Amazon PPC Ads: 21 Point Guide To Making a Profit (Updated)

‘I’ve already got Google Shopping up and running, and it is enough of a pain to manage that whole process, what do I need Amazon PPC for?’

‘I’m making money hand over fist with Google Shopping, and I don’t think I have even maximized the return on the investment I’m making on Google.’

‘If people are searching for anything, they’re searching Google – period. When I have more time, I’ll take a gander at Amazon PPC, but for now, I’m good.’

If this is your attitude towards Amazon PPC, then we are prepared to convince you otherwise in this guide. After this read, we hope you see the importance and value of Amazon Shopping for your bottom line, and we’ll show you how to succeed in the process.

1. Why Amazon PPC?

Amazon now has over 300 million users, and 80 million are Amazon Prime members. Amazon, like Facebook and Google, has a treasure trove of data on what buyers purchase and how they do it, so using this platform can drive a high ROI if you have a good product and you manage your PPC campaigns well.

Amazon is one of the largest companies in the world. They have their own fleet of airplanes. Long story short, a lot of people are buying a lot of products on this platform, and if you sell products then you want to be in this space, too.

Amazon is also one of the top retailers in the world, according to Deloitte.

Amazon Ad Types:

And these are the three different types of ads that you can run on Amazon.

Here is a quick breakdown/review of where Amazon ads show up, with other details on targeting:

Via CPC Strategy

In addition, you can also target Product Display Ads by Product Categories now, which is when users are browsing products in the category of your choice.

2. Amazon PPC With Sponsored Product Ads Placement

Sponsored Product Ads – These are ads that are shown based on keyword targeting, just like for Google Ads or Bing Ads. They can be shown for certain search queries or search results, based on the keywords that you’re bidding on.

Via Amazon

Your ad is your product listing that might show up organically for searches in Amazon, but since you’re paying, they will show in locations with high visibility (depending on your product’s performance and the amount you bid).

Via WordStream

Amazon has a quick breakdown of where Sponsored Ads can show up:

3. Amazon PPC Using Sponsored Brand Ads (Formerly Amazon Headline Ads)

Amazon Sponsored Brand Ads – (Headline ads) are more top-of-funnel. If users don’t quite know what they’re looking for, this is an opportunity for advertisers to capture the attention of select users to show them your brand and products. You’ll want to target keywords that indicate a general interest in your product type or category.

These ads usually take you to a customized branding page with the listings in the ad or you choose your Amazon Storefront if you have built one out. Sometimes it’s just more information about the brand, but more than likely, they’ll take you to a page with 3 or more products related to the search query you typed in.

Amazon PPC headline ads or Sponsored Brand Ads show up on top of the Amazon SERP with an image and description that take you to a company landing page, a brand page with multiple products, or just one product page.

Via WordStream

In order to use Sponsored Brands (Headline Ads), you need to be part of the Amazon Brand Registry.

Via Amazon

Sample landing page for a Headline Search Ad

Campaign Types –

Automatic Bidding – This is the easiest to set up. You just choose your product/ASIN/SKU and then Amazon will automatically target what they consider relevant keywords to your product. You bid by ad group.

Manual Bidding – This is just like traditional Search campaigns, where you build campaigns, ad groups, and keywords manually. Your ad is your product ASIN or SKU. Key word match types are Exact, Phrase, and Broad. You should use all three if possible and bid by keyword.

A wise approach would be to use both types. Automatic targeting is a great way to discover new keywords and find negative keywords to block. Eventually, you will want to shift most of your budget to Manual.

Bid+ is much like Google AdWords’s Enhanced CPC and allows Amazon to bid up or down and drive ads more to the top left if you have conversions. While this gives one less control, getting to the top-left is essential to driving traffic.

4. Sponsored Display Ads (Formerly Amazon Product Display Ads)

Sponsored Display Ads (formerly Product Display Ads) – These ads are targeted by interest or specific products, and show up along the side of another product page or below a product. These are great ads to show against your competition or for similar products.

Sponsored Display Ads can appear on the right sidebar of the product page of a similar or competitor product.

Via WordStream

Product Display Ads can also appear within a product detail page, as shown here:

Via Ad Badger

Per Amazon: Product Display Ads also appear on the right rail of search results, at the bottom of search results (similar to Sponsored Products), on the customer reviews page, on the read all reviews page, at the top of the offer listing page and in Amazon-generated marketing emails, such as follow-ups and recommendations. Product Display Ads run across desktop, mobile web and mobile app.

Product Display Ads take users to your product page. You can target by Interests or product targeting, but not by keywords. You can also now target by product categories.

Each campaign is limited to one target type.

5. Amazon Advertising Requirements

In order to advertise with Amazon, you’ll have to meet certain requirements.

• You must have the ability to ship to all US addresses
• You need an active Amazon Seller Account
• You must have eligibility for the Buy Box
  • This means you have to sell for 2-6 months with good standing/high levels of performance
  • This status is visible in your Seller Central account

6. Product Display Ads Targeting Optimization

Target competitor products. Take your best selling product and use it to go up against your competition for brand awareness and sales. Top selling products have the best chance to overtake your competitors with their high star ratings and reviews.

Highlight your USPs (unique selling points) of the differentiators that separate you from your competitors

Also use sale items, seasonal products, and clearance products to target complementary or similar products.

Target as many products as you can, and use Amazon’s ‘expand’ option – similar to how you use ‘broad’ match in keyword targeting campaigns – to capture other products that you might have missed out on that Amazon’s algorithm can pick up for you.

Andrew Maffettone of Seller’s Choice suggests starting with one ASIN (Amazon Shopping Identifier Number) and reaching your ACoS target first, then expanding from there.

“When we do Product Display Ads for our Amazon sellers we like to take one ASIN and create a campaign targeting competitors’ ASINs. As we optimize and get the ACoS within our target, we add more and more competitors. After a while, we’ll create more campaigns based on complementary products. So, if we’re selling belts I may create a Product Display Ad campaign directed at jeans.”

7. Interest Targeting In Product Display Ads

As the name implies, this targeting is based on Amazon’s data on user interests and behavior. It is best to bid lower for this targeting method, because it is a broader method of targeting.

Use this method to complement specific product ASIN targeted campaigns that are showing good profitability.

8. Organic Amazon Gains From Amazon Advertising

Amazon management company Sellics says it best:

“We’ve repeatedly seen that organic ranking has been considerably improved for those keywords that were used successfully in Amazon PPC ads,” says Sellics.

“This is in part due to extra sales that have been generated by ‘Amazon AdWords’ enhancing the sales history of the product. Sales history is a very strong ranking factor. If a product sells better, Amazon will place it higher up in the ranking of search results.”

That makes a whole lot of sense.

Amazon advertising simply allows you to pay to be in the top rankings for at least as long as you can sustain it with an advertising budget, but it is worth it to get the visibility and sales on your products.

9. Amazon Costs And Advertising Cost Of Sale (ACoS)

It can be relatively profitable to advertise on Amazon, especially considering that the cost-per-click can be quite low when compared to Facebook or Google.

Running ads on Amazon can be a bit different than on Google or Facebook, because the metrics are a little different. Within Amazon, the key metric is Average Cost of Sale, or ACoS.

Average Cost of Sale is how much you spend on average to generate one sale of a product. Optimizing towards this metric makes sense because you take into account not just the purchase, but the value of the purchase.

You’ll first want to figure out the cost breakdown of your product before you determine ad spend to see how much you can spend on a sale to break even.

Via Sellics.com

In the example above, 78% of your product cost is accounted for before you even account for ad spend, which means you have 22% to work with in order to try to make money.

Let’s put some hard numbers to this. Suppose you sell a sweater for $10. For each sale, you don’t want to spend any more than $2.20 in advertising per sweater sale in order to break even. However, you don’t want to just break even – you want to make some money. In the example, you want to try to make a 10% profit margin, or $1 per sweater. Therefore, you want your target ACoS to be $1.20 per sweater.

Now, you want to figure out your bid price per click. You’ll need to calculate your conversion or purchase rate. Let’s say you get a purchase an average of once every ten clicks, or 10% of the time. You need to be able to get ten clicks for $1.20, which means you can only pay a maximum of $0.12 per click.

10. Campaign Metrics

As we’ve seen in the previous section, Average Cost of Sale (ACoS) – or the total cost of advertising divided by the number of sales generated – is going to be your most important key performance indicator (KPI).

However, Amazon PPC has a new performance dashboard with a host of metrics to help you better understand how your advertising efforts are doing so you can pull different levers to adjust the performance of your campaigns (i.e. bids and pricing).

Via Sellics.com

Some of the metrics the new Amazon performance dashboard gives you visibility on – in addition to Advertising Cost of Sales – are clicks, impressions, spend, sales, orders, click-through-rate (CTR), and cost-per-click (CPC).

You might be thinking, ‘Well, as long as I optimize my ACoS, I’m good to go’. But, budgets aren’t unlimited, and there will be countless keywords and products that you’ll be able to bid on in order to show your product.

Having impression, click, and CTR information can help you plan and forecast your budget, or even your profitably increase, if you can maintain the ACoS.

For example, if you know the impression and CTR metrics for a specific targeting method, you can predict how much you will spend monthly and the corresponding revenue that comes with it. You can plan your Amazon marketing budget months in advance.

Instead of being surprised that your budget ran out a few days before the month is over, you can comfortably set aside a certain budget for each targeting method, knowing the return you’re going to get based on the impression and CTR data.

Finally, you can use this extra data to predict and implement price changes to become more competitive or optimize your bids. The two levers you have that work off of each other are pricing and bids. Once you gain traction with a certain product, you can increase your price and bid less, because you are confident you are getting impressions from your organic rankings and your high seller ratings.

11. Budgeting

Daily budgets are spent as quickly as possible, and your budget will not be paced throughout the day. This means that a smaller budget could be spent in a few minutes if there are a large number of shoppers interested in your advertised products. This is something to remember when deciding between targeting methods with high and low search volume.

Currently, the daily budget cap is only available for Sponsored Products.

For Headline Search Ads, you will not be able to switch between a daily budget and a lifetime budget. In order to do so, you’ll need to create a whole new campaign with different budget settings.

12. Premium Display Ads

Premium Display Ads are a bit off topic, but good to know about if you’re thinking about using Amazon’s huge following to boost your brand awareness. Premium Display Ads are basically banner ads that are displayed throughout the Amazon network of websites.

When Amazon is not serving up targeted product ads based on a user’s searches, they allow banner ads for brands that aren’t necessarily selling products on Amazon.

This is essentially Amazon making some extra cash on the side by monetizing their web traffic with Google Display/Adsense type ads.

You’ll need a premium account, and a big budget. Some companies use this space to complement products they are already selling on the platform to drive more sales. You will also see banner ads of brands that clearly don’t sell their products on Amazon and are just trying to build up brand awareness.

13. Sponsored Products Targeting In More Detail

Via PPC Hero

For most campaign types, automatic targeting on Amazon PPC is like broad match type. You cast a wider net, but at the expense of showing up on irrelevant keywords, interests, or other targeting methods. One way to approach how to choose between the targeting methods is to create two campaigns. With the automatic targeting campaign, you can set lower bids to offset the higher volume of lower quality searches where you’ll be appearing.

Manual targeting, like exact match keywords on Google Ads, means more control over what you show up for. You’ll want to bid up on these keywords, interests, etc. and then gradually lower your bids after seeing performance before choosing whether to expand or contract using bid adjustments.

14. Amazon Manual Keyword Targeting Explained

As discussed in the previous section, you’ll want to create an automated keyword targeting campaign to find new keywords that lead to purchases. Again, you’ll bid low for these keywords since you’re casting the widest net here.

You’ll then want to add these successful keywords to an ad group within the campaign. In this ad group, you’ll still be using automated targeting to match to new keywords, but the keywords used as a basis for this ad group will be more qualified. You want to bid a medium level bid for these keywords.

Finally, you’ll want an exact match only ad group that contains only the best performing keywords. You’ll bid high on these keywords to maximize times where you can show up for the most revenue producing keywords.

Sellics also advises PPC managers to add the keywords running in the Broad Ad Group as ‘phrase negatives’ to the automatic campaign, so that the automatic campaign does not duplicate the efforts of the Broad Ad Group.

Via Sellics

When doing Amazon PPC keyword research, you can do it manually, by analyzing the commercial intent of keywords, researching keywords surrounding your product, and using the broad match method defined above to slowly build up your keyword list.

Another method in finding keywords would be to find a 3rd party vendor, like Keyword Inspector, that has a proprietary tool to help you find thousands of keywords by simply typing in the ASIN. This can save the work of slowly accumulating keywords based on the keyword process described above. Again, it is all about the resources (i.e. time and money) that you have available to you.

15. Amazon PPC Campaign Structure

There is no ideal campaign structure. As Sellics says, “There will always be a trade off between a low maintenance campaign structure vs. a time-intensive ‘perfect’ campaign structure that will require you to monitor thousands of keywords per product.”

Just like in real life when you’re seeking work-life balance, in Amazon PPC management, there is a balance between squeezing out the most from your advertising dollars and doing ‘pretty good’ hitting your ROI targets – while still leaving time for other marketing and business duties.

As much as you can manage and optimize with accuracy, you’ll want to break up your campaigns by targeting method. For example, if you’re targeting by product or ASIN, you’ll want to create a separate campaign for each of these targets. If you have a lot of targets, then you’ll want to group them the best that you can while minimizing the targeting methods.

16. Amazon PPC Ad Copy And FOMO

With Product Display Ads and Sponsored Products, you won’t have much to work with in terms of testing ad copy, because these ad types depend a lot on the product attributes to highlight what is most important to a user in buy-mode.

However, with Headline Ads, you can adjust ad copy and images to see what works best to maximize the CTR of your ads. For seasonal or clearance/ sale items, you’ll want to create a sense of urgency around your products. In today’s world of social media attention-grabbing, its more difficult than ever to gain someone’s attention.

Despite the difficulty, users can’t resist not missing out. In fact, they fear missing out on anything awesome. As an advertiser – or if you’re using an advertising agency to help with your PPC efforts – you can use this to your advantage by creating ad copy that capitalizes on this fear. Make your product seem irresistible and necessary right now.

17. Use High Quality Images

This point doesn’t need much explanation, but is crucial for Ecommerce.

Online retailers are at a disadvantage to brick and mortar stores because customers can’t touch and feel the product they are about to buy. High quality images are the great equalizer in this regard. Don’t neglect high quality images of your product. The more detail, the better. Make sure users can zoom in and see products clearly. This builds confidence in what they’re buying.

18. A Word On The Amazon Buy Box

82% of Amazon’s sales go through the Buy Box, and the percentage is even higher for mobile purchases. What is the Buy Box? Basically, Amazon has an algorithm that determines the best product to show for different categories, and products on the right side below it.

You need Buy Box eligibility to advertise on Amazon anyway, so it is important to know what makes you Buy Box eligible and work on it to improve your organic standing with Amazon. It is most similar to Google’s Quality Score.

Via Sellbrite

Either way, Amazon wants a purchase to be made, and they’ll organically show products on the right side below the ‘buy now’ option for products they think can earn a purchase alongside the product that is appearing.

Amazon’s algorithm pits competitors against each other – and tests them against each other – for relevant product variables and attributes that they share.

You have to balance your price with your seller metrics. People with high seller metrics can increase their prices and still ‘win’ the buy box, you just have to price accordingly.

This is prime Amazon real estate, and the algorithm takes into account delivery/fulfillment settings, availability, seller rating, and price. Seller ratings are huge, and since they are similar to testimonials on a landing page, you will need to seek these out like crazy. Do whatever you can to get high seller ratings.

You also have to rank high in customer support metrics.

19. Test Ads, Copy, And Landing Pages For Incremental Improvement

Testing is a staple of PPC ads and the key to consistently making incremental improvements to revenue and profit.

One of the benefits of Headline Search Ads is that you can customize the ad creative. Take advantage of this and invest time in testing the different components.

Test out different ad headlines and images to see which ones lead to a greater CTR to maximize the clicks for each of your targeting methods.

Test different products mixes, and even the order of products, on your custom landing pages to see which combination maximizes your revenue.

Every combination of products you use will give a different return. Correspond these different landing page experiences with different ad copy as well.

It is crucial to understand that the words you use in the ad copy need to match up with words that users see when they arrive at your landing page. This symmetry of online marketing is crucial to converting users.

Here are a few other best practices to follow when testing:

• You’ll only want to change one variable at a time. If you change more than one variable, you won’t know which variable caused the change in performance.
• Run the test for at least 2 weeks. There are many arbitrary rules for what meets statistically significant data. You’ll want to make sure you have enough data to make a good decision, while not wasting too much time trying to impress a panel at your digital marketing dissertation. Use your best judgement.
• Identify winning criteria based on your business goal, adapt your new campaign, and continue testing. When you are on a roll in terms of testing new copy, landing pages, bids, and pricing, then you’ll have reached expert level mastery of PPC.

However, don’t ever get complacent, as PPC can be a bit like chess or poker in that it can take a short time to learn but a lifetime to master.

20. Display Retargeting & Video Ads in Search Beta To Increase Brand Visibility

Retargeting is a staple of PPC strategy, and Amazon is currently testing a beta version of a retargeting program where product ads can appear on and off Amazon on third party sites.

This was managed exclusively through Amazon Marketing Group, though now all advertising is managed under a single entity called: Amazon Advertising

The manual control version of this hasn’t even been released in beta, yet, so this option gives a lot of control over to Amazon to show your products where they think you will get the best chance of a purchase, based on a variety of factors.

With both Google and Facebook seeing a lot of success with Dynamic Product Retargeting on their platforms, it makes sense for Amazon to compete in this field – especially since they have so much customer data for users at the bottom of the funnel.

Another new Amazon ad product is Video Ads in Mobile App search results. This is great for branding but also click through rate to your product (since it’s in actual search results) as well as conversion rate since videos are, well, helpful.

A Final Word on Amazon PPC

As you can see, if you’re selling products Ecommerce style, it is a no-brainer to sell on Amazon. Their platform is built for Ecommerce products, and once you have your seller account setup, if you have a viable and competitive product, the campaign set up is fairly quick and straightforward.

At the very least, you want to be showing up for competitor and similar products with the Product Display Ads, and these are the easiest campaigns to set up. There is no keyword research involved, and you get a chance to appear right beside your competitors.

Don’t let your competitors get off easy with some competition. Make them feel you with your Amazon ads and take the money that’s rightfully yours!