Amazon PPC Campaigns in 2019

Amazon PPC is one of the more difficult things to learn for most new sellers, but it's also the most important thing every seller should know. PPC campaigns can be very lucrative for sellers to drive sales, increase reviews and boost their products search rank quickly.

In this article we'll be going through the basics of Amazon PPC campaigns and we'll also cover a few advanced topics to get you started. This might be a long article, but if you stick with it, you'll learn everything you need to know to run a successful PPC campaign.  

The topics we'll be covering include:

  1. What is Amazon PPC and how does it work?
  2. Amazon PPC options
  3. Amazon PPC Requirements
  4. Factors affecting PPC
  5. Basic terms you should know
  6. When to use Amazon PPC
  7. Amazon PPC Strategies

What is Amazon PPC and how does it work?

Amazon Pay-per-click (PPC) or Amazon Sponsored Products is an advertising platform to help sellers promote their products on Amazon and increase their product sales. In a PPC campaign, you only pay when a potential buyer clicks on your product's ad link. If no one clicks on your ad link, you don't pay a dime. PPC is the same as CPC (Cost-per-click).

Another form of advertising is PPM or price-per-mail, which is an impression-based method of advertising that platforms like Facebook and Instagram use. However, for this article we'll only be focusing on PPC.

Amazon PPC options

When setting up an Amazon PPC campaign, you'll notice that there are a few Ad Types that you can choose from.

  • Sponsored product ads
  • Headline search ads

This format allows you to advertise your product based on certain keywords that you choose. For instance, say you're selling pressure cookers. You would add "pressure cooker" as one of your keywords. Now whenever someone searches for "pressure cooker" in the Amazon search bar, your product would appear like this.

Notice how the first 2 products are sponsored products and the third product is not. 

Click-through rates and sales conversions on sponsored product ads usually perform better when compared to the other two formats. One of the reasons for this is because they intermix with organic results and are presented at the top of the search result.

However, it's important to do your keyword research before you setup a Sponsored Ads campaign, because if you don't you could end up wasting a lot of money.

Headline Search Ad

Like Sponsored Ads, a Headline Search Ad or Banner Ads shows up under an organic search and is the first thing a user sees. Using the same example as above, you can see how these ads appear under a search for "pressure cooker".

You can display multiple products simultaneously, customize the landing destinations, and even the ad copy.

Headline search ads offer the largest range of customization. You can choose from your brand pages, product pages, search result pages or a custom URL.

Where Sponsored ads are great to target shoppers who are looking for your product, headline ads are great if you're trying to create better brand awareness for your line.

Amazon PPC Requirements

Before running a PPC campaign on Amazon, make sure your account and product meet the following requirements:

  • You must have an active Professional Seller Account
  • Your product must meet the Buy Box Eligibility criteria
  • Amazon Brand Registry - this is required if you plan on advertising via Headline Search Ad

Not too bad.

Factors affecting PPC

Here are some basics for you to keep in mind when setting up a PPC campaign.

  • The highest bidder wins
    - using the above example, "pressure cooker" had two products in the search result. The seller with the highest bid will get top spot
  • Ad Quality
    - the quality of your Amazon ad is measured by the possibility of a potential buyer to click on it. The ad's click history is taken into a account here.

To ensure that your ad quality is high make sure you have a great image, clear and conciser verbiage in your ad and you're bidding on relevant keywords.

Basic Terms you should know

By now you should know that Amazon has a lot of platform specific jargon, but when it comes to PPC campaigns there are only a few that you should know:

  • Average Cost of Sale (ACoS)
  • Click-Through Rate (CTR)
  • Search Terms
  • Keywords
  • Impressions
  • Conversion Rate
  • Average Cost Per Click

Search Terms

These are the exact terms that a potential buyer types in Amazon's search box.

Keywords

Amazon keywords let sellers choose which search terms they want their ads to show up under. If seller's keywords appear under the buyers search terms, then their ad will show.

Average Cost of Sale

ACoS is one the most important metrics you should know. ACoS ultimately tells you how well your ad campaigns are performing. ACoS is measured as a percentage showing you how much a sale costs you in advertising money and is calculated as:

Some key takeaways about this metric:

  • The lower your ACoS, the better your ad is performing
  • ACoS helps let you know whether your ad is profitable
  • To get a better picture of how your ad is performing, look at your Break-Even ACoS and your Target ACoS

Here is how you figure out your Break-Even ACoS and here is how you figure out your Target ACoS. Once you have your these metrics, you get a few more takeaways:

  • Any ACoS lower than your Target ACoS further increases your profit margin
  • Any ACoS higher than your ACoS but lower than your Break-Even ACoS is profitable, but eats into your profits
  • Any ACoS higher than your Break-Even ACoS is in the red

Impressions

Impressions refers to the number of times your ad has been displayed for potential buyers to see. Here are some key takeaways for understanding your impression #:

  • Low impression # might be because you bid too low
  • Low impression # might indicate that you're using the wrong keywords
  • High impression # and low CTR indicates that you may not be targeting the right people or your listing is not optimized

Click-Through Rate (CTR)

Your click-through rate tells you how well your ad is doing and is calculated as:

Key takeaways of your CTR:

  • A higher CTR generals means your ad is doing a good job of getting viewers attention
  • A lower CTR means it's not compelling enough
  • When optimizing keywords, your CTR rate is a good place to start. Generally, it's a good idea to pause any keyword that is below 8%.

Average Cost Per Click

Not all clicks are the same price, which is why knowing your Average Cost Per Click (aCPC) is good to know. Your aCPC calculates the average CPC for all of your keywords, giving you a total for your PPC campaign.

Conversion Rate or Order Session Percentage

Your conversion rate tells you how many users clicked on your add AND purchased your product. This  number can vary greatly depending on a number of different factors. For instance, Sponsored Ads will typically have a higher conversion rate than Headline Search Ads.

Order Session Percentage is important for two reasons:

  • If people are clicking on your ad but not purchasing your product, then you need to revisit your listing
  • Amazon factors in your conversion rate when determining your ad's rank and how often it will be displayed

When to use Amazon PPC

There are a number of different reasons and scenarios where running an Amazon PPC campaign makes sense. Even if your sales are doing great, running an Amazon PPC campaign can sometimes help you prolong your bull run or even increase your sales even more.

Boost sales for all products in your line

Headline Search ads are a great way of promoting not just a single product but an entire line of products. Another way to increase your sales includes running ads on keywords where your products don't rank very well. By placing ads, your product can get a lot more attention on the first page.

Seasonal Campaigns

It's no surprise that most Amazon sellers see their biggest months right before Christmas, which is why bids on keywords often go up at this time. But depending on your product, other holidays/season might be even bigger for your product, which is why advertising at those times can help put your product in front of customers when they are actively looking to buy.

Increase organic rankings for keywords

Amazon ads can have positive effects on your product's normal organic ranking, because extra sales and clicks improves your products sales history and sales history is a very strong ranking factor. If a product sells better, then Amazon

Boost a new product

A lot of sellers often ask if they should wait to get a few reviews before spending money on advertising and our answer is always the same, yes you can, but you need to know what you're doing and monitor your ad campaign like a hawk. The reason being, is that a Amazon ad campaigns can help new products get their initial sales quickly and rank faster, as noted above, but it can also hurt you if you don't keep an eye on it. If you run an ad campaign and notice your conversion rate is low, you need to pull that ad, because this will negatively affect your product's sales history.  

Create brand awareness for new product launches

Products that have the most sales are automatically on top of the search results. New products have greater difficulty in ranking high for keywords and lower ranks result in fewer sales. Running PPC campaigns is an ideal method by which the product ranks high and also gets increased sales potential.

Amazon PPC Strategies for 2019

Running a successful PPC campaign requires sellers to invest time upfront to ensure their ad campaigns are structured correctly. Now, we could literally write a novel on all of the different PPC strategies and even then we would still likely miss a few things, so for this guide we're going to walk you through one approach to structuring a Sponsored Products campaign and give you some tips on optimizing your PPC campaign.

Amazon Keywords Match Types

Before we dive into structuring your Amazon PPC campaign, you're first going to have to understand the three different match types used. Knowing these match types is vital to creating a successful PPC campaign.

  1. Broad Keyword Match
    Search terms that not only match your keyword but also related to your keyword. Your advertisement may display regardless of the order of keywords and also for additional words.

    Example - say you're selling skateboards for Barbie dolls. A Broad keyword would be "skateboards". You'll get a lot more impressions, but not everyone typing in "skateboards" is going to be looking for Barbie skateboards.
  2. Phrase Keyword Match
    The phrase match is where you specify a phrase and the keywords are matched with terms before or after. The critical feature of phrase match is that it allows you to control the word order. Variations may include misspellings, singulars & plurals.

    Example - Barbie skateboards sale (singular); Barie skatboards (misspelling); and purple Barbie skateboards.
  3. Exact Keyword Match
    By the exact keyword match, you can narrow down to the customers who are searching exactly for your product. Exact match targeting allows only your exact keyword to trigger your ad.

    Example - Barbie skateboards (ad will only show if user types this in - ads are NOT case sensitive)

Ok, now that you understand that let's get into structuring your PPC campaign.

Structuring your Amazon PPC campaign

First off, you're going to be creating two campaigns for each product (ASIN), one automatic campaign and one manual campaign. It'll look a little like this:

Automatic Campaign

The automatic campaign's primary purpose is to figure out all of the keywords users are searching under and how well they perform. You're going to let this campaign run for 1-2 weeks and after you've collected enough data, download your Search Term Report and go through it to find your high converting keywords and it to a list. This list is going to be used for your new Manual  Campaign.

Manual Campaign

For your manual campaign, you'll want to create three separate Ad Groups (for each keyword match type); one for broad match, phase match & exact match. Once you have these Ad Groups setup, set the duration and budget for your manual campaign. For those new to ad campaigns, go with a small budget (< $20) to start with.

Tips on creating your Ad Groups:

  • When going through your Search  Term Report, look for long tail keywords; these are keywords used by customers with a specific search intent, e.g., large purple barbie skateboard. You won't get as many impressions, but if the customer searches for it, there's a much higher chance of them clicking on it and converting.
  • In the Search Term Report, keep an eye on search volume. A low search volume means that this keyword isn't searched very often. If it's not a long tailed keyword, then this is most likely a bad keyword to use.
  • After 4-6 weeks it will become more clear which keywords perform better than others. When this becomes clear, you'll want to gradually reduce bids for non-converting keywords you've identified.
  • Don't change bids too quickly. You want to make sure you have collected enough data before making bid adjustments. A general rule of thumb is you want to collect at least 2,000 impressions before making any changes to your bid.

Optimizing your PPC Bids

On top of keeping your ad spend in check, you'll also want to keep an eye on how various keywords are performing and remove keywords that are unlikely to convert. To analyze your PPC campaign, you'll first have to calculate your target ACoS (see above). By comparing your actual ACoS to your target ACoS, you will be able to measure how well your ads are performing against your goal.

As a general rule:

  • The lower your ACoS, the better your ad is performing
  • ACoS helps let you know whether your ad is profitable
  • To get a better picture of how your ad is performing, look at your Break-Even ACoS and your Target ACoS
  • Any ACoS lower than your Target ACoS further increases your profit margin
  • Any ACoS higher than your ACoS but lower than your Break-Even ACoS is profitable, but eats into your profits
  • Any ACoS higher than your Break-Even ACoS is in the red

We hope this has been helpful for you. If you have any questions, please ask them in the comments below and we'll be sure to answer them.