Amazon PPC – explained how does it work

Amazon PPC basics explained – Advertise your products on the Amazon platform

People who are new to Amazon don’t really know about the advertising options and are not yet familiar with PPC and what kind of campaigns it’s possible to run.

When selling on Amazon, it’s important to be visible for potential customers. And to appear on the first page under specific keywords (as most shoppers make their buying decisions from products on the very first page, and never even visit the second page).

You can achieve these results by learning about Amazon SEO and optimising your listings. But you won’t ever be able to do this for all possible keywords so luckily there are other ways of showing your products which are only possible through Amazon PPC campaigns. And today we will explain how it works!

What kind of Amazon PPC campaigns can I run on Amazon?

First of all, there are 2 different campaign types you can run:

Sponsored products

Sponsored Products are ads for individual product listings on Amazon. They appear on search results pages and product detail pages, helping drive sales and product visibility.

Under almost every keyword search on Amazon, you will see listings with the badge “Sponsored”, which is exactly the case here

Sponsored Brands

Sponsored Brands showcase your brand and product portfolio, featuring your brand logo, a custom headline, and up to 3 of your products. Sometimes the ad appears with only your logo. To be eligible for this feature, you need to be registered in the Brand Registry.

But how does Amazon PPC work?

By now you know about the placement of ads on Amazon, but how does it all really work?

If you’re familiar with Google Ads, it will be easier for you to get started. Just like with Google, Amazon allows you to choose the price you want to pay per click. That’s why it’s called PPC.

The difference is that people visit Google when they want to research all sorts of products, topics, etc.. Whereas people visit Amazon when they have a product in mind and are ready to buy. That’s why Google Ads have 1–2% conversions compared with Amazon’s 10% conversion rate!

If you’re not familiar with Amazon yet, you need to know about Seller Central first. This is an admin panel for Amazon sellers. Where they can manage their orders, create and optimise product listings, as well as setting up campaigns.

When setting up campaigns, you can choose an automatic or manual campaign type. Where you choose keywords related to your product to appear higher in the search engine rank pages. Alongside this, you can set a daily budget for that specific campaign.

There are multiple sellers trying to advertise under the same keywords. So how do you ensure that your ad comes before or after your competitors’? The technique is simple. The person who set the higher bid (pay-per-click) is shown higher than the other competitors’ ads.

Cost per click depends on the competition but in the UK, for example, normally it is around £0.50–£2.00.

Automatic campaigns

When running an automatic campaign, you basically rely on Amazon and let it show your products under the keywords which Amazon thinks are relevant based on your product’s information.

It is always advisable to start with the automatic campaigns and run them for 1–2 months. Amazon will be able to provide you with data for this period for the keywords that were more likely to convert customers for your products. Therefore, you can use this data for setting up manual campaigns, should you choose to.

Manual campaigns

Within a manual campaign, advertisers can further refine their ad targeting by using three keyword match types:

• Broad match type: searches terms that contain all components of your keywords in any order
• Phrase match type: searches terms that contain all components of your keywords in the same order
• Exact match type: searches terms that match your keywords word for word (same word order + same components)

So if you want to advertise with the keywords “hand luggage”:

For the Broad match type, your ad could appear with the search query “hand black luggage”.

For the Phrase match type, it won’t appear for “hand black luggage”. But it will definitely appear for the keywords “luggage hand” or “hand luggage black”.

And for the Exact match type, there can’t be any variations besides “hand luggage” for your ad to appear.

Track the results of your campaign

After activating campaigns and giving them some time, you’ll be able to track your results which might help you optimise your efficiency for the future.

The most important abbreviation for you to know is ACoS. Which is Advertising Cost of Sales, and it shows the percentage of sales attributed to advertising. This is calculated by dividing the total ad spend by attributed sales. For example, if you spent $4 on advertising resulting in attributed sales of $20, your ACoS would be 20% (i.e. $4/$20 = 0.20).

ACoS allows you to estimate the percentage of your profit margin taken up by advertising on Amazon.

There are many factors to consider when optimising your ACoS. Including things like setting “negative keywords” which you don’t want to advertise under, and understanding the most appropriate bid for certain keywords, etc. But it’s probably best to have a separate article that deals with increasing the efficiency of Amazon PPC advertising.

Another feature is that you will be able to see impressions – how many times your ad was in front of the eyes of the potential buyer, how many clicks your ad generated, how many ‘new to the brand’ customers you had, how many are returning customers, and much more besides!

Would you be interested in reading more about Amazon PPC, and learning about tactics and features which enable you to create more efficient campaigns? Drop a comment below and we will write more in-depth research on this topic.