Amazon Pay-Per-Click (PPC): The Definitive Guide
What is Amazon PPC?
Pay-Per-Click, also known as PPC, is often used as shorthand for Sponsored Products Campaigns—promotional campaigns used to feature your product to millions of shoppers and help companies of all sizes increase their sales.
Intrigued? Read on to find out how you can take full advantage of Amazon PPC!
The Amazon Pay-Per-Click (PPC) Model
Traditionally, companies have charged advertisers for two things:
- How many Ads they display, and
- How many clicks these generate.
Method 1 charges per a number of impressions, i.e. how many times an Ad has appeared on a web page (usually measured per 1,000 views). Success here is measured by a high number of impressions. This method is mainly used to increase brand awareness. When it comes to sales, most people prefer Method 2, appropriately called Pay-Per-Click (PPC).
Advertisers only need to pay when people actually click on an Ad, therefore verifying their interest in a product. Amazon encompasses Method 2 as their advertising model—you pay when people click on your Ad. Although it sounds better in theory, the PPC model also means you need to work harder to create a successful campaign as Amazon receives no payment for simply displaying your Ad. That precious advertising space could have gone to another Ad, one which shoppers would have clicked.
In short, Amazon has the interest to choose the most profitable Ad to display—the one which will help generate sales.
Most Internet Ads work in a similar way. Whenever you open a page on your browser, dozens of Ads bid against each other for the Ad placement to appear on your screen. Within milliseconds, a winner is decided and you see an Ad.
Amazon chooses which Ad to display by examining a number of parameters. The bidding value (how high an advertiser is willing to go) is one of them. The Cost-Per-Click (CPC) is weighed against how relevant and valuable the Ad is deemed to be—as decided by how many people click on it—and what they do once they view the product advertised (do they make a purchase or do they return back to the search results page?).
It is important to be smart about your Ad spend and its placement: throwing money at Amazon in the hope that your Ad will always appear first is not going to work. Instead, you need to work on your keywords.
Utilizing Amazon Keywords
Keywords are one of the main contributing factors in influencing your Ad’s success—i.e. what it takes to make your Ad show up on Amazon instead of your competitor’s.
There is no “right number” of keywords to include in your campaign, and you can go as high up as 1,000 words or phrases. We suggest you start with between 20 and 30 keywords, then build up on them.
When choosing keywords, AMS provides a list of potential keywords for your product based on historical searches. However, it is advisable to add to these keywords, as it is difficult to identify winning keywords if you start with too small a sample set.
Choosing the right keywords for your product can be a difficult task, but we’re here to guide you through the process.
Let’s take an example: your company makes Bluetooth speakers and you are planning on creating an Amazon Ad campaign for them. You have to decide which keywords to choose based on what your audience may use to search for your product. Therefore, you have the option to choose between “speakers” or “amplifiers.”
After conducting your keyword research, you decide on the term “Bluetooth speakers” as the target keyword for your product.
The next step is to create your Ad and run it for a couple of weeks to see how successful the Ad campaign was. Let’s say your results show that you only got a handful of impressions because your keyword is too specific. Therefore, to make it more specific to shoppers, you add “Bluetooth” and “speakers” as separate keywords, to increase the views.
You now get thousands of impressions as your Ad caters to anyone looking for speakers—whether they’re Bluetooth or not—and cell phone headsets. However, that can pose another problem. You have to outbid all of these new competitors (people selling both “Bluetooth” products and “speakers”) for your Ad to display. Because of the added competition, your Ad starts to display less frequently. To counter this drop, you are forced to raise your bid, risking smaller profits. Even so, Amazon may stop showing your Ad
How to Optimize Amazon Keywords: A/B Testing
As the above example demonstrates, you have to constantly weigh two opposite needs against each other: the need to target those specific shoppers who are interested in your exact product against the need to display your product to as many people as possible.
In practice, finding the perfect balance between these two is a crucial factor in determining the success of your campaign.
Therefore, it is important to identify your audience and how to best reach them. Constantly tweak your keywords and don’t worry about a campaign breaking down: you can always run another one.
Constant experimentation is the best way to success. Campaign management at its best is an endless series of so-called A/B Tests. It requires you to create different sets of Ads using variations of your keywords, then choose repeatedly among the more successful ones. The goal is to enter a virtuous circle of ever-improving Ads.
But how do you know which Ads are performing best when you have dozens of them running at the same time? Sales alone isn’t the best indicator of success, as they can be the result of any of your campaigns. When you have dozens, even hundreds of campaigns running, it is crucial to measure your data with Amazon’s metrics.
How Much Should You Spend on Amazon Ads?
You may wonder how much you should be spending on advertising. You should be spending as much as it is profitable for you in advertising. If every $1 you spend on Ads is producing $20 in sales, you want to spend as much as you possibly can.
However, your Amazon Ads are only part of your overall strategy. For example, if you are launching a new product or want to increase your brand awareness, profitability may be a secondary concern compared to increasing your traffic and visibility.
Why Should You Use Amazon PPC?
Amazon PPC can be the best way for a business of any size to boost its sales. Amazon visitors are actively looking for products to buy. Furthermore, Amazon has created a friendly, easy-to-use platform which lets you advertise economically and has developed the tools to create campaigns in a matter of minutes.
Amazon PPC can increase organic traffic to your product pages, as it complements the rest of your marketing strategy. When Amazon sees a “hot” product, it will send more organic traffic to it, so it will benefit in more than one ways. The goal is to create a virtuous circle of increased sales, and Amazon PPC can be a crucial part of that.
Amazon PPC can also be used to increase awareness for a brand or a new product. This will require a slightly different approach—one which prioritizes impressions rather than clicks—but again, Amazon PPC can be of great help in achieving this goal, placing your brand or product in front of millions of active shoppers.