How To Use Amazon PPC: The Last Guide You Need (2020)

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With a brand value of 125,263 million USD, Amazon is the third most valuable brand in the world. Almost everybody knows Amazon. It's the world's biggest eCommerce company.

A 2018 study shows that a whopping 41% of buyers start their product search on Amazon and end up buying it from Amazon.

Here's a closer look at the shopping behavior of Amazon customers:

  • ~ 2/3 of buyers never go beyond the first search result page
  • ~ 1/3 of buyers click on the very first product
  • ~ 2/3 of buyers click on one of the first three products

These stats show that it's time to take your products to the first page of search results. After all, you want to sell them through Amazon.

But how can you achieve this?

With Amazon PPC...

You can create campaigns for specific keywords to promote a product to customers who are intrinsically searching for it. You're also able to improve your ranking and increase your sales through Amazon PPC.

If you want to know how to set up an Amazon PPC campaign like a pro, you've come to the right place.

Here's what you will learn in this post:

  • What is Amazon PPC?
  • Why you need Amazon PPC?
  • Who can use Amazon PPC?
  • How to set up Amazon PPC
  • Lots more

Let's dive right in.

What Is Amazon PPC?

In fact, Amazon PPC is Amazon's advertising platform. If you're an Amazon seller, you can use it to promote your products.

PPC means Pay-Per-Click = You only have to pay when somebody clicks on your ad.

You can set up Amazon PPC campaigns for specific keywords. Therefore, you're able to target exactly those users who are intrinsically searching for your product.

Amazon's Auction Model

Amazon calculates PPC costs based on an auction model. Let's take a look at the following example:

You target the keyword "bottle" and your bid is $1. Competitor A bids $1,5 and Competitor B bids $2.

You $1
Competitor A
$1,5
Competitor B
$2

Who wins this auction?

The one with the highest bid.

Competitor B wins the auction and pays $1,51, although his bid was $2.

That's how Amazon PPC works.

Most CPCs (Cost-per-Click) aren't that expensive. Here's an infographic showing average Amazon PPC values:

Stats Table May 2019 vs June 2018

How Amazon Ads Show Up

There are three types of ad formats:

Sponsored Ads

Amazon PPC Headline Ads

Sponsored Ads are the most common type of ad formats. They show up in search results and carousels. You can run them manually or automatically.

While auto campaigns are content-based (based on your listing's content), manual campaigns are keyword-based (based on the keywords you choose).

You can run auto campaigns to gather keyword data that you can use for manual campaigns. For example, you can take keywords with an excellent ACoS (Advertising Cost of Sale) from your auto-campaigns and add them to your manual campaigns.

Also, if you run Sponsored Ads on Amazon, it's uber important to search for relevant keywords. You need to search for keywords that convert because finally, you want to make sales.

But how can you find these keywords?

There's one brilliant strategy you need to know.

You've to search for the top-ranking keywords of your competitors.

Why?

Because ~ 90% of sales come from these keywords.

Here's what you've to do:

1. Get a free Helium 10 account

2. Start Helium 10 Cerebro

3. Type in the ASIN of your competitor's product

Helium 10 product reseach with Cerebro

4. See for what keywords your competitor is ranking and set ORGANIC RANK from 0 to 5

Helium 10 Cerebro results

Now, you can see all the keywords from which your competitors are generating sales.

Headline Search Ads

Amazon PPC Sponsored Products

You can only use Headline Search Ads if you enroll your brand in Amazon Brand Registry.

These Ads are certainly more expensive and come with an additional Cost Per Click but the volumes and the sales they drive compensates for all the cost involved.

Product Display Ads

Amazon Product Display Ads

Product display ads are only available for vendors. However, they are super effective. You can place ads directly under the "add to cart-button" of your competitor's listings. This makes it easy for you to steal customers from your competitors.

Why Invest In Amazon PPC?

There are three simple reasons why you should invest in Amazon PPC:

All people buy their stuff on Amazon

With over 2.5 million monthly website visits on Amazon.com alone, Amazon is the world's largest online marketplace.

According to recent stats, 66% of customers start their product searches on Amazon (41% start it on Amazon and end up buying there).

Furthermore, 59% of 16-36 Year-Olds Head to Amazon Before Any Other E-Commerce Website. (Inviqa)

You need to sell your product

If you start selling on Amazon, you want to make sales right?

But if you don't promote your product, nobody will buy it.

Just take a look at these stats:

  • ~ 2/3 of buyers never go beyond the first search result page
  • ~ 1/3 of buyers click on the very first product
  • ~ 2/3 of buyers click on one of the first three products

Sure, you can promote it via other channels like Facebook or deal pages, but Amazon PPC should be an essential part of your strategy.

You need to rank organically

If you want to become a successful Amazon seller, you've to understand how Amazon's Algorithm works.

I recommend reading this article here to understand the basics since it's quite complex.

But I can tell you that the Algorithm works based on one principle:

Amazon wants to make the most sales possible.

Accordingly, you need to make sales to rank higher.

If you start making sales continuously, your organic ranking will improve and you'll make passive sales.

Finally, as long as you don't sell books on Amazon, Amazon PPC is no option, it's a business requirement.

Who Can Use PPC?

If you're a Vendor, you've access to Sponsored Ads, Headline Search Ads, and Product Display Ads.

Sellers with a Professional Account have access to Sponsored Ads. Only sellers who enroll their brand in Amazon Brand Registry can use Headline Search Ads.

Only Vendors can use Product Display Ads.

You Need To Understand This...

If you want to run a profitable Amazon PPC campaign, you first need to understand the fundamentals. 

First of all, there are two metrics you've to keep in mind:

Sales and ACoS.

Sales: You know what sales are.

ACoS: Advertising Cost of Sales.

Your ACoS makes or breaks your campaign. Don't exceed it.

Break-Even ACoS

Break Even ACoS

ACoS means Advertising Costs of Sales. 

In any case, you don't want to lose money when running ads on Amazon.

For this reason, your ACoS (Advertising Costs of Sales) shouldn't exceed your actual profit margin.

ACoS = Profit Margin ⇒ Break-Even ACoS

Target ACoS

ACoS profit

Sure, you don't want to lose money. But in general, you want to make money.

If you want to make profits, your ACoS needs to be lower than your profit margin before deducting advertising costs.

ACoS < Profit Margin 

Profits

If you want to calculate your final profit, you need to deduct all advertising costs.

ACos Calculation

Keyword Match Types

As on any advertising platform, there are different kinds of keyword match types.

  • Broad match: search terms that contain all of the given keywords in any order + Others.
  • Phrase match: search terms that contain all of the given keywords in the same order + Others.
  • Exact match: search terms that match your keyword exactly.

Here's an infographic showing the differences between these three keyword match types:

Amazon PPC Keyword Match Types

How To Set Up Amazon PPC

For most sellers, it's hard to run a successful PPC campaign right from the start. In fact, 51% of sellers want to improve their advertising strategy: 

page 1 1

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If you want to be successful with Amazon PPC, you've to go through the following steps. Each of them is important to your success so try to do everything properly.

Do Keyword Research

As already mentioned, you need to find out the most important keywords. There's absolutely no way around.

We already covered a strategy using Helium 10 Cerebro to find out what keywords your competitors are ranking for.

However, there's also another tactic that you should put into action. You need to find out keywords based on one seed-keyword:

1. Get a free Helium 10 account

2. Start Helium 10 Magnet

3. Type in a seed-keyword

4. Get hundreds of keyword suggestions

Helium 10 Magnet

Optimize Your Amazon Listing

Optimizing your Amazon listing is a MUST when it comes to PPC. You've to spend money on advertising, so ultimately you want to get the best results possible.

For example, when you enroll your brand in Amazon Brand Registry, you can add video content to your listing.

A video can improve your conversion rate by up to 80%.

Furthermore, you need to have excellent reviews. 60% of people see reviews as their most trusted source of information:

Costumer Reviews 1

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If you have ZERO reviews, you won't be able to make one single sale.

I highly recommend checking out our guides to Amazon Listing Optimization and How To Get Amazon Reviews.

Your Main Image

It's no secret that the main image is uber important. Just take a look at this heatmap:

Amazon Heatmap

You can see that people only check the main photo to decide whether to give a product a chance or not.

Unfortunately, there aren't many opportunities to stand out from the crowd due to Amazon's policies.

However, there are two things your image has to fulfill:

  • Ultra-high quality
  • Dominant

You do not know what a dominant picture is?

Just take a look at Apple's marketing strategy:

Ipod

Instead of promoting their product through technical details (1 GB storage), they say 1,000 songs in your pocket (benefit).

Also, you can see that they have a dominant product design, together with a dominant product photo.

It's no coincidence that Apple is so successful. Learn from their marketing strategy and try to implement their tactics.

Set Your Goals

As always, you need to set goals. If you don't set goals, you don't know what you want to achieve in a few months or years.

When it comes to Amazon PPC, there are two crucial metrics you have to keep in mind.

SALES and ACoS. (After all, you want to make sales and you also want to make a profit)

What you should also do is to monitor your Conversion-Rate. If you have a poor Conversion-Rate, your ACoS may be higher. 

In any case, make sure to track these three metrics:

  • Sales
  • ACoS
  • Conversion-Rate

Structuring Amazon PPC Campaigns

Here's the default structure of an Amazon PPC campaign:

Campaign

Ad group 1

  • keyword
  • keyword

Ad group 2

  • keyword
  • keyword

If you only sell one product on Amazon, you don't have much to consider when structuring your campaign.

But if you sell several products, you need to structure your campaign in such a way that you can measure the performance of each product/keyword correctly.

Putting all products in one ad group would be useless because each product has a different price, different conversion rate, etc...

For this reason, you need to create an ad group for each product with keywords that are relevant to the product.

This allows you to analyze all data, such as keyword data, correctly.

Optimize Your Amazon PPC Campaign

Optimize keywords

Depending on the keyword match type you choose, Amazon will show your products for different search queries.

For example, if you select the keyword "bags" with "broad keyword match", your product will also be displayed for "sports bags".

However, if you sell leather bags, nobody will buy your product because people are searching for sports bags.

You've two opportunities to avoid this:

  • You can utilize "Exact Keyword Match"
  • You can use "Negative Keywords" to exclude specific keywords

Update Products

Over time, you will know which products convert and which not.

So, instead of spending money on products that don't make money, only promote products that convert.

With this strategy, you can spend even more money on products that generate sales and increase your revenue.

Transfer keywords from automatic to manual campaigns

Running an automated campaign is a great way to collect keyword data and find keywords that you can use to make money.

If you have the budget, you can run an automatic campaign and then include the best performing keywords into your manual campaigns.

Optimize CPC bids

You've to optimize your PPC bids to improve your ACoS and achieve your campaign goals in the long run.

Here's how to do it:

  • If ACoS is bad: Lower keyword bid 
  • If ACoS is good: Increase the keyword bid
  • Keywords don't generate sales (No ACoS): Delete the keyword

Conclusion

By now, you should have a good overview of how to use Amazon PPC to grow your business.

To summarize this article, let's take a look at the most important takeaways:

  • Optimize your listing: Make sure to have a great product photo and positive reviews.
  • Research keywords that convert: Use Helium 10 to search for keywords that bring you sales.
  • Define your business goals and target ACoS: If you don't know your goals, you won't be able to improve your PPC Strategy.
  • Promote products that convert: You don't want to spend your money on advertising products that don't sell.
  • Don't waste your time: Optimizing your bids from time to time is necessary, but there is no need to make minor changes all day.

Advertising On Other Channels

If you're thinking about promoting your products on other channels, this infographic will help you with your first steps.

Also, check out these 5 SEO & PPC Trends to Watch out in 2020.

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