How to Run PPC on Amazon: Step-by-Step Guide
Are you an Amazon seller looking to maximize your product visibility and boost sales? One powerful tool at your disposal is Amazon’s Pay-Per-Click (PPC) advertising.
On average, the ad spend of an Amazon seller is $22 for every $100 generated. This equates to a 4.5x return on ad spend, highlighting the remarkable profitability of advertising on Amazon as one of the most lucrative options for e-commerce advertising.
In this comprehensive guide, I will show you how to run PPC on Amazon and provide you with valuable tips.
So, let’s dive in!
Introduction to Amazon PPC
Amazon PPC (pay-per-click) is an advertising model that allows sellers to promote their products directly within Amazon’s search results and product detail pages.
What does PPC stand for?
It stands for pay-per-click, meaning you only pay when a shopper clicks on your ad. This form of advertising can significantly increase your product visibility, drive targeted traffic to your listings, and ultimately lead to higher sales.
There are 3 types of ad campaigns:
- Sponsored Products
- Sponsored Brands
- Sponsored Display
To learn more about the key features of these types, check out our article on Amazon PPC.
Watch this short video on how a sports nutrition brand used Amazon Ads to reach buyers from all over the world:
There is another type of advertising — Amazon DSP, which stands for Amazon Demand-Side Platform. It is a powerful advertising tool that allows brands and advertisers to reach a vast audience across various channels. With Amazon DSP, businesses can create targeted display and video campaigns to effectively engage potential customers both on and off the Amazon platform.
Amazon DSP operates on a CPM (cost per mille) ad model. This means that businesses pay a specific cost for every thousand impressions their ads receive. In this article, I’ll focus on Amazon PPC ad types.
Why Is PPC Crucial for Amazon Sellers?
Having a well-executed PPC advertising strategy becomes imperative for Amazon businesses of all scales.
While organic ranking, which determines the natural placement of your product in search results, holds significance, advertisements play a vital role in expanding your reach on the platform.
This is mainly because Amazon has a vast collection of hundreds of millions of products, which makes it simple for listings to get lost in the crowded marketplace.
According to JungleScout, 77% of Amazon sellers use Sponsored Products ads. So, in this article, I will take a closer look at this type of advertising campaign.
Automatic and Manual Campaigns
Both automatic and manual Amazon PPC campaigns have their advantages and can be used together as part of a comprehensive advertising strategy.
Automatic PPC campaigns can be highly beneficial for beginners who are just starting out. Amazon provides assistance throughout the process and offers a valuable learning experience. These campaigns also allow you to gather valuable data that can be utilized in future campaigns.
The automatic strategy means selecting keywords that Amazon’s system considers connected to your product. As time goes on, Amazon uses data from shoppers’ clicks and purchases to improve the ads, making them more suitable for your listing and increasing the number of people who buy your product.
Sponsored Products automatic targeting offers a range of four distinct match types:
- Close match
- Loose match
Using the close match and loose match options, your ad will appear in shopping results when your product closely or loosely matches the shopper’s query. The substitutes and complements options will display your ad to shoppers who are looking at similar products or products that complement yours.
While automatic campaigns offer convenience, it is important to understand their limitations.
By opting for automatic campaigns, you trade some control for ease of use. Amazon may not optimize your campaign spending as efficiently as you could manually. Therefore, it is advisable to use automatic campaigns initially when launching a new product, allowing you to familiarize yourself with their functionality.
Manual campaigns offer the advantage of increased control, but they also require constant evaluation and monitoring. In manual campaigns, sellers can choose their target keywords, set specific bids, and fine-tune their advertising strategy. This control allows for more precise targeting and optimization, enabling sellers to reach their desired audience effectively.
I suggest gaining a thorough understanding of the PPC process, which you can achieve by starting with automatic campaigns. By utilizing them as a learning tool, you can grasp the fundamentals of PPC and gradually transition to manual campaigns with confidence.
Understanding the nuances of Amazon PPC keyword research can give your product a competitive edge in the marketplace.
How to Set Up Amazon PPC
Let’s see how to create a Sponsored Product automatic campaign step by step.
Step 1. Go to your advertising console and click Create campaign.
Step 2. After that, you will see 3 campaign types. Choose Sponsored Products.
Step 3. Name your campaign and include start and end dates, as well as the daily budget. If you wish for your campaign to continue without a specific end date, simply leave the field for the end date blank. Select Automatic targeting.
Step 4. The next section is Campaign bidding strategy. You might want to start with Dynamic bids — your bids will be automatically lowered if your ad is less likely to convert to sales. You can change the bid strategy any time you want.
Step 5. Create an ad group.
Step 6. Choose the products you want to promote.
Step 7. Next, you can either set a default bid for the entire campaign or set bids by targeting group (Close match, Loose match, Substitutes, Complements).
According to Amazon’s recommendation, it is suggested to start with a bid of $0.75, irrespective of the product. However, I suggest being slightly more competitive with your bidding when initially launching your campaign. It’s recommended to bid as high as $1.50 to $2.00 to increase your chances of generating early sales.
Step 8. Set negative targeting. Remember that you can add negative targeting after your campaign goes live. Click the Launch campaign button.
Typically, it takes around 30 minutes to an hour for your ad to appear on Amazon after submission.
Get more information on Sponsored Products here.
Monitoring Performance and Analytics
To track the performance of your Amazon PPC campaigns, you can utilize Amazon’s advertising analytics tools. These tools provide valuable insights and metrics that can guide your optimization efforts. Key metrics to monitor include:
- Advertising Cost of Sales (ACoS): This metric calculates the amount spent on advertising to generate one dollar in attributed sales.
- Return on Ad Spend (ROAS): It measures the revenue generated per dollar spent on advertising.
- Click-Through Rate (CTR): It measures the number of clicks your ad receives divided by the number of impressions.
- Conversion Rate (CR): This metric indicates the percentage of shoppers who complete a purchase after clicking on your ad.
Check out our article on ACoS vs ROAS to learn more about these two metrics.
Our ACoS to ROAS calculator is the perfect tool for effortless and efficient metric conversions, providing quick and accurate results.
Convert ACoS to ROAS
Convert ROAS to ACoS
Avoiding Common Mistakes in Amazon PPC
To ensure the success of your Amazon PPC campaigns, avoid these common pitfalls:
- Neglecting keyword research and selection. Consider using Amazon PPC software and tools to automate this process and save you time.
- Setting inappropriate bid amounts that result in poor ad placements.
- Failing to monitor campaign performance regularly.
- Ignoring customer feedback and reviews.
- Overlooking the importance of Amazon PPC optimization.
How much should I spend on amazon PPC?
The ideal budget varies based on your product, niche, and advertising goals. It’s recommended to start with a small, manageable budget and gradually increase it as you see positive results and better understand your ACoS and sales data.
Are there any alternatives to running PPC campaigns on Amazon to boost sales?
While Amazon PPC is a powerful tool, other e-commerce advertising platforms can complement your sales efforts. Optimizing product listings, providing excellent customer service, and utilizing social media and external marketing can also contribute to increased sales and brand awareness.
How do I choose keywords for my PPC campaign?
Conduct thorough keyword research to identify relevant and high-converting keywords for your products. Use tools like Amazon’s Keyword Research tool, third-party keyword research tools, and competitor analysis to discover valuable keywords to target in your campaigns.
What is the significance of ACoS (Advertising Cost of Sales) in Amazon PPC?
ACoS is a critical metric in Amazon PPC that represents the ratio of ad spend to sales. It helps you measure the efficiency and profitability of your campaigns. A lower ACoS indicates better performance, as you are spending less to generate sales.
How does Amazon's PPC model differ from other platforms like Google Ads?
Amazon is an e-commerce platform where people come with an intention to buy something, while Google is a search engine where users can have various intents like looking for information, reading news, and of course, shopping. Therefore, ads on Amazon may often be more effective at generating sales, while Google ads can be more useful for brand exposure and reaching users at different stages of the buying process.
In addition, Google offers a variety of ad formats, such as Search, Display, Shopping, Video (YouTube), and more. Amazon’s primary ad formats are Sponsored Products, Sponsored Brands, and Sponsored Display ads.
Marketing Manager at Lira Agency. I enjoy creating valuable and informative content for our clients and visitors. I spend my free time reading books on marketing and psychology.