Table of content:
- Intro to the Amazon PPC Checklist
- Before you get started with PPC
- Understanding Amazon PPC
– Why use PPC?
– Sponsored products VS brands VS display
– Keywords & Targeting - Launching your campaigns
– Campaign structure
– Campaign setup: best practices
– Bidding and budgets - Campaign optimization
– Why do you need constant optimization
– Optimization goals & strategies - Understanding your results
– ACoS, break-even ACoS and pre-ad profit
– Understanding and improving your CTR
– ‘Average metrics’ to orient yourself
– Sponsoreds Analytics - Conclusion
1. Intro to the Amazon PPC Checklist
E-commerce has been booming over the last decade with the advent of new technologies and the lasting impact of crises such as the COVID-19 pandemic. Today it is a waste not to tap into such a prominent source of revenue and customers.
In 2022, the largest E-commerce platform is Amazon. Creating and advancing your brand on Amazon will be a long and challenging journey. To help you succeed, we have created this comprehensive Amazon PPC checklist to guide you through the major aspects of Amazon advertising, which constitutes the primary way of advancing your brand on Amazon.
2. Before you get started with Amazon PPC
As the playground on Amazon becomes ever more competitive and the strategies utilized – ever more complicated, you need to prepare your listing properly way before even contemplating the launch of a PPC campaign. Like any profit-driven organization, Amazon seeks to promote its most valuable sellers. As a result, you would NOT want your brand to seem lackluster and subsequently waste your money on suboptimal campaigns which will make or break your business on Amazon. Thus, before diving deep into our Amazon PPC checklist, let’s make sure you have everything needed for successful advertising beforehand.
Here are some tips on preparing your listing for the future launch of your Amazon PPC campaign:
– Visuals. Show your product most appealingly. For example, use infographics and HD pictures of your products; consider uploading a video describing the primary attributes thereof or utilize other forms of A+ content to further enhance the buyer’s experience with your listings.
– Description. Firstly, make the title as relevant as possible and include all the necessary info about your product. Then, make the description itself easily readable. Emphasize the main points using bold or italics fonts, but don’t overload the text with unnecessary information.
– Reviews and score. Analyze reviews your receive carefully and diligently. Consider launching a PPC campaign only after you get around 15-20 of them. We also recommend starting a campaign only if your particular listing has a rating of 3.9 or higher. This is a psychological breakpoint after which the buyers are more likely to trust the contents of ads shown to them.
After achieving the above, you may consider yourself ready to launch your first PPC campaign on Amazon.
If you need a helping hand in creating high-quality A+ content, you can request a consultation from our Amazon experts here.
3. Understanding Amazon PPC
Why use PPC?
There are two main ways of acquiring customers on Amazon: organically or via PPC advertising. PPC is a vital instrument here since it is an investment in the future of your business. Not only does it redistribute the buyers towards your listing, providing a short-term boost to your sales, but if done correctly, it will both form brand loyalty in your customers and influence Amazon’s algorithms in a way that boosts your organic sales and allows you to overtake an even larger share of your competitors’ customer base. These are the major reasons why you should use Amazon PPC.
Sponsored products VS brands VS display
There are three types of Amazon PPC campaigns you can choose from: Sponsored Product, Sponsored Brand and Sponsored Display. Let us shed some light on the difference between them and recommend the most suitable cases where you can use them.
Sponsored Products is the first ad type you will encounter. It is an ad that actively promotes products to Amazon visitors searching with related keywords or viewing similar products. This type can be used by literally everyone and, hence, is the most frequently used while also providing the best ROI out of all of the types.
Sponsored Brands is an ad type that highlights the brand logo, the custom headline, and up to three products of a single brand. By clicking on a brand logo on the advertisement, shoppers come to a store or on the advertiser’s landing page. When shoppers click on a product – they get to the product detail page again.
There is also an option to feature a single product ad with a video, as well as the product image and title. When Amazon visitors click on a video, they go to the product detail page.
Unlike the previous type, Sponsored Brands is only accessible to Professional Sellers on Amazon’s Brand Registry or Retail Vendors.
The primary advantage of Sponsored Brands type is the ability to develop brand awareness. It is a perfect campaign to attract new customers and spread the word about your business. Also, it is the only ad type that allows for video ads on Amazon.
Sponsored Display is an ad type with product and category targeting that allows sellers to show the display to customers who have already seen similar products or the one that was advertised. Similar to Sponsored Brands, only registered sellers can use this type. But, unlike the previous two types, Sponsored Display only has one targeting type: Product Targeting (which means you can only target competitors’ ASINs).
This type is primarily used to drive buyers away from competitors’ listings but can as well play a role in a defense strategy, shielding your listings from competitors’ ads.
As Sponsored Products is the only ad type a newcomer on Amazon may start with, and the stakes are high at this stage, it is advisable that you use third-party PPC managing tools, such as Zero To Hero, to avoid making costly mistakes. Such tools are usually well tailored toward newer users and will greatly simplify the process of launching an effective Sponsored Product campaign, with the other two types also being available for launch and optimization.
Keywords & Targeting
Another important part of Amazon PPC advertising is targetings. Those can be classified into two pairs. Targetings can be manual or automatic, keyword or product. Let’s analyze the above targetings one by one.
Manual targeting. Manual targeting lets you choose your own keywords (and/or Amazon’s suggested keywords), ASINs, or categories to target. For the purposes of this article, category means groups of ASINs organized by similarities.
Automatic targeting. Automatic targeting settings are configured to allow Amazon to match your ads with keywords and products similar to the product in your advert. Keyword and product matches are based on shopping searches related to your product information.
Keyword targeting. As you can see from the name, this type targets an audience based on the keywords chosen. Keywords in Amazon PPC are akin to a bridge between search terms and search engines, allowing the latter to recognize which search terms you wish to target. You can use this targeting type in Sponsored Products(SP) and Sponsored Brands(SB) campaigns.
Product targeting. As opposed to the previous targeting type, product targeting means reaching an audience not via keywords but via competitors’ ASINs. This helps shoppers find your product when searching for products on Amazon or browsing detail pages and categories.
Targeting by ASIN shows your adverts to people browsing certain ASINs on Amazon. This type is primarily used in Sponsored Display(SD) campaigns.
Targeting by category shows your adverts to people browsing within product categories, with options to refine for price, brand and star ratings.
The Zero to Hero tool, for example, uses a unique and advanced campaign structure technique, which makes all the above work seamlessly and in your favor. It also uses keyword clustering (i.e., the grouping of keywords with similar characteristics so that they can be turned on or off as the case may be), to further optimize the possible benefits you can gain from PPC campaigns.
4. Launching your campaigns
Campaign structure
Now that you’re done with all the preparations, let’s continue with our Amazon PPC checklist. The first step to success when launching a PPC campaign on Amazon is to structure it properly. At Sponsoreds we have developed a unique and thoughtful campaign structure consisting of four parts: Control Part, Growth Part, Negative Part, and PAT Part.
Control Part constitutes campaigns driving up to 70% of your traffic. These campaigns use only the Exact Match targeting type, which gives the seller more control over the day-to-day operations of the campaigns. This Part is also easy to optimize since shutting down relatively irrelevant keywords will bring you the expected results due to the use of the Exact Match type.
Growth Part concentrates on utilizing the Automatic Campaigns to search for new keywords to be used in your campaigns. The keywords used in other parts will be put into the Negative Match type to avoid competition.
Negative Part aims at drastically increasing the CVR of your campaigns and saving your money by determining the keywords inherently irrelevant to your products and putting them into the Negative Match type.
PAT Part targets your competitors’ ASINs and categories to redirect traffic to your listings. This part also uses Category Targeting with Automatic Campaigns, similarly to the Growth part: the campaign searches for new ASINs to be used in the PAT Part.
Keyword clustering is also used on a case-by-case basis to facilitate the optimization of keywords with similar characteristics.
Amazon PPC campaign setup: best practices
Sellers have been conducting their businesses on Amazon for quite some time now, thus there are many different ways to approach Amazon advertising. In this Amazon PPC checklist we’d like to share some of the best-performing ones, that our team defined after many years of working with Amazon:
– The use of Automatic Campaigns for keyword research. In Automatic Campaigns, Amazon’s algorithms often find high-converting keywords. These keywords should be moved to your manual campaigns for further optimization. This will allow you to maximize ROI, however, be careful since an Auto campaign, while great or harvesting keywords, might result in higher Ad Spend due to a possibly high number of irrelevant keywords.
– Identify and Bid on Long-tail Keywords. Such keywords will enable you to target specific buyers who have already made up their minds as to what to purchase. In this manner, you attract more relevant traffic to your listings.
– Negative Targeting. This option allows you to shut down irrelevant keywords, thus, decreasing your ACoS and improving organic sales in the future.
– Use Automation tools. Amazon PPC optimization is a tedious and data-intensive process. However, many parts of the process are monotonous and can easily be automated. This will help you scale your business and save valuable time. Automation also eliminates the possibility of human error.
– Target your competitors’ ASINs. This practice is as old as Amazon. Its primary objective is to redirect the flow of customers from your competitors’ listings to yours through PPC campaigns, usually the Sponsored Display type.
– Bid on your brand keywords. This is mostly a defense strategy. If you show your ads on your listings, there will be no competitors’ ads; hence, no redirection of customer traffic from your listings.
– Group product variations. You need to be careful about ad cannibalization if a product has multiple variations. You can avoid this by packaging and selling them under a unique ASIN. This will make it easier to advertise your products and will help you save money and ensure that the products do not compete with each other for an advertising spot.
– Use dayparting. PPC ads on Amazon tend to perform differently at different times. As such, it might be more effective to shut down some campaigns when they’re at their weakest. Dayparting enables you to schedule the time when particular campaigns are running to achieve maximum results.
Of course, our Zero to Hero tool utilized all of the above techniques and more. It is also easy to use and can help you outrun your competitors due to its unique campaign structure described above and thoughtfully created AI used within the tool.
Bidding and budgets
Defining bids and budgets is yet another crucial part of launching a PPC campaign, and therefore, this Amazon PPC checklist. The general principle for calculating bids for certain keywords can be summarized in two words: risk evaluation. If keywords draw relevant traffic, the bid should be higher; if there is a risk of getting irrelevant traffic, the bid should be lower. For budgets, we recommend following the four strategies presented below.
– “Simple” strategy – suitable for beginners who have a new product with some sales history and 20-100 reviews on the listing. The budget here is not too high, and bids are kept minimal. However, please be aware that such a strategy, while simple and relatively safe to implement, might not be the best choice if you’re looking to grow your business efficiently. Depending on the product you sell, we recommend researching the average bid for your niche and setting your bids slightly lower than that.
– “Revenue growth” strategy – requires a good quality listing, with a number of reviews ranging from 100 to 500. The budget can be around 50% higher than what you defined for your first advertising campaigns, but this time we suggest you set your bid closer to the average value for your niche. The goal here is to get a better position with minimal risk.
– “Max Traffic” strategy – the aim is to get maximum traffic. Amazon noted good RPP and doesn’t limit the traffic now. Work with placements. Use a high budget and bids for placements, but make sure to keep an eye on the results, so you can make adjustments right away when they might be needed.
– “Profitable PPC” strategy – you should use it when:
- there’s low inventory,
- there’s a need to sell all stock forever,
- you already have top positions, and there’s no need to spend a lot on advertising.
If your listing is on top of PPC and organic positions at once, you can encounter a problem when the listing gets more organic traffic than a paid one. So, there’s no point in spending on traffic that’s already yours. Facing this situation, we recommend pulling down the ads on the page. Then, with the help of some CPC ads, you can drive traffic to the middle or bottom of the page and close those extra sales.
If you wish to delve deeper into the issue of budgeting campaigns, you should check out our article covering this exact topic.
5. Campaign optimization
Why you need constant optimization
The environment on Amazon is constantly changing. With the high competition levels of the last several years, it is now unacceptable for you to just launch a PPC campaign and forget about it. Amazon constantly monitors your CVR and drives organic traffic to your listing accordingly. Since PPC greatly influences said CVR, it is vital that your campaigns don’t fail spectacularly. As mentioned before, that can make or break your listing, especially if it is a new product or you are a new seller. Thus, we at Sponsoreds recommend that you use optimization tools to facilitate day-to-day PPC management.
Optimization goals & strategies
The strategies used may vary drastically depending on the goals set for a particular campaign. To this end, we at Sponsoreds have designed eight strategies for optimizing a PPC campaign with respect to different variables while using the PPC Automation tool.
– ACOS Targeting. This strategy is straightforward and designed for sellers who know what ACOS they are targeting. Then, the tool will adjust the campaigns, bids, and budgets the way we can get to the desired ACOS and stay with it for a long time.
– Overall Profit Growth. This strategy is designed to affect organic sales with Amazon Advertising. The tool maximizes ads and thus total sales with the help of every Ad Tool available on Amazon (SP/SD/SB) to get as much organic ranking as possible. It usually takes 30-40 days to see the result. We try to keep ACoS as low as possible, ensuring that it doesn’t prevent us from hitting the target. At the same time, within the framework of this strategy, we try not to go beyond the break-even ACoS.
– PPC Profit Growth. Once we see that 70% of keywords are ranking at the Top of Search, or we are a Best Seller, and far beyond the nearest competitor, you are welcome to choose the ‘PPC Profit Growth’ strategy. We move the traffic from the Top of Search placement to the Rest of Search and Product Pages to prevent cannibalization of organic sales. This strategy is about keeping ACOS as low as possible but ensuring we get sufficient sales to sustain the result.
– Product Launch. This strategy starts with deep keyword research to prevent money and time losses by harvesting these keywords from Automatic campaigns. We begin with Sponsored Products and Sponsored Display campaigns, starting with low-frequency keywords and the Rest of Search / Product Pages placements. Sponsored Display campaigns with coupon codes significantly impact sales at this stage (5-15%), so we highly recommend you support this strategy with a coupon code. We suggest at least 150 reviews to start running advertising in such a manner.
– New Keywords Ranking. This strategy aims at gaining more market share. We have three campaigns that are designed specifically for harvesting new keywords. Auto CTA, Auto Negative, and Broad Negative campaigns are like a “black box”. We’re aggressively pushing these campaigns to gain ranking juice using Top of Search placement.
– Low Inventory HPLS. When the product is in the risk zone of stock out, we move to a very profitable strategy. We significantly decrease bids for all keywords and Product Targetings. We turn off high-frequency keywords and let only the most profitable keywords run.
– Get the Best Seller Tag. To get the Best Seller Tag for your product, we move all the traffic to the Top of Search placement for all campaign types (SP/SD/SB). If it doesn’t help, we start to get more traffic from the product page/rest of search placements. Also, to help you get BST, we utilize the “Brand Attack” campaign to steal the sales from all competitor products and “Brand Defense” to protect your own brand. Finally, if we see that one of your products has a chance to become a Best Seller, we will let you know what needs to be done to accomplish that.
– Defend Best Seller Tag. This aggressive strategy utilizes special PAT campaigns in all available types (SP/SD/SB) to protect your Best Seller positions. We achieve this by showing all possible ads on your competitor’s listings (thus, occupying them). We start this when we notice that the gap in BSR between you and your competitor drops to 150-200 points only. Also, we will turn on a unique campaign for top-performing keywords.
6. Understanding your results
The last, but not least part of our Amazon PPC checklist is related to analytics. Sellers need to go through vast data and metrics to estimate the success of their venture. However, there is a substantial number of Amazon PPC metrics to choose from. We’d like to present the most important of them and shed some light on how to use them optimally.
ACoS, break-even ACoS and pre-ad profit
The second only to CVR in the importance department metric for Amazon PPC is ACoS. In short, it is the sum of money you spend on advertising per dollar of revenue you make. It allows you to track the costs of your campaigns and then estimate how much profit you will be able to make. Generally, you should aim for lower ACoS unless pursuing a specific strategy with high ACoS.
You can also use ACoS to calculate your profit margin or break-even ACoS. To calculate profit margin, you need three data points:
- Revenue — the income from selling your products.
- Cost of goods sold (COGS) — the amount of money it takes to source or produce your products. That includes manufacturing costs, taxes, fulfillment costs, and storage costs.
- Gross Profit — means your COGS minus your revenue.
Divide “Gross profit” by “Revenue,” and you get your profit margin. As a rule, your ACoS should be below the break-even point.
The third metric in this category is the pre-ad profit. This is basically the profit you receive organically, without the interference of the ad sales. It is important that the pre-ad profit is sufficient for your business to both turn profitable and sustain growth through PPC.
Understanding and improving your CTR
The сlick-through rate(CTR) is the ratio between the number of people who clicked the ad and the number of people who saw it. Your advertising campaigns will show different CTR, and you should use it to evaluate whether your campaigns are a success or a failure.
Higher CTR means more interest in your ad, thus, increasing the chances of increasing your product’s sales.
Lower CTR indicates that your product can’t withstand the competition very well or that you offer your product to the wrong customer.
There are numerous factors attributing to the changes in your listings’ CTR. Some of them, such as visuals or the number of reviews, have already been mentioned earlier in the text. The others include the price of your product (the lower the price, the higher the CTR), being an FBA seller or having any Amazon batches, such as Best Seller.
‘Average metrics’ to orient yourself
First and foremost, we should clarify that there are no universally accepted benchmarks for certain metrics. An optimal value highly depends on the goals you are trying to achieve. However, there can be some agreed-upon statistical average for the metrics discussed to orient yourself.
For ACoS, it’s the combination of the highest sales and lowest ACoS possible. For break-even ACoS this is whatever number is higher than your current ACoS. For CTR, this will be anything higher than the 0.5% mark. Your CVR should be more than 5% to get into the top 25% of listings, with the average CVR being 2.38%.
If you want to discover something new, we have written an article delving deeper into this particular topic.
Sponsoreds Analytics
Nowadays, luckily, people don’t have to analyze everything on their own. Countless software has been developed over the last few years to help you with this time-consuming endeavor. One of those is the Sponsoreds Analytics tool.
Its main purpose is to compile an in-depth report on the performance of your PPC campaigns, including the use of different metrics (e.g., CTR, ACoS, ROAS, Ad Net Profit, etc.) so that you can make informed decisions as to the future of your Amazon venture. Moreover, the tool can differentiate between ad performance and organic sales, allowing you to analyze sales based on their source.
You can play around with Sponsoreds’ Analytics for free with the 14-day trial!
7. Conclusion
Starting a PPC campaign on Amazon is a complex process. You need to account for different factors before even starting a campaign while feeling extra nervous since a poor-performing campaign can ruin your listings’ “reputation” with Amazon, resulting in subpar organic sales growth. Therefore, many sellers resort to using third-party software to advance their businesses. We reckon you should do the same, and you can do so by using a free PPC Audit tool to get acquainted with our products!
