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It is clear that Amazon's advertising business is growing faster than ever, putting even more pressure on the competition. Still, with the right Pay-Per-Click (PPC) strategy and campaign setup, your business can survive and prosper in 2023.
In this guide, we uncover 7 guidelines you should follow when optimizing your PPC campaign on Amazon. However, we must first review Amazon PPC basics and its types before following these guidelines.
Amazon is the biggest online retailer in the US. It has a 37.8% market share of e-commerce in the US, which makes it the leading online retailer in the country. Amazon provides users with over 75 million products, and there are more than 9 million third-party active vendors in its marketplace throughout the world.
The search engine and advertising platform on Amazon are designed to handle the massive traffic and users of such a huge website. The platform for advertising runs on keywords. Amazon calls its advertising “Sponsored Ads” which lets bidders buy keywords that are shown to users when they shop for a similar product.
Can you target your product's potential buyers on Amazon? Yes, you can set up Amazon PPC campaigns for specific keywords to precisely target users who search for your products. Here is what happens once you set up your Amazon PPC campaign:
You are not required to pay for the full bid once you become the highest bidder. That will be unfair when multiplied by millions of viewers. So Amazon asks you to give only one cent more than the highest bidder.
For instance, if the second-highest bidder’s bid for the keyword “gaming chairs” is $2.40 and your bid of $3.70 won the bidding war, you will only have to pay $2.41 for the click on your ad.
Amazon gives you the possibility to set a budget and timeframe for your ad campaign. On average your PPC costs can be between $0.10 to USD 6.00 per click.
Before we get into Amazon PPC ads, It is important to understand Amazon's key PPC metrics. Here is a definition for each one:
Amazon provides PPC campaigns to advertisers, agencies, and self-service portals. It uses particular terminology that is unique to the platform but is similar in function to other platforms. You need to be familiar with these terms when you set up your PPC ad campaigns on Amazon:
Amazon Sponsored Products are similar to Google ads. You have a product to sell on Amazon. So, you search related keywords for it with keyword search tools. Then you add relevant keywords to your products and target them for the Cost-Per-Click (CPC). Amazon displays your ad when buyers search for one or more keywords or products you are targeting.
Amazon-sponsored brands, previously known as Headline Ads, are perfect to showcase your brand personality. You will find them as a banner ad on the left, top, and bottom of the search results page. You can redirect these ads to your website or your product's page.
These ads include a headline, logo, and up to three featured products that you can link to their listings.
What if you have a product or service outside Amazon that you want to promote on Amazon and show to its millions of users? Then you have to select Amazon Sponsored Display. It is a self-service platform that Amazon provides to target customers on and off amazon. Sponsored Display ads increase your PPC campaign efficiency, especially if you have a product to sell on Amazon.
Amazon provides you with two options for your PPC campaigns: automatic or manual campaigns. Both services have their pluses or minuses. It mainly depends on what goals you want to achieve on PPC ads to select each one of these services. You can choose to use both automatic and manual targeting for your campaigns.
If you just started your PPC campaigns, automatic targeting is what you should go for. It saves your time and allows you to be more flexible with the campaign. Amazon will do the job for you to match your ads with shopping groups or products. This platform provides insights and recommends suggestions to bid more effectively to reach your goals. For instance, you get suggestions on the exact bid for the keywords or the bid range you need to be aware of.
In manual targeting, advertising agencies can help you make more sophisticated decisions to target more specific targets or products. The options you have in manual targeting require experience and insights from past or present projects to give you more control over where and when your ads appear.
You can set up a different bid for each keyword, product, and category. You still receive help from Amazon with suggested bids and bid ranges to help you decide better. We recommend starting with an automatic campaign for at least two weeks to have some data to work with when you change to manual targeting.
If you lack experience in setting up PPC campaigns on Amazon, chances are you make bleeding campaigns. If you spend $1000 on advertising, get only 100 customers, and your product is $5; you have a bleeder. You spent $1000 and got $500 in revenue. There is no chance this campaign is profitable, and you should cease these campaigns immediately. Go to your ad campaign settings and discontinue any campaign having less than $1 Return-On-Ad-Spend (ROAS).
If a campaign you are running has a high ACOS, you should reduce the bid for that campaign. You need to keep your ACOS as low as possible. If Your ACOS is 30%, it means for every $100 you made on sales, you have spent $30 on ads. This signifies that your campaign is not optimized for maximum profit. To optimize it, find all the products that have a high ACOS and reduce the bid to 50%. This is how you bring down the total amount you spend on an ad.
In the previous part, you optimized campaigns with greater ACOS than 100% and reduced them to 50%. Another scenario is when you have come to a conclusion to keep your ACOS below a particular number. Then you have to lower your bids again. Suppose you have a campaign with a 35% ACOS, but you have decided to keep it under 35%. Then take these steps:
That’s how you successfully reduce your ad cost, which in turn lowers your ACOS. This strategy can make your PPC campaign more profitable. (Numbers and percentages are for demonstration purposes only.)
What if you have keywords in your campaigns that are doing good in generating revenue for you? These keywords are already optimized and should have a reasonable cost compared to market prices. You can increase your bidding offers for these keywords to increase your chances of winning. By doing this, you can ensure that your Amazon ad campaigns will succeed, and you will make a profit.
When you analyze the data from your ad campaigns, you may discover keywords that generate no sales. So, why should you keep them? These are negative keywords which, as the name suggests, are the opposite of the “positive keywords” that you bid on. You can set up your Amazon ad campaign manager in a way that Amazon does not display your ads when users search for these words in the search bar. You can also stop bidding for these keywords
For instance, keywords such as “free” or “giveaway” may be considered negative keywords. Who wants to buy anything when searching for these words on amazon?
Another strategy is to start with a broad positive keyword campaign and evaluate the analytics for them. Find out which keywords you appear in and which ones you do not. You can eliminate irrelevant, underperforming, or overpriced keywords this way.
You can also review some Amazon Brand Analytics reports and decide which keywords you want to bid on and which ones you want to stay clear from.
You can use a similar process for negative keywords to find high-performing keywords. You can analyze your past data and find sales generated by each keyword in your campaign manager settings. It’s also a good idea to check Amazon suggestions when you type a specific keyword.
Suppose you want to find high-performing keywords for “gaming chairs”. You will probably see Amazon suggesting “gaming chairs for adults”. “Gaming chairs for kids”, “gaming chairs for teens” or “gaming chairs with speakers”. This gives you an idea about what the users are searching for and what keywords you can bid on to get better results for your PPC ads.
Controlling your budget means you do not spend your budget before you get insights. There is no such thing as market saturation in Amazon because the user base is gigantic. It is a reasonable approach to spend some money on keywords, analyze them for a few weeks and then start and optimize the process from there.
Also, your keyword targeting depends highly on your goals. No ad agency can help you if you don’t know what exactly you are aiming for. Your goals may be increasing brand awareness, generating sales and revenue, retargeting customers, creating loyalty for your customer base, testing new offers, attracting leads, or many other goals you can set in your digital marketing strategy.
Each of your goals requires dedicated and precise tactics and analyzing metrics and insights to make savvy decisions based on data is your golden key to success.
The answer is Yes. Since you get charged when a user clicks on your ad, you will get millions of impressions without paying Amazon. This means you receive exposure, which is an essential element in building brand awareness.
According to AdBadger, the average Amazon Cost-Per-Click (CPC) is $0.89, and the average conversion rate is 9.87%. By comparison, the average conversion rate on other e-commerce platforms is 1.33%.
If you rely on organic search results and ranking on Amazon, it will be difficult to stand out among 350 million other products. It doesn’t matter how excellent your products are; customers would rather not go through several result pages to find you. That’s precisely why you should expand your reach with PPC ads.
Customers are abundant on Amazon, and the numbers don’t lie. As Amazon's user base grows, your business can be more profitable than ever.
The best strategy is to be within the customers' reach whenever they search on Amazon. Unless you have an accurate strategy and experience, you will end up fishing with high costs and wasted ad money.
Our team of experts in JM&Co from around the globe can assist you in making profitable decisions. If you plan to increase profits and end 2023 in style, you can contact us, and we will help you set up streamlined, cost-effective campaigns for your Amazon PPC advertising, as we have done before for our other clients.
The art is building the right growth campaign. The science is in the results.