An Amazon pay-per-click (PPC) marketing campaign is an easy, cost-effective way to increase visibility, sell through inventory, and boost your organic rankings.
But how do you run a successful PPC campaign that shows a strong return on investment?
How a PPC campaign works
How does a pay-per-click campaign work?
Someone searches for a desired product on Amazon. The search pops up with organic results as well as “paid” results. Sometimes these sponsored posts are at the top, bottom, side, or mixed in with the organic postings.
Those “paid” or “sponsored” search results are pay-per-click ads. A seller runs an Amazon PPC campaign to get their posts sponsored under certain keywords.
With a PPC campaign, you pay for the number of clicks you receive. This means that you have a greater chance of return on your marketing investment. If people are clicking on your advertisement, they’re already interested in what you have to sell. Then it’s your listing’s job to convert those clicks into sales.
In an ideal situation, you would want a 1-1-1 ratio of impressions to clicks to sales. You don’t pay per impression, but you would ideally want each impression to equate to a click. You then want that click to convert to a sale.
If you have a high impression rate but low click rate, you’re likely not attracting people to click on your listing. This doesn’t technically cost you any marketing money, but it’s a waste of resources and energy. You want to make sure that your front-facing listing—especially the headline, main photo, and produce price—are attractive and click-worthy.
If you have a high click rate and low sales, your listing isn’t converting. This is costing you marketing money since you pay based on clicks, not sales. Thus, you want to make sure your product listings are completely optimized for a high sell-through.
How can you create a successful PPC campaign with high returns?
1. Optimize your listing.
Before you can run a successful PPC campaign, you need to start with a high-quality Amazon listing. If your listing isn’t optimized, you’ll be throwing money at a campaign without a return. An optimized listing is necessary to attract clicks and convert sales. Without a strong listing, you’ll likely have to pay for clicks without making any return on sales.
Listing optimization is the basis for attracting customers and sales.
Learn how to optimize your product listings for 2018 here. And learn how to not optimize your product listings here.
2. Know your marketing spend.
Too often, sellers start a marketing campaign haphazardly without a goal or target in mind. In order to see an appropriate return, it’s critical that you understand how much you’re willing to spend on your ads and what you hope to get from that budget.
One of the advantages of PPC is that you can set a spend budget. This means the campaign will run as long and as aggressively as you determine based on your budget.
When determining your budget, it’s important to consider how your marketing will impact your product margins. How much are you willing to spend per unit on marketing?
Remember that slow-moving inventory cuts into your margins with warehousing fees. “Margins” are never stagnant.
3. Determine your target ACoS.
What is your target advertising cost of sales (ACoS)? ACoS is the percent of attributed sales spent on advertising. You can get this number by dividing the total ad spend by the amount of attributed sales. The attributed sales are those sales that come directly from the ad.
For example, you spent $5 on advertising. You receive $20 in sales directly from that advertising. Your ACoS is 25% If you spent $7 on advertising and received $20 in attributed sales, your ACoS would be 35%.
Your desired ACoS will depend on your target goals. If you are launching a new product, ACoS might be a breakeven point. This means the ACoS percentage will equal your margin.
For example, you sell a product that has a margin of $5 (you make it for $5 and sell it for $10). Your margin is 50% of your revenue. If you spend $5 on advertising and receive $10 in sales, your ACoS is 50%. The margin and ACoS percentage are equal, which means you’re breaking even without making any profit.
A strong target ACoS is 20%, which shows a balance of sales and profitability. This is a strong target for trending products that have a proven track record in the past weeks.
4. Select the right keywords.
With PPC ads, you have to “bid” on keywords. The goal here is twofold:
- Find profitable keywords
- Increase the bids for high converting keywords
We recommend starting with an automatic campaign to help choose the right keywords. Amazon will run this campaign for you, picking appropriate keywords based on the Amazon algorithm.
Every week (or even every day), you should be looking at the keywords for which Amazon is showing your listing.
Look at the keyword list. This will show you which keywords are most searched and which most convert to sales—and at what ACoS. This shows you how many people are searching that keyword and purchasing from you.
You can also filter keywords by spend to see where you are spending the most money. If the high-spend keywords aren’t the same as the high-conversion keywords, you might want to consider turning the high-spend ones into negative keywords.
This will help you understand which keywords are working for your listing. From there, you can run a manual campaign where you select which keywords you do and don’t want to bid for.
Remember, you have to optimize your keyword bids as well. You can specify the maximum amount you’ll spend on a specific keyword when your ad is clicked on. If your competition for that keyword is strong, you may need to raise your bid (which cuts into your margins). If you can’t afford to raise your bid, consider optimizing for long-tail keywords and less competitive keywords.
5. Select the right negative keywords.
Now that you’re optimizing for high-conversion keywords, it’s time to remove non-converting keywords that are wasting money. You can put these in “negative keywords” and Amazon will make sure your ad does not appear in these searches. This will narrow the search funnel to ensure your ad is shown only with relevant searches.
For example, you sell a luxury product. You can put “cheap” or “inexpensive” as a negative keyword. Amazon will block your ad from appearing in searches with “cheap,” which could otherwise cause in an irrelevant click (that you have to pay for).
Learn more about negative keywords from our partner Seller’s Choice: Everything You Need To Know About Negative Keywords On Amazon
6. Monitor your daily budget.
With a PPC campaign, you set a daily budget. But if that budget is on the lower side, you might run through your entire budget during the day. Most Amazon customers shop at night, so if you’ve already spent your daily budget, you’re missing a strong opportunity to reach a higher number of eyes.
There are two ways to control this. First, you can set a higher daily budget for a shorter period of time. This is a strong opportunity for “flash” campaigns with advanced sellers. The other option is to set a $0 daily budget in the morning, and then log on mid-day to set your daily budget. This will target afternoon and evening shoppers.
7. Choose the right opportunity to run a PPC campaign.
We often get asked when it’s the right time to run a PPC marketing campaign on Amazon. You can run a paid campaign whenever you want, but some opportunities will push your business further and faster than others.
When you’re launching a new product, a PPC campaign is a great way to get a high sell-through, improved best seller rank, and boost in reviews. Don’t run a PPC campaign immediately when launching, though. You should have a few sales and reviews under your belt to make the listing look more attractive to potential customers.
Remember, even though you’re sponsoring a post that pushes you to the top of search results, your customers won’t be interested in your listing if price, reviews, and listing aren’t optimized.
You can also run a PPC campaign for products that currently have a low sell-through but high potential. You don’t necessarily want to waste money on marketing a slow-moving item if it’s not moving because no one wants it. But if you have a slow-moving item because the competition is high, you don’t have enough reviews, or you’re a high niche product, a PPC campaign is a great way to gain visibility.
The Bottom Line
An Amazon PPC campaign is a strong opportunity to improve visibility and sell-through inventory. With an optimized listing, monitored keyword bids, and a controlled marketing budget, you can ensure your PPC campaign shows a strong return on investment.
Are you interested in optimizing and marketing your product? Do you want to grow your sales exponentially in the next six months?