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Amazon has a cost-per-click (CPC) advertising feature that allows sellers, vendors, agencies, book vendors, and Kindle Direct Publishing (KDP) authors to advertise individual product listings through keyword bidding. This feature is called Sponsored Products, but it’s also popularly known as Amazon PPC. Amazon PPC keyword optimization is what helps sellers to rank higher on Amazon search results pages and gain more sales.
What are the Benefits of Using Amazon PPC?
If you want to maximize the visibility and sales of the products you offer in Amazon, using Amazon’s PPC can help you achieve your goals. Here are some of the benefits of using Amazon PPC:
- It helps you gain higher product rankings.
- It helps widen your reach and attract actual buyers.
- You’ll only pay for the ads when shoppers click on them.
- It has a feature that allows you to easily measure your goals and success.
- You have the option to have full control over the ads.
Why Should You Invest in Amazon PPC Optimization?
While the use of PPC may be easy and convenient, finding the right keywords and formulating the best strategy can be challenging. Of course, you would want to get your money’s worth in your ad campaign, and you can achieve this by using the right structure for your Amazon PPC campaign, proper Amazon PPC keyword optimization, and strategic bidding.
There are a few things to consider in PPC optimization. One of them is bulk optimization which allows strategies to be performed across multiple campaigns and ads all at the same time. You can combine campaigns, adjust filter settings, and find keywords that are working and not working.
For manual campaigns, raising or lowering bids for keywords can be aligned with a strategy to determine which can be best used on phrase/exact match campaigns. There’s also a feature for negative keywords which allows you to eliminate keywords associated with the product that does not convert to sales.
How Does Bidding Work in Amazon?
The PPC model allows you to win ad placements on product listings and search results. Amazon PPC involves bidding on keywords relevant to your products to win those placements.
Also, there are settings available that can help you determine the results of your sponsored products. If you are competing against a competitive product the key differentiation for sponsored placements is the keyword bids. A competitive product is a product around the same price, features, and number of reviews as yours. If everything is equal, the one with the highest keyword bid will win the Amazon advertising bid auction.
You have different strategies to choose from when creating and bidding on sponsored products. It can either be a dynamic or a fixed bid based on Amazon’s algorithm. For dynamic bids (down only), Amazon lowers your bids when your ad does not convert into sales. Meanwhile, for dynamic bids (up and down), Amazon can raise up your bids when it is most likely to generate sales and lowers it down when it doesn’t. For fixed bids, you have full control over raising or lowering your bids on your campaigns.
Choosing the right setting can also help optimize your Amazon PPC campaign.
How Can You Adjust your Bid for Optimization?
One of the best ways to avoid overbidding and underbidding is to optimize your Amazon PPC bid. You can do that by following this formula:
New Bid = (Average Order Value (AOV) x Conversion Rate) ÷ 1/Target ACoS
Or simply: New Bid = (Average Order Value (AOV) x Conversion Rate) x Target ACoS
New Bid = ($19 x .10) x 0.3 = $0.57
Note: To understand this illustration better, we have provided a terminology section below. This is where we defined the jargons we used in this article.
- Average Order Value (AOV) – this tracks the average dollar amount spent by a customer when they place an order on a website. It can be computed by dividing the company’s total revenue by the number of orders.
- Average Revenue Per Click – this measures the average amount of revenue recorded by each sales activity for each click from a possible buyer. It can be computed by dividing the company’s total revenue by the number of clicks.
- Conversion Rate – this is the percentage of visitors in a website that completes a desired goal out of the total number of visitors. Getting high conversion rates is one of the ultimate indicators that you’ve reached your advertising goals.
- Cost-Per-Click (CPC) – this refers to the actual price that you pay per click in your PPC campaign. A click represents a visit or an interaction with the sponsored ad which means that a potential buyer has given attention or is searching for the product that you are offering. It can be calculated by dividing the competitor ad rank by your quality score plus $.01.
- Revenue Per Conversion – this helps you understand where you get the highest revenue from the pool of conversions – either by product, campaign, keyword etc. You can compute it by dividing the company’s revenue by conversions.
- Target Advertising Cost of Sales (ACoS) – ACoS is used to measure the performance of a PPC campaign. It can be calculated by dividing your ad spend by the sales.
Other Amazon PPC Tips for Optimization
Here are other Amazon PPC keyword optimization tips to consider when optimizing your ad campaign:
1. Consider the type of keyword matches
This helps potential buyers search for relevant sponsored products. For manual campaigns, it can be classified into broad, phrase, and exact matches. Broad match types contain all components of keywords in any order. Phrase match types contain all components of keywords in the same order. Exact match types contain word-for-word keywords.
There’s also a negative keyword setting that can help you eliminate targeted searches not related to the product you are selling and words that are not converting into actual sales.
2. Set your goals.
One of the best ways to measure whether your campaign has been successful is by setting your goals right off the bat. For PPC campaigns, goals can be measured by calculating ACoS. Or by determining if the sales or impressions are maximized, and by evaluating if the target profit margin was achieved.
3. Keep an eye on your budget.
For proper budgeting, first, you must compute for the break-even ACoS before setting your ad spend. This way, you’ll be able to determine the maximum amount that you can spend on your PPC campaigns to reach break-even. Next, if you want a profitable campaign, you can compute your target ACoS. Do this by determining your profit margin and the break-even ACoS. It is good to note that your hall not spend your target ACoS to assure a profit.
We hope this article has given you more insights about Amazon PPC optimization for sponsored products. In case you need more assistance in setting up your ad campaigns and navigating Amazon PPC… We offer an easy-to-use Amazon PPC software that helps you rank higher on Amazon’s search results pages. This way you can easily achieve your sales goals.
If you have questions or insights to share, please feel free to post them via the comments section. Please also consider joining our Facebook Group where we discuss any questions you may have about running an Amazon business.
We are SellerMetrics, our Amazon PPC Software helps Amazon sellers, brands, KDP Authors and agencies navigate Amazon Advertising PPC via bid automation, bulk manual bid changes, and analytics.