Amazon Sponsored Products – The “Amazon Adwords”
Sponsored Products is the Adwords of Amazon. In other words, it’s product advertisement that shows up in Amazon’s organic search results. Compared to Google Adwords, Amazon Sponsored Products is (still) cheaper and much more straightforward. Getting started with promoting products on Amazon is relatively easy.
How do Sponsored Product ads work?
Sponsored Products ads appear directly in the regular, or “organic” search results on Amazon — and that’s exactly what makes them so effective. Customers that visit Amazon to buy something specific see suitable advertisements for their search term during the search and purchase process. Compared to ads via Google or Facebook, the intent to purchase is, on average, significantly higher on Amazon.
Sponsored Product ads are displayed in the following fields during the customer’s search and purchasing process:
- Search results: At the beginning, middle, end or next to the search result (see picture)
- Product pages: Ad carousel on product pages
Amazon Sponsored Products Ads in Search Results
Other important key factors of Sponsored Product Ads:
- Content: The ads always promote a single product and have the same structure as an organic search result (Ads are created automatically based on the product)
- Link: The ads link to a product page
- Targeting: The ads can be displayed for selected keywords
What are the advertising costs for Amazon Sponsored Products?
Amazon Sponsored Products are billed according to the Pay Per Click (PPC) model. PPC means that advertisers don’t pay for impressions, i.e. when the ad is displayed, but only when users click on it.
The cost-per-click (CPC) depends on the highest bidder: An auction determines which PPC ads will be displayed. Each advertiser submits a bid for their ad. The highest bidder wins the highest ad position — but also pays the highest price. The typical CPCs for Amazon.com currently range from a few cents up to three US dollars.
Does Amazon Advertising also affect my organic ranking?
Yes. Sales volume is one of the most important factors for ranking on Amazon. The sales volume includes any sales from Amazon PPC campaigns, so promoting products via Amazon PPC can indeed improve your organic ranking.
That’s why Amazon PPC campaigns are especially useful for launching new products. Even established products can, however, benefit from running PPC campaigns by achieving an ongoing improvement of your Amazon ranking (learn more about the relationship between Amazon SEO and Amazon PPC).
Prerequisite for successful campaigns: An optimized product page
Before kicking off your PPC campaign, it is essential to optimize the product page for these factors:
- Keywords: Amazon displays an ad for an advertised keyword only if the product page includes similar keywords. Optimize the product page for all your relevant keywords.
- Click-through rate and conversion rate: Good pictures and text on the product page increase the click-through rate and conversion rate of the product and thus of the advertisements.
- Reviews: Positive and plentiful reviews increase the click-through rate and conversion rate of the product and thus of the advertisements. Ideally, the product has gathered at least a few initial reviews before starting the campaign.
Key Performance Indicators (KPIs) of Amazon ads
To accurately assess the performance of Amazon Sponsored Products campaigns, you should also know all the key metrics, and how to interpret them.
- Impressions: The number of times the ad was displayed in the search result etc.
- Clicks: The number of times the ad was clicked = Number of visits to the product page.
- (Attributed) Conversions or Orders: The number of orders that were placed after clicking on the ad. By default, an order is assigned to a click on an ad if it occurs within one week after the click. Note that this also includes orders of other than the advertised articles.
- (Attributed) Sales: The sales generated by the attributed orders.
- Click-Through-Rate (CTR): CTR (%) = Clicks / Impressions — How many people click on my ad when they see it? In other words, how many users (in %) found my ad interesting?
- Conversion Rate (CR): CR (%) = Conversions / Clicks — How many people placed an order after they clicked on the ad? In other words, how many users (in %) could be persuaded to buy the product?
- Advertising Cost of Sales (ACoS): ACoS (%) = Advertising cost / Advertising revenue. The ACoS indicates the efficiency of the advertising campaign. The ACoS also shows whether an advertising campaign is profitable (see next section).
Important basic terminology of Amazon Sponsored Products
To manage Amazon Sponsored Products campaigns effectively, you need to first understand the essential elements of Amazon PPC (more info on the basic technical terms in the next lesson.)
- Search Terms Vs Keywords: Search terms are the words a customer enters into the Amazon search bar. Keywords, on the other hand, are the terms that advertisers bid on for the positioning of the ad. Depending on the match type, one keyword can allow the ad to display for multiple search terms.
- Match Types: Match types determine how close the match between a keyword and search term needs to be for an ad to appear. There are three types (Exact, Phrase, and Broad). In a nutshell, a broad match type will cover many search terms in a campaign but will lack precision. In contrast, the effort to manage closer match types (esp. Exact) is quite high, but it allows for more precise control.
- Negative Keywords: Use this feature to exclude single or multiple search terms from showing the ad (match types: exact and phrase). Negative keywords can be used effectively to avoid unnecessary costs and to manage the traffic within the advertising campaigns.
- Campaign Types: In automatic campaigns, Amazon displays your ads automatically for specific search terms (thus allowing automatic keyword research, see below.) Only one overall CPC bid is set. In manual campaigns, you determine your own keywords, match types, and keyword CPCs. You will have more precise control, but it also requires more effort.
- CPC (Bid):If and where an advert appears is determined in an ad auction. Each advertiser places a bid for the click price (Cost per Click – CPC). The highest bidder receives the best ad position (1st place, page 1) — the next highest bidders follow according to their bid. The advertiser does not actually pay the submitted bid, but only 1 cent more than the next bidder in line. The true CPC is therefore usually lower than the bid and its value depends on the bid of the competitor.
- Budget:An average daily budget can be defined for each campaign. The maximum possible expenditure per calendar month is calculated from this daily budget and the number of days (daily budget x number of days in the calendar month = maximum expenditure per calendar month). IMPORTANT: The daily budget is an average value because if the daily budget has not been depleted in one day, the unused budget will be added to the following days. In this case, the daily expenditures on the following days might be higher than the daily budget.
Boost Your Amazon Ad Performance with Sellics
Analyze, optimize, and manage Sponsored Products and Sponsored Brands (previously Headline Search Ads) campaigns with the AMS Module in Sellics Vendor Edition. Maximum success with Amazon PPC campaigns- it’s never been easier!
- PPC automation: Save time with automated bidding. Managing keyword bids manually can be very time-consuming. Sellics automates these tasks for you and saves you a lot of time.
- See your KPIs and ad performance: Get an immediate bird’s eye view of your PPC performance. Compare your Sponsored Products vs. Sponsored Brands campaign performance with ease.
- Intuitive trend visualization: Understand how your PPC performance develops over time. Visualize and easily evaluate past campaign performance with our Trend Chart.
- Smooth workflow for campaign management: Full integration with AMS. Create and optimize your campaigns easily with Sellics. Efficiently handle bulk changes to campaigns, move keywords between campaigns, use negative keywords, and more.
- See your PPC history log: Changes you make to your keyword bids, budgets, added or removed keywords are all visualizaed for you. Learn from the past and know exactly which changes correlated with a boost in ad performance.