Advertising on Amazon - Amazon Sponsored Products Ultimate Guide - Sellics

Advertising on Amazon – Amazon Sponsored Products Ultimate Guide

Advertising on Amazon – Amazon Sponsored Products Ultimate Guide
By Robin Hanna in Amazon Advertising & PPC Amazon Marketing Tips Posted

Amazon Sponsored Products – The “Adwords of Amazon”

Sponsored Products is the Adwords of Amazon — In other words, it’s product advertisement that shows up in Amazon’s organic search results. Unlike Google Adwords, Amazon Sponsored Products is (still) cheaper and much more straightforward. Getting started on promoting products on Amazon is relatively easy.

To get you started as smoothly as possible, here are the most important things you should know as a beginner:

  1. What is Amazon PPC, or Sponsored Products?
  2. Which basics should I know before starting?
  3. How do I create and optimize Amazon PPC campaigns?

Interested in more advanced tips? Click here for our Amazon PPC Guide for advanced users.

1. What is Amazon PPC, or Amazon Sponsored Products?

Promoting products on Amazon: How do Amazon Sponsored Products 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 more plausible on Amazon.

Overall, Amazon sponsored ads can be displayed in three different places during the search and purchase process:

  • Search result: At the beginning, middle, end, or next to the search result (see picture)
  • Product pages: Display carousel on product pages
  • External Websites (Beta, currently only Amazon.com): Retargeting of visitors of a product page
    (more info)

Amazon Sponsored Products Ads in Search Results

 

Other important key factors of Amazon sponsored ads:

  • Available for: Sellers (via Seller Central) and vendors (Amazon Marketing Services)
  • 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

How much does Amazon PPC, or Amazon Sponsored Products cost?

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 Amazon 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 click rates, or CPC, for Amazon.com currently range from a few cents up to three US dollars.

Can advertising on Amazon improve my organic ranking?

Yes. Sales volume is one of the most potent factors for ranking on Amazon. The sales volume includes any sales from Amazon PPC campaigns, so promoting products via Amazon PPC can indeed improve organic ranking.

That’s why Amazon PPC campaigns are especially useful for launching new products. Even established products can, however, benefit from Amazon PPC campaigns by providing a lasting improvement of the Amazon ranking (more information on the relationship between Amazon SEO and Amazon PPC).

2. Which basics of Amazon Ads should I know before getting started?

It’s very easy to create Sponsored Product campaigns and to start promoting products on Amazon. Before you start, you should still familiarize yourself with a few basics.

Important Basic Terminology of Amazon Sponsored Products

To manage Amazon Sponsored Products campaigns effectively, you need to first understand the basic elements of Amazon PPC (more info on the basic technical terms here).

  • Search Terms Vs Keywords: Search terms are the words a customer enters, the terms that can cause an ad to appear. Keywords, on the other hand, are the terms that advertisers bid on for the competitive positioning of the ad. Depending on the match type, one keyword can cause 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 much 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.

Key Performance Indicators (KPIs) of Amazon Ads

To accurately assess the performance of Amazon Sponsored Products campaigns, you should also know 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 other than the advertised articles.
  • (Attributed) Turnover:The turnover 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).

How Much Should I Spend on My Amazon Ads? (Set AcoS Target Value)

How much can I spend on my Amazon PPC campaigns? Easy: To make a profit, don’t spend more on advertising campaigns than your margin allows. You can see this very quickly by looking at the ACoS. As long as the ACoS is smaller than the margin, you’re still making a profit. In other words, a Dollar spent on advertising will yield more than a Dollar from additional sales. An example:

 

To calculate the margin, deduct all relevant costs (taxes, Amazon fees, product costs, overheads) from the price. In our example, there is still a 20% margin left to spend on advertising campaigns without loss. The so-called break-even ACoS is therefore 20%.

If you want to leave a margin after advertising (for example 5%), you will have to subtract it from the ACoS to get your target value (target ACoS) — in our example, the target ACoS is 15%.

Amazon PPC Optimization Part One: Optimize Your Amazon Product Listing Before Launching Amazon Adverts

Make sure you refine the SEO of your product listing before kicking off an Amazon PPC campaign. Sponsored Products campaigns are more successful with an Amazon product page that also considers Amazon’s SEO. There are two reasons for this:

  • Keyword Reach: Amazon displays an ad for a specific search term only if the product page includes similar keywords. Optimize the product page for all relevant keywords.
  • CTR and CR: Good pictures, text, reviews, etc. on the product page increase the click-through rate and conversion rate of the product and thus of the advertisements.

3. How Do I Create and Optimize My First Amazon Sponsored Products Campaign?

Beginner’s Strategy for Amazon Ads

Best Practice: Combine Automatic and Manual Campaigns
Here’s a simple and effective start-up strategy: Combine an automatic and a manual campaign for the same product or set of products. Use the automatic campaign for continuous keyword research. At the same time, keep feeding the manual campaign with good keywords from the automatic campaign. The manual campaign allows precise control and optimization of the keywords.

Compile a Product Set for a Campaign
Make sure that the products in the product set you’re compiling for these two campaigns have similar keywords and product margins.

Creating Amazon Sponsored Products Campaigns

Creating an automatic campaign is easy. All you need to do is name your campaign (or ad group) and define a budget and a CPC bid. As soon as your campaign kicks off, Amazon examines the advertised products and automatically starts displaying your ads for selected search terms. You can export these search terms as a .csv file in Seller Central or conduct an easy, in-depth analysis of them in the Sellics PPC Manager.

Create a manual campaign to add your own choice of keywords. An excellent resource to research these keywords is Sonar, Sellics’s free Amazon keyword research tool (Check out this guide to Amazon PPC Keyword Research with Sonar). For a decent basic coverage, research the 20 to 30 top keywords and add them to the match type “Broad”.

The following table summarizes all the details you need to create a campaign:

Amazon PPC Optimization Part Two: Routine Optimization of Sponsored Products Campaigns

Routine optimization is critical to the success of Amazon Sponsored Products campaigns. Make sure you always collect enough data to support your decisions, though. To be specific: Wait at least one week between each optimization run.

Once you have collected enough data, you can perform the following optimization procedures in the automatic and manual campaign:

  • Optimization: Automatic Campaign

    • Keywords and CPC Bids
      • Poor ACoS: Lower default bid if ACoS > Target value
      • Good ACoS: Increase default bid if ACoS < Target value
      • Transform keywords: Turn converting or relevant search terms with many clicks into keywords for the manual campaign
    • Negative Keywords
      • Exclude irrelevant or expensive search terms (evaluate search terms via .csv export in Seller Central or directly in the Sellics PPC Manager).
    • Budget
      • Increase if the campaign is profitable, but the budget has been exhausted
  • Optimization in the Manual Campaign
    • Keyword and CPC Bids
      • Keywords with poor ACoS: Lower keyword bid if keyword ACoS > Target value
      • Keywords with good ACoS: Increase keyword bid if keyword ACoS < Target value
      • Keywords without conversions: Reduce keyword bid or pause keyword
      • Keywords with few or no impressions: Check if keyword is missing from product if there are no impressions. In case of low impressions try increasing the keyword bid.
    • Negative Keywords
      • Exclude irrelevant or expensive search terms (evaluate search terms via .csv export in Seller Central or directly in the Sellics PPC Manager).
    • Budget
      • Increase if the campaign is profitable, but the budget has been exhausted

Easy and effective optimization of Amazon PPC campaigns — With Sellics PPC Manager

Sellics’s PPC Manager dramatically simplifies the management and optimization of Amazon PPC campaigns. Use our PPC Manager to maximize revenue and optimize your Advertising Cost of Sales (ACoS). Save time and automate your keyword bids with our Bidding Automation feature. The PPC Manager is available in our Sellics Seller Edition and Vendor Edition.

Highlights:

  • Save time with automatic bids etc.
  • No .csv exports required: Analyze search terms directly in the interface
  • All essential key figures at a glance
  • Use smart filters to find top and flop keywords quickly
  • Detailed graph analysis of key statistics and trends
  • Automatic tracking of changes including bid history
  • And more

Try Sellics for free now!

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