In this post you’re going to learn exactly how to create and optimize effective Amazon PPC campaigns, step-by-step.
In fact, this approach has helped us to grow our client sales and ROI every month.
So if you’re looking to get more sales on Amazon, this comprehensive guide is for you.
What is Amazon PPC?
Amazon PPC (also referred to as “Amazon Pay-Per-Click”) is the process of advertising products on the Amazon platform.
Millions of Amazon customers are searching for products daily. They click on the search bar and type their desired product or keyword, then advertisers on the relevant keyword/search phrase will play into a digital auction. The advertiser with the highest bid will win the auction and their product ads will be visible to the customer.
Advertisers are in an auction and only pay the bid price if their ad gets clicked.
Amazon PPC is a pay to play game.
With that, here are the steps to create effective Amazon PPC ads in 2021:
Table of Contents
1. What are the Amazon formats available
2. Where do Amazon PPC ads show?
3. Why should you use Amazon PPC?
4. If you need ranking Improvement then you should use Amazon PPC
5. Amazon PPC Costs – Pay to Play Game
6. How to Master Amazon Paid Search?
7. The Basics of Amazon PPC (don’t worry we’ll cover advanced PPC strategies too)
8. Amazon PPC Keyword Targeting
9. Setting up Amazon PPC Goals
10. What should be my budget for Amazon PPC?
11. Let’s Calculate Your Break-Even ACoS
12. Calculate Your Net Profit
13. Optimize Your Amazon Listing for Higher Conversion Rate
14. How to Create and Optimize Your Amazon Paid Advertising Campaigns
15. Amazon SKAGs (single keyword per ad group)
Step #1: Types of Amazon PPC Ads
In order to be successful with Amazon PPC, you need to understand what PPC formats are available and how to use them.
Let’s dive in each individual format.
SPONSORED PRODUCT ADS
Sponsored product ads are a must-have for every successful Amazon seller. Ads will show in the search results or product pages.
It’s the format with the most scalability and volume.
If you want to make more sales with your Amazon store, you have to leverage Sponsored Product ads.
If you use Sponsored Products “Extended Ad Network Beta”, your ads can be shown on external websites for remarketing visitors who saw your product pages but did not purchase.
Sponsored Products are super valuable because they mix with organic results and give you a higher market share.
Typically, they work profitably if you have done proper keyword research and you are optimizing them frequently.
Our data as PPC Agency shows that Amazon Sponsored Product ads cost less and convert better than Google Ads.
Learn our advanced Sponsored Product Ads strategies.
SPONSORED BRAND ADS
Sponsored Brands show at the top of Amazon searches. They are advertisements that highlight your brand logo, headline, and different products of your choice.
To use sponsored brand advertisements, the advertiser must have a minimum of 3 brand-registered products on Amazon.
Learn more about Amazon Brand Registry
Like Sponsored Products, advertisers use keywords to target shoppers.
Read our comprehensive guide on Amazon Sponsored Brands
PRODUCT DISPLAY ADS
To advertise on product pages, you have to use product display ads.
These advertisements allow you to promote your ads on product pages, search below search results, customer testimonial pages, and top of the offer listing page.
With Product Display Ads you can advertise relevant advertisements on detail pages of similar products and sell related items.
Extend your reach to show in relevant targeting audiences.
Engage customers with custom ad visuals and headlines.
Read our advanced guide to Product Display Ads
Step #2: Where do Amazon PPC ads show?
In order to be successful with Amazon PPC, you need to understand what PPC formats are available and how to use them.
Let’s dive in each individual format.
SPONSORED PRODUCT ADS
Sponsored Product Ads appear in three locations:
Choice #1: Search results page
Choice #2: Product detail pages
Choice #3: Websites out of Amazon’s platform that are using the Sponsored Products “Expanded Ad Network Beta”.
Step #3: Why should you use Amazon PPC?
The easiest way to get more sales on Amazon is through Amazon PPC (pay-per-click) ads.
Combining PPC and SEO on Amazon is going to help you to make more money with your store.
If created and managed properly with daily, weekly and monthly optimizations and systems in place, Amazon PPC campaigns can help you sell more products on a faster rate and increase your organic rankings.
If you want to make more sales on Amazon, you leverage all targeting options and optimize your PPC campaigns based on your KPIs.
Step #4: If you need ranking Improvement
then you should use Amazon PPC
If you are trying to improve your organic ranking you have to do PPC.
Paid advertising on Amazon will get you more sales, therefore more sales generated will have a positive effect on your organic product ranking.
The more you sell you make, the higher you will rank.
You have to work on getting consistent daily sales in order to rank higher and receive higher organic traffic share.
The best sellers on the platform focus on both PPC and SEO.
Step #5: Amazon PPC Costs – Pay to Play Game
The Cost-Per-Click (CPC) on Amazon will be always different in each auction.
Let’s say as an example your auction is “Derma Roller” and you would like to advertise for this keyword.
Each seller selects a bid for their ad to show up.
To win an auction your bid needs to be competitive. Usually the highest bidder wins the highest ad position in the auction.
In the example above, advertiser 3 wins the auction since the bid is the highest in that specific auction.
If the ad on advertiser 3 is clicked, then the advertiser will be charged $3.51 since Amazon will charge with only $0.01 more than the next highest bid.
So when advertising on Amazon it’s important to play with your bids and try different combinations.
If you are not spending your target daily budget, then I suggest increasing your bids.
If you are spending your daily budget, but you are not getting your desired ROI then I suggest you take a look at negative keywords, bids, conversion rate.
You have to learn from your data and find where the pipe is broken and fix it.
Step #6: How to Master Amazon Paid Search?
In order to master Amazon PPC, you need to understand how paid search works.
These include exact keywords to long-tail keywords like “natural soy scented candle”.
Obviously short terms have higher search volume compared to long phrases.
Amazon customers convert extremely well since they already have buyer intent and they are searching for your products.
Amazon packs a list of products that are relevant to the search in order to satisfy the customer’s desire.
What will happen?
Amazon will show a mix of organic and paid search results (products).
Products that have paid search ads will show above the organic results (it doesn’t matter what you search).
Step #7: The Fundamentals of Amazon PPC
After auditing 1000’s Amazon PPC accounts we found that most sellers (+90%) don’t have a clear PPC structure with campaigns for testing and scaling.
When it’s not clear what is working and what not you’ll find yourself in a difficult position, especially if you have multiple products.
But before we dive deeper into advanced Amazon PPC structures let’s cover the key concepts and terminology.
There are two types of campaigns that you can use with your Amazon PPC ads. In automatic campaigns, you let Amazon run your ads for you without any control or input from your side. In a manual campaign, you have a full control over the PPC environment and you can choose keywords, negatives, bid adjustments, etc.
Usually, we use both options but this really depends on your Amazon PPC strategy and target ROI.
SEARCH TERMS & KEYWORDS
What is the difference?
“Search terms” refer to what customers type into the search bar.
“Keywords” refer to what PPC advertisers bid on.
Depending on the keyword match type (more on this later) used, one can keyword could cover multiple search terms or just one.
KEYWORD MATCH TYPES
There are 3 keyword match types. The different types will determine for which search phrases your ads will show up.
Broad match lets a keyword trigger and shows your product ads when a customer searches for that phrase, similar phrase, or even close variations of the keyword term.
Example: derma roller
Phrase match will only show your product ads when customer search includes the phrase of your target keyword.
Example: “derma roller”
Exact match keywords will show your ads to customers that are searching exactly the keyword you’re bidding on.
Example: [derma roller]
Negative keywords can help your growth by reducing your ad costs. Use them to remove search terms that are not profitable or not related to your product ads.
When utilized weekly, negative targeting can increase your profits.
When removing search terms that are spending money without hitting your target KPI (key-performance-indicator) you will make more money and reduce your advertising costs.
PLACEMENT BID ADJUSTMENT
We highly recommend this feature to be used on a regular basis based on the data.
As an Amazon PPC Agency, we find a lot of missed opportunities with our new clients since they weren’t looking at Placements frequently.
A bid modifier can be applied from 0% to 900%.
How often should you take a look at your placements?
At least one time per week for all of your active campaigns.
Advertisers can use Amazon’s dynamic bidding options that allow Amazon to adjust bids in real-time based on conversion probability.
We are not using this option.
If you have a PPC Team they should not be using it too.
The data needs to be analyzed on a daily, weekly, and monthly basis and you can base your decisions on it if you are looking for the highest ROI possible.
Ideally, when you set up your Amazon PPC ads, you will have different campaigns.
1. Campaign targeting keywords with broad/phrase match for testing purposes.
2. Campaign targeting best performing keywords with an exact match.
3. Campaign targeting competitor ASINs.
Step #8: Amazon PPC Keyword Targeting
Amazon AI uses keyword targeting to match customers’ search query with relevant ads.
Within a controlled PPC campaign (manual campaign) you can refine your ad targeting using the match types that are available:
• Broad match type: We love using it for testing purposes when we are still trying to find keywords that are working well.
• Phrase/Exact match types: We are using these two options for proven keywords that meet our target KPI. So ideally you want to keep broad match keywords for testing and phrase/exact match for scaling your most profitable keywords.
Remember, when setting up your Amazon PPC campaigns you should create a competitor list of advertisers that are advertising for the same keywords that you want to.
Also, creating a comprehensive Amazon keyword research with different keyword stages.
For example, if you are selling coconut soy candle advertising for the keyword “candle” might make sense but if you think about it you’ll end up advertising with many different kinds of candles and most of them might be much cheaper.
So you will end up spending your money on the keyword with the most traffic but the lowest conversion rate for your product.
What you could do is attack a keyword like “coconut soy candle”, “coconut candle”, “soy candle”.
If you are on a limited budget, using long-tail keywords that match your product can work very well.
Step #9: Setting up Amazon PPC Goals
Having goals is vital for every marketing campaign. In order to measure your Amazon PPC performance, you need to track your data regularly and have goals.
Goals your goals using this formula:
Step #10: What should be my budget for Amazon PPC?
This is connected to your goals and based on what you would like to achieve.
Step #1 would be to calculate your profit margin before ad spend, and understand your breakeven ACOS.
Calculate your margin first to understand how much you can afford to spend to acquire a customer.
Without clearly defined KPIs it’s going to be difficult to manage and optimize your campaigns profitably.
You need to know how much you can spend for your client acquisition on each individual product that you are selling. It’s a must.
Step #11: Let’s Calculate Your Break-Even ACoS
If you want to increase your daily sales with Amazon PPC, you need to know your breakeven ACoS to determine your net profit margin for all of your products.
If you have multiple products, then you need to know your break-even ACoS for all of them.
If your break-even ACoS is 25% and you want a 10% profit margin, this means you have 15% to spend on paid advertising.
Make sure you are not overspending or over-testing keywords with your paid advertising campaigns. Turn off keywords/ads that do not hit your target ACoS.
Step #12: Calculate Your Net Profit
Calculating your net profit is absolutely necessary if you care about profit (and let’s face it, who doesn’t?).
You need to calculate your net profit after deducting your advertising ad-spend.
Formula to calculate it manually:
Step #13: Optimize Your Amazon Listing for Higher Conversion Rate
Optimizing your Amazon Listing is one of the fundamental elements to make more sales with the platform.
Your product listing must be optimized for Amazon SEO and for higher CTR (click-through-rate) and CR (conversion rate).
There are two optimizations with which you could start right away.
#1 Keyword optimization: Adding all relevant keywords for your product. Making sure you are not missing keywords that a customer might type.
#2 Content Optimization: Adding high quality pictures and writing direct-response copy for your product description.
These optimizations will improve your paid and organic sales.
Step #14: How to Create and Optimize Your Amazon Paid Advertising Campaigns
We recommend advertisers to use a combination of brand search ads, prospecting ads, proven to work ads.
So if you have 1 product that you would like to advertise then your setup is going to look like this:
1. Brand search campaign that is targeting your brand keywords.
2. Testing campaign – manual campaign with different keywords that you are testing.
3. Proven to work campaign – manual campaign with keywords that are proven to work well for your product.
4. Automatic campaign.
If you want to advertise 2 or more products just use the structure above without the brand search campaign.
You need to know where you are testing and where you are scaling your profitable ads on Amazon.
Having a clearly defined structure will help you to make more sales on a higher ROI.
OPTIMIZING YOUR AMAZON PPC CAMPAIGN
Organize daily, weekly and monthly optimization for your Amazon PPC campaigns. Even if you are on a tight budget, you should focus on spending your budget only on keywords that make sense and hit your target ROI.
When reviewing your campaigns, you want to make sure that you are not taking decisions quickly.
We recommend watching your campaigns on a daily basis and looking up the data day-to-day to understand how your campaigns are performing and what optimization they need.
Here a few of the optimizations that we do in our client ad accounts:
1. Reviewing the data on Automatic campaigns
Once we see how automatic campaigns work, we will analyze the top converting search terms and transfer them from automatic campaign to the manual campaign with best performing keywords.
Then we will exclude these keywords from the automatic campaign (since we will be bidding on them in the manual campaign) and we want to avoid keyword overlap.
You want to take decisions like that only based on the data. So you add only keywords that meet your target ACoS.
2. Use Negative Keyword Mining (remove unprofitable search terms and keywords)
Analyze your campaigns every week and remove search terms that do not meet your KPIs.
Apply negative keyword mining every week to all of your campaigns and turn off keywords and search terms that are spending your money without driving sales on the target ROI/ACoS.
If you have search terms or keywords on breakeven/near breakeven leave them active for another week and make a note to review these keywords/search terms again next week.
You should also review for irrelevant search terms that are not relevant to your product.
You should also double-check and make sure that all irrelevant search terms are removed.
You don’t have to win all auctions to be profitable with Amazon PPC.
Focus on winning auctions that are proven to work well for you and spend the majority of your marketing budget on them.
3. Optimize your placements for all of your Amazon PPC campaigns
A commonly missed opportunity for optimization. Amazon Placements are overlooked by most advertisers.
Why? We have no idea.
Should you optimize your placements?
Yes, you should.
Here is an example of one of our new ad accounts:
Our client team did not bother to optimize placements.
Spending $802 on the Product Page placement with 0.59 ROI compared to the possibility of spending on Top of search (first page) placement with 4.59
4. Optimize Your CPC Bids
Based on your data you have to optimize your Amazon CPC bids.
If you are not spending your daily budget, you could increase your bids by 10-20% and watch the data closely. If you are still not hitting your desired daily ad-spend you should increase your bids again.
If that doesn’t help, then you will need to do keyword research and look for missed opportunities.
When reviewing your data it’s important to keep in mind your conversion rate too.
For example, if your CPC bid is $5 and you spend $500 to get 10 clicks but convert only 10% of the traffic for a product that is $50 you won’t be profitable (recently we had a case like that).
What data showed us in the example above?
CPC BID was $5 x 100 clicks = $500 ad spend = 10 sales x $50 (per product) = $500 Revenue = ROI 1.0 and conversion rate of 10% (pretty standard for Amazon).
We started to drop our bids by 10% a day and experiment with more keywords.
Two weeks later we were able to increase our client ROI up to 2.
Applying negative keyword mining, decreasing bids, testing more keywords.
Wondering if your Amazon PPC team is optimizing your campaigns frequently?
Just open your active campaigns and click “History”. You’ll find out if your ad account is being looked after.
Step #15: Amazon SKAGs (single keyword per ad group)
Most of the advertisers on Amazon never heard about Amazon SKAGs.
We find them extremely useful since you can have full control over the PPC environment.
Here is an example of a structure:
Test it out and let us know what you think!
We find that type of campaign to work extremely well for scaling Amazon PPC ad account.
We use it for scaling purposes only.
There you have it:
Our Amazon PPC: A Step-By-Step PPC Guide