Amazon Pay-Per-Click (PPC) is increasingly become a major channel for businesses to further their reach, increase conversions and manage intense competition. For existing Amazon sellers, PPC in the platform has become a necessary investment to increase discoverability and sales as it places products right in front of 310 million Amazon users.
What sets Amazon PPC from other channels are basically the users that navigate the site:
- Amazon reaches out users with buying intent, and not simply those who are window shopping
- The platform’s PPC increases conversions, as visibility increases for products
- It was observed that when a business invests in PPC ads, the search ranking of products in organic rankings also increase
- Performance tracking is relatively easy in the site with Amazon’s tools that measure effectiveness of ads
Creating An Amazon PPC Campaign
It should be noted that not all PPC ads in Amazon are shown at the top of the search engine results. Ads, which are thusly labeled may appear at the top, bottom and the side of a search engine results page. These ads may also appear on product pages. The position of these ads are determined through bidding, with the highest bidder most likely claiming the top part of a page.
The first step in creating ads for PPC in Amazon is to select which of your products you intend to advertise. You may do so with individual products or with entire line, depending on your goals and strategies. After doing so, identify the specific categories these products should fall under in Amazon. Selecting the right category may spell the success of your PPC campaign.
The next step is to choose a campaign type. Campaigns in Amazon basically falls into two categories: Automatic targeting campaign and Manual targeting campaign. The first campaign type allows easier creation of campaigns as keywords that target the product are produced automatically. However, Amazon may sometimes create irrelevant keywords that could waste ad spend. A manual targeting campaign thus in contrast provides more control as keywords are inputted by the user.
With manual targeting, keywords have three match types: broad match, phrase match and exact match. A broad match allows ads to run on keywords that are variations, synonyms and other related forms; A phrase match is a closer variant of a broad match, such that it queries should match the exact phrase or some variations of it; Lastly an exact match allows an ad to appear only when the search queries is the keyword or a plural form of it.
As mentioned earlier, the position of an ad in a page is for the most part dependent on the bid. The higher the bid, the higher the visibility of an ad is.
To ease the setup, Amazon places suggested bids as a guide as it is based on the number of total competitors and their bids. There is an option to activate Amazon Bid+ that automatically raises an ads bid by 50%, and places it on the top of the row in search engine results pages when the bid is successful. Do note that this feature obviously raises ad spend and should only be used when your margins are already high.
After setting bids, next is setting up a daily budget. This should place a control on your spend so you won’t get into trouble when a lot of users click on your ads.
Average Cost of Sale is Key
As with any paid campaign, keeping track of metrics is key. With Amazon, an important PPC metric is the Average Cost of Sale (ACOS). It is simply derived by subtracting cost of goods, fulfillment by Amazon price and miscellaneous costs from the product selling price and dividing that profit by the selling price.
The ACOS threshold determines the maximum cost a campaign can shoulder and determines if it should be paused or allowed to run and garner conversions. If the campaign is below ACOS, it means it still in the green and can be left to run. On the other if its above, bids should be decreased or the campaign should be shut down.
After setting up these in Amazon for a PPC campaign, it is now time to work on the ad creatives. Once those are uploaded and all set, the campaigns can now be activated and optimized at least once a week.
Reach Out To POPXOP
If you’re interested in learning more about advertising in Amazon and increase your customer reach, reach out to us and we’ll gladly help you out.