Amazon PPC Ads: A guide for optimizing your ad strategy

Amazon buyers have access to an extensive selection of product choices on the marketplace. The company’s catalog has grown exponentially throughout the years, with an estimated 350+ million products sold by third-party sellers. Because customers can search and compare items across every category, the battle for Amazon sellers is to find sustainable methods for making their products stand out from the competition.

As the third-largest online advertising company, only behind Google and Facebook, Amazon’s pay-per-click (PPC) can provide an ideal platform for online sellers seeking to generate brand awareness and sales on the marketplace. Pay-Per-Click (PPC) advertising has developed into a key marketing channel on Amazon, enabling sellers and vendors to purchase ad visibility throughout Amazon search results. As the marketplace becomes increasingly competitive, more merchants use PPC ads to expand and leverage their product offerings more effectively.

Why Use Amazon PPC?

With 148.6 million Prime subscribers in the US alone, Amazon’s advertising solutions provide sellers with an effective method for reaching consumers. The campaign types are created not just for enhancing product visibility and boosting sales but for also building brand awareness and trust. Merchants can diversify their existing clientele and target specific audiences. The fee structure for Pay-Per-Click advertising is another enticing aspect for many sellers. Amazon ad costs are charged based on the clicks for each advert rather than its impressions, helping sellers only pay when a customer is interested in their product.

Additionally, sellers participating in PPC advertising can generally benefit from:

  • A boost in the overall visibility and sales of products, through optimized ads with high-volume search keywords. This can also contribute to listings appearing on the first page of search results.
  • Enhanced organic rankings on the Amazon search engine, exposing products to a wider audience of shoppers. Because a product’s sales history contributes to its organic ranking, this help grow brand awareness and sales simultaneously.
  • Device-friendly advertising that can be served to users on mobile and desktop.
  • Reach to a built-in global audience of purchase-oriented users on the platform.

The Available Types of Amazon Advertising  

Sellers that opt to use PPC advertising have various ad types to choose from for their campaigns. The most popular of those is Sponsored Products advertising, followed by Sponsored Brands, then Sponsored Display ads.

Sponsored Products adverts are designed to appear within search results and product listing pages, often closely resembling organic listings. This type of advertising allows sellers to select between automatic and manual keyword targeting strategies. Automatic targeting uses Amazon’s algorithm to determine which keywords are related to a product listing, then adjusts ads over time as more shopper data is collected from visits, clicks and purchases. Sellers that opt to use automatic targeting can choose between four keyword match types, including close matches, loose matches, substitutes, and complements.

Although automatic targeting reduces the amount of input required, it can often lack the optimization options that manual campaigns offer. The other option, manual targeting, enables hand-picking select keywords for the system to bid on. Ads with manual targeting will only appear if the shopper’s search terms match. A more hands-on approach is required for effectively managing manual campaigns. Using third-party ad management software is highly recommended, as it allows for AI assistance with campaigns which can lead to lower ad spend and better sales in the long term.

Sponsored Brands ads are the second type of ads available to marketplace sellers, allowing them to drive awareness about more than a single product at once. The ad format features a more prominent visual design than Sponsored Products to help catch shoppers’ attention. Three formats are available, appearing either at the top of Amazon search results as a headline banner or as halfway down the search results as a video thanks to the newly launched Sponsored Brands Video. Headline banner ads, also known as “product collection” and “store spotlight” will typically include a custom tagline, brand logo, and two or more products. Merchants can choose to link ads directly to product detail pages or an Amazon storefront.

Unlike the other two ad formats, Sponsored Display ads enable sellers to retarget customers that have already visited their product detail pages, on and off Amazon.

Choosing the Right Strategy for your Business

Similarly to other advertising channels, the success of a brand’s campaigns will depend on numerous factors. For those just starting with Amazon ads, we recommend that you slowly experiment with all available options. Automatic targeting campaigns are a great starting point for gathering data that is useful for creating optimized manual targeting campaigns. Running both types simultaneously will help to get a more in-depth understanding of your customers and keep track of new potential search terms.

Depending on the ad strategy and type, certain campaigns may yield a higher RoAS for a brand than others. For instance, Sponsored Brands campaigns tend to generate a higher portion of sales due to their keyword targeting strategies and focus on promoting single products rather than a whole brand or range. However, when it comes to Amazon ads, you should always factor in how the price of the products will affect performance metrics. The return on spend will generally increase with products with a higher price point, as each bid will represent a much smaller fraction of the item’s total value. External campaigns hosted on channels like social media, newsletters, and websites can also impact your performance on the Amazon marketplace. 63% of customers will begin their product searches on Amazon, so don’t underestimate the value of cross-channel campaigns to boost performance.

The demand for each product and keyword will control the variations of the cost. There is no set price, but it will mostly range from $0.05 per click for the least competitive keywords to up to $5+ within the most competitive categories. There is also the option to set a daily budget, which can start at $1.00 but will be varied depending on the product, competition and cost of keywords within a particular category. It is generally recommended that the cost-per-click for each keyword should not be more than 2.5% of the product’s selling price. Compared to the other digital advertisers offering PPC, Amazon can be particularly cost-effective. Unlike Facebook and Google, users on the Amazon platform will have higher levels of purchasing intent when using the platform.

It can be challenging to initially figure out the specific types of advertising and PPC strategies that may be effective. This is where experimentation can help determine what works for the brand and what isn’t as effective. Low-performing campaigns can be identified and removed to make way for the top-performing ads, which sellers should gradually refine and tweak to find the sweet spot of RoAS and ACoS.

Our Tips for PPC Success

The process of creating an Amazon PPC campaign can be challenging. New sellers must know which keywords to use, where to spend their budget, and how to set up tracking. Even for experienced users of the platform, many intricate processes may need improvements. We have included some helpful tips about the best strategies to achieve success using PPC. 

1. Understanding performance and the ACoS feature

Advertising Cost of Sale (ACoS) is one of the key metrics used to measure the performance of Sponsored Products campaigns. Many users will believe that lowering the ACoS is the best possible strategy. However, sellers should instead consider how the objectives for each advertising campaign will relate to the ACoS. Launching new products, selling surplus stocks, increasing profit margins, and other objectives should be considered when analyzing the performance of advertising campaigns.

2. Discover the negative keywords

Negative keywords are just as important as positive matches. Similarly to Google, Amazon enables sellers to remove keywords that associate products with the wrong search term. Combining match types with negative keywords will create negative phrase matches and negative exact match keywords. We recommend conducting this process before launching to save money and increase conversions by showing adverts to the desired target demographic. It is also good policy to continuously repeat this process to ensure that new negative words are added over time.

3. Control your inventory

Running out of stock for products on Amazon has big effects on accounts. Sellers that do not maintain sufficient stock levels will be penalized with reduced organic rankings, losing the Buy Box, and paused Sponsored Products ads. This will allow competitors to generate more sales, increase market share and overtake organic rankings. We recommend the use of automated software to ensure that stock levels are always tracked and restocked. Using software tools is also highly effective for merging stock processes within all e-commerce channels. Lowering advertising spends to reduce sales is another strategy for ensuring that products do not run out of stock.

Final Thoughts

Planning an Amazon advertising strategy is essential for brands looking to fully showcase products, especially during peak traffic dates for online shopping, such as Prime Day, Black Friday and seasonal holidays. As new features such as Sponsored Brand videos and shoppable images continue to enhance Amazon ads, constructing effective advertising campaigns can be a powerful tool for merchants looking to increase profitability and brand awareness.

If you’re looking for support to set up your Amazon advertising, Highlands is here to help! With more than 20 years of experience, Highlands can provide the time, resources and expertise to help your brand navigate the world of online marketplaces.

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