Amazon PPC campaigns are one of the best marketing ways to generate sales in Amazon for your products as sellers or vendors.
After reading this comprehensive guide on Amazon PPC, you will gain a complete understanding about the concepts, know-how, tactics and best practices in Amazon Advertising and the variety of opportunities of marketing of your products in Amazon depending on the type of seller or vendor you are.
Amazon Pay-Per-Click (PPC) advertising is a method where you pay only for the advertisement that a potential buyer clicks and views the product.
In other words, it is like renting out the outdoor billboard space for free to place your ad but you only pay when a passerby accesses your ad to reach out to your product.
Isn’t it wonderful?
Amazon advertising is revolutionary, competitive, cost-effective and an ideal way of advertising of your products to reach your shoppers by placing your product ads in the top or within the Amazon SERPs to increase sales in Amazon.
Before we elaborate on Amazon PPC, get a hold of a few terms defined below that are required to understand about Amazon PPC.
ACoS = Total spend ÷ Attributed sales (from ads) x 100
If you are running ads, the other factors you should consider on working to generate sales and profit in total are:
To name a few, running ads through Amazon Advertising helps in
Amazon provides for a variety of Ad solutions through which you can find, attract and engage with Amazon customers at every stage of their buying decision journey.
The below table 2.1 showcases different ad solutions of Amazon. In this guide, we will focus on Sponsored Products and Sponsored Brands in detail.
|Popular||Sponsored Products||Sponsored Brands||Store|
|Others||Display Ads||Video Ads||Custom Ads||Amazon DSP|
Every ad solution is different and enabled for different purposes. Every ad solution of Amazon has a suite of ad placements within Amazon and off-Amazon catering to different stages of its customers in their buying decision path. The below table 2.2 will broadly help you to understand in a nutshell about the type of ad solution, requirements, types and goals.
|Type||SPONSORED PRODUCTS||SPONSORED BRANDS|
|Requirements||Professional sellers, vendors, book vendors, Kindle Direct Publishing (KDP) authors, and agencies||Professional sellers enrolled in the Amazon Brand Registry, vendors, book vendors, and agencies|
|Eligibility||Buy box, Eligible categories||Buy box, Eligible categories|
|Placements||top of, alongside, or within search results Product listing pages||feature brand logo, a custom headline,upto 3 products on search results|
For every ad solution, Amazon has created superlative ad placements to maximize the reach to the audience with an intent to buy products.
Ad placements for each type are explained in detail further below in the respective sections of Sponsored Products (Section 3) and Sponsored Brands (Section 4).
Amazon will display your product ads only when your product is in the Buy Box at the time the customer views the ad.
Before starting to advertise your products, it is crucial to jot down your advertising goals, business and marketing goals, budget and enumerate the focus touchpoints of the buyer’s journey.
The types of advertising goals that a seller needs to inculcate while designing amazon ppc campaigns for different stages in a customer decision journey are:
Reach and Brand awareness campaigns generate long-term, new demand for your brand by reaching those who are not currently engaging with the product category.
Campaigns designed for consideration stage will prompt customers to show interest and keep the products visible among customers considering a purchase. By such campaigns it can generate short-term, new demand for your brand by reaching those considering the brand's category, but not currently considering the brand.
Campaigns can be promoted to influence the customers who are almost ready to make the purchase. Through these advertising campaigns, it can capture existing demand for their brand by reaching those already considering the brand.
Drive Brand loyalty and open up cross-selling and up-selling opportunities through customized storefronts or remarketing to existing brand customers or using Subscribe and Save offers among brand subscribers.
Depending on the stage of the product's lifecycle, you need to write down the goals you want to accomplish through advertising in Amazon. If your brand or product is new, you should focus on creating awareness and reach out to the intended shoppers. Every advertising goal indulges a different strategy (also depends on the product category, price, disposable income of the buyer etc) to finally accomplish sales. So, it is crucial to mark your goals and budget to build best amazon advertising strategies for your product.
Goals can be short-term and long-term. Budget and sales vary accordingly. If you wish to generate sales during a festive season, you can raise your marketing budget for short-term and deploy bombarding advertising strategies to boost maximum sales.
Sponsored Products displays ads in a variety of places across Amazon to make it easier for shoppers to find your products. Ads may appear in desktop, tablet, and mobile browser and app placements. One of the biggest highlights of sponsored products is that the ads are placed within the search results for the shopper allowing for high product discoverability.
Whenever a sponsored products campaign is run, these are the following locations the ads may appear depending on the bidding and budget the ads are allocated to :
|Top of Search||appear in the top row of search results|
|Middle of Search||appear in the middle of search results|
|Bottom of Search||appear in the bottom of search results|
|Detail Pages||appear after product information on detail pages.|
Devices-related Sponsored Products Ad placements
|Desktop Browse||appear in the last row of the browse results page for category-specific browse pages.|
|Tablet Browser||appear in the middle of search results|
|Mobile Browser||appear in the bottom of search results|
|Mobile App||appear in the top of search results and in the last rows of search results.|
Campaign name : Name your campaign based on the type of products you'll be advertising, or seasonal products you'll promote.Know more
Start/End Date: These are the start and end dates of a campaign you are running.Know more
Daily budget : The daily budget is the average amount you are willing to spend on a campaign in one day. It is spread out over one month, and applied across all the days in that month.Know more
Targeting : Targeting uses keywords and products to show your ads on search and detail pages to relevant shoppers. For Sponsored Products campaigns, you can create two types of targeting: automatic and manual. (explained further below)
Note: Your campaigns are generally eligible to go live 1 to 2 hours after you submit them.
Whenever a buyer types a search term, Amazon will display your ads when the keywords you inserted in the ad groups match with it. Matching the keyword with the search term can occur in 3 ways: Broad, Phrase and Exact.
This match type offers ads broad traffic exposure. A customer search term will match if it contains all the keyword terms or their synonyms. The customer search term can contain keywords or synonyms in any order.
For Sponsored Brands, you can add broad match modifiers to indicate words that must appear in the customer's search in order for your ad to run. Add a broad match modifier by adding a plus symbol "+" before the word.
Example: If you use the keyword "+men shoes" with a broad match, then the ad will only match to searches that contain the word "men". The ad may match to "men sneakers" or "running shoes for men" but not to any search term that does not contain the word "men" such as just “sneakers” or just “running shoes”.
The customer search term must contain the exact phrase or sequence of words. It is more restrictive than broad match and will generally result in more relevant placements for your ad.
The customer’s search term must exactly match the keyword in order for the ad to show, and will also match close variations of the exact term. Exact match is the most restrictive match type, but can be more relevant to a customer’s search.
You can’t change the match type of an existing keyword, but you can add multiple match types for one keyword. You can also select match types for Negative Keywords.
Negative keywords prevent your ads from displaying when a shopper's search terms match your negative keywords. Negative keywords can be matched in two ways:
Ads don't show on search queries that contain the complete phrase or close variations. There is a maximum limit of four words per negative keyword and 80 characters.
Ads don't show on search queries that contain the exact phrase or close variation. There is a maximum limit of ten words per negative keyword and 80 characters.
Campaigns are made up of one or more ad groups. Ad groups help to cluster similar SKUs together.
In auto-targeted campaigns, you can apply a single bid to the whole ad group. In manual-targeted campaigns, you can select a common group of keywords to target all the SKUs within the ad group. Since keywords and bids apply to all SKUs within an ad group, it’s advisable to choose SKUs that are closely related to each other.
✓Ad group name : Assign an ad group name that is descriptive and meaningful to you.Know more
Amazon provides for a variety of targeting methods to reach your ads out to your intended audience. Targeting can be done at campaign level and at ad group level.
✓At Campaign level:
Amazon uses multiple default strategies on your behalf to match your ad to a shopper looking for your product.
Though it skips the process of selecting keywords, the degree of control over the campaign is also greatly reduced resulting in higher ACoS or lesser conversion rate.
It helps Amazon Sellers to specifically target keywords and products. You can choose different match types for keywords, and choose categories, products, brands or features related to your product.
Manual targeting is laborious but result-driven and yields a higer degree of control on campaigns.
✓At Ad group level:
Sponsored Brands campaigns aid in developing premium brand awareness, product discoverability and product portfolio engagement. It is done by enhancing your brand in prominent search placements with customizable ads that link directly to a landing page or a Store or a product details page.
Sponsored Brand Ads are provided with high degree of visibility and appear:
To create a campaign for Sponsored Brands:
Budget: Specify the total amount you are willing to spend by setting a daily or lifetime budget.Know more
Key differences between Sponsored Products and Sponsored Brands:
|Feature||Sponsored Products||Sponsored Brands|
|Campaign structure||Campaigns > Ad groups > Ads > Keywords||Campaigns > Creatives > Keywords|
|Budget options||Daily budget||Daily budget, Lifetime budget|
In practice, Amazon Sponsored Brand Ads usually result in a slightly lower conversion rate compared to Amazon Sponsored Products Ads but your brand will receive more impressions and exposure to Amazon buyers.
There is no one-size-fits-all strategy or campaign structure for Amazon sponsored campaigns and it varies depending on your business and marketing goals and the product portfolio you sell on Amazon.
But the order of progression from fresh to mature campaigns is almost similar to every campaign.
Testing and consistent optimization of campaigns is the only thriving way to maximize the sales and revenue effectively and efficiently.
Initially, it is suggested always to start with Automatic campaigns (if you are not aware of (suggestion: even if you are aware of) your keywords and customer behaviour in your product category)
The best Amazon Sponsored Campagins strategy is always a combination of both automatic and manual targeting campaigns.
Automatic Targeting helps out on discovering lucrative keywords that your audience is using to find your products.
Whereas, manual targeting will allow you to maximize investment on sales delivering keywords and exclude non-delivering ones through statistical certainty from the reports.
You can set-up and manage manual campaigns in multiple ways suiting to the best needs of your business goals and marketing budget. Below are a few simple hacks that will enable you to run successful sponsored campaigns. Remember, there is no one-size-fits-all strategy for sponsored campaigns.
If you are running with a decent budget with many SKUs, try to separately create ad groups for every SKU in your product portfolio. Though Amazon suggests to group similar items into every ad group, you can hack through few disadvantages with this strategy.
When a shopper searches Amazon for products, Amazon runs a real-time auction to decide which ads to appear for that specific search and in which order those ads will show on the page.
Before competing, those ads must meet a minimum relevance criteria. Based on a combination of the seller’s bid and the ad’s relevance to the shopper's search, ads are ranked and displayed at different ad locations.
The maximum default bid (manual targeting) or the maximum bid (automatic targeting) is the cost-per-click that you are willing to pay when someone clicks an ad from this ad group
Keyword bidding gives you the most control in terms of your ad performance and spend.
Cost-per-click bids that are set at the keyword level take precedence over the default cost-per-click bid set at the ad group level
Suggested bid and bid range is an estimate provided by Amazon (updated daily) and is calculated from a group of recent winning bids for ads that are similar to yours in your product category.
Bidding setting applies to all bids within the campaign. There are two types of bidding to compete in the real-time auction in Amazon:
Using Dynamic bidding, bids can be altered in two ways explained in the following table 8.1
|Dynamic Bidding||Down only||Up and down|
|Description||Real-time bids reduction by Amazon for less likely converting clicks||Real-time bids alteration (increase/ decrease) by Amazon for clicks that can convert|
|How it works||
Amazon also provides adjust bids by placements option for sellers to choose. The performance of different bids can be viewed in Amazon based on 3 ad placement groups - top of search (first page), rest of search, and product pages. So, bids can be set different for two placements explained in the below table 8.2 ( "x" is the base bid)
|Placement type||Bidding limits|
|Top of the search||x to 10x|
|Rest of the search||x|
|Product pages||x to 10x|
Now, let's take an example combining both bidding strategy and adjust bids by placement.
Let's assume you are willing to put a base bid for a keyword : $1
Now, you wish to explore 'adjust bids by placement' option for this keyword and set percentages as mentioned in the table below. For reference, the maximum percentage change Amazon will alter the base bid if you choose 'Dynamic - up and down' bidding strategy is provided below in table 8.3
|Placement type||'Adjust bids by placement' set by you||Maximum bid change by Amazon
in 'Dynamic - up and down' bidding
|Top of the search||50 % (1)||100 % (a)|
|Product pages||100% (2)||50 % (b)|
|Rest of the search||No change||50 % (c)|
Let's understand how the bids will be applied based on bidding strategy in our example below:
|Bidding Strategy||Maximum bid range applied on placement|
|Top of the search||Product pages||Rest of the search|
|Fixed bids||$ 1.5||$ 2||$ 1|
|Dynamic bid - down only||$ 0 - $ 1.5||$ 0 - $ 2||$ 0 - $ 1|
|Dynamic bid - up and down||$ 0 - $ 3||$ 0 - $ 3||$ 0 - $ 1.5|
From the above table 8.4, it is clear that the bids are not altered by Amazon by choosing fixed bidding strategy. In fixed bidding, the bids are only varying based on placement.
By choosing 'Dynamic bidding- down only' bidding strategy, Amazon will adjust bids down from there for opportunities where a click is less likely to convert into a sale for each respective placement
By choosing 'dynamic bids - up and down', Amazon may increase a bid by up to 100% for top of search (first page) and up to 50% for other placements
If you are still confused how the bids for different placements came by using different bidding strategies and 'adjust bids by placement', check the following calculations table (table 8.5) to get a clear understanding how bids using different options work and maximize opportunities for likelihood of sales.
|Placement type||Calculations (max bid)|
|Fixed bids||Dynamic - down only||Dynamic - up and down|
|Top of the search||Base bid + 50%(1) = $1 + $0.5 = $1.5||Base bid + 50%(1) = $1 + $0.5 = $1.5||By
placement - Base bid + 50%(1) = $1 + $0.5 = $1.5
Dynamic - $1.5 + 100%(a) = $1.5 + $1.5 = $3
|Product pages||Base bid + 100%(2) = $1 + $1 = $2||Base bid + 100%(2) = $1 + $1 = $2||By placement - Base bid + 100%(2) =
$1 + $1 = $2
Dynamic - $2 + 50%(b) = $2 + $1 = $3
|Rest of the search||Base bid = $1||Base bid = $1||By placement - No change
Dynamic - Base bid + 50%(c) = $1 + $0.5 = $1.5
Most of the sellers who advertise on Amazon judge the success of their campaigns using a metric called advertising cost of sales (ACoS) as it represents ad spend as a percentage of sales (a direct metric of your advertising’s profitability). For example, if you spend $5 on ads and generate $25 in sales, your ACoS is 20% [(5/25) x 100].
The lower the ACoS, the cheaper it was to drive a sale; the higher the ACoS, the more expensive it was to drive a sale.
Though ACoS is the most important metric in analyzing sponsored campaigns in amazon, it could be misleading to understand the overall impact of your advertsing if ACoS is used in isolation.
Before we dive into how to look at ACoS in different scenarios, let's try to understand how to calculate and first assign a targeted ACoS, break-even ACoS
As an analyst at buy box strategy for ecommerce businesses, we recommend a universal process that - to predict better of a successful sponsored campaigns and sales and thereby, success of your Amazon business, it is imperative to calculate costs and profits on unit-level basis.
Break-even ACoS is simply the profit you make after cutting all the incurred costs before you start sponsored campaigns. So, we can call break-even ACoS as 'profit before PPC'.
Break-even means "no profit, no loss". So, if your ACoS is equal to the profit you would make before running Amazon PPC, you won't make any profit or loss with that ASIN. If the ACoS is less than break-even ACoS, it will be profitable and if goes above break-even ACoS, it will incur a loss.
Let's assume you have a product that you would price at $ 20 in Amazon. The following is the rough breakdown of the costs you generally incur:
Gross profit = $20 - ($6 + $3 + $3) = $8
Profit before PPC = ($8 / $20) x 100 = 40 %
The break-even ACoS for this product is 40%. For you to run sponsored campaigns for this product, pegging your ACoS below 40% will result in profit.
Like discussed in the Section 2, every sponsored campaign should have advertising goals based on the stage of selling of your product in Amazon. Based on your business goals and marketing budget, you need to start the campaigns by locking at a target ACoS.
In the above example, let us take 3 scenarios having different advertising goals for your Amazon Business:
Let us first get to know the important metrics data provided by Amazon regarding the campaigns, ad groups, performance of ads made available in different reports.
|Budget|| Sponsored Products: Average amount you are willing to spend on your
campaign per day.
Sponsored Brands: Maximum amount for the lifetime of your campaign, or a capped amount to spend per day on your campaign.
|ACoS||Percentage of sales spent on advertising|
|RoAS||Return on Advertising Spend is the ratio of total sales to total spend. It is also simply an inverse of ACoS|
|Sales Attribution||Amazon tracks the activity of a shopper who clicked your product ad even if the shopper makes a purchase at a later period. Currently, Amazon considers standard attribution window for Sponsored Products as 7 days while the attribution window for Sponsored Brands as 14 days. Within the attribution window, the sale is attributed to the click to the ad the shopper previously made.|
|Ad group metrics|
|Match type||Sponsored products: Broad, Phrase and Exact match type.
Sponsored brands: Phrase and Exact match type
|Estimated Win Rate||Realistic percentage of how many eligible impressions your keyword might receive.|
|Keyword bid||Maximum amount you will pay for a click when this keyword triggers your ad. Custom keyword bids will override default bids.|
|Click-through-rate (CTR)||Percentage of shoppers who click on your ad.
CTR = Clicks ÷ impressions.
|Other Sponsored Brands metrics (new-to-brand metrics)||Measure orders and sales of your products generated from first-time customers of your brand on Amazon|
|New-to-brand orders||The number of first-time orders for products within the brand over a one-year lookback window.|
|New-to-brand sales||The total sales (in local currency) of new-to-brand orders.|
|% of orders new-to-brand||The percentage of total orders that are new-to-brand orders.|
|% of sales new-to-brand||The total sales (in local currency) of new-to-brand purchases.|
|New-to-brand units||Number of units from first-time orders for products within the brand over a one-year lookback window.|
|% of units new-to-brand||Percentage of total units that are units from new-to-brand orders.|
|New-to-brand order rate||number of new-to-brand orders relative to the number of clicks. (New-to-brand order rate = New-to-brand orders / clicks)|
|Report type||Description||Date Range|
|Targeting Report||Provides insights into sales and performance metrics for targets in all campaigns that received at least one impression||90 days|
|Advertised Product Report||Provides insights into sales and performance metrics for your advertised ASINs in all campaigns that received at least one impression||90 days|
|Purchased Product Report||Provides details on the non-advertised ASINs a shopper purchased after clicking on your ad||60 days|
|Search term report||Provides the search terms entered by shoppers searching on Amazon that resulted in a click. It helps to identify high performing searches and also to create negative keywords for search terms that don’t meet your goals.||60 days|
|Placement report||Provides insights into the performance across different placement types of the product ads||90 days|
|Performance over time report||Provides data of the clicks, cost per click (CPC) and spend for all of your Sponsored Product Campaigns.||90 days|
|Keyword Report||Provides insights into sales and performance metrics for targets in all campaigns that received at least one impression||90 days|
|Keyword Placement report||Insights into your keyword performance across different placement types.||90 days|
|Campaign report||Insights into the overall performance of your campaign.||60 days|
|Campaign Placement report||Insights into your campaign performance across different placement types.||90 days|
You may find Amazon advertising, sponsored products, sponsored brands to be complicated or too much to learn. If you go through this comprehensive guide on Amazon sponsored products and sponsored brands, you will definitely gain the pulse of how Amazon advertising functions.
As an agency managing advertising solutions for Amazon sellers, we know that Amazon Sponsored Products ads will continue to be one of the most powerful tools for driving discoverability and incremental sales and reach to your audience with intent for Amazon sellers.
Now, let's make it easy by making a checklist for you to go forward and implement advertising strategies. If you are stuck with some problem, comment below or email to us and we will be happy to help.
What should be ...
For a detailed understanding, read our comprehensive guide - A to Z on Amazon product listing optimization
We recommend running 5+ Sponsored Products campaigns within the first few weeks of advertising. The more campaigns you run, the more opportunity you have to learn what helps you drive the most sales on Amazon.