Selling on Amazon is no simple matter. You are literally competing with millions of sellers from all over the world. One way to cut through the noise is to advertise on Amazon using the platform’s pay per click ads. If you didn’t know about this, don’t worry, you aren’t alone. Whether this is your first time hearing about Amazon PPC or if you are just interested in learning more, read on and learn about Amazon PPC management and how to use the service to its fullest potential.
What Is Amazon PPC?
In a sense, Amazon PPC is exactly what it sounds like: pay per click advertisements on Amazon. If you’ve ever looked at an Amazon search results page and seen a listing marked “Sponsored,” that was an Amazon PPC ad. You make an ad for your product listing or brand page, set bidding rules and the system places your ad in front of Amazon shoppers. There are three types of Amazon PPC ads:
- Sponsored Product Ads: These are ads that promote individual products on Amazon. They are primarily targeted using keywords.
- Sponsored Brand Ads: These are ads for your brand that can include a custom headline, logo and up to three products. They may point to your store page or custom landing page on Amazon.
- Product Display Ads: These are ads for Amazon product detail pages. They offer greater behavioral targeting options and customization than the other advertising options.
This can be a very effective way to get in front of buyers’ eyes. It is certainly easier to rank an ad well in search results than it is to do so organically. However, there is an enormous number of sellers on Amazon and that number keeps growing exponentially. Without the right Amazon PPC management, it is easy for ad budgets to inflate and return on investment to plummet.
Who Can Use Amazon PPC?
There are two main types of merchants on Amazon: Vendors (1P) and Sellers (3P). Vendors can use all types of ads. Sellers may use Sponsored Products Ads if they have a professional selling plan. Sellers must have Brand Registry to use Sponsored Brand Ads.
How Much Does Advertising With Amazon Cost?
Like other pay-per-click advertising solutions, the costs for an ad depend greatly on who you are competing against. The average is typically between $0.50 and $3 per click. That is a significant range. More competitive product categories, subcategories, and keywords tend to be much more expensive.
Is Amazon PPC Worth It?
Absolutely yes, Amazon PPC is worth the investment. It is one of the most reliable ways to get your products and brand in front of prospective Amazon buyers. It is a great way to increase traffic to your pages on the site. And with an increase in traffic and sales, Amazon’s algorithm will notice and the organic ranking for the product will also increase. Amazon is one of the few platforms where paying for PPC will improve organic ranking. However, like all online advertising platforms, especially in competitive spaces, you need to have a good strategy and understand your goals to earn a reliable return on investment.
How Can I Maximize the Impact of Amazon PPC?
Like all advertising, Amazon PPC is only worthwhile if it is ultimately profitable. PPC ads are generally direct response ads. In other words, you want them to bring a potential customer straight to your product or brand so you can convert a sale.
So, one of the first steps in making sure your Amazon PPC campaign is a success is to optimize your pages. Making sure that you have optimized product titles and product details is a great first step when optimizing any Amazon listing. However, bear in mind that your goal is to make a sale and a strong product page plays a huge role in that.
Amazon ads use keywords for targeting. These keywords help match your ads against user searches. When you set a keyword, you can choose a level of specificity for matching. This primarily affects multi-word phrases.
- Broad: If the search term contains the keyword in any word order it is a match. However, the whole keyword has to be included.
- Phrase: If the search term matches the keyword exactly or contains it in the correct order but with other words, it is a match.
- Exact: If the search term matches the keyword exactly it is a match.
Keywords also cover certain variants. This includes special character alternatives to letters in the keyword, different capitalization, plural/singular variants, minor spelling errors and filler words. For example, in the latter of these, “shirt men” and “shirt for men” are both even on exact.
The more specific your keywords, the more likely you are to get highly-interested buyers seeing your ads. Conversely, however, the broader your keywords, the more people will see them in total. There is a balance that needs to be struck for every campaign. This is no easy undertaking and it can be helpful to have an expert manage Amazon PPC for you, especially initially, to find that optimal balance.
How Do I Optimize My ROI?
In Amazon PPC, the Advertising Cost of Sale (ACoS) is a really important number. It is your ad spend divided by the total sales earned through your ads. For example, if you spent $25 on ads and earned $100 in sales, your ACoS would be 25%. Tracking and managing this number are the keys to getting the best possible ROI from Amazon PPC services.
To begin, you should perform a couple of calculations. First, find the break-even ACoS for your product. Add up the cost of producing or buying the product from your vendor, the cost of shipping the product, Amazon’s fees and any overhead. Let’s say your product sells for $10 and your profit before advertising is $2, then your breakeven ACoS is 20%.
Obviously, the goal isn’t to break even; so, you should also plan a target profit margin after advertising. Let’s say you want to earn 5%. That makes your target ACoS 15% or your breakeven ACosS minus your target profit margin.
Let’s say that your current ACoS is 18%, and you want to reduce is to 15% as mentioned above. To do this, you need to either increase your ad revenue, decrease your ad spend or both. Ad spend is your click-through rate times your impressions times your cost per click. Ad revenue is your clicks times your conversion rate times your average selling price.
- Click-Through Rate: This is the number of people who clicked on your ad divided by the number of people who saw it (impressions). A low click-through rate indicates that your advertisement isn’t compelling or is not as compelling as competitive listings in search results. You may need to change your ad or opt for more specific keywords.
- Cost Per Click: This is how much money you pay for a click. You can reduce this by adjusting your bidding strategy or bidding on less competitive keywords. This can be complex to fine-tune, so consider an Amazon PPC management service.
- Conversion Rate: This is the number of people who buy a product divided by the number of people who click on your ad. You can improve this by fine-tuning your product page. Finding more specific keywords may also help.
Every campaign is a little different, so the way to optimize it varies. However, understanding these key factors and A/B testing some variations of your campaign will help you increase traffic and optimize your ACoS.
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