Whether you’re just setting up shop on Amazon or are looking to dial in your advertising game, having an Amazon Pay-Per-Click (PPC) strategy may be your ticket to growing your ecommerce business.
Getting on board with Amazon PPC can help you figure out how your listings perform, so you can optimize your ad spend to turn those marketing dollars into revenue.
But let’s face it, paid advertising on any platform can feel overwhelming.
That’s why we’ve put together this beginner’s guide to help you build your Amazon PPC strategy, understand why Amazon PPC is crucial to your business, and help you set up an ad campaign based on your budget.
Ready to start killing it with Amazon PPC? Let’s go.
The scoop on Amazon PPC strategy
- The ins and outs: Understanding Amazon PPC
- Why an Amazon PPC Strategy is everything
- Choose the right Amazon PPC ads for your biz
- The ultimate Amazon PPC keyword strategy
- Rinse, repeat and monitor your Amazon PPC Strategy
Looking for straightforward ecommerce advice? We break down all the latest in our email newsletter. Sign up for free today!
The ins and outs: Understanding Amazon PPC
There is a lot of information out there about how to try and win at an Amazon PPC strategy. But before you dive in headfirst, it pays to know the basics.
In a nutshell, Pay-Per-Click (PPC) advertising is when advertisers pay a determined fee each time someone clicks on their ad. Amazon PPC is specific to the Amazon seller’s market — and when you put your hard-earned dollars to work correctly, your Amazon PPC strategy will pay you back in a big way.
Here are some of the key Amazon PPC metrics to know:
- Advertising Cost of Sales (ACoS) — The return on investment for the campaign determined by dividing the total ad spend by attributed sales
- Impressions — How many times your ads were displayed
- Clicks — How many times your ads were clicked
- Attributed Sales — Your total sales generated in one week of running an ad
- Return on Ad Spend (RoAS) — The ratio of sales generated from an ad versus how much you spent on the ad (aka how effectively you’re spending your ad dollars)
Want more insights like these straight to your inbox? Subscribe to our free newsletter, and get the latest scoop on ecommerce strategies and tactics.
Why an Amazon PPC Strategy matters
In an increasingly competitive ecommerce market, sometimes you have to pay to play. If you want eyeballs on your products, a sure bet is to set up Amazon PPC ads.
Hands down, advertising is one of the best ways to get the right exposure to attract customers ready to purchase. And Amazon PPC is a great way to generate more revenue, but a solid strategy is what makes the difference.
Investing time in an Amazon PPC strategy allows you to test different keywords and target specific audiences to optimize your ads for conversion.
Choose the right Amazon PPC ads for your biz
When mapping out your strategy, it’s important to decide the types of ads that work best for your business.
Here’s a quick breakdown of the three ad types:
- Sponsored products: These ads are product-specific and target a specific keyword. They work best for special promotions, new product launches, or if you’re looking to gain a greater piece of the market share.
- Sponsored brands: These are a great way to promote your brand, and will lead potential shoppers to a landing page or a collections page on Amazon. It’s best to include multiple products, an attention-grabbing headline and your brand logo.
- Sponsored display ads: This type of ad allows you to send users to specific product listings from a direct ad click. They’re more likely to appear to well-researched users who are looking for a specific item versus a general search.
The ultimate Amazon PPC keyword strategy
Choose the right keywords for your Amazon PPC Strategy
To choose the ideal keyword, you need to step into the minds of potential customers.
When a user types their search in the Amazon search box, Amazon’s algorithm matches them up with products. So, the more specific you are with your keywords, the more likely you’ll find shoppers ready to click the ‘Buy’ button.
But remember, as a new seller (or new advertiser) you’re competing with well-established brands that often have large ad budgets — and the higher a keyword’s search volume, the bigger the competition.
This drives up the Cost-Per-Click (CPC), and you can end up spending a huge amount of your ads budget on very little exposure. Not cool.
But there is another way. Enter, the longtail keyword strategy.
How the longtail keyword strategy works
Picture the scene: A sunglasses retailer creates a listing for a pair of men’s sunglasses.
If they use the keyword ‘Men’s sunglasses’, they’re less likely to get relevant hits because it’s a highly targeted keyword with lots of competition.
So, they decide to target a longtail keyword to attract a customer looking for a specific type of sunglasses. Let’s say they use ‘Men’s Ray-Ban aviator sunglasses’ instead.
This lets Amazon’s algorithm know they’re targeting a specific type of customer interested in this brand of sunglasses.
The outcome? More ready-to-buy customers looking for the specific item your store carries. 😎
How to optimize your Amazon PPC ads to generate profit
Once you’ve started to target specific longtail keywords, you’ll notice a higher conversion rate and lower ad spend. Congrats!
Now, it’s time to focus on profit.
To keep your Amazon PPC strategy profitable, you need to monitor ads closely to optimize ad spend. To make sure your ads are worth it, these are the three key things you need to figure out:
- Profit margin: To figure out your Advertising Cost of Sales (ACoS), you need to determine your profit margins by deducting the costs (anything to do with your product and listing, such as shipping, manufacturing, fees, storage, etc.) from your list price. Say a pair of designer sunglasses sell for $300, and your cost is $225. You have a 25% profit margin.
- Determine your break-even ACoS: Now you know your profit margin, you can quickly figure out how to break even on every product. For example, so long as your ad spend doesn’t go over 25%, you’re in the profit zone. Driving down ACoS is the name of the game when it comes to building a revenue-generating ad strategy.
- Determine your target ACoS: Finally, it’s time to build a sustainable profit machine. You know what your profit margin is, and you know how to break even with your ad spend. Next, it’s time to decide how much revenue you want to bring home. Let’s say you want a profit of 15% for every pair of glasses sold. That gives you an ad budget of 10%. If you list the sunglasses at $300, you can comfortably spend $30 to acquire that customer. Simple.
Amazon PPC strategy hack #1: How to bid for keywords in Amazon
To optimize your chances of ranking for a keyword, you need to strategically add them into your product descriptions. But that isn’t enough to draw in the right customers.
To hit all bases you need an epic keyword bidding strategy.
Amazon’s bidding algorithm is similar to an auction. Sellers who make the highest bids and use the keyword correctly will get a listing bump, which means more visibility.
But don’t think you can simply bid large amounts of every keyword. After all, you pay for every click, which means you pay even if you draw in the wrong crowd.
That’s why when it comes to bidding, you need to let the data decide which keywords are worth investing in — and then only bid on what you can realistically afford.
Here are a few tips to keep you on the right path:
- Go through your keyword discovery for each item.
- Then determine your ACoS and bid on the keywords based on your budget.
- Keep your ads running to gain momentum — if you turn them off, you’ll lose your position in the ranks, which can be detrimental to your sales.
- Remember, you can always dial down your ad spend without completely turning your ads off.
- The only caveat is if your inventory is low and you risk running out, which is a big no-no with Amazon.
Rinse, repeat and optimize your Amazon PPC Strategy
Amazon PPC is an awesome way to tap into the right customers for your product. But that doesn’t mean it’s easy — especially if you manage multiple products.
The best way to get started is to bookmark this guide, figure out your strategy and focus on the keywords your brand does best.
And remember, slow and steady wins the race — start with your most popular products so you can gain enough traction and data to understand what works for your brand (and what doesn’t). Over time you can add more products and develop a complete Amazon PPC strategy that scales profitably. 💪🏼
Ready for a simple ecommerce advice you can actually use? Sign up today for our free email newsletter!