If you want to run Amazon PPC ads, you need three things.
You need a great product. You need an ad budget. And you need this Amazon PPC strategy guide. That’s because in this guide, I’m going to go through everything you need to run a profitable Amazon PPC campaign. I’m also going to go into the best campaign strategies and automation tactics that will take them to the next level.
Considering 70% of Amazon searchers never click past the first page of results, 35% of Amazon searchers click on the first product featured on a search page, and the first three items in search results account for 64% of clicks, then this guide is critical to your success.
So let’s talk about Amazon PPC.
What Is Amazon PPC? Is It Worth It?
Amazon PPC, also known as sponsored products, is an ad network within the Amazon ecosystem. The functions are the same as any other ad network. You pay money to get premium positioning on the keywords you want to target. It’s also an auction style system, which means if you bid $3 for a keyword and your closest competitor bids $1, then you win that bid.
The real question is though… is it worth it?
The answer is yes. In fact, it’s not even an option anymore. You need it.
Besides the fact that the first 3 listings get the majority of clicks, unlike other ad networks, Amazon PPC actually has a direct effect on the organic rankings of your products.
That’s because one huge factor to ranking is recent sales.
In other words, if you can increase your sales from 10 units per day to 100 units per day, Amazon doesn’t care whether that came from organic or paid ads. They just care if it happens and will reward you with better organic rankings and more Amazon reviews. So even in a world where you just get “average” results with your ads, you still become profitable through organic.
Now, let’s say you didn’t care about any of that.
Are they still worth it?
The answer is still “yes”.
That’s because even if you don’t want to advertise on other people’s listings, other people will try to advertise on yours. So even if you didn’t care about making more sales and driving up your organic rankings, you can still use ads to stop people from poaching your customers.
That is a really hard proposition to beat.
How Much Does Amazon PPC Cost?
Amazon PPC works like an auction, similar to Facebook ads. This means that everyone who wants to participate inputs the biggest number they’re willing to pay. The highest bidder wins the highest ad position and will also only pay 1 cent more than than the next highest bid.
So let’s say there are three advertisers…
Advertiser 1 – $1/click
Advertiser 2 – $2/click
Advertiser 3 – $3/click
This means advertiser #3 will win the winner. They will get the highest ad position and the cost per click will be $2.01 because the next highest bidder after them was advertiser #2.
With that said, the average cost per click (CPC) on Amazon is anywhere between $0.02-$3. It can also vary wildly depending on the category you’re advertising in, what time of the year you’re advertising in, and even how well written your product description is due to how it affects your conversion rate.
Amazon PPC Ad Types – Explained
Everything in Amazon PPC starts with the type of ads you’re going to use because every type of ad has its own goals. So let’s go through each.
Sponsored Product Ads
These are ads that allow you to target specific keywords. They appear in 2 locations: the search results page and on Amazon product detail pages. They look like regular organic listings, except they’ll have the “sponsored” badge above them. This essentially makes them look like native ads.
Sponsored Brand Ads
These ads appear in 3 locations: Above search results, to the left of search results, and below search results. In addition, these ads will allow you to advertise multiple products, write unique ad copy, and can link to a seperate landing page.
Product Display Ads
These ads appear right under the “Add to Cart” button on Amazon product detail pages. These ads can be used to target competitor’s pages or defend your own pages.
The Building Blocks Of Amazon PPC Ads
Amazon uses completely different naming systems to differentiate between features compared to other ad networks. So to help you understand what the heck is going on, here’s what they mean.
Target – You can choose to target your ads based on keywords, product ASINs, or product categories.
Search Terms vs Keywords – Search terms are terms customers type into Amazon search. Keywords are the words that you specifically target to advertise too.
Keyword Match Types – You can choose between a broad, phrase, or exact match type between the keyword you’re targeting and the customer search term.
Campaign Types – There is automatic, which is when you let Amazon run your ads for you. And there is manual, which is when you do it yourself. Manual tends to be more accurate.
Dynamic Bidding – This is when Amazon adjusts your bids in real time.
Adjust Bids By Placement – This feature allows advertisers to target Top of Search and Product Detail Pages.
How To Come Up With Your Target ACoS Goal
Your break even “advertising cost of sale” of ACoS is your profit margin before ad spend. This is the number that will pretty much dictate whether you can build a profitable Amazon business or not. As long as you don’t spend more than your ACoS, you’re good to go.
So if your ACoS is 30%, you need ads that don’t spend more than 30%.
Now let’s say you want a profit margin of 5% with the same product. You target ACoS goal now becomes 25%. So as long as your ads don’t spend more than 25%, you’ll have a 5% profit margin.
With that said, let’s say you want to focus on profit.
Here’s the equation you would use…
(Total Profit – Product Margin % Before PPC) – Advertising Costs
This equation will give you your net profit after PPC, which ultimately is the only real number that matters in advertising. Gotta make a profit no matter what.
How To Create Your First Amazon PPC Campaign
Now, it’s time for the good stuff.
The first thing you want to do before you push any buttons is to set goals.
Are you trying to make as many sales as possible? Are you trying to be as profitable as possible? Are you trying to find a mix between sales and profit? For most people, option #3 is going to be the long-term, sustainable path.
The next step is to decide what product to promote.
This includes researching a product’s sales, ranking, and popularity to determine if you should promote that product and what placement to promote them in. For example, you could advertise your best selling product in a sponsored brands ad to maximize awareness.
The third step is your keywords.
If you use automatic campaigns, you won’t have to worry about this part as Amazon already does it for you. But if you decide to go with manual campaigns, then use tools like Keywords Everywhere or Sonar to help you research. With that said, Amazon recommends you start with automatic campaigns and then move those keywords onto a manual campaign.
The fourth step is to create your campaign.
Login to your Amazon account, click the “advertising” tab, and select “create campaign”. They’ll then let you pick between sponsored products, sponsored brands, or sponsored display ads. Make sure to use a simple naming system for every ad so it’s organized and easy to understand.
The fifth step is targeting.
If this is a brand new campaign, just start with automatic. Once you’re ready to do manual, here is where you upload your keywords, choose your match types, and update your keyword bids.
After that, just submit your ads.
The Best Amazon PPC Strategies
Amazon PPC Strategy #1: Optimizing Your Bids
Amazon ads are a cutthroat game. And there’s no better way to experience that yourself than by optimizing your bids. It’s a critical practice because the moment you stop, you become “forgotten” by the Amazon gods and your competitors will swoop in to take your place. Now, you’re just left with crumbs. But if you stay on top of your game, you can win and win big.
For example, you can play around with your bids to find the “sweet spot” between growth and profitability. You can also play around with your ACoS percentage to see how much more profitable you can become with the same ad set.
Amazon PPC Strategy #2: Keyword Harvesting
This is one of the “secret” strategies used by the best of the best Amazon advertisers.
Basically, you’re using your paid auto campaigns to find the best Amazon search terms for you. Then, you take the winners and put them into your manual campaigns. Lather, rinse, repeat.
Here’s how it looks step by step…
1/ Set up your auto campaigns
2/ Pick the keywords with ACoS around your target ACoS
3/ Use all three match types (broad, phrase, exact)
4/ Use bids based based on your average CPC in your auto campaign
5/ Set your bid 15% above your average CPC for broad match
6/ Set your bid 15% above that for phrase match
7/ Set your big 20% above that for exact match
8/ Add these keywords to your manual campaigns
Repeat this process every 3-6 weeks.