Last Updated on
Updated June 2019
If you’ve been stuck asking yourself “How does Amazon PPC work?”, not only is the answer here, but we have built a full Amazon PPC tutorial that will take you from clueless to expert in no time.
No matter whether you’re looking to learn how to optimise Amazon PPC campaigns or just looking for a proposal from a leading Amazon PPC service, you are in the right place!
Amazon Pay Per Click, or PPC, is the advertising platform found within Amazon Seller Central. It provides an awesome opportunity to create and manage an Amazon PPC campaign. It will enable you to sell more products faster, whilst also increasing organic traffic.
Amazon PPC strategy is difficult.
It’s also becoming more and more difficult with each new competitor that enters the market.
In this Amazon PPC guide we’ll be going over exactly how you can improve your ACOS, set-up profitable PPC campaigns and grow your Amazon business in the process. But let’s start with the basics.
What Is Amazon PPC?
Amazon Sponsored Products is Amazon’s paid advertising medium. It is also something that 99% of Amazon businesses do not do correctly. Please please please do not get this wrong. You will be leaving thousands on the table, or worse paying tens of thousands overbidding on keywords and optimising for the wrong potential customers!
What does “sponsored” mean on Amazon?
Sponsored simply means sellers that are utilising Amazon PPC ads (Amazon sponsored products) to display their advertisements in front of customers. Products without the “sponsored” tag on Amazon are natural, organic search results. If you’re interested in increasing your natural organic rankings, then check out our case studies to see what we’ve achieved for previous clients, or go to our process page to learn how we do it.
For PPC improvements, however, you need to stay right here!
Note: We have also recently built an Amazon PPC training course designed for people who are looking to do this manually and achieve extremely low ACoS figures.
The PPC platform allows you to build a campaign and target specific keywords on this campaign, including how much to bid, what products to link to and your daily spends. In this guide, we breakdown everything you need to have a successful campaign and make thousands of sales!
How to Create an Amazon Sponsored Products Campaign
As a company who employs several Amazon PPC experts, we’ve written a lot on the subject of optimisation of Amazon listings and Amazon SEO in general. This is our speciality. But Amazon’s PPC & advertising platforms are a massive opportunity when implemented correctly.
Before we get started on how to actually build an Amazon-sponsored products campaign, we wanted to take care of some FAQs that get asked by clients. Generally speaking, Amazon PPC optimisation is an incredibly effective way to generate sales at a very low ACoS. As a result, we recommend all Amazon sellers build a campaign.
This is especially the case in the early days, as a successful PPC campaign will allow you to boost your organic rankings in the long term.
What Does ACoS Stand For?
ACoS stands for Advertising Cost Of Sales and is essentially how much you pay vs how much you earn in sales.
For example, if we have a product that costs $100 and we pay $10 in advertising to make one sale, then our ACOS is 10%. This is on top of other Amazon fees do not forget. So if we have a net profit margin on these products of $50, after Amazon seller fees and manufacturing fees, then we roughly have a 50% ACoS to generate sales. Anything over 50% would mean we are losing money on this keyword/product.
Another key point is that we can actually take a slight loss on the front end of sponsored products and Amazon PPC IF we can then make this back later on. There are two core elements here.
1.) Lifetime Value Of A Customer – If you have customers that love your product and will keep coming back again and again, then you should spend as much as possible on advertising as your lifetime value will be so high. This is the core argument of whoever can spend the most on advertising will win.
2.) Organic Ranking Improvements – When you make a sale through any channel, you will receive a slight increase in organic rankings and visibility. This in turn, of course, makes it more likely you will generate sales through organic keyword searches. This is the goldmine of Amazon and the SOLE GOAL we have for our entire business model. This is why we offer highly effective and reliable product rankings, even for high competition keywords, so you can reap the benefits of our unmatched expertise while investing your time elsewhere.
Should I use Amazon Sponsored Products?
The short answer is yes!
Amazon’s SP campaigns are very easy to set-up if you have experience with keyword research, or have used a similar advertising platform, such as Adwords or FB advertising in the past. Amazon’s campaign manager is actually a lot easier to use too. As you do not have to create any specific ads, all that changes is the product listing is shown with the only difference being a “sponsored” tagline above the product. See the screenshot below.
The majority of products on top of competitive search terms have sponsored products on top. These companies pay a fee per click through to their products and a certain percentage convert into customers.
How to Create an Amazon Ad – The Build Process
Now that we have the “what” out of the way, we can look into the actual Amazon PPC tips we use ourselves in the building of a successful sponsored products campaign. These are the 5 steps we use for personal and client businesses, and the ones that have achieved incredible results time upon time, such as the campaign screenshots below.
Stage 1 – Keyword Research
Keyword research and analysis is the process of finding what search terms people are searching when they want to find your product. This is the first step to any of our optimisation campaigns, as we need to determine what the client’s product is in the eyes of the buyer. Most of the time, the product’s keywords are very obvious. For example, if we are looking for something to prop a laptop up, the most likely keyword is, of course, laptop stand. But what else do people search? What else can we optimise our listing for and also put into our PPC campaigns?
To do this, we use a number of keyword research tools. If you put in your primary search terms, laptop stands, you can see it shows you the top terms in relation to this keyword. This is great for getting the terms DIRECTLY related to your keyword. For example, this one simple task has now given us 3,500 keywords, 500+ of which have over 1,000 searches a month! We can now implement these new keywords into our content and PPC campaigns.
But what about the keywords that do not contain the direct keyword? What if someone was looking for a computer stand? Or a tablet stand? Our product might be relevant for these users searching, but if we do not know these keywords, we are never going to rank for them.
There are two ways to find these. The first is to go to the Google keyword planner and type in your primary keyword. There are other tools that do a similar thing in a better way, but these are paid solutions. For example, Ahrefs is an incredible tool for this. This process gives us another 500+ keywords to go through. Some, of course, will not be relevant or will be information based queries, but the majority are going to give you a great list of keywords to implement into your listing and campaign.
Since writing this post we have curated a giant list of tools for Amazon sellers, many of which help with keyword selection, research and on-page optimisation.
The second is good old fashioned asking people. When you ask someone how would you describe this product, or what do you think this is? Make them list 5 variations and this will give you some awesome keywords that maybe even Google missed.
Once you have your keywords in place, you can get onto stage 2 which is implementing keywords.
Stage 2 – Implementing keywords
This is essentially on-page optimisation for the listing. If you do not have a well-optimised product page, then you will not convert very well. This all means that you will be spending a lot of money to make very few sales. We get fully onto CRO and what needs to be in place before you launch a campaign in the next stage. However, for your listing to convert for the keywords you found, they will need to be in the listing from the start. For instance, if we have a bunch of keywords we want to rank in Amazon’s search engine, then prospects search this, they would expect to see these keywords in your title, bullet points etc. It is not only important from an Amazon rankings point of view, but also for a customer conversion too.
We will be writing a full guide on how to implement keywords into a listing, as well as perfect on-page optimisation in the near future, so watch this space.
Stage 3 – Pre-launch CRO & Reviews
CRO, or conversion rate optimisation is something you should test before starting your campaign. This is how well your listing converts. We like to look at the traffic vs sales figures to get an idea of this. If you have a 10% conversion rate, the number of people who visited your site vs the number of people who purchased, then you can realistically calculate how much you should be bidding for your keywords. But, we will go further into bid optimisation in stage 5. For now, look at the data inside your seller central account that shows traffic vs sales and ensure your number is not something ridiculously low.
CRO Quick tick checklist:
- Do you have 10+ reviews?
- Do you have your keywords integrated into your listing?
- Do you already have another marketing medium set-up?
- Do you have a review process set-up?
These all need to be answered YES!
Note: If it is very low, this may be from doing incorrect marketing elsewhere. For example, we had a client that ran FB ads at $100/day. They saw a few sales for a $40 product, so continued to run the ad. The issue was the conversion rate was tiny and the campaign was still in a loss. They made an average of 3 sales, but of course, with Amazon fees and manufacturing costs, this was a relatively big loss per day. The issue was also that they were getting about 500 visits a day from Facebook and only 3 sales. That is a conversion rate of less than 1%, not good! Below we are going to talk about how to improve the conversion rate of your products inside Amazon listings.
Most of the time, people will start an Amazon-sponsored products campaign with no reviews or less than 5. This is business suicide as people like to know what others thought (social proof), essentially you need to ensure you have 20+ reviews in place before starting an Amazon PPC campaign. How do you get 20+ reviews? Walk outside and ask people to buy your product and leave a review, it is really not that hard. Get creative if you must. Soon we will be doing a full guide on how to generate reviews for Amazon, which will include methods inside their Terms of service.
Using a tool called Jungle Scout we can estimate how many sales these products make per month. Although the product with 4 reviews is actually in the 1st position and the other product is in 3rd, you can see by the results below that the product with only 4 reviews makes an average of only 34 sales a month and revenue of £700. Whereas the other product generates 136 sales per month for £5,400. A huge difference. Also, remember the key concepts around incentivised review tracking and how Amazon uses fear to deter people.
So stage 1 of CRO is having enough reviews. Once you have this, you can move onto the second step.
On top of reviews, you want to have a listing that has good copy. Copy-writing is stage 2. There are only 3 key elements to ensure your copy is perfect. These are the: Title, Bullet Points and Description. The description is less important as very few people read all of an Amazon listing before making a decision, but for the people that do, you want to ensure you have a well written and in-depth description talking about the product’s features and what benefits they provide. Include as much information as possible here, even if you think it might be only a minor benefit. In the description, you can also talk about your brand, customer service and refund policies.
The title is where you should include a range of your keywords, but also in a way that does not look overly keyword-stuffed. When you have 10 keywords all one after the other in a title tag, it really does put off potential buyers. As a result, you want to ensure you are not putting off these people. The easiest way to do this is to ensure your title is not just written for the search engine, but also for customers too.
Finally, you want to ensure your bullet points are correct. This involves taking your top features and USPs for your product and talking about what makes them better than the competition. You can also talk about the great reviews you have received. Essentially, in these lines you are giving key product information whilst selling the product at the same time.
Stage 3 is images. You have to have images that look good. Showing your product being used in multiple different situations, as well as having feature benefit images too. This involves adding text to images, or stats showing why your product is better than the competition. Assuming most people do not read the text description of your listing, you have to get the benefit of your products across in the images instead, as 90% of people will view all the images before making a purchasing decision.
Stage 4 – Launching The Campaign
So by now, you have your keywords, your listing is ready and you are going to start the campaign. We are going to start from the very beginning when we talk about how to exactly set-up a profitable sponsored products campaign.
Inside your seller central go to advertising and hit campaign manager. When you are in here click the gold create campaign button. Here you will get some options on what to name your campaign, daily budget, start date, end date etc. All this information is not that important. For clients that have less than 10 products that are all specifically different, we call the campaign name the name of the product. If they have 20+, then it is going to be the group of products we are working with. In this case, you can just name your campaign anything you want.
Keep the start date today so it starts as soon as we finish and we like to have no end date. For the budget, you can put whatever you like, but we recommend starting as high as possible. Again, if cash flow is an issue, then just go with whatever you need. The final option on this page is to select automatic or manual targeting. PLEASE put manual as automatic will be a quick way to lose all your money.
When you click next, you will be taken to step 2 of the set-up. This involves creating the ad-group. Again, if you only have a few products just create one of these for each product. In the ad-group name part, just name the specific product or model. Once you have selected and added the relevant product(s), you will scroll down to the “set a bid and provide keywords” section. Here you want to click provide your own keywords and copy and paste all the keywords we discovered in stage 1. Default bid can be set at anything, for now, I just like to do $0.50.
When you add your keywords, you will see the keyword bid option. Here you can see first-page bid data. We like to be at the top range for this as it means you will appear in the top 3 and you will not be charged an incredible amount. We will move more onto that in stage 5. Sometimes there will not be any data, in which case you will just keep it at your default bid option. Once you have your keywords and some sort of selected bid input, click save and finish. When you go back to the advertising home section now you will see your live campaign.
Additional strategies in our Amazon marketing guide post.
Obviously in your case, if this is your first campaign you will only have 1 and there will be no spend or stats up yet. To quickly run through the stats, the spend is, of course, the total advertising spend; sales is your total revenue that has come as a result of direct clicks only and then the ACoS figure as we mentioned above, which you want to be as low as possible.
Once this information is set-up, there is only one stage left and that is to optimise the bids and tweak the campaign as it goes along. There are a lot of ways to do this, but we like to start by using Amazon’s data, as this is the best way to scale very quickly.
Stage 5 – Bid Optimisation & Scaling
What we are looking to do here is to see what bids Amazon is recommending and where we are appearing in the results. As we saw at the start of the post, we know that even if we bid lower and appear in the 2nd or 3rd advertising spot, with more reviews we can outsell the competition AND on top of that, we will be paying less per click, so we will be making more per sale too.
Once Amazon has some data they will show you the suggested bids. They also have an algorithm that outlines what these bids are and it is very similar, although less evolved, to the algo used in Google and Facebook. Here all you want to do is go 0.01 per click above the suggested bid. Later on in the campaign, we will decide which ones to scale and which ones to potentially remove. Once you have put this figure in it should automatically save.
Although this is a great product, getting conversions at 10% ACoS is incredible, the issue is that it is a small volume, which brings me on to the next point.
On this point.
What Is A Good ACoS?
A good ACoS is usually below the profit margins for your specific product.
If your net profit margins are 30% for a product and you have an ACoS of 10% then you’ve made a net profit of 20%. Analyse the quality of the ACoS levels on a product-by-product basis.
Be Patient with ACoS
Once you have found what ads convert, increase the daily budgets and the bids. This will lead to more sales at a SLIGHTLY higher conversion rate, but the difference between conversions vs the volume increase in revenue will earn you more money. This is something that most people get confused with, so we will quickly touch on it.
What we are talking about here is scaling ads that work to the point where conversions start to get worse. Let us take the example above. Let us say we spend £40 a month to make £400, that is a 10% ACOS and a great profit margin for a 40% profit margin product. In this case, we have a 30% profit margin as we are taking 10% of that hit in advertising. This means we earn: £160 – £40 ad spend = £120 profit per month. That is great as it is just one product and one ad, but it is still not a lot of money.
Instead, this is what we would recommend.
Increase daily budgets to the highest, remember it’s unlikely you will even reach this, but to be sure you are not limited, you want to do this. Next, you want to increase your bids 20-50%. This will lead to a more expensive click, but the VOLUME of sales you get will also increase dramatically. So let us say our ACOS goes from 10% to 20%, BUT we spend £200 a month instead of £40. Now we have made £1000 in sales that month. When we look at the stats it is £1000 – £200 spend = £600 profit, over 50% increase in end profit, just from spending more money on something we already knew would work.
If you do not want to get too complex, this is where you stop, you just optimise your bids once per week, or few days if you prefer, and then take the profit each month. If you do want to get more complex, then you can spend more time removing specific keywords and increasing bids proportionally up or down based on the ACoS and profit margin of each individual keyword and product. But honestly, this is something that you do not need to actually do. Amazon sponsored products is set up in such a way that you will earn simply from getting the right keywords, this is why stages 1-3 are so important.
If you are interested in our Amazon PPC guide video course outlining all the key elements in real time and diving into how we build campaigns for 6% ACoS, click the image below.
I hope you found this Amazon sponsored products guide useful. Amazon PPC is one of the best ways to not only make sales but also to improve your best seller rank, which leads to higher organic rankings and more sales again, so don’t be afraid to invest more heavily in this! If you have any questions about our PPC processes, or would just like to get in touch to discuss your Amazon business, do not hesitate to contact us to discuss any Amazon consulting needs you may have.
If you are looking for Amazon PPC management services, also don’t be afraid to get in touch to see how we can drive your sales.
Last but not least, we can actually use our proven and original strategy as the leading Amazon PPC agency to boost your organic rankings for you, leading to huge improvements to your sales and revenue, without you ever having to do anything – so request a proposal if this sounds good.
If this sounds like something that might work for you, we highly recommend checking out our case studies to see our previous results and to envision the impact similar results would have on your business.