Amazon PPC: Unleashing the Power of Advertising on the E-Commerce Giant

With millions of products and an extensive customer base, Amazon provides an excellent opportunity for sellers to showcase their offerings and drive sales. Among the various advertising options on Amazon, Pay-Per-Click (PPC) campaigns have gained immense popularity due to their effectiveness and measurable results. 

In this comprehensive article, I will delve into the immense power of Amazon PPC advertising and thoroughly explore how it can effectively help businesses achieve their goals.

Amazon PPC is a form of advertising where sellers bid on keywords relevant to their products. They pay only when a user clicks on their ad, hence the name Pay-Per-Click. This advertising model allows sellers to promote their products prominently within Amazon’s search results and product detail pages, increasing their visibility and potential for sales.

Amazon PPC Ads

Amazon remains a highly sought-after digital advertising platform, consistently gaining prominence. The year 2022 witnessed a remarkable achievement for Amazon, as its global ad revenue surged to a staggering 38 billion U.S. dollars, almost twice the figure recorded in 2020. 

With a substantial global e-commerce sales volume of nearly 500 billion dollars and an extensive user base comprising millions of internet users, Amazon has unequivocally solidified its position as a dominant player in the rapid growth and advancement of retail media advertising.

Check out our article on the best e-commerce advertising platforms to discover other PPC options.

According to Statista, Amazon is the most popular online shop in the U.S. in 2023. 

Source of data: Statista

Amazon PPC has proven to be highly effective for sellers who want to increase their product visibility and drive sales on the platform. It offers a targeted approach, ensuring that your ads are shown to users actively searching for products similar to yours. With proper campaign management and optimization, Amazon PPC can generate a significant return on investment (ROI) for sellers.

Amazon PPC, just like any marketing strategy, comes with its own set of advantages and challenges.

By understanding and considering these pros and cons, sellers can make informed decisions about incorporating Amazon PPC into their overall marketing strategy and optimize their campaigns for success.

Determining the precise cost of a PPC ad campaign can be challenging due to its bid-based nature. However, several factors contribute to the overall expenditure of an Amazon PPC ad, including:

• Ad Type: The type of ad chosen, such as Sponsored Brand, Sponsored Product, Sponsored Display, can affect the cost. Different ad formats may have varying pricing structures.
• Keywords: The competitiveness of keywords directly impacts the cost per click. Bidding on highly competitive keywords tends to increase the price per click.
• Competition: The bidding behavior of other Amazon sellers targeting similar keywords can influence the cost. Higher competition often drives up the bidding price.
• Targeting System: The choice between manual or automatic targeting for your product keywords can influence costs. Manual targeting allows for more control but requires additional time and effort.

Considering these factors will give sellers a better understanding of the expenses, allowing for effective Amazon PPC bidding optimization.

As an example, one of the advertising formats offered by Amazon is “sponsored products.” This format focuses on promoting items when users conduct shopping searches. In 2022, the average CPC for sponsored products reached $0.98, slightly surpassing the prices associated with sponsored brands and sponsored display ads. 

Interestingly, the investment in sponsored products appears to yield favorable results. A survey conducted in 2022 revealed that U.S. marketers regarded sponsored products as the ad type delivering the highest return on advertising spending (ROAS).

Understanding specific terminology is fundamental in crafting a successful PPC strategy on Amazon. 

Key terms include:

• Ad Daily Budget – This represents the maximum daily expenditure allocated for an advertisement.
• Ad Impressions – Refers to the total number of times an ad is displayed to users.
• Advertising Cost of Sales (ACoS) – Calculated as Ad Spend / Sales Revenue, ACoS indicates the percentage of Amazon sales attributed to advertising costs.
• Amazon Standard Identification Number (ASIN) – A 10-character identifier assigned to every product on Amazon.
• Attributed Sales – Sales that Amazon credits to your ad campaigns, covering all product sales occurring within one week after users click on your ads.
• Bid – The amount you are willing to pay for your ad to appear when users search for a specific keyword or product on Amazon.
• Click-Through-Rate (CTR) – CTR is calculated as Clicks / Number of impressions, indicating the ratio of ad clicks to ad displays.
• Conversion Rate – This percentage reflects site visitors who complete a desired action.
• Cost-per-Click (CPC) – Calculated as Ad Spend / Number of Clicks, CPC denotes the cost incurred for each click on your ad.
• Cost-per-Mille (CPM) – CPM represents the cost an advertiser pays for 1,000 views of their ad.
• Match Type – Applying to keywords, Match Types restrict or widen the searches for which your ads will appear. 
• Negative Targeting – It enables sellers to remove undesirable search terms from their ad campaigns.
• Optimization – This term refers to the strategic process of improving and fine-tuning advertising campaigns. Businesses should prioritize Amazon PPC optimization to ensure their campaigns are cost-effective and yield the desired results.
• Return on Ad Spend (RoAS) – This metric assesses the profitability of your ad campaigns. Check out our article on ACoS vs ROAS to learn how to evaluate the progress of your business.

Let’s have a look at 3 Amazon PPC campaigns.

Among the various types of Amazon PPC campaigns, Sponsored Products stand out as a highly effective and popular choice for sellers looking to increase their product visibility and drive sales. This advertising format allows sellers to promote their individual products directly within Amazon’s search results and product detail pages, capturing the attention of potential customers who are actively searching for relevant items.

Amazon Sponsored Products ad

Learn more about Sponsored Products ads here. 

• Placement within Search Results: Sponsored Products appear strategically within Amazon’s search results, seamlessly integrated alongside organic listings. This prime placement allows sellers to increase their product’s visibility and attract the attention of shoppers who are already in the buying mindset.
• Enhanced Product Detail Page Visibility: Sponsored Products not only appear within search results but can also be featured on relevant product detail pages. This expanded visibility increases the likelihood of conversions, as users can easily discover and explore the advertised product within its specific category or niche.

Amazon Sponsored Products ad (product page)

• Targeted Reach: With Sponsored Products, sellers can leverage the power of keywords to reach a highly relevant audience: ads are displayed to users actively searching for similar items. This targeted approach maximizes the chances of converting impressions into clicks and sales.
• Customizable Ad Creative: Sellers have the flexibility to create compelling ad copy for their Sponsored Products. They can showcase product images, include concise and persuasive text, and even highlight any promotions or discounts they are offering.

This advertising format allows sellers to promote their brand and multiple products together, creating a cohesive brand experience for potential customers. Sponsored Brands enable sellers to showcase their logo, a custom headline, and a curated selection of products in a visually appealing banner-like format.

Amazon Sponsored Brands ad (within shopping results)

Learn more about Sponsored Brands ads here.

• Prominent Placement: Your advertisements have the potential to appear prominently at the top, alongside, or within relevant shopping results, ensuring maximum visibility and exposure to potential customers. These ads also can appear on product detail pages. 
• Multi-Product Showcasing: Unlike other Amazon PPC formats, Sponsored Brands allow sellers to showcase multiple products within a single ad. This feature enables sellers to present a comprehensive selection of products, increasing the chances of attracting customers and driving conversions.
• Customizable Brand Messaging: With Sponsored Brands, sellers have the freedom to create a custom headline that represents their brand message effectively. This headline, along with the logo, helps to establish brand recognition and create a lasting impression in the minds of customers.

Amazon Sponsored Brands ad (within shopping results)

• Direct Shoppers to Your Brand Store: Sponsored Brands ads can link to a dedicated Brand Store, a customizable storefront that showcases your brand and products. This provides an opportunity to create a curated shopping experience, reinforcing brand identity and increasing customer engagement.

Sponsored Display campaigns aim to target customers based on their interests and purchasing behaviors. For example, if an Amazon shopper has previously viewed the product details page of one of your items, an ad for that specific product may appear on another website or app they frequently use. This strategic placement allows your ad to reach potential customers as they navigate through various online platforms.

Learn more about Sponsored Display ads here.

• Audience Expansion: Sponsored Display campaigns enable sellers to extend their reach beyond customers actively searching for products. 
• Customer Interest Targeting: Sponsored Display campaigns also offer the option to target ads based on customer interests and behaviors. By leveraging Amazon’s vast customer data, sellers can reach specific audiences who have shown an affinity for products in similar categories, enhancing the relevance of the ads and driving higher engagement.
• Off-Amazon Display: In addition to appearing on Amazon’s own platform, Sponsored Display ads can be displayed on Twitch and third-party websites and apps, extending your reach to potential customers outside of the Amazon ecosystem. This off-Amazon display increases brand exposure and provides an opportunity to connect with new audiences.
• Automatic Campaign Creation: Sponsored Display campaigns can be automatically generated based on a seller’s product selection, making it easy to launch and scale campaigns. Amazon’s algorithms analyze product information and customer data to create targeted campaigns that align with sellers’ objectives.

After logging into your Amazon Seller Central account, select Advertising and proceed to Campaign Manager. Finally, click on Create campaign to initiate the campaign creation process.

To learn how to get started with Sponsored Products, check out our article on how to run PPC on Amazon and follow the step-by-step guide.

Here is a short video on how to prepare your account for advertising:

Check out our article on Amazon PPC Strategies to to unlock the secrets of driving targeted traffic, boosting conversions, and skyrocketing your sales.

As the e-commerce industry continues to grow, Amazon PPC remains a crucial tool for businesses to gain a competitive edge and drive sales. It offers a unique opportunity to reach over 2 billion potential customers and effectively promote products on the world’s largest online marketplace.

It’s important to regularly optimize ad campaigns to achive better results. Consider using Amazon PPC software and tools to automate this process and save you time.

Check out our article on Google Shopping vs Amazon PPC to determine which option is best for your business.

Visit our eCommerce PPC library for more valuable insights.