Amazon PPC (Pay Per Click) is a form of advertising that has allowed sellers and vendors to run ads on Amazon for their products since 2012. In this complete guide to Amazon PPC, we’ll explain how these ads work on an introductory level, then cover more in-depth aspects such as:
- When Amazon PPC ads appear (and when they don’t)
- When you should run Amazon ads
- How the organic ranking of your product is influenced
- How much Amazon advertising costs
Tip for more advanced Amazon PPC users: Check out the Amazon Sponsored Products Tips in our blog for the latest optimization and strategy tips!
Amazon PPC is also called Sponsored Products because the product ads appearing in search results are ‘sponsored’ (paid for) and not organically ranking in those positions. Amazon ads are a way for sellers to ‘buy’ a position at the top of Amazon’s search results. Advertisers pay each time a customer clicks on their ads, hence the name Amazon Pay Per Click.
How does Amazon PPC work?
This kind of Amazon advertising is based on keywords and auctions. A seller bids a certain amount on the keyword(s) for which she wants her product to appear. In simple terms: The seller with the highest bid will appear in the first position in Amazon’s search results, the second-highest bid will appear in the second position, etc. Sellers only pay when their ad is clicked on – just like Google’s advertising system, it’s a kind of ‘Amazon AdWords’.
Amazon PPC ads can be placed by any seller with a professional selling plan. PPC ads aren’t available for all product categories, though. An overview of all available categories for Amazon PPC can be found here (when logged into your Seller Central account). Some of those are:
- Pet Supplies
- Health & Personal Care
- Home & Kitchen
Where do Sponsored Products ads appear on Amazon?
The ads appear in two places (take a look at the screenshots):
Amazon’s Search Results: Ads appear on the search results page, even on the first one. Despite being discreetly marked as ‘sponsored’, the ads appear seamlessly in the search results next to organically ranked products. They’re structured like a normal product listing (including price, reviews, etc.) and can be placed at the beginning, in the middle, or at the end of search results.
Product listing pages: Amazon PPC ads also appear on product listing pages underneath the title and pictures, but above the product description text.
4 Benefits of using Amazon PPC
Even if your Amazon sales are running fine on their own, you might want to start running ads for a variety of reasons. Here are some of the most common reasons sellers use Amazon PPC:
1. Boost sales for all products in your product line
Amazon PPC ads can be started in order to boost the visibility of your product line and help increase sales. Some ways you can increase your sales generally include running ads on keywords for which your products don’t have enough natural visibility in Amazon’s search results. By placing ads, your products can get a lot more attention on the first search results pages than they normally would.
2. Seasonal campaigns
According to the product, seasonal campaigns can be run for corresponding keywords (e.g. Christmas, Hanukkah, Mother’s Day, Valentine’s, etc.). Amazon ads are a great way to make optimal use of increased customer interest in the product due to seasonality. The same can be said for end-of-season sales to quickly get rid of inventory at the the end of a season.
See Related Post: On-Amazon Advertising
3. Boost a new product
New products have an especially difficult time being found on Amazon – because products that sell well are placed at the beginning of search results. New products generate few clicks, and therefore less sales, and have a more difficult time climbing to the top of Amazon’s search results. It’s a vicious circle that can be broken with the help of Amazon PPC ads. Running Pay Per Click ads gives you the option to boost new products by generating clicks and sales, so that they gradually begin to rank better organically. Because the long-term objective here is to boost sales, taking a loss or selling with minimal profitability can be acceptable in the short term.
4. Safeguarding top sellers and brands
Even if your product already ranks at the top of Amazon’s search results, it could still make sense to run Amazon PPC campaigns for it. The goal in this case is to defend your own top positions and to avoid losing sales to the competition who is also running Sponsored Products ads.
Get Started with Amazon PPC Ads Now!
Does Amazon PPC influence organic rankings?
Yes. Using Amazon ads can have positive effects on your product’s normal ‘organic’ ranking. This is in part due to extra sales that have been generated by ‘Amazon AdWords’ enhancing the sales history of the product. Sales history is a very strong ranking factor. If a product sells better, then Amazon will place it higher up in the ranking of search results. Furthermore, we’ve repeatedly seen that organic ranking has been considerably improved for those keywords that were used successfully in Amazon PPC ads.
If you need some help finding keywords for your Amazon PPC campaigns, try the new Amazon PPC keyword generator here. It has a unique and complex algorithm to calculate actual search volume of keywords on Amazon. You can also read our Amazon PPC Strategy Tip series for ideas and inspiration, like PPC Tip #1 which shows you how to use automatic campaigns to generate keywords for your manual ones.
How does payment for Amazon PPC work?
Amazon ads are based on a Pay Per Click (hence ‘PPC’) model that’s well known with Google AdWords. Hence why some refer to Amazon PPC as ‘Amazon AdWords’: Sellers only pay when a customer clicks on their ad – but not for the number of impressions, or simply running ads.
The cost of advertising on Amazon is cheaper than you think: Amazon CPC prices are much lower than Google’s
You might think that it would be expensive to advertise on Amazon. After all, the search queries are all made with an intent to purchase. But surprisingly, the cost of advertising on Amazon is relatively cheap in comparison to other ad services like Google AdWords or Facebook Ads. According to Amazon, the average successful bids (that means bids that win the first ranking position) cost between 14 cents and 72 cents depending upon category. (You can find an overview here.)
The Amazon CPC bid you place isn’t the price you’ll actually pay, however, because it’s a maximum bid. The actual CPC price paid is just the amount needed in order to place your ad above the next competitor. This is often under the maximum bid.
The actual click price is highly dependant upon the competition for that keyword. The click price and therefore the required bid price for especially popular keywords can be considerably higher than this value. The amount of sales that are generated through the ad determines whether it’s worth it to pay these Amazon CPC prices. In order to generate sales, the ad doesn’t necessarily have to appear in the first position. A moderate bid can be more profitable in relation to the circumstances.
What are the requirements for running Amazon Ads?
Amazon PPC ads will be shown when a customer enters certain search terms into Amazon’s search field box. Sellers can determine which terms (keywords) for which they’d like their ads to be shown.
So that an ad can be shown for a certain keyword, the product must first be considered relevant for that keyword. This is the case if the keyword is contained in the product information (for example, in the title). The product must also be in the buy box – only then will the ad be shown.
If there is more than one relevant Amazon PPC ad, then you’ll compete for placement (first, second, third position etc.). An auction determines which ad appears in which position (the so-called ‘ad rank’), which is comprised of two factors:
Sellers bid on a CPC (click price) for a keyword; The CPC price is the highest they are willing to pay.
The quality of an Amazon ad is measured by the probability of a customer clicking on it. This is comprised of the ad’s applicable click history, as soon as it’s been active for awhile.
What does this mean? The higher your Amazon CPC bid, the higher your ad will be placed when you’re competing with ads of the same quality.
And vice versa: The higher the quality of your ads is (respective to your competitors), the less you’ll need to bid in order for your ad to appear in the first position.
How do I create Amazon ads in Seller Central?
If you want to start Amazon advertising, you can find Sponsored Products in your Seller Central account in the tab ‘Advertising’ in the top nav bar. After you’ve entered your payment method (which is by credit card in most Amazon marketplaces), you can create ads.
Optimize your Amazon PPC campaigns
If you need help getting started or optimizing your existing Amazon PPC campaigns, Sellics can greatly reduce the time investment in both learning how to manage Amazon advertising and optimizing the campaigns. Check out these 10 Sponsored Products Optimization Tips and be sure to calculate your product’s profit margin accurately, since this will be indispensable in determining a good Advertising Cost of Sale for your campaigns.
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