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For 63% of online shoppers, Amazon is the first thing they check when searching for products. However, given that the platform has millions of sellers and products available, your business might easily be overlooked by potential customers. Having a solid Amazon marketing strategy lets you get the most out of the platform. One way to strategically market your brand on the platform is by leveraging Amazon Advertising, a PPC service similar to Google’s PPC search ads.
Amazon Advertising has gotten so big that last year, its global ad revenue grew to USD 38 billion, making it one of the top players in retail media advertising, right alongside digital advertising giants Google and Meta.
How can you leverage Amazon PPC advertising in 2024 to drive sales and grow your business? Learn more about Amazon PPC, what it is, how it works, and how you can use it to equip your business for growth.
Amazon pay-per-click or PPC advertising is a powerful and cost-effective way for Amazon sellers to put their products in front of their target customers. It’s essentially an advertising model that amplifies the presence of your products by way of product ad campaigns. Similar to how traditional PPC models work, when someone clicks on an Amazon PPC ad, Amazon charges the seller a small fee.
Amazon PPC ads can help drive sales by improving your product’s visibility. It can put your product on top of Amazon search results. As an Amazon seller, you can set up a bid so that your ad appears when someone searches for a particular product.
For instance, if someone searches for “dog food” on Amazon, the platform collects all relevant ads for that particular keyword. Different sellers set up bids for this keyword and the ad with the highest bid will win the auction and will then be displayed by Amazon as a “Sponsored Product” ad. This will appear on top of search results and product detail pages. When someone clicks on the ad, the merchant will have to pay Amazon a certain fee.
According to Amazon, Sponsored Products are CPC ads that promote individual listings on the platform. There are several benefits to leveraging this feature such as seeing a 55x growth in impressions, a 50% increase in units ordered, and as much as 93x more unit sales. The goal of Sponsored Products is to boost sales and generate traffic to a merchant’s product pages.
As your business grows, so too does the need to drive sales and raise your profits. Below are some of the key Amazon PPC metrics you need to understand to help you evaluate the success of your Amazon ad campaign:
ACoS is an Amazon-exclusive metric that tells you how much revenue is generated from your ad spend. To calculate your ACoS, you can use this formula: ad spend/sales generated from ads or your ad revenue.
The rule of thumb here is the lower your ACoS, the more profitable your ads are. That’s because when your ad spend grows faster or bigger compared to the revenue you generate, your ACoS increases. On the other hand, if your revenue grows faster compared to your ad spend, then you get a lower ACoS.
With ACoS, there are three main objectives. Note that these may be subject to change depending on circumstances, such as when you’re introducing a new product and want to boost its ranking:
RoAS is an indicator of your total ROI. To calculate your RoAS, you can use this formula: total ad sales/ad spend. The goal is to generate higher RoAS.
CVR is a long-term metric that indicates whether your Amazon ads are capable of generating conversions. For instance, if people click on your ad but don’t make a purchase, it might mean that your product isn’t the solution they’re looking for. Moreover, CVR is one of the factors that Amazon looks at when determining the ranking of ads. This, in turn, influences how often an ad is seen on the platform.
Note that conversion rate is an important metric, but you also need to look at the factors influencing it, such as high-quality product options from competitors.
CTR is one way to measure how good your ad is or how well it’s performing. In general, the higher your CTR, the better, as this means that your Amazon ad is compelling or engaging enough that people would want to click through it. Lower CTRs could indicate that your ad is not relevant enough or compelling enough for your audience.
To calculate your CTR, you need to divide the total number of clicks by the total number of impressions. It’s worth noting that because Amazon ranks ads based on factors like total revenues and not just CTR, you shouldn’t solely rely on CTR if you’re looking to boost your ranking on Amazon searches.
TACoS indicates the impact of your Amazon ad on organic sales. To calculate your TACoS, divide your advertising spend by your total revenue, which includes your ad revenue and organic revenue.
Having a low TACoS means that your ads are generating high ROI. If you get a high TACoS, this indicates that your ad might not be performing well enough. This is because your TACoS helps you understand the overall profitability of your product and gives you a better understanding of how your ad sales are affecting your organic sales. If you get a high TACoS, then it may be time for you to review your PPC campaign and make changes to your bids or test out advertising new products or using new keywords.
Note that when it comes to these metrics, you might experience fluctuations. However, these changes don’t necessarily mean that you won’t be generating sales on the platform. To get a better idea of your Amazon business’s overall performance, you need to monitor these metrics over a period of time. It also helps to identify any regularly occurring trends, as these can allow you to assess the impact of your Amazon PPC ads and identify what you can do to boost your sales and conversions.
Amazon PPC can increase the visibility of both your brand and your products. That’s because your Amazon ads will have highly visible placements on strategic pages. Aside from boosting your visibility, Amazon PPC ads can drive sales, as it lets you use ads to expand your reach to customers looking for a particular solution. Moreover, because you only pay when someone clicks on your ad, you can have better control over your advertising budget.
The bottom line is, having an effective Amazon PPC advertising strategy can help your Amazon business stand out from a sea of competition.
Building an Amazon PPC strategy will entail a fair amount of experimentation. You’ll need to test out different types of Amazon PPC ad campaigns to see which one works best for you. You’ll also have to factor in keyword targeting to find out which method suits your needs best. Aside from these two components, here are some key aspects to consider when creating your own Amazon PPC strategy.
Setting specific and measurable goals, as well as determining business objectives for your brand, can help you come up with an optimized advertising strategy. What is your advertising goal? Do you want to build brand awareness or do you want to drive conversions? What about increasing customer loyalty?
For instance, if you want to build brand awareness, you can consider leveraging different ad campaign types. To drive conversions, you need to engage high-intent shoppers. For this advertising goal, you may want to consider using Sponsored Product ads. Sponsored Brand ads can work if you want to boost customer loyalty and retention. One of its main features is it lets you showcase multiple products and add branding in the form of your logo and custom headline.
Identify the product you want to use for your first Amazon PPC ad campaign. For example, opting to set up a Sponsored Product ad lets you promote a new product while allowing you to boost sales and drive traffic to your product page.
Consider the ad campaign types you’ll be using. Do you want to use Sponsored Product Ads, Sponsored Brands Ads, or Sponsored Display Ads? Each type works differently and has a different goal. For instance, Sponsored Brands ads let you create ads for multiple products complete with your brand logo and a custom headline. It’s an ideal choice if you’re looking to build brand awareness and increase your entire catalog’s sales. Note that Sponsored Brands ads are only available to vendors and sellers registered in the Amazon Brand Registry. If you want to promote specific products, then using Sponsored Products Ads is a viable option. Use it to boost sales for a new product, for example, and bring more traffic to your product pages. This option is made available to all professional sellers and vendors on the platform.
Every Amazon seller will have a different view on how much they’ll be willing to spend on Amazon PPC ads. A good starting point for a PPC budget is approximately 10% of your revenue, considering that each click can cost anywhere between $0.15 and $6. Moreover, advertising costs can be affected by several factors, such as your selected ad type and ad placement, goals, and competition level or how much the competition is willing to spend on their own ad campaigns.
Your targeted keywords need to match your product listings to ensure that your ads are counted as relevant. That’s because Amazon won’t display ads that don’t match the keywords used in search queries. This is why it’s crucial that you incorporate targeted keywords in your listings. However, don’t stuff your listings or PPC campaigns with keywords, as this can make it difficult for your target audience to understand what your product is and how it can benefit them.
The same principle applies to long-tail keywords, which tend to be more specific. When using such keywords, it’s important that they match your listing so that Amazon will show your product ads.
Perform competitive analysis and see what keywords your competitors are using. What are their best-performing keywords and how can you apply those to your product listings? While you can perform keyword research yourself, it can be a tedious process. You can use keyword research tools to identify not only keywords but also their search volume and approximate bid range.
Amazon offers several ad products, including Stores, audio ads, video ads, custom advertising, Amazon Attribution, and Amazon DSP. However, for Amazon PPC, there are three main ad products:
These are self-service CPC ads for individual product listings. It’s the most common Amazon PPC ad that appears in shopping results and product detail pages. It works by generating ads from your product listings and has automatic targeting features, allowing you to quickly and easily create a campaign.
Because these are cost-per-click ads, you only get charged by Amazon when potential customers click on your ads. Moreover, you can determine how much you’re going to bid for each click and thus have better control over how you set your budget. It also gives you access to sales and performance metrics so you can determine how your Sponsored Products ads impact your business.
Amazon lets you set up automated ad campaigns or manual campaigns for Sponsored Products ads. With automatic targeting, Amazon takes care of choosing keyword and product matches for your ad based on shopper queries related to your product listing or information. One advantage to using automated features is that they let you quickly and easily set up an ad campaign.
Meanwhile, manual targeting is more suitable for advanced advertisers with prior targeting experience. This option also gives you better control over your ad campaign, as you can choose categories, features, and other components related to your product, as well as determine the match types for keywords.
Sponsored Brands ads are also self-service CPC ads for brands. This lets you feature multiple products from your Amazon shop. Your Sponsored Brands ads will appear in shopping search results and will be displayed with your brand logo and a custom headline, videos, or images. This feature can help build brand awareness, as it allows your brand to expand its reach and target new audiences.
Furthermore, Sponsored Brands ads can drive traffic to your Amazon storefront because it lets you add clickable logos, compelling images, and relevant product categories. So when someone clicks on your products or categories featured in your Sponsored Brand ads, they’ll be redirected to your product page.
According to Amazon, one of the benefits of using Sponsored Brands ads is they can increase your ROAS by 5.5% when they’re combined with Sponsored Brands video, store spotlight, and custom image ad formats. Additionally, it can boost conversion rates by up to 57.8%.
Sponsored Display ads are programmatic self-service PPC ads that let you expand your reach and engage relevant audiences on and off Amazon. They also facilitate product or brand discovery and can be used to encourage your audience to reconsider your products for purchase. It comes with customization features that let you update or revise specific campaign sections and include updated creative assets.
Sponsored Display ads work by letting you choose the products you want to promote and set up bids and your daily budget. It’s especially useful if you want to reengage audiences that haven’t made a purchase yet but have expressed a prior interest in your offerings or in similar products. The great thing about Sponsored Display ads is that they can appear on and off Amazon. On Amazon, such ads may appear on the Amazon homepage or on product detail pages. They can also appear on third-party websites and apps, depending on your audience or targeting strategy.
Below are actionable tips you can follow to optimize your Amazon PPC campaigns.
If you’re new to Amazon PPC, using Sponsored Products ads may work to your advantage, as these let you quickly create campaigns. Plus, they’re one of the most commonly used PPC ad types. However, solely sticking to this ad type might not work for your brand. The type of PPC ad you’ll end up choosing will depend on factors such as your products, target audience, and goals. If possible, try out all different PPC ad types to see which ones work best for you.
Testing allows you to assess the performance of your ad campaigns. Testing consistently allows you to further optimize your ads and maintain your competitive edge. Doing so also lets you determine which tactics work and which ones need to be scrapped, such as with different keyword targeting methods. It’s also important to constantly monitor your campaigns and review ad reports to determine how you can best improve them.
Enticing images and videos can pique the interest of your potential buyers but good ad copy can propel them to take action. Therefore, when creating Amazon PPC ad campaigns, you must complement these with strong, original, and compelling ad copy.
Using popular competitor keywords can help generate exposure for your product. With that in mind, you may consider bidding on popular branded competitor keywords. However, it’s advisable that you only do so if your product is similar to a popular name brand or is superior.
Using Amazon PPC ads can be a worthwhile venture, provided that it’s done well. It can put the spotlight on your product, drive traffic to your product pages, and boost sales, therefore helping you gain a competitive edge in this ever-growing online marketplace.
It’s important that, before experimenting with Amazon PPC ads, you have an effective advertising strategy in place to ensure that your ads are well-targeted and optimized. Moreover, while keeping an eye on metrics is a helpful way to monitor the performance of your ads, note that your ad’s performance can still vary. This can depend on factors such as your niche, target market, and your total revenue. The good news is, Amazon PPC advertising lets you set your budget, thus giving you optimal control over how much you’re going to spend on Amazon PPC ads.
Lastly, you won’t get instant results with Amazon PPC, as it might take some time before you see initial results. Refrain from making any sudden changes that may adversely impact your campaign and give you inaccurate data. Instead, let your campaign run for a couple of weeks before making any major adjustments.
As your business scales, you’ll need to rely on a marketplace management platform to help you manage your eCommerce channels. Threecolts offers a suite of solutions designed to help you analyze financial metrics, get on-site support, recover your profits, source profitable products, and more. Get started with Threecolts today and see how its solutions can transform your Amazon business.
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