WHAT IS AMAZON PPC?

It is a model of advertising where Amazon runs advertisements on its site for various sellers. It’s the most powerful and cost-effective way to get your products in front of customers and drive sales. A good Amazon PPC Campaign structure will help to boost sales, maximize conversions and improve your Amazon ranking.

Have a quick overview of how Amazon PPC works:

• Shopper search on Amazon for “water bottle.”
• The search results page displays both organic listings and sponsored ads.
• Amazon gathers all the relevant ads for the keyword “water bottle.”
• Sellers bid on the keyword, and the highest bidder wins the auction.
• Sellers only pay when a shopper clicks on their ad.
• This pay-per-click model allows sellers to control their budget and set bids for each click.

PPC will trigger your ads and enable new products to get traffic to the listings and maximize clicks. The money you spend on PPC ads helps your company rank better in other search engines results page as well.

TYPES OF AMAZON ADVERTISEMENT:

There are following types:

• Amazon Sponsored Products: The Amazon search results promote individual products.
• Amazon Sponsored Brands: Sellers can choose their own customer headlines, logos, and landing pages in these ads, which often include multiple items.
• Amazon Display Ads: These ads often appear next to the “add to cart” button. Vendors deploy them to target interest groups

Regardless of what match types your company chooses, understanding how these sponsored ads on Amazon work is key to getting the most out of your campaigns.

AMAZON PPC TERMINOLOGY:

Some of the specialized terms businesses in this sector use are:

Automatic Campaigns:

Amazon will automatically choose the keywords for you to target based on your product listing information such as the title, bullet points, description, and keyword search terms. You will still control the bid price and daily budget but all of the keywords will be chosen by Amazon.

Manual Campaigns:

With manual campaigns, the seller chooses the keywords to be targeted in the ads. The ads will be run on those selected keywords only.

Impressions:

The number of times your product ad was displayed, for a search query that matched the keywords you are running ads for. Sellers only pay for ads only when a customer clicks on your ad not for the number of impressions or for running the ads.

Clicks:

These are the number of times buyers have clicked your ad to view the complete product detail page.

Cost Per Click (CPC):

This is the amount sellers pay to Amazon when a potential buyer clicks on the ad. The amount can range from $0.05 to $10 per click for PPC campaigns.

Average Cost per Click (Avg. CPC):

The average amount you’ve been charged for your Amazon product ad. Average cost-per-click (Avg. CPC) is calculated by dividing the total cost of your clicks by the total number of clicks. The average amount that you’ve been charged for a click on your ad. Your average CPC is based on your actual keyword bid / maximum cost per click. The average CPC might be different than your maximum cost-per-click (max. CPC), which is the highest amount that you’re willing to pay for a click.

Here’s an example of how Amazon calculates your average CPC.

Let’s say a keyword is bid at $1, and the ad gets two clicks, one costing $0.20 the other costing $0.40.
The Total Cost per Click is $0.60. Divide $0.60 (the total cost) by 2 (your total number of clicks) to get an average CPC of $0.30.

Click-Through Rate (CTR):

A click-through rate (CTR) is the ratio of clicks to impressions for an ad. For example. If your ad gets 100 impressions, and only one buyer clicks on the ad, your CTR will be (1/100)*100 =1%

Conversion Rate:

The conversion rate is the number of people who visited your listing versus the number of people who purchased your product

Advertising Cost of Sales (ACoS):

ACoS measures the efficiency of an Amazon PPC campaign. You can look at your ACoS on the campaign level and your overall ACoS for all campaigns.

It is the ratio of attributed ad spend to ad revenue.

ACoS = ad spends ÷ sales

For example, if you spend $5 on advertising and get $20 attributed sales, your ACoS will be (5/20)*100 = 25%.

Attributed Sales:

This is the total amount of sales that your ads generate within a period of time from clicks on your ad. The sales data can take up to 48 days to show up in the report.

Keyword Bids:

The keyword bids are the maximum cost you are willing to pay when someone clicks your ad. Manual Campaigns require you to bid separately per keyword, while on automatic campaigns you specify the default bid. The default bid is the maximum cost-per-click for every ad from this ad group.

TYPES OF BIDDING:

• Dynamic Bid-Down Only:

Amazon automatically lowers your bid if it understands your ad is less likely to convert into sales. This prevents your ad from appearing in searches for irrelevant products.

• Dynamic Bid – Up And Down:

If your ad is more likely to convert into a sale, Amazon may raise your keyword bid by up to 100% for the top of search results and 50% for all other product placements. Similarly, if the ad is less likely to convert, it automatically lowers your bid.

• Fixed Bids:

Here, Amazon does not change your bids. Your bids will stay the same until you manually change them.

• Rule-based Bidding:

Amazon also has a rule-based bidding strategy for Sponsored Product ads. Here, you can set up a target ROAS. Amazon then adjusts your base bid with each impression to achieve the targeted ROAS.

Now that you have covered the basics of Amazon PPC, you will be able to better understand how advertising works on Amazon.

If you have any queries regarding running Amazon PPC campaigns or you are not getting results from your current campaigns feel free to reach out to us!

This post was written by Syeda Hajra from our Brand Building Team.