Ultimate Guide to Amazon PPC

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         Amazon PPC advertising (Pay-Per-Click) has become a powerful marketing channel for Amazon. Amazon’s PPC ad allows sellers and merchants to “buy” product visibility at the top of Amazon’s search results page.

The number of sellers taking advantage of the potential of Amazon PPC continues to grow dramatically from year to year. Therefore, without a defined plan, it can be difficult for Amazon to achieve its PPC goals.

What is Amazon PPC?

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A Pay-Per-Click Advertising Campaign is one of the impressive strategies Amazon has come up with to increase the number of sales all along with profits. Likewise said, there are collectively various methods to optimize your PPC Ad campaign. Not all Amazon sellers might think alike. Few techniques might work out well for some and a few would disappoint some. We have discussed most of the factors that have a serious effect on a PPC ad campaign above. Put in the best of your efforts and make sure to try all of them.

Why should you consider paid advertising on Amazon?

Over 200 million customers prefer purchasing with Amazon to any other store. Despite the astronomical figure, every single customer finds the exact product they are looking for. Amazon marketing provides great exposure for every retailer that wants to be seen by the target buyers.

People searching on Amazon are more likely to be at the end of the buyer’s journey (i.e. closer to a purchasing decision). They know what product they want on Amazon, and they are just looking for the right deal and provider. Being visible to the customer that wants to buy your product is very important if you are going to sell your products. There might be many customers who are willing to buy what you’re selling but miss out because of the lack of visibility. Moreover, if the buyers do find the exact product they are looking for on the first page itself, they wouldn’t bother scrolling through the rest. Your ad is the face of your product, which will compel the buyer to view your product.

Are Amazon PPC Ads worth it?

bids

It is a known fact that Sponsored Ads are one of the most effective ways to increase conversion rates and ranking for your products. As more and more sellers enter the amazon business, the competition would be tough enough to implement much more effective strategies such as Sponsored Ads.  Though the payment for the clicks comes from your profit margin, this will in turn boost your sales.

Here is all about different types of ads for amazon that you need to know before choosing “the one” for you:

  • Sponsored Product Ads
  • Sponsored Brand Ads
  • Headline Search Ads

What are Amazon Sponsored product ads?

SPA is the abbreviation of Amazon Sponsored Product Ads. They are one of the efficient ways of approaching an advertisement for a sponsored product. They make your product look more appreciable and distinct. Clicking on these ads directs the user straight to a specific product they are searching for. These ads are usually displayed below or above the search results page. Obeying all the do’s and don’ts will help you give a tough fight to the other competitors. They have a high conversion rate of approximately equal to 10 percent. SPA’s are generally hard to ignore or get your eyes off them because they appear as soon as the page gets refreshed. These advertisements are subtly marked as “Sponsored.” 

Sponsored Product Advertisements appear for at least a day and disappear. The operation of these ads can be in the hands of the product seller.

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Sponsored Brand Ads are part of Amazon’s Pay-Per-Click Advertising that enhances your brand’s visibility up to three products. Just like Product ads, Sponsored Brands follow the amazon PPC advertising paradigm. When a buyer clicks on your ad, Amazon charges you for the click on the ad. You pay for clicks, not impressions.

Remember that amazon specifically prefers branded products over random ones. Do not try to sell many random products but instead focus on building a brand. This way you’ll be able to get approval without any questions and on top of that you’re building an actual brand that’s going to be more long-term

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What are Product display ads?

Product display ads are another effective way of procuring fame for your selling product. These ads do not concentrate on giving importance to the keywords. They focus or target more on the product display page. These ads also drive the customers to the page where all the details of the product are displayed. They provide you with furthermore information like customer reviews, customer images, follow-up emails, etc. Product Display Ads are pay-per-click ads that earn profits in either way. These ads may also contain videos. Video Ads can come under the same category too. Video Ads grab the attention of the users very quickly. These ads are to be played automatically without being clicked. In this way, Product Display Ads could be used efficiently to bag more profits. 

What are Amazon Headline Search Ads?

Previously, Amazon Headline Search Ads were available in vendor central through Amazon Marketing Services. Whereas now, it’s also serviceable to third-party sellers. These kinds of ads are helpful to promote your products as well as brands. Amazon Headline Search Ads can be visible at the top of the customer search results page. In this advertisement, you can group multiple products and improve the perceptibility of the brand’s name. Just typing the brand’s name will help you find out all the products manufactured by that particular brand. Focus on the keywords and optimization of the headline language is very important.

  • Both Amazon sellers and vendors can use Amazon PPC ads (although sellers must register with the Amazon Trademark Registry, see table below).
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How much does an ad on Amazon cost?

Sponsored Products, Sponsored Brands, and Sponsored Display Ads are purchased at cost per click and displayed for free. There is no charge for viewing or publishing.

You only pay when a prospect clicks on your ad. You can manage how much you pay per click, i.e. how much you spend on your ads.

Does Amazon PPC improve organic rankings?

Organic ranked products are those that appear at the top because amazon’s A9 algorithm has decided to put them there.

Both sponsored ads and organic ranking work together to increase your sales.

Suppose you’re product is somewhere in the later pages of the search results and then you use sponsored ads to get to the top and make sales. As your sales increase, your product will gradually move to the top organically. If your product is listed first due to both PPC and organic ranking, you’ll be able to increase your sales drastically and have higher profit margins.

How do PPC auctions work?

The cost per click (CPC) of each Amazon ad is determined in a so-called second-price auction. Each advertiser will send you a default bid for your ad (the maximum amount you’re willing to pay per click)

The highest bidder will receive the highest ad position (ad rank # 1) and pays the highest cost-per-click, but the highest bidder does not pay the bid amount. The highest bidder pays only $ 0.01 more than the second-highest bidder.

Few important factors that help you run a successful PPC Marketing Campaign are listed below.

They are:

  1. Campaign Name
  2. Management of your Keywords
  3. Quality Score
  4. Relevance of the AD
  5. Duration of the Campaign and its budget
  6. Unique Selling Proposition 
  7. Target ACoS
  8. Target ASIN
  9. Extensions of the AD
  10. Online Reputation
  11. Landing Page

Getting Started with Amazon PPC

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SETTING UP PPC CAMPAIGN:

Creating campaigns:

  • Go to the campaign manager in amazon seller central and click on create a campaign.
  •  To create an automatic campaign, click on automatic.
  • It is always best to put an apt name for your campaign to avoid confusion.
  • Enter the start date, end date, daily budget, and finally input a default bid and Amazon will take care of the rest.
  • Click launch campaign to launch it.

It’s that easy to launch an automatic campaign.

To create a manual campaign,

  •  Click on manual
  •  Select the match type you want. If you want to include a combination of keyword match types, run separate campaigns for each match type.
  •  Instead of choosing a default bid for the keywords, here you can enter your choice of keywords and apply the suggested bid to them.
  • Few keywords take up most of your budget so remember to check them before clicking apply all.
  • Click launch campaign.

Metrics of Amazon PPC:

Amazon Click Through Rate (CTR)

Amazon Click Through Rate (CTR) is the ratio of shoppers that click on your ad to the number of times it is shown.  Each of the campaigns and keywords has a specific CTR that measures how successfully your ad compelled the customers to view your product. Technically, it is useless to spend a hundred dollars on your product’s ad if it isn’t attracting customers to at least view it. The success of your ad is measured by the number of clicks you get for the number of times your ad is seen.  It reveals the relevancy of your products.

What can be considered as a good or high CTR?

The average click-through rate is 0.4%. Anything above this average is considered a decent CTR. If your CTR is less than 0.3%, it either means that customers are not impressed by your ad or your ad is irrelevant to what they’re looking for.  This means your ad should get at least 20 clicks for 500 ad impressions.

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How to increase this Click Through Rate (CTR)?

Few factors greatly affect your CTR and all you need to do is learn to optimize these factors to increase the CTR.

  • Image
  • Title 
  • Relevant Keywords
  • Best Seller
  • Reviews
  • Fulfilled by Amazon
  • Price

Amazon Conversion Rate

Conversion rate is the ratio of the number of clicks converted to sales to the number of clicks. More conversion rate means more successful is your ad in promoting your brand. This means your ad is not just attracting traffic, but attracting the right traffic.

Conversion rate is used to measure the number of page visits that result in a sale.

Why is keeping track of Amazon Conversion Rate important? 

  • It helps you determine what areas need to be improved. For instance, you can check which keywords have a high conversion rate for a particular product. This way, you take the keywords that do not bring in more sales off the list and this alone saves hundreds of dollars.
  • Keeping track of CVR is important to increase your organic ranking.  It allows your product to rank better. Therefore, if you have a low conversion rate in your listing, your product is less likely to be shown on the first page of Amazon search results.
  • It gives you an overall view of your listings’ performance.

What can be considered a good CVR?

The average conversion rate on Amazon is roughly between 10% – 15%. Of course, like all metrics, these averages differ based on the kind of products you sell. Anything below an 8% conversion rate can be considered low and requires your immediate attention. 

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Improving Conversion Rate:

The majority of the buyers click your ad intending to consider purchasing your product but are not compelled to buy it, which indicates that there is still a need to improvise your strategies to increase sales. You can improve the conversion rate by observing and acting upon the factors that majorly influence CVR.  Few factors significantly affect your CVR.

  1. Keyword Demand
  2. Description
  3. Image
  4. Fulfillment by Amazon
  5. Badges
  6. Pricing
  7. Reviews
  8. Analyze

Quality Score

It is the key metric to a successful PPC marketing campaign. Just like other ads, Amazon specifies a quality score for your ads. A quality score is used to determine your cost-per-click(CPC). You can improve your PPC quality score simply by choosing and grouping keywords that relate to your landing pages, making sure that these are helpful to the other potential customers. A good quality score for high-intent commercial keywords is 7. And a good quality score for low-intent keywords is around 9.7. Amazon considers different metrics to determine their quality factor like:

  • Performance of the Product
  • Product Experience
  • Ad relevance

ACoS

ACoS is the abbreviation of Advertising Cost Of Sale, which measures the performance of Amazon ad campaigns. It’s the ratio of the ad spend to the revenue generated on it. It’s calculated in the percentage to show you how much profit or loss you are making through the advertising campaign.

As important as it is, ACoS is not just a number. Knowing how to calculate, how profitably can that be used, what damage can it cause, and how do you manage that. A proper advantage can be taken with the ACoS if practiced practically.

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How can you differentiate between a good ACoS and bad ACoS ?

A good or a bad ACoS is determined based on the level of targets that you want to achieve. Predominantly, a ‘low ACoS’ is considered a good one. Lower your ACoS is, lower the amount you spend on the ad sales. Standard ACoS to be taken into consideration for a GOOD ACoS is around 15-20 percent. Your ACoS may look pretty bad at the beginning with a high ACoS value. All that you have to do is to follow few tips to lower your ACoS value.If the calculated ACOS is high, you make a loss. The average Acos, Advertising Cost Of Sales is almost around 30 percent. Higher the ACOS, the higher the ratio of the amount spent to sales revenue. It sometimes is inferred based on the Profit Margin. The Profit Margin is the amount you obtain after deducting all the expenses from the selling price. These expenses cover from production to manufacturing fees together with shipping charges, storage costs, etc. The final margin is the percentage obtained after subtracting the ACOS percentage from the profit margin percentage.

Optimizing your PPC Campaign

If you are a seller that has been in this business for a long time, you would know what effect sponsored ads have on your sales. Hence, it is important to optimize your PPC campaign.

Read further to know-how!

1. Know your break-even ACOS.

Three simple steps are all that you need to calculate your break-even

  • Calculate the Profit Margin
  • Calculate ACOS
  • Compare ACOS to Profit Margin

A low ACoS states that you are making profits. Whereas high ACoS means that you are losing money from the advertising campaign. Different methods bring you profits, making your ACoS low. There are a lot of other factors you need to keep in mind before practicing practically. You have to be aware of how to calculate the ACoS, break-even points, profit margins, and TCoS.

A low ACoS is almost around 25%.

An average ACoS lies between 25% to 40%.

A high ACoS is above 40%.

Points to remember while determining out your break-even point are :

  • Having a profit margin more than ACOS says that you are making money from the advertising campaign.
  • An Acos higher than that of your profit margin says you are losing money from the advertising campaign.

Considering the case where your ACOS is lower than the profit margin, we can say that you are making money from the campaign. However, if the case conversed, you’d have been losing money from the advertising campaign.

2. Set a target

You need to decipher what you want your target ACOS to be to optimize your PPC Campaign. ACoS is the abbreviation of Advertising Cost Of Sale, which measures the performance of Amazon advertising campaigns including theAmazon PPC campaign. It is the ratio of the ad spend to the revenue generated on it. It’s calculated in the percentage to show you how much profit or loss you are making through the ad campaign. Advertising Cost of Sales(ACoS) is the factor that determines how successful the ad campaigns are running. With the ACoS percentage derived from the formula, it’s easy to conclude the ad campaign. Through the analysis, you get from the measurement of ACoS you can also try to optimize your ads by following certain methods.

3. Check with an automated campaign

If you are a beginner and haven’t figured out which keywords give you the best results, an automatic campaign is the one for you. In the automatic campaign, you let amazon suggest you the best keywords based on your product, title, and your budget. This way you wouldn’t have to be an expert to set your PPC and it also saves your time. Amazon even suggests long-tail keywords that you might not have guessed can bring out the best results. 

Even if you know the keywords that you want to use, it is always better to start with Amazon’s automated keyword campaign. Amazon does a decent job of bidding on keywords based on the data in your product listing. Your ads will also show up within your competitor’s listings.

4. Choose the right keywords

It is important to give keywords enough time to give you the desired results. But few keywords do not bring in sales despite giving them the time needed. You might end up wasting many dollars on such keywords.

Find whether there is actually demand for your product and if there is demand then what are the keywords that you’re going to implement in your title or description. Finally, choose a keyword with a decent search volume and a relatively less number of competing products.

Check the search term report and remove the keywords with a conversion rate of less than five percent. The search terms report includes the number of clicks, the money spent, and the ACoS column.

5. Launching the right type of campaign

You can also launch a manual broad match campaign to analyze the highest targeting keywords. The broad keyword match type is the least restrictive of all the match types. Since it matches a broader range of keywords, it should be used to expand the campaign’s reach.

Everyone has a combination of match types that works for them depending on the product and target customers. There is no right or wrong combination. It is all about experimenting and learning from the results.

6. Optimize keywords

After running the campaign for a week, check the report and select the keywords that have the highest conversion rate. Choose the most converting keywords and add them to exactly match the “winners” campaign. You can also check which keywords help achieve your target ACoS and take the ones which are not bringing enough sales off your list. If you are using AiHello AutoPilot all these tasks are handled automatically. You have to just select the “Winner” campaign in AutoPilot settings and AutoPilot will continuously monitor your campaigns and transfer high-performing keywords.

7. Automate campaigns

It is a tedious job to give most of your time in analyzing your campaigns. You can automate your PPC Campaign to save both your time and effort.

Sometimes, though you might be pretty good at PPC  advertising, there might be some tweaks that you can make to your campaigns that can enhance them.

This fact-oriented approach to making decisions gets the best out of your Amazon PPC campaign, thus, increasing your profit margin.

8. Get used to the cycle

You need to be cautious and keep observing the report every week or every two weeks to understand how to proceed further.

  • Begin with a broad match keyword campaign based on keyword report
  • Find out which keywords have low conversion rates and add them to your negatives.
  • Add profitable keywords, create a manual exact match “winners” campaign, and bid higher on these keywords.
  • Change your keyword bids to meet your ACOS goals
  • Keep repeating!

If you keep doing this, over time you’ll be able to achieve the goal that you’ve been dreaming of.

Structuring a PPC Campaign

 Why should you worry about the structure of your PPC Campaign?

The structure of your PPC Campaign is just as crucial as a skeleton is to your body. The design of your campaign determines how, when, and where your ads would appear. This would determine if you are attracting enough and the right traffic which can strongly affect your sales. Since you’re putting a lot of time and effort into structuring your campaign, you might do it right.

In this blog, we’ll walk through different PPC campaign structures based on how you sell your products on amazon.

Before jumping ahead, let us look at an essential term that would frequently be used later in this blog –  ASIN.

 Target ASIN

It is mandatory to know about the ASIN if you are trying to sell anything on Amazon. ASIN is the abbreviation for Amazon Standard Identification Number. It is a unique 10 digit number considered as an identifier for a particular product that is assigned by Amazon. Just like Keywords, these ASINs can be selected manually or can be chosen automatically through an algorithm designed by Amazon.

You might be wondering why these ASINs are given so much importance? It’s because they serve a lot of data by referring to the catalog data, for searching and browsing on Amazon.com, etc. All of these help the customers search their products easily by applying some filters and also directly search any specific product by its ASIN making it customer-friendly. As long as the PPC ad campaign runs customer-friendly, it runs successfully.

HOW TO STRUCTURE A PPC CAMPAIGN?

You can put your exact match keywords into your manual campaign, and your broad/phrase match keywords into your automatic campaign. This way, the best-performing search terms are focused on exact matches while the automatic campaign discovers new potential keywords.

However, It is important to note that a single strategy might not suit all amazon sellers. Not every Amazon seller sells the same type of product. We will look at different approaches that different types of sellers can implement in detail.

1. A single product seller 

2. A single product seller with modifications

3. Multiple product seller

4. Company Campaign Structure

5. Wholesale Campaign Structure

Summing Up

In this way, a Pay-Per-Click advertising campaign must be carefully handled because it often can be tricky. In case if you are new to all of this, it might take some time to understand the concept or the working of a PPC campaign. Take an ample amount of time and put in enough effort to make sure the campaign runs competently. This is the highest level of campaign structure and needs to be extraordinarily optimized and fuss-free. Otherwise, it would be impossible to analyze your search term data to optimize your PPC campaign.

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