What is Amazon PPC & How to Start Your First Campaign on It?

Amazon sellers can create PPC campaigns for advertising.
Table of Contents
Amazon has an internal advertising system that Amazon Pay-per-Click (PPC) is a part of. In the PPC advertising method, sellers who use advertising will be charged when a user clicks on ads; in other advertising methods, a user may see the ad. Amazon Advertising helps sellers generate brand sales, awareness, visitors to Amazon stores, and more. When sellers want to drive sales fast, advertising on Amazon is one of the best ways to build brand awareness. In the following article, we will explain Amazon PPC in detail.

What is Amazon PPC?

In Amazon PPC, agencies, brands, and third-party sellers can create an advertisement for their products by targeting keywords shown in competitor product listings, Amazon’s search results, and even on the Amazon display network. Actually, like an auction-style system, in Amazon PPC, advertisers bid on keywords

and product pages.

The sellers with the highest bids on relevant keywords will win the auction as an Amazon customer searches for a specific product. In contrast with organic traffic, by using Amazon PPC, sellers can rank their products and gain more sales and reviews, which gives the product listings more visibility.  Amazon PPC can help you scale up your Amazon FBA Business.

Amazon PPC Different Types

Generally, Amazon’s small and midsize business (SMB) sellers who advertise their products on Amazon are about %79. There are three classifications for PPC ads:

There are 3 types of Amazon PPC campaigns.
  • Sponsored Product ads
  • Sponsored Brands ads
  • Sponsored Display ads

Sponsored Product ads

Businesses can advertise their products with sponsored product ads based on the keywords or product pages. About 77% of sellers use this type. Sellers promote individual product listings on Amazon by using sponsored product ads. This ad type could be the most beneficial as it shows the promoted product on the search result page and other product pages. 

Sponsored product ads sample

When choosing an ad, it is essential to choose the targeting type. Sellers can use two targeting strategies types while creating Sponsored Product ads:

1) Manual Targeting

In manual targeting, you can hand-select the keywords or products. The manually targeted ads will appear if a buyer searches the specific keywords or visits certain product pages. Manual targeting is a “hands-on” type: it’s more effective, but you need to keep optimizing it.

Manual targeting setting of sponsored product ads of Amazon.

2) Automatic Targeting

In automatic strategy, the algorithm of Amazon determines the targeting keywords and products related to your product listing. Amazon uses the clicking data of shoppers and purchases to adjust the ads to suit seller listings and increase conversion. Four different keyword match types are available in automatic targeting:

  • Close match: The ads will appear when a customer uses the closely related search terms to your advertised product.
  • Substitutes: Here, advertising targets the customers who look for items similar to your products (e.g., Ninja blender instead of Magic blender).
  • Complements – the advertising shows the detailed pages of products that complement yours (e.g., walking sticks go with hiking shoes)
  • Loose match – when customers search keywords related to your product, these ads appear.
Automatic targeting of Amazon PPC campaigns.

Although automatic targeting is more manageable, it doesn’t have optimization options like other ad types.

Auto campaigns are mainly used as discovery campaigns to find the best performing keywords and products on which you can run manual campaigns.

Sponsored Brands ads

Sponsored brands ads of Amazon advertising.

Formerly it was known as “headline search ads.” Sponsored Brands ads catch more customers visually with more than one product. It is estimated that about 39% of sellers use Sponsored Brands ads.

Three formats are available in Sponsored Brands:

  • Product collection includes two or more products with the brand’s logo and custom tagline
  • Store spotlight also includes two or more products with the brand’s logo and custom tagline
  • Video includes a 15-30-second-long video showcasing a single product
Different types of sponsored banner ads.

These ads can appear as headline banners at the top of Amazon search results or further down the page as a video. Customers will navigate to product detail pages or a brand’s Amazon Storefront by clicking on each ad.

Sponsored Display ads

Unlike Sponsored Products and Sponsored Brands ads, Sponsored Display ads are designed to be a self-service option. They can appear on Amazon’s affiliate sites like Facebook, Google, Netflix, and even mobile phone apps. As the newest type of PPC, it gives marketers more incredible options and is paired with ASINs so that they can focus on the behavioral segments.

Sponsored display ads of Amazon market place.

The estimation shows that about 25% to 30% of sellers are users of this ad. In the picture below, Sponsored Display ads appear on a competitor’s listing, right below the product description.

How Does Amazon PPC Work?

Amazon PPC is a model of paid advertising. If done correctly, it helps sellers to increase sales of their products. The advertiser pays a fee to Amazon when a buyer clicks on their ad.

Understanding how bidding works is fundamental for our campaigns to work correctly. A bid, or auction, is the amount of money one is willing to pay for a click.

For example, imagine 20 sellers are offering the same product as you. As a new seller, you create an ad to have visibility. Your goal is that if a customer searches for the word “mountain shoes,” your product will appear in an ad.

You must understand that if there are 20 sellers with the same product, they may also be using this strategy. So, whose ad will show up?

The more money you are willing to pay for the ad, the better position you will have; it is advisable to add a few more cents to the bid suggested by Amazon.

The seller with the highest bid will appear at the top, the seller with the second highest bid will be in the second position, and so on.

The CTR (clickthrough rate) plays a vital role. If customers click on your ad and generate sales, Amazon will position you better.

Suppose your keyword bid is $3.00, and the seller with the leading position has a bid of $1.70. So, by bidding more than the other seller, your ad will win the auction. However, your payment will not be $3.00 but $1.71, which is a few cents more than your competition.

Is Amazon PPC Worth It?

The short answer is “Yes.” It is an efficient way to drive traffic to your products. Amazon PPC ads allow you to promote your products in a prominent position. They help you build brand awareness, improve organic rankings, and increase sales, which is their main benefit. You benefit from every cent you spend. So, it is worth it.

Ultimate Guide About Amazon BSR

Amazon PPC Average Conversion Rate

Conversion rate can mean different things depending on the action you want people to take.

For example, suppose you want to measure the conversion rate in email subscriptions. In that case, you calculate it by dividing the number of people visiting your site by those who subscribed to your newsletter.

Regarding Amazon, the conversion rate is the metric used to measure the number of page views that result in a sale. This metric is essential for several reasons:

  • It gives you an overview of the health of your listings.
  • It allows your product to be better classified.
  • It helps you evaluate the results of your A/B tests on your listing.
  • It helps you determine which areas need to be improved.

However, a high conversion rate does not necessarily mean the business is doing well. Remember that having a visitor who bought your product equals a 100% conversion rate. So, it’s still important to look at the actual numbers rather than just the percentage.

Typically, sites selling a product or service have a 1-2 percent conversion rate. However, this number can be significantly higher when it comes to Amazon.

The average conversion rate for Amazon is 9.87%. While other eCommerce websites have a conversion rate of 1.33%, Amazon PPC ads’ conversion rate (9.89%) speaks volumes about the power of advertising on this platform. The reason is that many people who visit Amazon are already determined to buy something, if not that day, then shortly: yet another reason why many eCommerce sellers use Amazon as one of their platforms to sell products.

How Much Should You Spend on Amazon PPC?

After deciding how to spend your money on Amazon PPC, you need to calculate the required budget for the ads. To do this, first, you need to decide whether you want to advertise all of your products or just a select few of them. Many sellers focus on the top 20% of their products because they don’t want to spend much on advertising.

Man is thinking about the budget that he should spend on Amazon ppc.

Experts recommend spending approximately 10% of your total revenue on PPC ads. Based on your break-even margin, you can determine how much you will spend on the ads.

How to Setup Your First Amazon PPC Campaign?

Now that you understand how a PPC campaign works, let’s get one up and running.

Interestingly, many marketers recommend starting with two campaigns, which significantly teach you the basics. You can start by creating an automatic PPC campaign and then a manual one. You can do it like this:

  1. Open Amazon Seller Central.
  2. Click Advertising.
  3. Click on Campaign Manager.
  4. Click on “Create Campaign”.

Carrying Out Your First Automatic Campaign

You may wonder why we’re going straight into an automated campaign, where we have no control over the keywords that Amazon will assign to our products. The answer is simple: Amazon PPC Automated campaigns offer an easy and cost-effective way to discover which keywords perform best for your products.

Remember to keep a modest budget for this campaign and keep checking it out. Over a couple of weeks, you’ll discover a list of high-performing keywords. Write them down and set them aside because we will need them shortly.

Gradually reduce your automated campaign spending as your list of successful keywords grows. You can make this easier by labeling your main keywords as “negative keywords”. Choosing negative keywords will prevent you from spending on them and free them up for your manual campaign, which brings us to:

How to Make a Manual Campaign

Armed with a handful of solid keywords from our automated campaign and sources like Google Keyword Planner, we are now ready to optimize our first manual campaign.

Start by choosing the manual option to start a new campaign. Then you can create an ad group, give it a name, import your keyword list, and finally select your product listings. Doing this will allow you to generate your ads.

After this, you can set your bid for the ad, the highest amount you’re willing to pay when someone clicks on your ad. As we have already said, this mainly depends on your competitors and what they are bidding on. With some time, you will know better how much you should put. Between $0.50 and $1.50 is an excellent place to start.

In the end, all that’s left to do is add the keywords, set the bids for them, and you’re done. Using the example above, you can add keywords like “gaming t-shirt” as a broad keyword and specific character names as an exact keyword.

Remember that running a PPC campaign is more art than science. You’re dealing with customer behavior, which can be pretty challenging to unravel. After two or three weeks, review your campaign, and you’ll have some exciting data to play with.

How to Optimize Amazon PPC Campaigns?

While the example above is a reasonably simple way to get started, the Amazon PPC system can snowball your brand or drain your time and money. So, here are some things to keep in mind:

There are 4 steps to optimize your Amazon PPC campaigns.
  • Constantly Check Your Keywords

Over time, the analytics reports will give you a detailed history of how each keyword performs, and you’ll soon find that some keywords far outperform others. Take some time weekly to review them, and if you find any low-value keywords, remove them and save your company’s marketing budget simultaneously.

  • Choose the Right Keyword Types

Keep a healthy variety of exact match keywords, and extend them with phrase matches and broad matches to reach as many potential customers as possible.

  • Avoid the Most Common Mistakes

From not using the available tools to overexerting yourself with PPC expenses, try to be as aware as possible of both your successes and your flaws in a PPC campaign. Bidding against yourself using a keyword in multiple campaigns is an example of a common mistake Amazon sellers make.

  • Stay Up to Date

Like any leading eCommerce platform, Amazon’s systems are constantly updated, changed, and enhanced with new features. Stay up to date on the blogs for the latest information, and if there are any significant changes, review your entire campaign set to see if any key (and keyword) changes need to be made.

Know More: Best Product Ideas for Amazon FBA in 2023

When Should You Use Amazon PPC?

According to experienced sellers, the right time to launch an advertising campaign is when you create a listing. Sellers like to boost sales and use the honeymoon period as much as possible to rank the product and get the first reviews.

In this business, data is essential, and creating a campaign from the beginning will help improve our sales.

Amazon’s PPC allows us to obtain vital information, for example, keywords that we do not have on our list and that we must add, keywords that do not help us sell, and we have to place them as negative keywords, etc.

Reasons to Use Amazon PPC

It would be best if you used Amazon PPC to run your campaigns for two reasons.

The first is that it helps boost the sales of your products, but you have to keep in mind that this is part of a long-term process, and you will not see the results immediately. You should know that it is an excellent alternative to gaining visibility among consumers, which may result in higher sales later.

Pay-per-click campaigns give more visibility to those keywords that you use regularly. With the rise of electronic commerce, there are more and more eCommerce platforms, which means an increase in competition in all aspects. This situation generates a list of too competitive keywords to rank in organic search.

Ultimately, creating PPC campaigns is a required method by which products rank high and gain high sales potential.

Which Factors Affect Your Ad Placement?

If there are multiple relevant products for a given search term, it means that you are competing for placement. 2 critical factors determine the ad placement in such a scenario:

Factors that affect the Ad placement on Amazon.
  • Amazon CPC: If you put down the highest amount, you will win because many sellers are willing to pay a higher cost per click to win over their competition.
  • Quality factor: An ad’s quality is measured by the potential buyers’ likelihood of clicking on the ad. So, the ad’s click history can be a significant contributing factor.

Considering these two factors, the higher you bid than the other advertisers, the more you increase your chances of placing your ad. In addition, you should pay attention to the quality of your ad because the better your advertisement is, the lower you’ll need to bid for its placement.

Final Thoughts

Amazon PPC offers sellers an incredible number of opportunities to promote their potential. The various advertising models on Amazon are suitable for both beginners and trading professionals – but always require a strategy to be successful in the end. As with other PPC models, without a strategy, you can quickly burn your advertising budget on Amazon without noticing any significant success.

The in-depth knowledge of customers’ shopping behavior is an enormously valuable unique selling point that retailers should use for themselves. Neither on Google nor Facebook or Twitter can buyers be addressed in a more targeted manner than on Amazon.


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