It is finally time for you to jump in and start advertising your product on Amazon. This can be an intimidating time since by now you have already created your Amazon Account got your products listed and sold a few items.
( you won’t be able to advertise a PPC campaign until you have already sold a few items. Since you will need the buy box in order to Advertise your products.)
It is now time to increase your sales, raise your rankings and further develop your Amazon Business. This article will explain the basic principles of Advertising on Amazon and help you learn the terminology behind advertising and how to set up and create your first campaign.
Why Should I Advertise
People don’t go to Amazon just to window shop Nearly half (46.7%) of US internet users started product searches on Amazon compared with 34.6% who went to Google first. Making Amazon a clear leader when it comes to people looking to start there product search.
Consumers on Amazon are looking to buy and they know to go to Amazon first in order to get what they are looking for. Half of your target audience is going to be looking at Amazon for products. By Advertising properly you will be showing up first for your desired keywords and getting in front of your desired audience.
Not only is your audience there but creating effective advertisement campaigns will allow you to sell inventory faster and to get better organic rankings for your desired keywords.
The Strategy Behind Amazon PPC Campaigns
Now that you have decided to start running an Amazon PPC campaign it is time to outline a simple strategy to get the most out of your campaigns. We don’t want to be making any rash decisions that will undermine the whole process.
Before we even start creating a campaign you will need to have your keyword research already planned out. you will need to know what keywords you are wanting to target so we can effectively optimize each campaign going forward.
Once we have our desired list of keywords that we are going to use for the advertisement campaigns the strategy going forward will be as follows.
- Run campaigns with desired keywords to find profitable keywords.
- Remove unprofitable keywords from campaigns.
- Increase budget on profitable keywords.
This process is very rinse and repeat but you should keep this in mind going forward with all campaigns. Make sure to always check back with each campaign that you are running. To make sure it is still profitable and not overspending on nonconverting keywords.
Understanding Amazon Terminology
Lets first get familiar with the key metrics and terminology you will be looking at while running a PPC campaign.
- Advertising Cost of Sales (ACoS) – This is the percent spent on advertising the converted to sales. This is calculated by dividing the total ad spend by sales. These sales have to come from some clicking your advertising campaign and proceeding to purchase within a week of the click. Organic Sales are not calculated.
- Sales – The total number of products sold from your advertisement campaigns. The User has one week since first clicking the campaign for it to classify as a sale. This section takes up to 48 hours to populate.
- Impressions – The total number of times your ads were displayed. Accurate results aren’t displayed for up to 3 days.
- Clicks – The number of times your ads were clicked. Same as impressions this section takes up to 3 days to show accurate results. Amazon removes any invalid clicks and impressions before showing you the data.
When creating a PPC Campaign there are going to be two types of campaigns you can create.
Automatic Targeting: Amazon decided on which keywords are relevant for your customers.
Manual Targeting: Your ads appear based on the keywords you provide.
For this tutorial we won’t be using Automatic targeting campaign. Automatic targeting campaigns are great for finding keywords. For example you can run a automatic targeting campaign with a low budget to find out any hidden keywords that you might not have in your manual campaigns.
- Exact Match: This search term only triggers when your keywords exactly match. Plurals are included here. For example, if you bid on exact match “bath towel”, you’ll appear for “bath towels
”aswell. Exact match is perfect for you r best performing keywords and gives you the most control over what you are showing up for. Phrase Match: Triggers by having your keyword in a phrase and will add more keywords to your original. For example, if you bid on aphrase match “bath towel” you can appear for “large bath towels” or “Cotton bath towel.”. This goes beyond your original keyword and start showing to a larger audience. This is offersmoderate control over and is good for high performing keywords.
- Broad Match Keywords: Broad match type can
trigger synonymsor stems of your keyword. this can make you potentially appear for 100’s or 1,000’s of different keywords. For exampleThis can vary from “bath towel” to “beach towel” to “bath accercories” to “100% organic wash cloths”. Broad match gives you the least control over what you appear for. Great for finding new keywords that convert.
Figuring out ad budget.
I generally start with a $50.00 per day advertising budget I know that this might seem like a lot but for the most part, Amazon doesn’t eat up all of your ad budgets per day. Unless you are very aggressive with your keyword bidding.
Figuring out your Average cost of Sale and bidding for each keyword is where you will need to do the most tweaking.
Generally, you want an ad budget that won’t run out throughout the day while keeping you bidding for keywords lower at the start and adjust based on performance.
Once you keywords are successful and have a low ACoS and you are running out of budget then I would adjust accordingly.
Getting Your Average Cost of Sale
On Amazon, the cost per conversion is known as “Average Cost of Sale” or ACOS. Which is the percentage you spent on advertising vs the total sale price of your item? To calculate your ACoS you simply divide the total spend by total sales so if you spend $30 on Advertising and sold $120.00 worth of inventory (30/120= 0.25 x 100 = 25% ACoS).
Before we start an advertising campaign we want to know our break-even point for each one of our products so we can adjust our bidding strategy and make sure that we aren’t losing money on keywords or the entire campaign.
To do this we add up all of our cost for the item and minus that from the selling price. So add you Cost of goods, FBA fees (which includes referral fees and fulfillment, etc.) and miscellaneous fees like the cost of shipping to FBA.
- Selling Price: $30
- Cost of Goods: $5
- FBA Fees: $12
- Miscellaneous: $3
$30 – ($5+ $12 + $3) = $10
So this leaves us with $10.00 of profit per unit, that we can use towards our advertising budget.
Now we need to calculate our ACoS threshold for our break-even point of $10.00. To do this we simply divide the net income from the Selling price (ie. $10/$30 = .30). This leaves us with a 30% ACoS threshold. Which means we can make money on any keyword that has a Cost of Sale of 30% or less. This is very important and something you should remember going forward.
Setting up your Advertising Campaigns.
Now that we know the basic fundamentals behind advertising on Amazon such as the terminology and how to calculate your average cost of sale. it is time to begin actually creating your advertisement campaign.
Step 1: Navigate
From your seller central account go to the Advertising drop-down menu and select Campaign Manager.
Then select create a campaign.
You will then be prompted with two options Sponsored Products and Sponsored Brand Ads. For this tutorial, we will be using sponsored products for our campaign so go ahead and select that.
Step 2: Campaign Settings
Campaign Name: Name the campaign something unique relating to your product. This won’t be your last advertising campaign and you might end up having multiples. So keep that in mind when creating a title.
Start and End Date: Normally I keep this blank. But if you just want to run a certain campaign for a limited amount of time you can do that here.
Daily Budget: We have already talked about your daily budget so enter what you have already decided on.
Choose between manual and automatic targeting. For this tutorial we are using manual targeting
Step 3: Ad Group
The ad group section is only visible to you. It is used to organize the products you are selling. For example, if you are selling T-shirts that are the same print but are a different color then add the different colors into the add group. This will allow you to target different keywords for the same product. Otherwise, create a title that makes the most sense to you for organization purposes.
Step 4: Products
Add the products that you want to include in the advertisement campaign. This can be one item or many. I do suggest keeping the numbers of products lower so you have more control over what that products are targeting.
Step 5: Bidding
There is 3 different types of campaign bidding strategy’s that amazon use in the placement of your keywords.
- Dynamic Bids – Down Only: Amazon will adjust the price of your bid down if Amazon feels this click is less likely to convert in a sale.
- Dynamic Bids – up and down: Amazon will increase or decrease up to 100% of your selected bid. depending on the likelihood of how well someone will convert.
- Fixed: is the exact bid you selected.
Default Bid: The default bid is the amount you are willing to spend per click. Unlike daily budget which is the total amount, you will spend in a day. The default bid is per click so if you have a default bid of $1.00 and your daily budget is $10.00 you should receive around 10 clicks to your listing.
Please note depending on the bidding strategy you select and the amount you have in daily budget will decide on the number of clicks you can receive.
Step 6: Targeting
- Keyword Targeting: Keyword targeting will target the keywords in the product search on Amazon.
(Steps 7 & 8 Will out line the process for Keyword Targeting)Product 2.
2. Targeting: This will place an advert on certain products, so if you have a competitor in your niche you can sponsor your product on there listing. This section will allow you to select an individual product or a category.
(Steps 9 & 10 Will out line the process for Product Targeting)
Step 7: Keywords
This is where keyword research comes in. When you first create/start an advertising campaign it is best to use long-tail keywords. Going after the High competition short tail keywords will only eat up your advertising budget and kill your ACoS. Your product is new and doesn’t have enough reviews or following for you to even think about going for the high competition keywords.
To add keywords to your campaign you have three options.
Suggested: Amazon Suggests keywords for you to use based on the product you selected.
Enter keywords: You are able to search and enter keywords manually to your campaigns.
Upload: after downloading the excel template you are able to upload multiple keywords at the same time.
Step 8: Negative Keywords
When you using the broad or phrase match types in your PPC campaigns. Amazon might show your listing on keywords that aren’t relevant to your product or targets keywords that will raise your ACoS.
This is something we don’t want to happen but it does. For any keywords that are negatively affecting your ACoS, this is where you are going to add them.
For new campaigns, you can keep this section blank as we do not have enough data at this point to figure out if we have any keywords that are negatively affecting our campaign.
Step 9: Product targeting
Product targeting ads work by targeting either individual products or products within a certain category. If your products are better then one of your competitors like lower prices or better features. I will put up one or two products targeting ads at a low budget to see how they fare.
Product targeting seems to be cheaper then keyword targeting but there isn’t as much traffic and sales trickle in. I would run one of these campaigns as apart of my keyword targeting campaigns.
Step 10: Negative Product Targeting
This section works similarly to negative keywords. For a product that is giving you a high ACOS, I would suggest adding them here. When I first create a campaign I leave this section blank and let the campaign run for a few weeks. This allows me to see which products are working and which products aren’t.
For adding negative product targeting there is two options remove by brand and remove by product
To remove by brand just use the search feature, find the desired brand and select. This will add it to the negative targeting and your advertisements will no longer show on this listing.
Alternatively, you can remove a certain product from your listing. In the search field, you can search by ASIN product name or brand name. I personally search by ASIN as this is the most accurate way to remove a certain product.
Things to Remember
Numbers: Always know your numbers, you need to know what your break-even point for each product you are advertising. With advertising, you can lose money just as quickly as you can make it.
Check Back: After launching your campaign check back bi-weekly to make adjustments. Your average cost of sale and clicks take up to 3 days for it to show in your advertisement campaign results. Giving your campaigns two weeks at a time allows you to better see what is going on and where your spending is going.
Experiment: Your first advertising campaign will not be your last, there is always room for improvement, new keywords to target and adjustments to be made.
Targeting Main Keywords: Remember that you always want to target keywords that you want to rank for. Amazon A9 Algorithm ranks keywords based on the number of sales that keyword triggers among other factors. By boosting a keyword with advertising you stand a far greater chance of ranking organically.
This tutorial gives you a basic understanding of how to create your first PPC advertising campaign and the terminology behind it.
Sharing is caring so if you learned something new or this helped you in anyway, please let others know.