Full Guide on Amazon PPC and Amazon PPC Metrics

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What Is Amazon PPC?

Amazon PPC (also known as sponsored products) is an advertising model in which the advertiser pays a fee to Amazon when a shopper clicks on their ad ( this is the pay-per-click part).

 There are 3 Amazon ad types:

1)Sponsored Products, 2) Sponsored Brands and 3) Sponsored Display Ads.  Sponsored Display is still a novel version of the former Product Display ads – PDAs.

Where do Amazon PPC ads appear?

 

 

Who can use Amazon PPC ads?

 

Vendors and sellers can both use Amazon PPC ads, however sellers would need to be enrolled in Amazon Brand Registry.

Wait, what’s the difference between vendors and sellers? Sellers (sometimes even referred to as third-party sellers) sell their products directly to Amazon customers. Vendors (sometimes called as first-party sellers) sell their products directly to Amazon in bulk or wholesale, then Amazon sells them to its customers ahead of it.

 

Is Amazon PPC Worth Using?

 

Actually, yes totally. Well executed Amazon PPC advertising campaigns aid you to  improve your organic rankings, increase sales and build brand awareness. If you’re using Amazon just as a selling platform but not an advertising one; you’re mostly missing out on a huge opportunity. 

 

Why should I try Amazon PPC?

 

Amazon PPC is a lot more effective than other advertising channels because it lets you reach out to your shoppers on the very platform where they make their purchases: Amazon itself.

With Amazon PPC you can promote your products with highly visible placements on Amazon; great news is that the ads appear on desktop and mobile browsers as well as on Amazon’s app. 

Amazon PPC allows you to choose from different Amazon ad types depending on your goals, you can control, flexibly set and scale your budget, the various detailed reports let you easily see how you have performed.

Amazon advertising offers a portfolio of different targeting methods from keywords to categories, brands, and products (ASINs—Amazon Standard Identification Numbers) as well as remarketing on external websites to ensure that your advertising is reaching the desired audience.

 

What are the Amazon ads pricing/fees?

 

You pay for your advertisements only when a potential customer clicks on the ad. You’re in control of the amount that you’re willing to spend per click and hence the amount you spend on ads. 

 

What is the average cost per click (CPC)?

 

So on Amazon, the current cost per click is $0.02- $3, though your CPC’s average can range greatly depending on the product category, ad type, or the marketplace. 

 

Are there any hidden fees associated with Amazon PPC?

 

Put in short words: no. Amazon’s pricing structures are always transparent and clear. You only pay for the clicks you get on your advertisements. You also have total control on your spending since you can set your bids and advertising budgets.

 

Does Amazon PPC also improve organic rankings for my FBA or FBM products?

 

Yes, it is possible to. Amazon PPC sales have a direct influence on a product’s organic ranking on Amazon (which doesn’t happen in Google Adwords). Hence, the more sales that are generated via Amazon PPC, the more will be the positive effect on the organic ranking of your product. 

This effect is important for new products. Since new products don’t have a sales history or any performance data, they are negatively affected in organic rankings. Amazon PPC helps change that by driving traffic to your FBM or FBA product listing. And thereafter, boosting the sales and generating reviews to drive further  customer conversions.

 

Amazon PPC Metrics

While making a campaign with Amazon Advertising, you need to make sure it’s profitable. To do that, you have accurately interpret the data your campaigns are generating on a regular basis.

You can determine the success rate of your campaigns through a series of Amazon PPC metrics. These include:

  • Average Cost of Sale (ACoS)

  • Impressions

  • Clicks

  • Click-Through Rate (CTR)

  • Total Spend

  • Overall Sales

  • Conversion Rate

In this post, we will explain how different PPC metrics work and how to optimize them for your campaigns and for increasing profits.

 

Average Cost of Sale (ACoS)

 

It’s agreed that AcoS, or Average Cost of Sales, is the most important of Amazon PPC metrics. Average Cost of Sales is measured as a percentage showing you how much a sale costs you in advertising money:

ACoS = $ Spent on Advertising / $ made in Sales

From this mentioned formula, it is evident that the lower your ACoS, the better your Ad is performing. A theoretical ACoS of zero would mean you didn’t spend anything, but still made a sale.

Why ACoS is important is due to its ability to let you know in a glance if your advert is making profits or not. To make the best out of ACoS scores, use it to keep in mind two further metrics: your Break-Even ACoS and your Target ACoS. Your Break-Even ACoS is the point where an Ad  is neither making nor losing money. Any ACoS lower than that is profitable. Conversely, any ACoS higher than that is costing you money.

Your Target ACoS is your ideal ACoS—how much your profit should be for a particular product.

You can use Break-Even ACoS and Target ACoS to determine what the right ACoS is for your Ad campaigns:

  • Any ACoS  that is lower than your Target ACoS increases the profit margin.

  • Any ACoS that is higher than your Target ACoS but is lower than your Break-Even ACoS is profitable.

  • And any ACoS higher than your Break-Even ACoS is making a loss.

Impressions

 

Impressions refer to the number of times your Ad has been displayed and viewed.

If your impressions are too low, it may be because your bidding is too sufficient and you keep getting outbid by others, in which case you should raise your bid amount. However, it may also be an indicator that you are using the incorrect or irrelevant keywords for your consumers. Contradictorily , if your keywords are too specific or niche you may need to use some more generally used ones.

If your campaign draws many impressions by barely any clicks it could be an indicator that you are not targeting the right audience. 

Clicks

 

Clicks refer to the number of times people have clicked on your Ad. This, along with the number of impressions, is important to know for two reasons:

  • If you have a high click rate but low sales, it showcases issues on your product page. Your Ad is sending customers to your page, but something causes them to exit without making a purchase. This indicates that you are either targeting the wrong people, or that you need to improve your product page.

  • Whereas, a low click rate with high impressions indicate a problem with your targeting: the audience is viewing your Ad but is not interested in purchasing the product. This happens mostly due to a poor keyword choice: the keywords that were used for attracting the audience are not matching the user’s intent. Reevaluate the chosen keywords.

 

Click-Through Rate (CTR)

 

To understand how good the Ad is, try to use Click-Through Rate (CTR). CTR is the ratio between an Ad’s Clicks and its Impressions: Click Through Rate = Clicks / Impressions

A high CTR is mostly better, since it means that your Ad is attractive enough for shoppers to click on it.

Inversely, a lower CTR means that the Ad is not attractive enough. You could try to change the Ad copy, or the position of your Ad or your product image to increase the CTR. You could also try to compare your Ad to your competitors’ Ad to learn what needs to be optimized in order for it to look unique.

While optimizing keywords, CTR is a great place to begin. You can pause any keywords with a CTR under 10%, as these keywords have not succeeded to generate interest in the product.

Total Spend

 

Total Spend is the total amount of money you have spent on your campaigns. To improve profits, this naturally needs to be as low as possible. But, a total spend that is too low means your campaigns are failing to get displayed. This is as big a problem as an unprofitable campaign, so you need to examine and study your targeting and keywords.

 

Overall Sales

 

Overall Sales are those which include both sales that come through your Ads and organic ones (sales generated not as a result of someone clicking on your Ad). A healthy ratio between Advertising Sales and organic ones is 6:4.

 

Order Session Percentage (Conversion Rate)

 

Your conversion rate is the percentage of shoppers who have clicked on your Ad and moved on to buy your product. This can greatly vary for different marketplaces and products.

Amazon refers to the conversion rate as “Order Session Percentage.” This is calculated by dividing the number of orders by the number of times people visited your listing including return visitors (“Sessions”) to get a percentage: Order Session Percentage = Number of Orders / Number of Visits

This percentage varies between  4% to 50% depending on category. Some market research shows the average CVR on Amazon PPC to be 9.6%.

 

Wrap Up

 

The only way to make sure of the success of your Ads is by analyzing Amazon PPC metrics at all times. However, not many manufacturers are permitted the time or inclination to do that. One needs to evaluate if they need to focus on being a great Amazon Advertising expert or an amazing product seller.

Just focus on your work and you are surely going to do amazing. Good luck!

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