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How does Amazon PPC work?
Amazon PPC is an advertising platform that helps sellers promote their products on the Amazon marketplace. When a shopper searches for a product using a relevant keyword, the sellers with the highest bids win the auction, and their product ads get listed in the sponsored placements. Advertisers only pay the bid price if their ad gets clicked.
Introduction
We all know that Amazon is a super competitive marketplace. Search for ‘nail clippers,’ and you’ll get hundreds if not thousands of search results. Some almost exactly the same.
Thousands of sellers are vying for the attention of millions of customers. So how do you get your products noticed among the sea of competitors?
That’s where Amazon PPC comes in.
Amazon PPC can turbo-boost your product visibility so that people can actually find you. Trust me, you’ll want Amazon PPC on your side.
Basically, you bid on keywords related to your product. When shoppers search for those keywords, your product appears at the top of the results page in the sponsored ads section.
Now, here’s the cool part.
When your product gets more clicks through PPC, it tells Amazon, “Hey, people really like this product!”
And Amazon starts giving your product some extra love by boosting its organic ranking.
Amazon PPC can be your golden ticket to making some serious cash if you do it correctly.
Here’s an example of just how profitable it can be.
Have you heard of Dr. Kellyann Petrucci?
You might have seen her talking about health and wellness and singing the praises of drinking bone broth on TV programs like Good Morning America and The Talk. She’s the author of The 21-day Bone Broth Diet, The 10-Day Belly Slimdown, and The Bone Broth Cookbook. (She really likes bone broth!)
When she started using PPC to promote her supplement products on Amazon, she made around 88 monthly sales. In less than a year, Amazon PPC helped her achieve over 6,000 sales per month.
We'll go into the details of how she did it later in the guide. But that’s what is possible with Amazon ads.
In this guide, we’ll cover everything you need to know about Amazon PPC. You’ll learn the pros and cons, how to launch your first campaign, and 10 expert tips to help you skyrocket your sales.
Let’s dive in.
What is Amazon PPC?
Before we get to the step-by-step guide, let’s quickly cover the need-to-know basics. Amazon PPC is the advertising platform for the Amazon marketplace. When a shopper searches for a product, they land on a results page of relevant products. In most cases, the first four results on the page will be sponsored.
Here’s an example:
You can use Amazon PPC to get your products in front of potential customers searching for related keywords. Every time a customer clicks on your ad, you pay a fee to Amazon. The platform works like an auction.
The seller that bids the highest amount gets the first position, with the second highest bidder getting the second spot, and so on.
Better visibility in search results means more clicks and sales.
If you’re just starting out, you should learn the basics of selling on Amazon before progressing to paid ads. Use the resources below to get up to speed:
- Selling on Amazon
- A beginner's guide to Amazon FBA (Fulfillment by Amazon)
- How to sell on Amazon — A step-by-step walkthrough
How much money do you need to get started?
The amount of money you need to get started with Amazon PPC depends on the type of product you’re selling, the competition in your niche, and your bidding strategy. Generally, you can expect to spend anywhere from $50 to $500 daily on Amazon ads.
Many sellers begin with a small budget and gradually increase it based on performance. This allows you to test different strategies and optimize your campaigns before investing more money.
If you have a smaller budget, you can consider Amazon dropshipping as a business model. That way, you don’t have to pay for any inventory upfront.
Learn more about the different ways you can make money with Amazon in the resources below:
- Dropshipping vs. Amazon FBA: Which ecommerce model is more lucrative?
- The ultimate Amazon dropshipping guide: How to dropship on Amazon
- Selling on Amazon vs. eBay: Which website is better and why?
What you actually need
You don’t need any special tools to launch your first Amazon PPC campaign.
Here are the essentials:
An Amazon Seller Central account
If you’re already selling on Amazon, you can create a campaign without having to fill out any additional signup forms.
A product that is eligible for Amazon PPC
Not all products are eligible for Amazon PPC. You can check if your product is in your Seller Central account.
A daily budget
You’ll need a budget for your ad campaigns. Around $50 per day is a good starting point.
Keywords
You need a list of keywords people will likely use when searching for your products. We’ll cover keyword research in more detail later in the guide.
How profitable is Amazon PPC
It can be a game-changer. With the right keywords and marketing strategy, you can skyrocket your sales on Amazon.
Let’s revisit the example of Dr. Kellyann.
As mentioned before, she has a range of supplement products that she sells on Amazon.
Again, when Dr. Kellyann started using PPC, she was averaging around $3,500 in monthly sales. She spent roughly $3,000 on advertising and generated around 88 monthly orders - a pretty modest return.
But here’s where it gets exciting.
Within less than a year, her monthly orders increased to over 6,000!
She reached an impressive $460,000 in monthly sales, spending around $86,000 on ads.
That’s the power of Amazon PPC.
Of course, the profitability of Amazon PPC can vary from one seller to another. It depends on your product niche, competition, and how well you optimize and manage your campaigns.
But the results can be incredible when you find a winning formula.
How Amazon PPC actually works - step-by-step
Ready to get your products in front of your target customers and drive sales on the world’s largest online marketplace?
Let’s get into the step-by-step guide to launching your first Amazon PPC campaign.
Step 1: Log in to Amazon Seller Central
First, you need to sign in to your Amazon Seller Account. Once logged in, navigate to the Advertising tab and then Campaign Manager.
Step 2: Create a new campaign
Click on the “Create Campaign” button.
There are three main advertising campaigns on Amazon.
If you are not signed up for the Amazon Brand Registry program, you can only run Sponsored Products campaigns.
You need to choose the campaign type that aligns with your advertising goals and the products you want to promote.
Sponsored Products
Sponsored Product ads are the standard advertising campaign type on Amazon. You can promote individual products within Amazon’s search results. These ads appear alongside organic search results and are marked as “Sponsored.”
Sponsored Brands
Sponsored Brands allow advertisers to promote their brand and multiple products in a banner-like ad format on top of the organic search results. These ads can include a custom headline, logo, and multiple product listings.
Sponsored Display
Sponsored Display campaigns enable you to reach shoppers on and off Amazon’s website. You can target sponsored display ads based on specific products, interests, or audiences.
For this guide, we’re going to concentrate on Sponsored Products.
Step 3: Create your ad group and choose your product
The next step is to give your ad group a name. Using descriptive names can be helpful if you plan to run multiple ad groups within a campaign.
Once you’ve named your ad group, it’s time to select the products for your first campaign. It’s always a good idea to start with a product that’s already performing well.
Choose a product that converts well and could really benefit from extra visibility in search results.
Step 4: Set up targeting
Next, you need to set targeting options that determine when your ads are shown to shoppers. Amazon offers two types of audience targeting for Sponsored Product campaigns.
Automatic targeting
Amazon takes care of keyword selection for you. It analyzes relevant shopper searches and determines the keywords that best match your product. It then distributes your budget across different match types:
Close match - keywords closely related to your product.
Loose match - Terms loosely related to your product.
Substitutes - Shoppers who view the product detail pages of similar products.
Compliments - Shoppers who view the pages of complementary products.
Automatic targeting is less time-consuming to manage. It’s also an excellent way to get valuable data for future campaigns.
However, it’s a broad approach that can result in your ads being displayed to less relevant audiences.
Manual targeting
Manual targeting gives you more control over your advertising strategy. You can choose the keywords, negative keywords, and match types for your ads.
Here are the match types you can select:
Exact match - Search terms that exactly match your keyword, including close variations.
Phrase match - Search terms that contain the exact phrase you specify.
Broad match - Search terms that contain all your keywords in any order, including plurals, related searches, and close variations.
Manual targeting offers more precision compared to automatic targeting. It’s also not that hard to do. If you’ve ever used Google Ads, you’ll quickly get up to speed on how the keyword targeting works.
You should create ad groups within your campaigns to organize your keywords. Ad groups help you group similar keywords and deliver more targeted ads to your audience.
Step 5: Keyword research
So how do you know which keywords to target?
That’s where keyword research comes in.
If you’re using automatic targeting, you can skip this step and revisit it later when you want to transition to manual campaigns.
For each ad group, you will need to conduct keyword research to find the terms shoppers use to find products like yours.
If you’ve been selling on Amazon for a while, you should have a list of relevant keywords you used for your product page titles, descriptions, and bullet points. These terms can form the base of your keyword strategy.
For this task, you will need to use a keyword research tool like Ahrefs or KeywordTool.io.
Start by entering your primary keyword into the tool. This should be a concise, highly relevant term for your product or niche.
You’ll be presented with a list of results that match your keyword.
Order the results based on their search volume, starting from high to low. This way, you can prioritize keywords that are being searched for frequently by potential customers.
Now comes the important part - carefully review each keyword on the list.
Pay close attention to its relevance to your product and target audience. Remove any irrelevant keywords that don’t align with your offering. As you go through the list, aim to gather around 100 keywords.
Focus on quality rather than quantity.
Remember, the goal is to identify keywords with the highest search volume and the greatest potential to attract relevant traffic to your Amazon listing.
Step 6: Bidding strategy
Now it’s time to select a bidding strategy. Amazon provides options to choose from; manual bidding and automatic bidding.
Manual fixed bids
With manual bidding, you can set the maximum amount you’re willing to pay for each click on individual keywords. This gives you more control. You can adjust your bids according to your specific objectives.
Automatic bidding
With automatic bidding, Amazon automatically optimizes your bids to maximize the visibility of your ads, all while keeping your budget in mind. There are two types of automatic bidding:
Dynamic bids - down only
This option lowers your bid amount when Amazon predicts a lower likelihood of converting a click into a sale.
Dynamic bids - up and down
Amazon adjusts your bid upward and downward. Like down only, it reduces your bid when the chance of a conversion is low. But it also raises your bid when Amazon predicts a higher likelihood of converting a click into a sale.
When deciding on your bidding strategy, it’s crucial to consider the competitiveness of the keywords you’re targeting and the potential return on investment (ROI). It’s about balancing cost-effectiveness and maximizing the impact of your advertising efforts.
Once you’ve set your bidding strategy, give your campaign and set your daily budget.
You’re ready to launch your campaign and start making sales.
Step 7: Optimize your campaigns
You can maximize your advertising ROI by continuously refining your Amazon PPC campaigns. It’s important to closely monitor your results to gauge performance and make adjustments.
Log into the Campaign Manager to access detailed performance data. These are key metrics you should focus on:
Click-through rate (CTR): The percentage of people who click on your ad after seeing it.
Conversion rate: The percentage of people who make a purchase after clicking on your ad.
Cost per click (CPC): The average amount you pay for each click.
Advertising cost of sales (ACoS): ACoS measures the percentage of sales revenue spent on advertising. It’s calculated by dividing the total ad spend by the total sales, multiplied by 100.
Return on advertising spend (RoAS): RoAS indicates the return generated from your advertising investment. It’s calculated by dividing the total sales by the total spend.
These metrics can help you determine the right budget allocation and keyword selection for optimal campaign performance. Ultimately, your aim is to maximize conversions while minimizing costs.
You’ll need to continuously refine your keyword selection to target the most relevant and high-performing keywords. You can also increase bids on high-converting keywords and decrease bids on underperforming keywords to maximize ROI.
10 Amazon PPC strategies to boost sales
Whether you’re a seasoned seller or just starting out, these practical tips can help you optimize your PPC campaigns and maximize your ROI.
1. Use negative keywords to reduce wasted ad spend
Clicks cost money.
Every time a shopper clicks on your ad and doesn’t make a purchase, it eats into your ROI and profit margin. Using negative keywords can stop your ads from appearing in irrelevant searches and reduce wasted clicks.
How to implement it:
Amazon’s Search Terms Report can show you the actual search terms that trigger your ads. Look for keywords that are not relevant to your product or that lead to low conversion rates.
For example, if you sell affordable earbuds, you may want to stop your ads from appearing for high-end brand name keywords like “Apple” or “Samsung.” These keywords could be draining your ad budget without generating sales.
What to watch out for:
You’ll want to review the Search Terms Report regularly and update your negative keyword list.
It’s not just negative keywords that you can find. You may discover keyword opportunities that drive sales but are not currently targeted in your campaigns.
2. Be aggressive
It’s better to have an aggressive and shorter testing period. Adopting an aggressive approach provides valuable data on product performance, keyword relevance, and customer preferences. You’ll also speed up sales and boost your organic visibility in search results faster.
How to implement it:
Set your sights on the top of page one.
Raise your bid amounts to compete for top ad placements, where you’re more likely to be noticed by potential customers.
Regularly track your ad’s position on the search results page. If you find yourself ranking lower, consider increasing your bids to regain a top spot.
What to watch out for:
If you’re not generating clicks and sales, it’s a clear sign that adjustments are needed. Consider refining your product image, revising your listing, and targeting different keywords.
3. Focus on high-profit products
Understanding the profitability of individual products is crucial for your Amazon PPC strategy. It helps you identify products that will benefit the most from paid advertising while avoiding wasted ad spend.
How to implement it:
Dive into your data to understand the gross profit margins of each SKU. This analysis will help you identify which products have the potential to benefit the most from paid advertising.
Allocate most of your ad spend to products with a higher gross profit margin. You’ll achieve a much better ROI by focusing on these products.
What to watch out for:
Don’t waste ad spend on low-profit or low-demand products. You can save valuable ad dollars and allocate them to more lucrative opportunities.
Keep monitoring the profitability of your products over time. The market can change and affect the profitability of individual SKUs.
If you’re looking for products to sell, make sure you check out our guide on the easiest items to sell on Amazon and eBay.
4. Use Sponsored Brand ads to boost brand awareness
Sponsored Brands is a great way to increase brand awareness. These campaigns allow you to create ads that appear at the top of search results. They feature your brand logo, a custom headline, and multiple products.
This means that your brand will be seen by more potential customers, which can lead to increased sales.
How to implement it:
To create a Sponsored Brands campaign, you’ll need to choose a keyword or phrase that you want your ad to appear for. It’s important to really focus on the search terms that are super-relevant to your product range.
What to watch out for:
The cost of Sponsored Brands can vary depending on the competition for the keywords you choose. Generally, this type of ad campaign is more expensive as it gives you a prime position on the search results page.
You’ll need to track your results carefully to make sure that your campaign is profitable.
5. Optimize your bid strategy
You can maximize the visibility of your ads and control your advertising costs by strategically managing your bids. It’s about balancing driving traffic to your products and maximizing ROI.
How to implement it:
Manual bidding gives you more control over your bids. This is super helpful when you’re first starting out.
Set your default bid at a level that aligns with your budget and the value you’re willing to pay per click for each keyword. You’ll need to consider your product’s profitability and your advertising goals.
It pays to bid aggressively at the start of a campaign to quickly generate feedback on your ads and keyword targeting strategy.
What to watch out for:
You’ll need to continuously adjust your bids to maintain a competitive edge. Increase bids for high-converting keywords and decrease bids for underperforming keywords to maximize profits and reduce wasted ad spend.
6. Use automatic targeting for testing
Automatic targeting can be valuable for gathering market research data. You can discover relevant search terms and keywords that customers use to find your products.
How to implement it:
Create smaller budget automatic targeting campaigns to discover the keywords customers use to find your products. Allow the automated campaign to run for a few days to accumulate sufficient data.
Once you have gathered insights from the automatic campaign, incorporate the new keywords into your manual targeting campaigns.
What to watch out for:
Limit the budget to prevent excessive spending on unoptimized campaigns. You’ll want to use the majority of your budget for manual targeting campaigns where you have more control.
7. Bid on your competitor’s best-performing keywords
Analyzing your competitor’s Amazon PPC strategy can help you identify profitable search terms you may have overlooked. You can incorporate these keywords into your campaigns and reach a wider audience.
How to implement it:
Conduct a manual analysis of your competitors’ product listings. Study their titles, bullet points, and product descriptions to identify the keywords they are targeting.
If they have found a winning keyword opportunity using PPC, it’s highly likely they will have added it to their organic listing.
What to watch out for:
While it’s tempting to bid on all the high-performing keywords of your competitors, they need to be relevant to your product. Targeting irrelevant keywords may attract traffic that is unlikely to convert.
The result?
Wasted ad spend.
8. Use longtail keywords
Longtail keywords are typically less competitive. Since there’s less competition, you’ll generally pay less per click when you bid on them. This can save you money on your Amazon PPC campaigns.
Longtail keywords are also more specific and descriptive. This can help you to reach the right customers and improve your ROI.
How to implement it:
Identify specific keyword phrases that accurately describe your products or services. There are a couple of ways to do this.
First, you can use keyword research tools. These tools give you a breakdown of the keyword competition, search volume, and other useful metrics:
The second option is to use search suggestions on Amazon. Look for combinations of three or more keywords that are highly specific and directly related to your offerings.
What to watch out for:
Longtail keywords typically have lower search volumes compared to broader keywords. You need to find a balance between specificity and search volume. Make sure you’re reaching a sufficient number of potential customers while maintaining relevance.
9. Optimize your product page
While Amazon ads can attract visitors, your product page will ultimately drive conversions. By providing detailed information, high-quality images, and engaging product descriptions, you increase the likelihood of converting shoppers into customers.
How to implement it:
The title of your product is one of the first things shoppers see. Use concise and keyword-rich titles that accurately describe your product.
You’ll also want to add multiple high-resolution images that showcase your product from various angles.
The description is where you can sell your product’s benefits and include details important to your target audience.
Discover more ways to drive sales on Amazon in our list of 18 sales strategies.
What to watch out for:
Make sure that all the details you provide are accurate. Misleading or exaggerated claims can lead to disappointed customers and negative reviews. That can tank your sales.
10. Encourage customers to leave reviews
Customer reviews play a crucial role in the success of your Amazon advertising campaigns. Studies show that the number of ratings and reviews is the third most influential factor in purchasing decisions on Amazon. It’s more influential than product images and descriptions.
Amazon also uses customer reviews as a ranking factor for organic search results. By accumulating more positive reviews, you can increase your product’s visibility. This can lead to increased organic traffic and sales.
How to implement it:
In most cases, the two most effective techniques are product inserts and the Request a Review button.
You can include a product insert inside the packaging. Use this opportunity to thank your customer for their purchase and kindly request a review.
The Request a Review button is your next best option. You’ll find the button inside your seller central account. Click the button, and Amazon will send a review request to the customer’s email inbox.
You can discover the 9 best ways to get Amazon reviews in our expert guide.
What to watch out for:
Make sure you comply with Amazon policies. There are strict guidelines on offering incentives for reviews. Simply put, you can’t offer discounts, freebies, or any other incentive in exchange for a positive review.
If you violate the guidelines, you could receive a warning. Some sellers have received account suspensions for multiple violations.
Pros and cons of Amazon PPC ads
While Amazon PPC offers a bunch of benefits, it may not be suitable for every seller. Here’s a quick rundown of the advantages and disadvantages of Amazon PPC:
✅ Pro: Increased product visibility
Amazon PPC puts your products front and center in search results. You can make sure your products are seen by potential customers actively searching for what you sell.
✅ Pro: Targeted advertising
You can aim your ads at shoppers using specific keywords related to your products. Amazon PPC lets you reach the shoppers who are most likely to hit that “Add to Cart” button.
The average conversion rate on Amazon is 9.58%. That highlights just how effective Amazon PPC can be at generating sales.
✅ Pro: Cost control
You have complete control over your advertising budget. You can set daily spending limits and maximum bids. This allows you to manage costs and get the most out of your ad spend.
✅ Pro: Pay for performance
You only pay when a shopper clicks on your ad and shows genuine interest. It’s a performance-based model, so every cent you spend goes toward potential conversions.
✅ Pro: Insights at your fingertips
Amazon provides you with a treasure trove of data and analytics. You can gain valuable insights into impressions, clicks, conversion rates, and other key metrics. It helps you make informed decisions for campaign optimization.
❌ Con: It can be costly
Depending on your product niche, competition for popular keywords can be fierce. Bidding wars can drive up costs, impacting your profitability and ROI. It’s essential to find the right balance between ad spend and revenue.
❌ Con: Learning curve
Setting up a campaign is relatively easy. But mastering the art of PPC campaigns takes time and effort.
There’s a learning curve involved. You’ll need to learn keyword research, bid management, and ongoing optimization.
❌ Con: Limited targeting options
While Amazon offers various targeting options, it can be limited compared to other advertising platforms. This can make it challenging to reach highly specific or niche audiences.
Grow your Amazon business with PPC
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All you need is a budget to launch your first campaign, a willingness to experiment and learn, and some great products to sell.
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