So You Develop a Successful Amazon PPC Strategy

1. What does Amazon PPC mean?
2. What does PPC cost?
3. What is a PPC strategy?
4. What are the advantages of an Amazon PPC strategy?
5. What Amazon PPC strategies are there?
6. How do you create your own Amazon PPC strategy?
7. Which Amazon PPC tools are recommended?

Amazon expects growth in the advertising sector by 2023 to just under 30 billion US dollars on the US marketplace alone. This would almost double the advertising revenue compared to 2020 (15.73 billion US dollars). With almost 89 percent, the sale of search and display ads on its own platform makes up the largest share. On the other hand, 11 percent fall on ads on video platforms and off-property ads offered via the Amazon Delivery Service Program (DSP). The search channel, in particular, is driving the growth of the retail media business of the prominent online marketplace.

For merchants and brand owners, the distribution channel brings many advantages, but the complexity of Amazon Advertising increases due to the multitude of advertising campaigns with different alignment forms. Sellers therefore need a clear Amazon PPC strategy to successfully advertise on Amazon. Johannes Ander explains in the guest article how you can build an Amazon PPC strategy for your business.

What does Amazon PPC mean?

Amazon PPC is Amazon's internal advertising model for search engine advertising. With Pay per Click (PPC), advertising costs are incurred by advertisers as soon as clicks are generated by customers. Amazon offers three campaign types in the Advertising Console (Sponsored Products, Sponsored Brands and Sponsored Display) that bill according to the cost-per-click model (cost per click). If you as merchants turn off the advertising campaigns completely, the costs are also eliminated. However, whether it is always smart for Amazon merchants to completely shut down search engine advertising or not even start it can be better assessed based on an analysis of your own portfolio and Amazon PPC costs.

What does PPC cost?

Every brand owner aims to place their brand on Amazon through advertising as far forward in the search as possible. However, the placement of the brand and the individual product groups depends heavily on whether Amazon considers the products relevant for the corresponding search.

In addition to search engine relevance, the assignment of items to the respective Amazon category (browse node) is important so that Amazon can play out the advertising accurately. Factors such as the product price, product availability, the Amazon title and the main image are elementary with regard to the click-through rate (CTR) and the conversion rate. Further SEO optimization options such as the bullet points, the description and the A+ content are also relevant, but not immediately visible to customers in the advertising campaign display.

In order to find out your own brand's potential for Amazon Advertising, it is advisable to analyze your own product portfolio in detail. From this, you can then derive which products are even eligible for performance marketing on Amazon and which are better suited for an organic listing - without data-driven advertising.

Basic Start with Margin Calculation and Categorization of the Portfolio

Before generating a cent of advertising costs, you should be clear which products are worth promoting at all in order to use additional ad traffic in addition to organic visibility and which SKUs have absolutely no margin to set up a sustainable Amazon PPC strategy.

It is advisable to first pass the so-called break-even ACoS. The break-even value or the profit threshold are business values that each brand owner should determine individually. The Amazon ACoS stands for "Advertising Cost of Sale" and measures the ratio between advertising costs and generated PPC sales. The advertising costs are divided by the turnover. The value from the Amazon cosmos is comparable to the CRR (cost-revenue ratio) that marketers often use in conjunction with Google AdWords or affiliate marketing.

What is a good ACoS? - Source: Adference

The higher the ACoS, the greater the proportion of the costs incurred. In addition, advertising campaigns can also be controlled according to the ROAS. The ROAS (Return on Advertising Spend) represents the ratio of the income generated by the advertising measures to the costs of an advertising campaign. In other words: the ACoS is the inverse of the ROAS. Both values are part of the Amazon own dashboard in the Amazon Advertising Console as well as recently the Amazon PPC reports.

With the help of the break-even ACoS analysis, sellers or Amazon consultants can together define target values in relation to ACoS, ROAS or for example CPO (Cost-per-Order) for your own Amazon Advertising, which reduce Amazon PPC costs or enable the most efficient campaign control possible.

Furthermore, based on the created margin analysis (e.g. target ACoS) and the expected Conversation Rate per product group, the optimum click prices for the advertising campaigns can be calculated. However, the calculation of the CPCs is much more complex and should be repeated in regular KPI analyses taking into account the product-specific Conversation Rates, campaign types and the second auction price principle.

Even if all click prices are determined, there are minimum bids that can influence the PPC strategy. In short, not every product is suitable or profitable for every advertising campaign, e.g. if Amazon sets a minimum bid of 0.15 euros for Sponsored Brands Videos (SBV). If the product does not convert, even the best bid management helps little, only the shutdown or pausing of the advertising campaign.

Sponsored Brands Video on Amazon

However, Sponsored Brands Ads have a prominent display on the search results page. For a new product, advertising formats such as Sponsored Product Ads should be used in advance to test the potential for a further branding advertising campaign using Sponsored Brands. Relevant products with sufficient conversion in SP campaigns and product reviews have the chance to achieve success even with a calculated minimum CPC - keyword: highest relevance. Approaches via initially cheaper campaign types are essential to evaluate the chances of success.

Minimum CPCs on Amazon

In addition to margin calculation, however, brand objectives, such as brand or product awareness beyond the own shop, can also play an important role in defining the later PPC strategy. A benchmark comparison of the average ACoS values by Amazon categories is interesting, but you should not use it as a basic assumption for your own Amazon PPC management.

ACoS Benchmarks, Source: Sellics

What is a PPC strategy?

In order to market the product portfolio as effectively as possible on Amazon, a structured Amazon PPC strategy is needed, which enables as efficient control as possible from the start of the advertising campaigns. It is also about differentiating from the competition and highlighting your own added value through Amazon PPC taking into account the relevance of the Amazon's A9 algorithm.

Amazon PPC Strategy Cycle

Analyze your own portfolio

A cornerstone of the PPC strategy is your own portfolio, which you should analyze and classify into individual product groups. These groups have identical margins and target values, so that despite the complexity of the PPC management, later campaigns - and conversion tracking can be optimally controlled. Whether startup, medium-sized company or major corporation, this step is essential for a sustainable allocation of the advertising budget and the success of performance marketing.

Find the right keywords

The keyword research, depending on the portfolio size, takes a bit more time. For the sake of completeness, it should be mentioned here that not only keywords play an important role in Amazon PPC campaigns, but also the ASINs or products of the competition, which are indispensable for product targeting.

Create keyword clusters for the right campaign management

Here it is especially important that you do not combine generic keywords with brand names in performance campaigns, but place them in your own individual advertising campaigns. This applies not only to foreign brand terms, but also to terms relating to your own brand. If you want to take the game to the highest level, you even group these keywords again by relevance and terms that do not match can later be set to "negative" in the PPC campaign setup for "broad" and "phrase" campaigns.

Brand owners with an extremely vertically differentiated product range, i.e. products that target other target groups within the brand, have the most efficient PPC control if the own brand keywords are played according to product group. If you offer a "cat scratching board" as well as a "hairdryer", a clear separation is recommended and not all long tail keywords of your own brand should be put into one campaign. This not only causes unwanted clicks, but also unnecessary costs.

Basic Campaign Setup: derive your own Amazon PPC strategy

The better you have done the keyword research, the easier it will be for you to group keywords and set up the PPC strategy in a structured way. Amazon-SEO -Tools now provide standard export files with keywords and potential search data that can be categorized simply with a little own effort and clicks. So that you ideally receive the right search queries and the Amazon algorithm can classify your products as best as possible, the quality of the keywords on the Product Detail Page (PDP) plays a decisive role. It's not the one who integrates as many terms as possible who "wins", but the one who has set up a readable and understandable page structure (retail readiness) - in addition to the relevance, but that is now understood by itself. In the structuring of the PPC structure and the campaign types with the individual ads campaigns, there are different approaches.

Targets: Define clear goals for the campaigns

As entrepreneurs, success must be made measurable. Every company pursues individual goals and defines specific KPIs, therefore the Pay-per-Click campaign goals should fit the own needs and requirements. For example, the PPC strategy can be different for a product start at an x-random point than after six months or a year. While at the beginning the focus could be on maximum visibility, impressions and conversions, the goal of profitability is pursued in the second step. The periods are also product and company specific and only serve as an example. A clearly defined goal strategy saves working time, reduces controlling processes and provides a uniform basis - regardless of whether it is operated with a PPC agency or in-house.

Amazon PPC Strategies

In addition, meaningful campaign structures ensure that Amazon PPC can be operated as efficiently and successfully as possible. These structures are the cornerstone of the PPC strategy.

What are the advantages of an Amazon PPC strategy?

With Amazon Advertising, the USPs of a brand and its products can unfold their full potential on the platform. In the end, it all comes down to your brand being seen and above all bought. Merchants who have been the top dog in their category on the marketplace for several years will not be easily displaced organically from their places in the top rankings without additional advertising measures.

The decisive advantages of an Amazon PPC strategy are growth and branding, because Amazon is still the preferred product search engine and a good ranking of your own products increases the visibility of the brand. If your product also has very good content and reviews, this can also be advantageous for other sales channels.

Those who know their own cost structures or product margins after deducting all costs as well as marketplace commissions can define the advertising KPIs for PPC and determine the type of advertising strategy. The goals are individual, whether high playout (impressions) or conversations is left to the product lifecycle and the own marketing strategy.

What Amazon PPC strategies are there?

A good Amazon PPC strategy should serve the purpose of the brand or of the product. Each brand owner knows his strategy goals best.

Defense wins championships: protect your brand!

Those who love their brand make sure that it is not easy for competitors to take over terms around their own brand and thereby rank higher than themselves. The CPCs can generally be set higher at this point, as Amazon values the relevance per brand. If this is not the case and the advertising costs are rising or stagnating, product optimization is imperative.

Brand protection on Amazon

In the example, the campaign was newly set up. Depending on traffic and target setting, the own cost-sales ratio should be defined by yourself.

Catch me if you can: Time for cross-selling and up-selling!

Product Targeting Ads (PTA) are excellently suited for all three advertising campaigns and should be used more intensively for brand-internal cross-selling and possibly up-selling, even with a low margin.

Cross-selling campaigns on Amazon

Again, you decide here to what extent your brand is worth and to what degree you want to keep the competition away from your own product pages.

Cross-selling campaign data example

Cross-selling campaigns with complementary products have proven successful. On the one hand, the advertising spaces for the competition can be blocked and the sales of the brand can be maintained. On the other hand, such PPC strategies provide an opportunity to boost new products accordingly at product launch on Amazon thanks to the own (generated) reputation and top seller examples. The question also arises at this point: Does the linking of the own product lines make sense for the buyer?

Offense wins games: with structure to PPC success on Amazon

As the product-related individual advertising is hardly distinguishable from the organic search results for the buyer, the advertising campaigns support the general visibility and the sales on Amazon. There is the keyword targeting as well as the product targeting in the cost-per-click (CPC) area.

With Sponsored Products Ads and Sponsored Brands Ads, you can place advertising on the keyword "Coffee" and at the same time aggressively promote the established and better positioned competitors. In addition, the Amazon search result pages can be used to find out which products of the competition are already organically and well placed in the front positions in the search result page ranking. Thus, I can not only place advertising on the keyword "coffee", but also directly attack the competition on the product detail page with product targeting campaigns for the same search term. Often, Amazon tools or browser extensions are used to filter the desired search results.

Amazon offers three advertising campaign types to advertisers that are worth it in different ways and depending on the control. It is recommended to start with the Amazon Sponsored Products campaigns and, depending on success and target setting, to derive further campaign types. Especially for their own branding, the Sponsored Brands Ads and the Sponsored Display Ads are suitable. Both types of advertising have advertising spaces within the Amazon search and a higher visibility on the Amazon product detail pages. They therefore offer a good opportunity to increase brand awareness and make as many potential buyers as possible familiar with the own logo.

How do you create your own Amazon PPC strategy?

1. Cluster your Amazon items

Before you start placing ads, you should already define the products that you want to advertise accordingly. Here, products can be grouped according to margin and Amazon product category (Browse Node). In addition, Amazon sellers have the option to further divide this grouping according to Fulfilled by Amazon or Fulfilled by Seller. Such a subdivision of the items is recommended for advanced Amazon sellers as it can increase the complexity in PPC management.

2. Create Amazon portfolios sensibly

To keep track in the Advertising Console, Amazon offers portfolios for the advertising campaigns. The portfolios can be named individually according to target control or the "product group". The advantage is that each portfolio can be set with an individual portfolio budget for a certain and indefinite time. In addition, PPC performance can be optimized individually thanks to reports. In this case, you should note that a budget limit for the campaign mode and the product lifecycle limits you because your campaigns will not participate in the bid auctions if the budget is exhausted and the competitors will win.

3. Use manual Amazon campaigns

Amazon offers manual and automatic advertising campaigns to advertisers with different targeting types and advertising spaces on the Amazon page. Use the available advertising opportunities and design your advertising campaigns as structured and varied as possible. Create manual campaigns with keyword targeting and product targeting. Pay attention to the own brand protection (Defense campaigns) in order to profit from cost-effective self-advertising with a high conversion rate.

If shoppers have gathered good experiences, you can use this effect for cross-selling and up-selling campaigns. Items that are likely to convert and have a corresponding margin are suitable for more aggressive campaigns (Offense campaigns) with higher bids. The ads that do not bring about any improvement can be controlled or paused via the bids. For Sponsored Brands and Sponsored Display Ads, you achieve a higher click probability if the custom image (Mood image) appropriately conveys the message of the keywords.

4. Bid adjustment by placement for top sellers

An additional performance boost can be brought about for well-performing campaigns by the bid strategy Bids by placements. Amazon Advertising offers two influenceable controls for this. The strategies are called Top-of-Search (above the search results first page) and product pages. These strategies influence the fixed CPCs by the x-fold and should be created taking into account the past performance and the own KPIs.

5. Use automatic campaigns with logic

Auto campaigns for Sponsored Products can help you maximize your playouts in different ad auctions. In order to use auto campaigns as efficiently and successfully as possible, all products should undergo an SEO optimization beforehand. In addition to the keywords that are stored on the product page and in the Amazon backend as general search terms, the products must be in the right category. You can use your grouped article groups (cluster) and put all articles in the auto campaigns with a low start bid. The campaigns can occupy low advertising spaces and simultaneously favor cross-selling. These campaigns only have a chance of success if the articles are optimized.

Which Amazon PPC tools are recommended?

Amazon tools are essential for SEO optimization and Amazon Advertising. On the one hand, it can quickly become confusing with a variety of different products and categories, so that the overview over the PPC campaigns is easily lost. Another advantage of Amazon tools is that they store the campaign data and reports from Amazon Advertising for more than 60-90 days. In this way, PPC data from the past can be analyzed without much effort and compared with any point in time. These tools are suitable for example for that:

1. Helium 10

Helium 10 is an Amazon tool that supports both Amazon PPC and Amazon SEO optimization. There are different features that either help with the keyword research, the keyword tracking or even the analysis of Amazon PPC reports. In addition, Helium 10 offers a browser extension that enables a first data analysis and the extraction of competitor ASINs.

2. Adspert

Also the tool Adspert offers you support in the connection, optimization and comparison of Amazon PPC campaigns. The tool relies on an AI that automatically finds the most powerful settings for your advertising campaigns. This way, you ensure that you always rely on the most efficient bids and best keywords and PATs.

3. Perpetua

Once the portfolio size reaches a certain level, a manual control of the PPC bids is no longer possible without further ado. In order for the PPC costs to be automatically monitored, an Amazon PPC tool is recommended that monitors key figures such as the ACOS and adjusts it if necessary. Perpetua works with various PPC strategies and keyword harvesting approaches that can be applied to different campaigns. In addition, rankings of the top keywords can be automatically monitored.

4. Adference

Adference is based on automatic campaign creation and search term optimization. In addition to the different campaign strategies, the Amazon Advertising tool offers a machine learning approach to analyze the own PPC portfolio of the account as best as possible and make automated derivations for bid management.

5. Amalyze

Amalyze is an Amazon tool that particularly facilitates keyword research for Amazon PPC campaigns and provides additional marketplace data. These Amazon data can serve as a basis for both the own advertising and the SEO optimization. Amalyze also offers a browser extension.

6. AMZ Tools

AMZ Tools with the own browser extension provides a detailed keyword analysis of corresponding Amazon products. The browser extension provides information about the organic and sponsored sales. In addition, AMZ Tools delivers search placement data and ranking data that favor a first SEO and campaign optimization.