Amazon PPC: The Ultimate Campaign Optimization Strategy Guide

If you’re new to selling on Amazon, you’re probably searching “How do I promote my product on Amazon?” The answer is Amazon PPC ads.

If Amazon is a jungle and paid advertising is the food chain. There are many things that can keep you from being profitable, just like there are many things in the jungle that can bring you to your demise. High CPC is like a Poisonous Dart Frog that slowly drains your account budget, Spider Monkeys are like pesky reviewers who may be trying to steal your profit, and competitors are like opportunistic Jaguars that lurk in the shadows waiting to strike. Okay, sorry for scaring you, but the truth is you can rise to the top of the food chain.

First, you have to know exactly how advertising on Amazon works:

Amazon Sellers bid on keywords in an auction-style system. The seller with the highest bid and best ad quality wins the keyword. When a potential customer searches that keyword, the seller who won the keyword will appear on the search results page.

This is an easy way of explaining it, but there are many parts to it. Our CEO, Michael got the idea of writing this mega-post after answering “How does Amazon PPC work” on Quora. 

I’m going to try to cover every basic topic in this post. If I don’t cover something important or didn’t explain a topic enough, please comment and I will get my furry badger paws to update the post. 

Introduction to PPC Advertising 

Paid traffic has an interesting history and has been around since 2000 and has been a science and art for many online businesses. It all started with Google AdWords. If you’ve been on the internet in the last 18 years, you probably have seen ads on your visited sites that try to get you to visit other sites. This is Google AdWords (now known as Google Ads). In 2012, Amazon advertising came into play 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 ads searchers are most likely to click on. Amazon bases their ad rank on profit and Google bases their ad rank on CTR. The bidding and ad types are similar and both share match types and negative keywords. 

Here’s a full post on the similarities and differences of Google Ads and Amazon Ads

What Does Pay-Per-Click Mean?

PPC stands for Pay-Per-Click and means exactly what you think it does. When a potential customer clicks on an advertisement the seller pays Amazon for that ad space. Keep in mind sellers only pay when the ad is clicked on–not when the ad is seen by Amazon users. Every Amazon ad you see is a PPC ad and every Amazon ad you’ve clicked on in the past, a seller was charged. Am I blowing any minds yet?

Is Amazon Advertising Worth It?

Yes, advertising on Amazon is totally worth it and the number one way to bring 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:

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:

Enhanced Brand Content 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

Amazon Ad Types

Headline Search Ads – Appear at the top of the search engine results page (SERP)

  • Headline Search 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 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)

  • Product 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.
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

Sponsored Product Ads are the most popular ad type on Amazon and appear in every step of the customer journey. They’re so awesome, I wrote a love poem about them. Don’t think I’m weird.

Here's an example of Sponsored Product Ads

Amazon PPC Campaign Match Types

When creating an ad campaign, you will also be forced to choose a match type for your campaigns. 

There are three types to choose from:

Broad Match: Bids on keywords that are broadly related to your product. This keyword type sees more long tail keywords, are less competitive and cheaper.

Phrase Match: Bids on keywords that appear in search phrases a customer types in. These are more specific than broad.

Exact Match: Bids on keywords that are really specific to your product or brand. These keywords are competitive and more expensive.

Negative Keywords: These are keywords you don’t want to show up for. When adding negative keywords, you avoid wasted spend because Amazon won’t show your ads to customers looking up these keywords. 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 also have the three match types to choose from.

What Metrics to Look For With Amazon PPC?

There are many metrics that you can look at to determine the success of your campaigns. Ad Badger keeps track of our user’s performance every month to give Amazon sellers benchmarks.

Here are some important metrics:

Cost-Per-Click

The Cost Per Click (CPC) is the amount you pay when a customer clicks your ad. Remember that Amazon PPC is an auction and these CPC prices are equal or less than the highest bid a seller places on a keyword. Sellers want a low CPC to maximize the return they get on an ad.

Average Cost-Per-Click for Amazon PPC

The average CPC for Amazon PPC is $.78. This metric varies due to competition.

Conversion Rate

Conversion rate is the percentage of ads that converted into sales.

Average Conversion Rate for Amazon PPC

The average Amazon PPC conversion rate is 9.8%.

Advertising Cost of Sale

Advertising Cost of Sale (ACoS) is the total ad spend divided by total sales. If your ACoS is 25 percent, you’re spending a quarter on ads to make one dollar in sales.

What is the Average ACoS for Amazon PPC?

The average ACoS for Amazon PPC is 31%. Of course, this metric is per Ad Badger, per day and might be a little higher because they use an Amazon PPC tool.

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

Amazon Ad Campaign Strategy for Beginners

Now let’s get to the good stuff. Starting to sell on Amazon can be daunting, but not after you read this. It’s tempting to bid high and try to get returns fast, but that strategy is doomed for failure. You won’t survive in the jungle without a good strategy.

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 investment per ad.

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.

What Is Amazon ACoS?

ACoS is like a teenager, complicated and a little moody. It’ll raise and lower each week and can be hard to control sometimes.

To understand ACoS on Amazon, start with this video:

What Does ACoS Mean?

ACoS stands for Advertising Cost of Sales or Advertising Cost Over Sales.

What is the ACoS Formula?

ACoS = Ad Spend / 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.

Low ACoS or High 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 ACoS

When starting out use the method Research, Peel, Stick, and Block (RPSB). This is a common strategy we inform Amazon sellers about. It’s a really easy way to gather data if you’re brand new to Amazon advertising.

Research: Start out with an Auto Campaign and let it run for a week. This will gather data for you and inform you of your highest converting keywords and your lowest converting keywords. Keep in mind that Amazon has a 48-hour delay on metrics. Your conversion rate should be around 10% for Sponsored Products. Read about other metrics here.

Peel and Stick: After you gained data on your keywords, take the top 20 highest converting search terms and place them into a manual campaign with an exact match type and bid higher. Consider these keywords the winner’s circle because you know these search terms will convert. I will go more into bidding in a second.

Block: Now take the lowest converting search terms and block them by turning them into negative keywords. You want to take search terms that didn’t receive any conversions. Remember, some terms that received a low number of conversions still are worth bidding on.

Use the Inch-Up Method to Get Keyword Data for a Low Cost

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 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: The Average Order Value X Conversion Rate / 1 Over Your Target ACoS = What You Should Be Paying Every Single Click.

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:

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 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 a 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.

Welcome to the Jungle

There’s your crash course into Amazon advertising. The jungle is yours now that you know how to rise to the top of the Amazon PPC food chain.

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