If you have been selling on Amazon, you must have heard about Amazon pay-per-click (PPC) advertising. If you are planning to sell on Amazon and have done some research, there is no way you haven’t heard of it. Everyone is talking about Amazon PPC and how it can help your Amazon FBA business.
What is Amazon PPC, and how does Amazon PPC work? These are the pivotal questions that many new sellers have. If you’re new to Amazon advertising, it is also pivotal to learn the basics. When you are paying to play, you need to optimize every cent spent.
This complete Amazon PPC guide will answer those questions and explain the basics. It’ll help you create successful Amazon pay-per-click campaigns that will help you take your business to the next level. To make the process easy and quick, you can use SellerApp’s advanced advertising suite. It will give you automated, reliable insights from your sponsored ads – all in a single click!
So, let’s get started.
But before that, here’s a quick walkthrough of what is covered in this post:
- What is Amazon PPC?
- How does the Amazon PPC auction work?
- Overview of Amazon ad revenue
- How does Amazon paid search work?
- Amazon PPC ad types
- Requirements to run a PPC ad
- Factors affecting the PPC placements
- Basic terms used in PPC
- Top 5 reasons to try Amazon PPC
- Amazon keyword match types
- Amazon PPC ad campaign strategy
- Final thoughts
What is Amazon PPC? How does the Auction work?
Amazon PPC also referred to as sponsored ads, is a well-known advertising platform to help sellers amplify their product sales online. With the pay-per-click (PPC) model, the advertiser only pays Amazon when you click on the ad. If you are running Amazon PPC campaigns, you will not have to pay for impressions.
When a PPC campaign is managed and optimized well, it can significantly boost the product’s visibility and sales. This will also boost the product’s organic ranking, thereby ensuring long-term success.
How does the Amazon PPC auction work?
The Amazon PPC auction process is simple. Each advertiser submits a default bid and competes against each other for ad spots. However, the bid set by the highest bidder is not necessarily the cost-per-click.
Suppose you have bid $2.00 for a keyword. The second-highest bidder has a default bid of $1.50. As the highest bidder, you will win the ad spot, but you won’t have to pay $2.00. You will only have to pay $0.01 more than the other bidder. This means you end up paying $1.51 instead of $2.00.
This means that the cost-per-click (CPC) for a keyword or targeted ASIN will depend on the highest bid, but it isn’t always the highest bid.
Additional reading: Comprehensive Amazon PPC course
To learn more about Amazon PPC, you can take a deep dive into our 3-part Amazon advertising course. These Amazon PPC tutorials will help you learn how to create, manage, and optimize your campaigns.
- Course 1: Amazon PPC Setup & Things to Remember Before You Start
- Course 2: Budget & Amazon ACoS Calculation
- Course 3: Setup, Match Types, Keywords & Bidding
Why you should use Amazon pay per click (PPC)?
Advertising is not the first thing people think about when anyone mentions Amazon. However, over the years, the retail giant has become a behemoth in the advertising space. Amazon’s revenue from advertising hit $5.4 billion in the 3rd quarter of 2020 – a 51% increase from 2021. While Amazon has not dethroned Google or Facebook, it has rapidly improved its market share.
So, why are people, especially sellers, crowding to use Amazon PPC?
The answer is simple – return on investment. Since Amazon is a retail platform, the users entering a search term are already looking to buy a product. They are active buyers looking to make a purchase. Your ads are more likely to convert when the customer is already in the market for the product.
The user base is also constantly expanding. This is particularly true for 2020. Most retail stores had to shut shop and customers turned to online retail to buy essentials and fulfill their shopping needs. The revenue figures for 2020 reflect this shift in consumer behavior. From $69.98 billion in Q3 2019, Amazon’s revenue in Q3 2020 rose to $96.15 billion!
So, Amazon has a captive customer base that seems to be spending more and more every year. With Amazon PPC, you are targeting that consumer base. There is money to be made when a PPC campaign is executed well.
When should I launch Amazon PPC ads?
This is another question that new sellers usually have. What is the perfect time to launch a PPC campaign? Unfortunately, there isn’t a conclusive answer. We recommend launching Amazon PPC ads as soon as you create a new listing.
To create an effective PPC campaign, you need data. To get actionable data, you need to launch your campaigns as soon as possible. The optimization process is iterative, so you need to keep at it to get positive results. Early on in the product life cycle, it is also difficult to gain visibility, and Amazon PPC helps solve that problem.
How Does Amazon Paid Search Work?
Here is a quick breakdown of how Amazon’s paid search works. It is not as complicated as it sounds. It is apparent that the Amazon Marketplace gets millions of searches each month. These include from short terms to long phrases (or what we call long-tail keywords). These shoppers are none other than people willing to buy products.
Understand that potential shoppers will never do window shopping on Amazon. They are not there to discover ideas. They are all set to buy. All they do is just go to the Amazon search box and type the product name they want to buy.
In turn, Amazon fetches a list of products that it feels will satisfy the customer’s needs. Now, this list of products displayed is called “organic” results.
Additional Reading: Amazon SEO Guide For Better Organic Results
However, there is something called “paid” search results. These are displayed above the organic results no matter what you search. Though place above the organic results, they sometimes do appear in between the organic search results, on the right side, or below the organic search results.
The concept of Amazon’s sponsored ad program is simple. Every paid search advertising or marketing option of Amazon follows an enhanced auction-based approach wherein vendors and sellers set their day-to-day budget for ads. The higher a vendor or a seller is ready to pay for his/her ad, the greater are the chances for the ad to be displayed.
Vendors and sellers pay for their advertisements per click – this means that they pay an amount every time a buyer clicks on the ad. According to reports, this model has successfully worked for many retail giants. In fact, Business Insider states that Amazon’s paid search revenue in 2017 was $2.8 billion. So, you can imagine the impact of such ads.
Amazon PPC Ad Types
PPC ads can be classified into three types:
- Sponsored product ads
- Product display ads
- Headline search ads
Let’s look at each PPC ad type in detail.
1. Sponsored Product Ads
Sponsored Product Ads allow a business to advertise their products depending upon the keywords.
Here is an example of how it looks like:
When it comes to click-through rates and sales conversions, sponsored product ads always perform great. They are highly beneficial because they intermix with the organic results and impersonate with them.
Typically, they are seen below Amazon’s organic search results, somewhere on the product detail page or on the right side of the search results. They work the best only if you have done your homework on keyword research.
To set up Sponsored Product ads, just select a product, choose the keyword term, and allocate a budget. Upon doing this, Amazon will target your sponsored ads automatically to a suitable audience.
Research shows that many businesses have experienced better sales with Amazon Sponsored Product ads than Google Ads. Moreover, they are thrice cheaper than Google’s CPCs.
2. Product Display Ads
Product Display Ads are another type of PPC ad that are shown on a product page – in a similar product section. These ads are designed to be a self-service option, which is paired with the ASINs and thereby, giving marketers greater options to focus on the behavioral segments.
Here is an example of what Amazon’s product display ad looks like:
Each ad type has its screen placement section, budget, and differs greatly in the conversion rate and the click-through rates influences. Amazon allows sellers to match every deal with an intended audience for a Display Ad.
As a seller, you get to target the product’s detail page, related categories, related interests, and complimentary listings.
Whenever you choose an ad for your product, it is vital to comprehend three things:
- Type of product
- Target audience
3. Headline Search Ads
Like Sponsored Ads, a Headline Search Ad is limited to particular product categories. These are none other than the ones that appear on the top of the search results with the brand logo. These are also called banner ads whose objective is to get buyers to click from a group of products.
They are placed on the top with an intention to increase the possibilities of a product being seen. With headline ads, you can display multiple products simultaneously, customize the landing destinations, and even the ad copy.
This type of Amazon PPC ad offers the largest range of customization. You can choose from your brand pages, product pages, search result pages, or a custom URL. You can also choose the text and images shown in the ad.
Here is how a Headline Search Ad looks like on Amazon:
Also, it can appear like this:
You should match the objectives with the kind of ad you choose. Say, for instance, sponsored ads should be utilized to target shoppers with a purchase intent whereas headline ads serve better if you are trying to create good brand awareness, and finally, product display ads can serve both purposes.
Requirements To Run A PPC Ad
It is important to ensure that you meet the following requirements before running a PPC ad campaign on Amazon.
- Seller Account: Every advertiser should have a seller account inactive state.
- Shipping: Every advertiser should be able to ship the products anywhere in the United States.
Buy Box: As an advertiser, if you are looking to advertise with the help of Sponsored Products, you need to meet the Buy Box eligibility criteria, which involves further conditions like: holding a professional seller account, show metrics (for cancellation rates, order defect rates, late shipment rates, etc.), and stock availability.
- Amazon Brand Registry: This is particularly required when using a headline search ad. The concept of Amazon brand registry is mainly to protect intellectual properties and offer enhanced user experience.
If you want to advertise using Headline Search Ads, you must be enrolled in the Amazon Brand Registry.
Amazon PPC: Factors affecting ad placements
Now that you know about the different types of Amazon PPC ads, it is time to look at how ad placement is determined. Most people assume that the highest bidder always gets the best spot – that isn’t always the case. While the cost-per-click is a critical factor, it isn’t the only one responsible.
These are the two vital factors that decide ad placement:
- Amazon CPC: The person with the higher CPC has a better chance of winning prime ad space.
- Quality factor: The probability of a customer clicking on the ad is also important. With Amazon PPC, Amazon only gets paid for clicks. Impressions do not help Amazon. The more likely a customer is to click on an ad, the better its placement.
If you have an ad that is converting well and generating clicks, you can afford to bid lower for an ad spot. A good product listing and ad copy are pivotal for reducing ACoS (advertising cost of sale) and maximizing ROI (return on investment) with Amazon PPC.
What is ACoS?
ACoS is a metric used to measure the efficiency of your Amazon PPC campaign. It is the ratio of ad spend to ad revenue. Essentially, It measures how much you spend for every dollar of revenue generated.
ACoS = (100 * ad spend) / advertising revenue
An ACoS is greater than 100 means that you are spending more money than you receive as revenue.
There is no golden number to assess a campaign. The ideal ACoS depends on a myriad of factors including, but not limited to, product category, business strategy, and advertising goals. You’ll need to tailor your ACoS goals depending on all these factors and devise strategies to meet your target.
Amazon PPC advertising: Key terms and features
- Amazon PPC: keyword match types
There are three Amazon keyword match types to choose from for targeting.
- Broad match: Your ad will be triggered when a shopper searches for your keywords in any order, along with other close variants. It doesn’t guarantee the best returns, but it is a great way to gather data after a product launch. This data will come in handy when optimizing and refining your targeting later. It is also a great way to improve ad visibility since your ads will show up for many similar search terms.
- Phrase match: Your ad will be displayed if a buyer searches for the keywords in the same order along with either suffixes or prefixes. If your keyword is ‘floor mat’, your ad will also be displayed for ‘blue floor mat’ and ‘floor mat green’.
- Exact match: The ad will only be displayed when a buyer searches for the exact keywords, without any other words or phrases. It is the most refined targeting option, and high-converting keywords will yield optimal returns with exact match targeting.
For a more detailed understanding of keyword match types and their function in Amazon PPC, I recommend reading the following detailed guide on PPC setup, match types, keywords & bidding.
- Dynamic bidding
Even after you set a base bid, you can use Amazon’s dynamic bidding strategies to help make optimal bids. There are two types of dynamic bidding strategies that will adjust your bids depending on the conversion probability.
In dynamic bidding – down only, Amazon can lower your bids by up to 100%.
In dynamic bidding – up and down, Amazon can lower or increase your bid by up to 100%. For ad placements that are not on top of the page, Amazon may increase the bid by up to 50%.
All these bid adjustments are based on the probability of conversion. It is calculated by Amazon based on ad history.
You can also adjust bids by placement to target the top of search and product detail pages. It can be adjusted from 0% to up to 900%.
These features are complex, so to learn more, I recommend watching this detailed video on bidding strategies.
- Negative targeting
Sellers can use negative keywords to minimize wasted ad spending. When you mark a keyword as negative, your Amazon PPC ad will no longer be displayed for that customer search term. When utilized well, negative targeting can drastically lower ACoS.
How do you identify negative keywords? Generally, you need to look out for keywords that are irrelevant and with no conversions. You can also use SellerApp’s advertising suite to complete the entire process in a few clicks. The machine learning algorithm automatically detects and highlights potential negative keywords for you. All you need to do is click one button to mark the highlighted keywords as negative.
You can automate negative keyword targeting using SellerApp’s ML-powered automation tool. Just set your parameters and let SellerApp take over.
Top 5 Reasons To Try Amazon PPC
Though you have a product that is making pretty decent sales, you might want to consider running PPC campaigns for a variety of reasons. The most common reasons why sellers and vendors run PPC campaigns for their products are listed below.
- To Boost Product Sales
Running PPC campaigns is one of the easiest ways to bring in sales. Increasing sales is, of course, the long-term objective of all sellers running PPC campaigns for their products.
2. Increases Organic Rankings Of Highly Competitive Keywords
There might be keywords in your listing which are too competitive to rank in an organic search. Running PPC campaigns for such keywords helps to build visibility. Having the first-page result for those keywords not only brings in sales but also increases the organic ranking of your product for the keyword over a period.
3. To Create Brand Awareness For New Product Launches
Products that have the most sales are automatically on top of the search results. New products have great difficulty in ranking high for keywords. Low ranks result in fewer sales. Running PPC campaigns is an ideal method by which the product ranks high and also gets an increased sale potential.
4. To Avoid Competitors Snatching Top Positions And Sales
Over a period, best-selling niches and categories see saturation in the number of sellers. Though your product ranks high in organic searches and has good deals, it can be easily outrun by competitors running PPC campaigns for their products. Most top-ranking brands run PPC campaigns to safeguard and retain the top ranks and positions in Amazon searches over competitors who also run PPC.
5. To Increase The Visibility Of Products For Seasonal Trends
Amazon Sellers see the biggest and the maximum sales during seasonal trends like Christmas, Mother’s Day, Halloween, etc. The same goes for the end-of-season sales and the Q4 quarter. Depending on the product, Amazon Ads can be a great way to generate sales by increasing customer interest as a result of seasonality.
Did you know that the top 4 ads on the Amazon page get 45% of the clicks?
Ad positions play a massive role in deciding the profitability of PPC campaigns. Often it is the first result; products in the case of Amazon, get the maximum clicks, irrespective of whether they are sponsored or organic results.
Amazon Keyword Match Types
Let’s take this example; the search term is benches. The search intent is quite apparent. However, Amazon displays a “baking tool” as the first sponsored product.
Avoid such instances of irrelevant ads by choosing the ‘Keyword Match type.’ With the Keyword match type, you can decide when to display your product and, based on the matches of the search term with your keywords.
You can choose for an exact search term match, terms padded before and after the search terms, make restrictions on the order of search terms, etc. For each campaign that lets you choose the keyword type, there are three categories to consider
Amazon Keyword Match types Differences:
- Broad Keyword Match
Search terms that not only match your keyword but are also related to your keyword. Your advertisement may display regardless of the order of keywords and also for additional words. This might include synonyms, misspellings, and variations of your keyword.
Pros and cons of Broad Keyword Match:
Broad match targets an extensive range of search terms including abbreviations, acronyms, and synonyms:
- This usually means higher visibility and sessions for these keywords, as shoppers can use a broader combination of search terms to trigger your ad.
- Broad matche can turn out to be extremely expensive and can drain your money by inviting clicks from irrelevant ads and search terms, like the example illustrated above.
- A broad match is a great way to target more people and get more visibility for your listing.
You could run a broad keyword campaign for a specific period, analyze the data, and then fine-tune the keywords according to the search terms.
- Phrase Match
The phrase match is where you specify a phrase and the keywords are matched with terms before or after. The critical feature of phrase match is that it allows you to control the word order. Variations may include misspellings, singulars & plurals, stemming, etc.
Example: skiing gloves, ski gloves, abbreviations, and acronyms.
Pros and Cons of Amazon Phrase Match Type:
Phrase match displays the ad only when the search term is the same as the keyword, but additional words can be added before or after the keyword.
- The target group of the ad is a medium-range and can be triggered by both short search terms, and broad search terms.
- You still enjoy high visibility for your product, however few unnecessary clicks that were generated in the case of broad term match are avoided.
- This is a good middle ground between broad and exact match, as you have slightly more control over when your ad displays.
- Exact Match
By the exact keyword match, you can narrow it down to the customers who are searching exactly for your product. Exact match targeting allows only your exact keyword (plus plurals, singulars, and misspellings) to trigger your ad.
Pros and Cons of Amazon Exact Match:
- Type The target group of the ad is very small yet quite precise.
- Exact Match takes a toll on the number of impressions compared to the other ad types as the ad is displayed to people who are typing the exact search term as your keyword.
- An exact match is a great way to ensure you get the right clicks and target the audience who are precisely looking for your product.
Amazon PPC Management Is a great way to drive sales. However, it is also a process that requires a lot of research and analysis to pull it off in the right direction. Amazon offers many choices to PPC sellers and campaigns, and if worked in the right direction, Amazon PPC is a great way to make enormous profits.
Amazon PPC Ad Campaign Strategy
We recommend a robust – 3-step process to make the most of your Amazon PPC campaigns.
Step 1: Activate Auto Campaign – High Bid
The objective of the “auto campaign – high bid” is to uncover all the keywords that are relevant for your listing across the price range. The recommended values you have to enter for the suggested bid rate for keywords are $5.00 with a daily budget of $20.00 and running for 3 days.
The typical bid rates are much lower than $5.00 but when you run this campaign for 3 days with $5.00 as the bid rate, you will get a very good understanding of the range of bid prices and the keywords for which people click your keyword.
How to Analyze the search reports
At the outset, our advice is to activate three campaigns. That’s exactly how I do it.
The first campaign is automatic. You can say Amazon: “Hey Amazon, I make an automatic campaign, then Amazon is there and looks at your listing. Then Amazon starts your campaign then all that you have to say is “I pay and so much per click”.
Here I recommend, go with a euro in the beginning. You pay only €1 per click. And to reduce the risk because now you’re saying I’ll pay €100 a day at once. You can decide it yourself and say at €20 ‘This is the end’ as an example. Amazon online marketing gives you this benefit.
The second campaign is: Do you think about which keywords are important to you? What keywords do people search for before they buy your product?
And the third campaign is again one of the things you can do with Google Ads. Once you’ve set up an account with Google Ads, you’ll be able to search for specific words in the keyword planner, and it’ll also show you other keywords.
I think it’s really about mass at the beginning. You want to get as many keywords as possible to see what works. And then it says to wait a week because the data from Amazon are not directly available.
Then you can go into the individual campaigns and look exactly through what people have clicked, which keywords made impressions on the user, how many people clicked on them, and how many people even ordered. All this keyword data is used to find Amazon’s hidden keywords. You want to optimize your listing on these keywords that you found. The more keywords you have the better.
I’ll explain the importance of the whole thing. The above process. And how does it work? Through sales, Amazon spins up: when your product sells well to your keyword. Then it gets ranked at Amazon. Because Amazon wants to sell and if your product is the best and people buy your product then your product is also placed above. And that is the ultimate goal. The more you go up in organic searches for your keywords you’ve found out. This is the benefit of Amazon advertising.
The 6th step is very important. Always optimize again. What has changed, are there more keywords, more lists? And with optimization, I do not mean that you should stop the thing! This campaign is increasing that only what you need to optimize, is how much you spend, you need to ensure that the whole is not the Red goes.
At least reinstate what they cost. This is the whole secret recipe as you at Amazon good ranks. Because Amazon sees someone searches “Wellies” sees your ad, clicks on it, and buys the rubber boots is for Amazon: “Aha!”
The product is just right for someone looking for “rubber boots”. We better take it up!
Pay-per-click advertising (PPC) / Amazon marketing is by far the most successful advertising model on the Internet.
The inventor of this advertising model was the US company Goto.com, which was later renamed Overture and has been trading as Yahoo Search Marketing since the end of February 2006.
But Google’s success led to this advertising model: when Google began advertising in 2000, Google named this ad, Google Ads was the breakthrough for the commercial success of the search engines. Today it can be assumed that over 90 percent of Google’s revenues come from these ads.
Even if there are many similarities between search engine optimization and the booking of PPC ads on a superficial view, both marketing activities differ considerably. The most obvious difference for the user is that the PPC ads are marked as advertisements and highlighted in color.
From the point of view of the online market, however, the fact that Google Ads advertising is paid per click is the most important difference to search engine optimization.
Because search engine optimization initially poses higher requirements, under certain circumstances the complete web appearance has to be completely reworked; if this initial hurdle is taken care of, the following fixed costs remain rather low and the single click is itself “free”.
If you want to draw parallels to offline marketing, search engine optimization is most likely to be compared with public relations work. In both activities, it is very difficult to predict the possible benefits.
This means that a press release can be just as unread as optimization cannot bring about any improvement in position. Amazon PPC ads, on the other hand, correspond to classic advertising, such as in newspapers or magazines.
Here and there you can estimate in advance how many people will consume the advertising message. And from experience, both measures are relatively easy to estimate such as ROI (Return On Invest). For particularly short-term activities, PPC displays are excellently suited.
Within a very short time, with Google often only in a few minutes, the advertisement is activated and immediately on the web to see. And just as quickly, the ads can be stopped again. This makes PPC advertising an ideal advertising form for the special activities of online shops.
How to download and analyze search term reports
You need to manage your Amazon PPC campaigns using robust data. The best way to get that data is from Amazon’s search term reports. Using these reports, you can figure out exactly what your customers are searching for.
To download your Amazon PPC search reports, just follow these steps.
- Log in to seller central and click on Reports.
2. Select Advertising Reports, and Create Report.
3. Under Campaign type, select the required sponsored ad type.
Amazon PPC Functioning
PPC advertising works on the auction model: Who is willing to pay per visitor at a higher price, will continue to appear within the listed ads above and can gain more visitors. The minimum prices for a booking are usually 0.10 Euro per click; to the top, only the game of supply and demand sets a limit. For particularly popular keywords such as “insurance comparison” or “data rescue”, Google’s advertisers pay more than 10 Euros for each click.
Pay-per-click or cost-per-click, abbreviated simply PPC or CPC, comes from the English language area. In English, pay-per-click means “pay or cost to click”.
Pay-per-click or PPC has developed in the field of online marketing. Internet pages are provided with advertising banners. For example, on a blog for long-distance travel, you’ll find airline banners or search engines for flight bookings.
These advertising banners are operated by companies. As soon as a customer is aware of the advertising, no costs arise. Only when he clicks on the advertising banner and is forwarded to the side of the company does it cost.
Behind the system are various ways to operate marketing. Advertising banners can be placed on search engines, blogs, private homepages, or company pages. Amazon PPC is based on the same principle.
Again, the dealer has the opportunity to influence. Thus, the product appears at all, the product of the needs keyword is considered relevant. This is because the keyword is contained in the product name, for example.
Another requirement is that the product in the Amazon Buy box stands. If these two conditions are fulfilled, the advertisement can be displayed.
If the keyword is relevant to multiple ads, they are in competition with each other to position the items. To solve this conflict, Amazon takes an auction that decides on the
That wraps up the basics of Amazon PPC. There is a lot of information to process, but a seller must know the fundamentals. This is just the start though. We recommend reading our other Amazon PPC guides and watching our tutorials before you get started. You can start with an automatic campaign to get some vital data. Amazon’s algorithms also do a reasonable job at running the campaign.
However, Amazon is an ultra-competitive marketplace. Each dollar of wasted ad spend is one less dollar in profits. The best way to maximize efficiency is by running manual campaigns.
Other Interesting Blogs
- Amazon Product Listing 2021 Guide: Best Optimization & Guidelines
- Amazon PPC bulk operations
- Top 7 Steps To Amazon Product Listing Optimization For Ranking
- Grow Your Business with Amazon PPC Automation