 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:
So you might be asking: “Which ad campaign type is better? Automatic campaign or manual PPC campaign?”
The answer is neither. You need to be running both! To learn more about the differences between Automatic Campaign & Manual PPC campaigns and how to use the two symbiotically, check out our more detailed post here.
The Three Amazon Ad Types
Sponsored Brand Ads
Also known as headline search ads, sponsored brand ads are 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 ads appear in the following locations on desktop devices:
- Above search results (hence “headline search”)
- To the left of search results
- Below search results
Sponsored Display Ads
Display ads appear on product detail pages and only available in Amazon Marketing Services (AMS).
Sponsored display 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.
Sponsored Product Ads
Sponsored product ads promote your products on product details pages and search results. Companies have increased their expenditures for sponsored product ads since it has an incredible consumer attraction and conversion abilities.
Like other Amazon PPC advertising options, Amazon only charges you for your Sponsored Product Ads when a shopper clicks on them. This feature provides your business control over advertising budget and bids for keywords.
Sponsored Product Ads appear in the following locations:
- On the right side of search results
- On the bottom of search results
- On product detail pages
Sponsored product ad type is by far the most popular on Amazon PPC and appears in every step of the customer journey. They’re so awesome, I wrote a love poem about sponsored product ads (please don’t think I’m weird, though).
Amazon PPC Keywords & Match Type
When creating an ad campaign, you will need to choose the keywords you want to bid on (note: “keywords” 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 in the search results.
For every keyword you choose, you will also need to select a match type. Match type refers to the way your keyword matches the user’s actual search on Amazon. There are three types:
- Exact Match: Your ads, Amazon will only show in front of the customer if their search terms are an exact match to your keyword (with the exception of plurals and slight mispellings).
- 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.
- Broad Match: The customer’s search terms just need to contain all the words from your keyword (but they can be in any order).
Keyword research is one of the main pillars of successful advertising campaigns and search ads so don’t neglect keywords research.
That’s an extremely brief overview of keywords and match types. If you want to learn more, check out our complete guide here.
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:
What Does ACOS Mean?
ACOS stands for Advertising Cost of Sales. In layman’s terms, it means how much it costs to make sales using Amazon PPC.
What is the ACOS Formula?
ACOS = Total Ad Spend ÷ Total Sales.
What is the Average ACOS?
The average Amazon ACOS we see for Ad Badger users is 30.4%, but keep in mind that’s because they use an Amazon PPC tool to tame their ACOS.
What’s my target ACOS?
Before I answer this question. Figure out your Break-Even ACOS first.
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 Amazon 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.
What to Do If Your CPC Is Too High
You can simply calculate the perfect PPC 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’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.
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 it 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:
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 spending.
- 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 on Amazon PPC keywords 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, thus improving your PPC campaings.
If you wish to compare, check out Ad Badger’s features when deciding on what Amazon PPC software to use.
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.
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