Amazon PPC Made Simple: A Step-by-Step Guide for 2024

The Comprehensive Guide to Amazon Ads. Learn how to use Amazon PPC to get more sales for your business. We cover types of ads, keyword match types, and more.

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Founder and CEO at IG PPC

· Updated on

October 15, 2023

min read

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Amazon continues to be one of the biggest players in eCommerce, with a 37.8% market share in the U.S. (and leading spots in virtually every corner of the globe.) Just think about it: that’s more than one-third of all eCommerce sales in the U.S., happening on one platform.

And yet, it’s super competitive. There are more than 75 million products in Amazon’s inventory and 6 million third-party sellers. So if you want to sell on Amazon you have to do everything in your power to leave the competition in the dust and win those first spots on the Amazon product listing page.

A solid Amazon PPC strategy can help you with that. In this article, we break down what Amazon Ads are, how they work, and how to use them to get more sales on the world’s biggest eCommerce platform.

What is Amazon PPC?

Amazon pay-per-click (PPC), also known as Amazon sponsored ads, is an auction-style paid advertising platform. It allows third-party Amazon sellers and brands to buy ads for targeted keywords and show their sponsored products as the first results in Amazon’s search, as sponsored ads.

Amazon PPC advertisers pay for clicks only, not impressions – so while your ad might show as a result in multiple instances (hundreds, maybe even thousands, depending on the popularity of the product), you will only pay for the actual clicks.

This helps you stand out from your competition while keeping costs low. It’s also especially useful for a new product launch when you have no sales or reviews history, as it can get the ball rolling for you.

Amazon PPC campaigns are useful in a variety of situations:

When you want to stand out from your competitors
When you have a new product launch when you have no sales or reviews history
When you want to boost your product’s performance and organic ranking

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How does the Amazon PPC auction work?

Amazon PPC auction works similarly to Google PPC bidding. You submit a bid on relevant keywords and then compete with other advertisers for the ad space.

Your cost per click needs to be 0.01 above your competitor's next lowest bid. So, for instance, if your bid is $1.00 and the next lowest bid is $0.75 you will pay $0.76.

When should I launch Amazon PPC ads?

It’s best to launch your Amazon PPC strategy and campaigns as soon as you create a new listing. Besides getting more exposure to your new product, launching your Amazon PPC ad campaign early will also help you collect more ad data on the product. Consequently, this will allow you to optimize your campaign accordingly.

Is Amazon PPC worth it?

In short, yes, Amazon PPC is worth it. As more consumers start their shopping directly on Amazon, more and more vendors and brands are competing for top search results on Amazon’s product listing pages. Having a good Amazon PPC strategy enables you to push your product to the top of the search, so you can get more eyeballs on your Amazon product page.

According to AdBadger, the average Amazon CPC (Cost-per-Click) is $0.89 and the average Amazon conversion rate is 9.87%. By comparison, the average conversion rate on other eCommerce platforms is 1.33%.

Of course, these are just average numbers, and they might vary from one industry to another – but they can also give you a good ballpark number on why Amazon PPC ads are worth it.

There are more than 300 million products on Amazon. Your listing, no matter how great or advantageous, can easily get lost among your competitors. A good Amazon PPC strategy can help you reach millions of potential new clients for a good price – so, yes, you should definitely consider investing in good Amazon PPC.

Why should I try Amazon PPC?

A well-built Amazon PPC strategy is a great way to get visibility for your products and stay competitive in the marketplace. It’s also a great tool to boost your product rankings, as sponsored ads tend to appear in more prominent positions on the search engine results page.

It’s also an effective way to drive traffic to your product page and increase sales. By investing in a good Amazon PPC strategy, you can tap into the huge buying potential of Amazon customers and reach out to a larger audience.

Consider this: Amazon ships approximately 1.6 million packages every day. That means it registers more than 18 orders every second and more than 66,000 orders per hour. That goes to show just what an amazing impact Amazon can have on your business.

There's even more good news. The entry fee on Amazon PPC is very low, and you can customize your campaigns as more data and sales come in, to maximize your results. You can start with as low as $5, test the waters, and then gradually increase your Amazon ad spending. Both the investment and the ease of the bidding system on Amazon PPC make it a low, minimal-risk enterprise.

Amazon is unique compared to other PPC channels in the sense that you can show your product listings to customers who are actively searching for products like yours. So, there's a direct correlation between how much money you spend on PPC and how many sales you can generate.

This isn't necessarily true on other PPC platforms. People go to socialize (or mindlessly scroll down their feeds) on social media platforms, which makes it harder for you to find an interested audience for your product.

Likewise, depending on the search intent, people aren't necessarily looking for an immediate purchase on Google. As for Display ads, they can get your potential buyer's attention, but they might still not be ready to make an actual purchase.

When people go on Amazon and search for a product, though, they are ready to buy. They are looking for the best product that meets their needs, and ads on Amazon can help you capture their attention and bring it to your product page. This makes it much easier to convert clicks into sales (and get a solid return on investment on your Amazon PPC.)

What are the Amazon Ads pricing/fees?

Amazon's digital advertising cost is set via a keyword auction so prices can fluctuate based on your industry. Depending on your product category, season, and competition you can start paying from 0.01 per ad to several dollars.

How much you spend on Amazon ads depends entirely on your budget and your campaign objectives. The more competitive the environment, the higher the Amazon CPC will be (and thus, the more you will have to pay for your ads.)

Generally, the best way to make sure you’re getting the most bang for your buck is to experiment with smaller sums of money and adjust your budget according to the results.

6 Benefits of using Amazon PPC ads

Amazon PPC can be a complete game-changer for your eCommerce business and here’s why:

It increases your product sales

Amazon ads are an effective way to reach out to potential buyers and boost your product’s visibility. By targeting the right, most relevant keywords, and optimizing your campaign settings and ad copy, you can get more impressions, clicks, and sales.

Looking for a tool to help improve your campaign performance? Check out our list of the best Amazon PPC software.

It boosts your organic rankings

The more people see your product page and buy from it, the better it will rank in the organic search results. Sponsored ads will drive more traffic to your page, allowing it to climb the rankings faster, and become more visible in Amazon’s search system.

It creates brand awareness

If you’re just launching your product or are looking to expand your brand into new markets, Amazon PPC is a great way to do that.

The Mere Exposure Effect (also known as the familiarity principle) states that people develop a preference for things merely because they are familiar with them. Amazon ads can help you reach out to more people and increase brand recognition.

It helps you avoid competitors from snatching positions

Organic rankings can be hard to achieve, but with the help of Amazon PPC, you can easily get your product in front of potential customers. This way, you can secure the top positions ahead of your competitors.

It helps you get the Amazon Buy Box

The Buy Box is one of the most important elements on Amazon, as it has a direct impact on sales. In essence, it’s a box on the right side of the product page, where customers can click to purchase your product. Securing the Buy Box helps you get more clicks and sales, as it’s the most visible area of the page.

Amazon ads can help you get there faster. It helps you gain momentum during seasonal sales. When the holiday season arrives or special events come around, you want to ensure your product stands out. Amazon PPC ads will help you do just that, by allowing more customers to find your product on the platform.

It gets you real-time feedback

With Amazon product ads, you can get valuable customer feedback and data in real-time, which will help you optimize your campaigns and fine-tune your product page.

For example, if you notice that a particular offer is shown as the first result in search, but people don't click on it, it might mean that you need to adjust your pricing or your presentation. Likewise, if people click on the ad but don't buy, it might mean there's not enough detail on your product page to convince them.

All in all, Amazon ads can be a great way to increase your sales, boost visibility and reach out to potential buyers. Whether you’re just launching your product or are looking to gain a competitive advantage, Amazon PPC can help you achieve those goals. With the right strategy and daily budget, you can get more clicks and sales in no time!

Now that you know about the benefits of Amazon Ads, let’s look at the different types you can create.

Types of Amazon Ads

There are three main types of Amazon advertising: Sponsored Products, Sponsored Brands, and Product Display Ads.

Amazon Sponsored Products

Sponsored Product ads are displayed on the top of Amazon’s search results pages. They look just like organic listings, just with a sponsored tag.

Amazon Sponsored Brands

Amazon's brand advertising option enables you to advertise your brand’s Amazon storefront or a collection of products on top of Amazon’s Search Engine Results Pages. You can do this with images or videos as you see fit (keep in mind that video ads tend to be more engaging).

Amazon PPC terms you need to know

To run Amazon ads, you should be aware that there are multiple ways to bid on an Amazon keyword. Here are some of the essential terms you need to know to make the best choice for your Amazon PPC strategy.

Broad match

Broad match is a keyword match type with the widest reach. With broad match keywords, your ads will appear when all the keywords are present, regardless of the order. So, for example, if your keyword is "Women's Shoes" your ad will show for "Flat Red Shoes Women's" searches too.

Phrase match

When you choose a phrase match for your Amazon keyword, your ad will show when your entire keyword phrase matches in the exact order in the search term (as well as when it has other words before or after it). For instance, if your keyword is "Women's Shoes", your ad will show when someone searches for "Red Women's Shoes" or "Red Women's Shoes high heels" but not "Women's Winter Shoes".

Exact match

When you choose the Amazon exact match bidding strategy for a given keyword, your ad will only show when someone searches with the exact keyword for instance if your keyword is "Women's Shoes", your ad will only show when someone searches for "Women's Shoes" and not "Red Women's Shoes".

Dynamic bidding

When setting up a sponsored products campaign you can select from different bidding strategies. "Dynamic bids - up and down" is the most popular one, where Amazon’s algorithm will raise or lower your bid based on the likelihood of the potential click converting to a sale.

That means they will increase your bids in real-time to help win impressions that may be more likely to convert to a sale or reduce your bids for impressions that are less likely to convert to a sale.

Dynamic bidding is more suitable for sellers who want to be more hands-off with their Amazon PPC strategy and don't need to have that much control over what happens with their ads.

Negative keywords

Negative keywords are keywords that will prevent your ad from appearing in the wrong searches. For example, when advertising men's shoes you would want to add the word “women” as a negative keyword to prevent your product ads from showing up when someone is searching for women’s shoes.

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Impressions

An ad impression is defined as "the number of times an ad is displayed on a screen." In other words, if your ad has, say, 1,000 impressions, then it means that Amazon showed it 1,000 times to people who fit the campaign criteria.

Clicks

“Clicks" represent the number of times someone clicks on your Amazon ad. For instance, your ad may appear to 1,000 people when they search for a product on Amazon. However, only 100 of them might actually click it, which means your click-through rate is 10%.

Amazon key performance indicators (KPIs)

Amazon key performance indicators (KPIs) are metrics used to measure the success of an Amazon advertising campaign. Keeping these in mind is important because it will help you determine if your campaigns are performing as expected and make adjustments accordingly.

Without the right KPIs, however, you are blindfolded to what works and what doesn't when it comes to your Amazon PPC campaigns - and thus risk pouring a lot of money into campaigns that don't bring the ROI home.

ACOS

The advertising cost of sales (ACOS) is one of the most important metrics used to measure your Amazon advertising campaigns. It compares the amount spent versus the amount earned, and it helps determine if your campaigns are cost-efficient.

CPC

Amazon CPC (or cost per click) is how much each click on your Amazon PPC costs. This is one of your most important metrics because you want to make sure that it stays within a reasonable daily budget. The Amazon CPC can depend on a lot of factors, including your competitors' bids and the relevant keyword you’re targeting, the negative keywords you want to exclude, as well as your industry, seasonality, and other factors.

CTR

Your click-through rate is the ratio of users that click on an add to the number of total users that see it. You can calculate your CTR by dividing your total number of impressions on an ad by the total number of clicks it gets.

For instance, your ad may appear to 1,000 people when they search for a product on Amazon. However, only 100 of them might actually click it - which means your click-through rate is 10%.

Conversion Rate

Your conversion rate is the rate of how many times your ad converts into a sale. To calculate your CVR (or CR), you have to divide the total number of clicks by the units sold. Keep in mind that while ad impressions and clicks can feel good, at the end of the day, your PPC conversion rate drives the revenue - so you want to optimize your campaign to increase it as much as possible.

Should you manage your Amazon PPC or outsource to an agency?

As you are starting out it is recommended to manage the Amazon PPC yourself to get to know the platform. However, as your campaigns become more complex and you require greater expertise it’s worth considering hiring an Amazon expert or agency.

Yes, working with an Amazon PPC agency will cost more money, but it can also yield much better results if they use the right strategies.

They will be able to create a proper Amazon PPC strategy from scratch, optimize your campaigns, run your Amazon PPC management, and make sure every cent you spend is getting you the best possible return. Plus, they will also be able to save you time, which you can use to focus on other aspects of your business.

Ultimately, it's up to you to decide if the extra cost is worth it, but if you have the budget and need to maximize the results of your Amazon PPC campaigns, outsourcing to an agency could be a great option.

Amazon PPC requirements - what you need to get started

OK, let’s say you’re keen on running your Amazon PPC strategy to see how it goes. Congrats, Amazon PPC requirements aren’t extremely complicated, so you’ll be up and running in no time. Here’s what you need to get started:

A valid Amazon Seller Central account and approved products

To run ads on Amazon, you need to have an Amazon Seller Central account and an approved product. Generally, Amazon Seller Central will approve you within 24 hours, so you won't have to wait for too long to get started.

A product description and product images

A well-crafted product description and appealing product images will help your Amazon PPC campaigns to stand out. Make sure you have a detailed, keyword-rich product description written in accordance to Amazon SEO best practices. Also, make sure your description is enticing enough to convince users to make a purchase.

As for product images, always ensure they're clear, relevant, and high-quality. A low-quality product image can deter someone from buying the product, as it doesn't inspire trust and it might make potential customers wary of buying from you.

A list of keywords you want to bid on

Next, you also need a list of keywords that you want to bid on. You can use Amazon's built-in keyword research tools to find the keywords most relevant to your product and needs. Keep in mind that you can use the same list of keywords for your Amazon SEO (organic marketing efforts.)

Takeaways

Getting started on Amazon PPC is easy - and it can be quite inexpensive too. Combined with the benefits of running Amazon advertising and the potential of driving significant revenue, Amazon PPC is an attractive option for sellers across all industries. So if you're serious about scaling your business, you should definitely try it out.

Whether you sell a unique product or you work in an Amazon reseller marketing department, Amazon PPC can help you maximize your ROI and get the most out of every single penny you put in. Keep an eye on your ad spending and how it ties to clicks and sales performance, and then adjust according to your business needs.