One of the most common obstacles sellers face when they are entering the Amazon marketplace is to get their product to rank and sell. If you’re new to Amazon advertising, this article will help you understand better how amazon ppc works and what ad type serves your goal best.
Before we dive into the specific ad types that are available on the Amazon advertising platform, we’ll answer some basic questions that are common among sellers that want to start with PPC.
What is Amazon PPC?
Amazon PPC is an advertising model where advertisers only pay for clicks from prospective buyers. To put this in simple words, you only pay for a click you get, you don’t pay for the amount of times your ad is shown in the search results page or on product detail page on Amazon. You need to have a seller’s account setup with Amazon in order to be eligible for amazon PPC advertising.
How does Amazon PPC work?
Every time a customer makes a search on Amazon, algorithm estimates what results will it show to them, based on relevancy of the product relative to their search. There is a difference between organic and paid results – paid results are the ones with the sign “sponsored” next to them, like in the below example:
In order to show your product in the sponsored section which usually gets all the premium placements, you need to enter the ad auction. Ad auction on Amazon means that every time when customers are searching on Amazon, a number of sellers are all bidding to show up high in the search results page. The one who bids a highest bid, usually wins the first place in the search results page. Also, they usually pay less than what was his maximum CPC (cost per click) bid. Maximum CPC bid is the maximum amount of money that you are willing to pay for a click on your ad. Your max. CPC should be as close as possible to the suggested bid, because then your chances to win the ad auction are the highest.
The reason why Amazon is giving everyone a suggested bid recommendation is because average CPCs vary from one category to another.
One thing that can really help you win the ad auction aside from high bids is a high-quality listing. Learn how to optimize a product listing on this link. Having an optimized listing will send Amazon a signal that you are a serious seller and they will take that into consideration amongst other ranking factors.
How to setup Amazon PPC?
In order to begin, you will need a seller’s account on Amazon. Once you have that done and approved, you can go to campaign manager to setup your first campaign. Amazon has three main campaign types available: sponsored products, sponsored brands and sponsored display.
Aside from different campaign types, Amazon also has different targeting options: keyword targeting, product targeting and audience targeting. Product targeting option is one of the most unique targeting options that you can’t find on any other platform. We will dive deep into each campaign type as well as targeting types to provide you in-depth understanding of the whole platform.
All campaigns have an option to choose the end date or choose to run it indefinitely. Choosing no end date means your campaign will run longer, and a longer timeframe can give you better insights on search terms and keyword performance to further optimize your campaign.
You can also assign a daily budget to your campaigns. Daily budget is calculated as an average daily spend of 30.4 days in a month. This means that – if you want to spend $1,000/month on Amazon ads, you should split that monthly budget by 30.4 and that way you will know how much to assign as a daily budget. Amazon uses average daily budgeting in order to prevent situations when advertisers run out of traffic just because they already spent their daily budget. Every day, the traffic varies, so some days you will spend even double than your average daily budget, and some days you will not even spend 10% of it.
Each campaign has an option to use different bidding strategies. There are three campaign bidding strategies: “Dynamic bids – down only”, “Dynamic bids – up and down”, and “Fixed bids”. You can learn more when to use each bidding strategy in this article here.
Sponsored Products campaign type
This campaign type was the first one to appear in Amazon PPC platform, in form of automated campaigns. You can choose to run your sponsored products campaign automatically or manually. Manual campaigns are good because you have maximum control over your placements, ad spend distribution and targeting. Auto campaigns are good because they contain maximum ad inventory (they consume as much ad space as possible), and also give you great insights into how Amazon is seeing your product. Once you collect some data in your search terms report from the automated campaign, you will much better understand how Amazon is positioning your product in the marketplace.
Ad placements that are offered through Sponsored products campaign types are in the search results, and in product pages. Some of the examples are here:
Manual sponsored product campaigns are the types that offer the same placements as automated campaigns, with the difference of being able to design your own targeting.
The power of manual targeting is in having complete control over where your ads will show up and who you will be competing against.
Keyword targeting through sponsored products ads allows you to rank higher in the search results page. On the other hand, manual product targeting allows you to choose which competitor you want to compete against. That way you get to choose your own placements, by either using category targeting, ASIN level targeting or refined category targeting. Learn more about product targeting options in this article here.
Sponsored Brands campaign type
This campaign type is very convenient for your own brand representation. Sponsored brands ads offer you a premium first place placement in the search results page, as well as some additional placements at the bottom of the page. Have a look at some examples:
Sponsored brands campaign are a combination of a visual aspect and precise targeting. You can also use keyword targeting as well as product targeting to build a sponsored brand ad. The beauty of Sponsored brands ads is that it offers a variety of ad formats and landing pages as well.
There are various combinations you can use: to promote your products from a landing page of your choice, or to feature a single product with an auto playing video. Your ads can lead to a product detail page or to the whole storefront, or to only a part of a storefront that represents a product line. Sponsored brands ads are the first ad type that allows custom images and videos in their creatives so they represent a very powerful tool for raising brand awareness for your brand and driving new customers. Sponsored brands campaigns are the only campaign types that allow you to measure the number of new-to-brand purchases. This is the number of first-time buyers for your brand, so you can easily understand the contribution of Amazon’s advertising platform to your brand’s expansion. New-to-brand purchases are one of the most commonly overlooked metrics in Amazon advertising, and they are one of the most important metrics for growing brands.
Just like in Sponsored products, Sponsored brands ads campaign type allows you to use negative targeting to prevent bad traffic from coming to your website. Negative keywords prevent your ads from displaying when a shopper’s search term matches your negative keyword. You can exclude irrelevant searches, reducing your advertising cost and making your campaigns more profitable.
Sponsored Display campaign type
This campaign type is one of the newest campaign types in amazon PPC. Sponsored Display ads are still being under-utilized because they are relatively new, but you can use them to drive sales growth for your account and take over more market share from competitors. Some of the most common placements of display ads right now are the product detail pages on Amazon. One thing that is also interesting about display ads is that they can also show up on Amazon’s partner websites. This is practically the only ad type that can show ads off-Amazon. Targeting types for sponsored display ads can be either Audience-based or product targeting (this is new). With audience targeting, the ads will show to shoppers who viewed the detail pages of your advertised products or similar products.
With product targeting on display ads, you have an opportunity to win more market share by appearing on your competitor’s product detail pages.
Amazon ACoS is one of the most essential metrics that measures your Sponsored Ad campaigns’ performance. Advertising Cost of Sales is the ratio between ad spend and ad sales expressed in percentage.
Looking to grow your online business sustainably? Check out our Amazon sponsored products guide below to learn how to use this tool to your advantage.
As an Amazon seller, you probably are already not only harvesting the traffic that Amazon is offering you, but also sending external traffic to your Amazon listings, coming from social media influencers, and authority websites.