Author’s Note: A special thank you to Zest Training for a great Amazon PPC training session. Keep reading for a thorough recap of the session!
Now, we’re adding one more tool in our toolkit: Amazon Ads.
We enlisted the help of Ted Walker, Craig Roberts, and Ryan Windsor from Zest Training to teach our team everything we need to know about advertising on Amazon.com, including how to use sponsored ads, the different types of sponsored ads, how to set up a new campaign, and useful optimization strategies.
We’re all about sharing the wealth of knowledge, so this blog post will review everything we’ve learned and everything you need to know about advertising on Amazon.
Here’s a preview of what this guide will cover:
- Why Sell on Amazon?
- What is an Amazon ad?
- Are Amazon Ads Right For Your eCommerce Business?
- How to Set Up an Amazon Ad
- Amazon Ad Reporting
- Optimization Strategies
Are Amazon Ads the best way to launch and scale your eCommerce business? Get a free growth audit to find out!
A Deep-Dive Guide To Amazon PPC
Why Sell on Amazon?
Amazon.com was founded by Jeff Bezos in 1994 with one goal in mind: to be the “world’s most consumer-centric company, where customers can come to find anything they want to buy online.”
What started off as a virtual bookstore ballooned into the largest Internet retailer in the world, generating approximately $177.9 billion in 2017, and has made Jeff Bezos the richest man in modern history.
What does Amazon’s success mean for your business?
By selling your products on Amazon, you’ll be able to leverage their trusted brand through association, prove that there is a demand for your product(s), reach a massive audience easier than ever before, and open up wholesale doors.
What is an Amazon ad?
An Amazon ad is the paid promotion of a product to have it listed in prominent positions on search pages.
There are two types of Amazon ads: Sponsored Product Ads and Enhanced Brand Content. Let’s take a closer look at each.
Amazon Sponsored Ads
Sponsored Ads can be launched by anyone with an Amazon Seller Central Account. Notably, sellers do not need a minimum number of products or a trademark to launch Sponsored Ads. Sellers can also launch Sponsored Ads as soon as their product is in the Amazon FBA Center (FBA stands for “Fulfillment By Amazon”; this is where Amazon ships out sellers’ products to customers.)
There are several reasons why you should consider using Sponsored Ads:
- Sellers can get their products ranking on Page 1 quickly.
- Sellers can immediately get their products in front of their target audiences.
- They increase your keyword ranking
- Comes with built-in conversion tracking (within Amazon)
- They are easy to set up and run
- And, most importantly, they can help you make sales!
It’s also important to cover the two types of Sponsored Product Ads: Manual Ads and Automatic Ads.
Manual Ads allow you to select the keywords you want to target. In contrast, with Auto Ads, Amazon chooses keywords it thinks are relevant to you.
There are pros and cons for each type of ad. For instance, Manual Ads allow sellers to target their most relevant keywords, and adjust the cost-per-click (CPC) based on relevance and conversions. However, by using manual ads, you could be missing out on traffic from other keywords.
Auto ads are easy to set up and helps sellers pick up traffic they may not be aware of. However, auto ads can damage your conversion rate and increase your Advertising Cost of Sale considerably (I’ll explain why later in this article).
Enhanced Brand Content
Unlike Sponsored Ads, Enhanced Brand Content ads require a brand registry. Brand registry is a way of protecting your brand on Amazon. You apply for it through Amazon Seller Central and you must have a registered trademark (which can take about 6 months in the U.S. and the U.K.).
Enhanced Brand Content allows small businesses to look like big businesses fast, and gives access to further marketing tools to help increase your conversion rate and get your product in front of more people.
One of those marketing tools is a Sponsored Headline Ad. A Headline Ad allows sellers to take prime position on a search result page and allows them to display three of their products across the search bar.
Zest Tip: Not all of these products have to be relevant to the search term, but displaying irrelevant products could significantly hurt your conversion and click-through rates.
Are Amazon Ads Right For Your eCommerce Business?
Deciding whether or not you should launch ads on Amazon really depends on your strategy and goals. Zest Training broke them down into three phases:
Launch and Growth
In this phase, the goal is to increase traffic, sales, and reviews. It’s okay to invest money into Amazon ads in this phase and target an Advertising Cost of Sale (ACoS) to your a budget.
Sales and Profit
Once your product has been launched and is selling, their goal is to optimize both and profit. Sellers should not be spending as much money on ads in this phase, and your target ACoS at your break-even point or up to 20% higher.
When you are low on inventory, your goal will be to maximize your profits while conserving your inventory until it is restocked. You should lower your bids and budget, or even turn off ads altogether.
Zest Tip: Avoid going out of stock because if you have to pause ads, your volume metrics will drop, and it may be hard to recover because you’ll have to relaunch and pay to rank again.
How to Setup an Amazon Ad
In this section, we’ll review how to set up both a Sponsored Ad and a Headline Ad.
Setting up a Sponsored Product Ad on Amazon
Let’s start with a Sponsored Product Ad. These ads are made up of 5 different aspects:
- Ad Groups – Each campaign can have one or more ad groups.
- Ad (Products) – Each ad group can have one or more ads.
- Keywords – Each ad group can also have one or more keywords (manual ads only).
- Negative Keywords – Can be added at the campaign or ad group level.
First, log into Amazon Seller Central Account, click the Advertising tab and then the Campaign Manager tab.
Next, click “Create Campaign”.
Then, set the campaign name, daily budget and campaign duration. Next, you’ll select a target type. Remember, there are automatic ads and manual ads. Let’s start with the Auto Ads. Start by clicking the “Automatic keyword campaign” button, then continue to the next step.
Now, name the ad group, and select one or more products to advertise.
Finally, you’ll set your default bid (every time you get a click, this is your max bid). Finally, click “Save and Finish”.
Now, let’s set up a Manual Ad in Amazon. Go back to the Campaign Manager tab, and click “Create Campaign”.
Then, set your campaign name, the daily budget, and start date. You don’t need to set an end date. And as your targeting type, select “Manual keyword campaign”.
Continue to the next step to create your ad group. On this page, set the ad group name, and then select the product(s) you want to advertise.
Move on and set the default bid. In the section below, you’ll be able to view and select suggested keywords from Amazon, or provide your own keywords based on your own keyword research.
Zest Tip: Avoid using the “Suggested Keywords” feature. You should be conducting keyword research to find the best keywords based on relevance, traffic to that keyword, etc.
Once you’ve entered your keywords, click the “Add these keywords” button. This will populate your keywords in the section below. In this section, you’ll find your keywords, the keyword match type, and suggested bid, and keyword bid.
Note that next to the comment box where you’ve entered your keywords, you’ll notice a “Match” drop-down menu with different keyword match options:
- Broad match: Results for the broad search term will appear (i.e. Customer searches for “yoga large mat”, ad will show under broad term “yoga mat”).
- Phrase match: Results for the phrase search term will appear (i.e. Customer searches for “blue yoga mat”, ad will show under phrase term “yoga mat”).
- Exact Terms: Results for the exact search term will appear (i.e. Customer searches for “yoga mat”, ad will show under the exact term “yoga mat”).
Zest Tip: Add your keywords under each match type. That means, if you have 10 keywords, you should end up with 30 keywords selected.
When you’re done with this step, click “Save and Finish.
A Zesty Top Tip: On top of your main Manual and Auto Ads, you can add another Manual Ad Campaign that targets your top 5 most relevant keywords. This makes conversion tracking for your most relevant keywords a lot easier.
Setting up a Headline Search Ad on Amazon
Now, let’s look at how to set up a Headline Ad.
First, log into Amazon Seller Central Account, click the Advertising tab and then the Campaign Manager tab. Move on to clicking the Headline Search Ad tab and then click the “Create Campaign” button.
On the following page, start building your ad. First, select one or more of your registered brands.
Then, select the products you’d like to promote and continue to the next page.
On the following page, you’ll be able to see a preview of your Headline Ad, and you can edit as necessary.
On the following page, you’ll be able to select your keywords. Again, we recommend adding your own keywords whenever possible. Zest Training also adds that the traffic data in the section below isn’t reliable. Do your own keyword research for traffic metrics and suggested keyword bids.
A Zesty Top Tip: For your product ads, write something unique that helps shoppers understand why they should consider your brand. Your message should match the keywords that are most important for your product. This will increase relevance for the customer and improve your opportunity for click-throughs.
On the final page, you’ll name your campaign, select a duration, a daily budget.
After submitting your campaign, Amazon will review your campaign for approval within 72 hours.
Amazon PPC Reporting
Once your ads have launched, you should get comfortable with Amazon’s Ad Reporting. Ad Reporting allows you to see a detailed report of your ad performance. If you interpret this report correctly, you’ll be able to optimize your Amazon ads, and minimize your ad spend while maximizing your reach and return.
When You Should Optimize Your Amazon Ads
Each week, you should review two weeks of your campaign data, starting with a date 3 weeks ago. You need to do this because you need to ignore the previous 7 days because there’s a delay in both reporting and sales coming in after ad clicks.
So, for instance, if today’s date is June 29th, your ads reporting window should be June 8 – 22 (2 weeks, starting from 3 weeks ago).
How to Access Amazon Ad Reports
To access your reports, log into your Amazon Seller Central account, click the Reports tab, and click “Advertising Reports”.
Next, click “Sponsored Products” or “Headline Search Ads”– depending on your campaign. After that, select your report type, name your report, select the time period covering your report, and the data unit (select total). Finally, click “Create report” and download your report.
What Do The PPC Reports Show?
Unfortunately, your report will contain a lot of redundant information. In order to tidy up your spreadsheet, you could remove the following columns:
- 7 Day Total Orders (#)
- 7 Day Total Units (#)
- 7 Day Conversion Rate
- 7 Day Advertised SKU Units (#)
- 7 Day Other SKU Units (#)
- 7 Day Advertised SKU Sales (£)
- 7 Day Other SKU Sales (£)
- Total Return on Advertising Spend (RoAS)
- Campaign Name
- Start Date – Note, only remove if ads are running continuously
- End Date – Note, only remove if ads are running continuously
However, there are some important metrics you should always analyze.
- Keyword: To track what people are searching for and understand the relevance of the keyword they used. This helps to build a better understanding of your customers and provides further keywords to add to your listings.
- Match Type: (Exact, Phrase or Broad) – To increase the keyword bid for the relevant match type, and increase impressions.
- Customer Search Term: To find new keywords, which you can target in future campaigns.
- Impressions: To get an indication of the market size for the keyword. This is important for your overall conversion rates, because sending the wrong traffic to your listing will negatively impact your ranking and the extent to which Amazon promotes you.
- Clicks: To understand how many people are clicking on your product – relevance again is key here.
- CTR: To work out the relevance of each keyword.
- Spend: To understand how much money has been spent on a keyword. (Zest Tip: You may increase or decrease your bids here for particular keywords based on relevance/impressions/CTR.)
- ACoS: To determine the performance of singular keywords and overall ads performance.
You’ve seen the acronym ACoS several times throughout this article, so why is it so important?
The ACoS is calculated by dividing your ad spend by the number of sales. That means if I spend $98 on Amazon Ads, and I’ve sold 280 products, the ACoS will be 35%.
ACoS is also your profit margin. Franz Jordan of Sellics defines the profit margin as “the amount you make after all costs (that is, the cost of production and shipping as well as general costs such as employee salaries, storage costs, etc.) and fees (Amazon fees & possibly FBA fees) are subtracted from the selling price.”
Your break-even ACoS is your profits before ads minus your ad spend, which should be zero.
Now, as Zest notes, your break-even ACoS is not 100% accurate due to other factors, but it will help you determine a Target ACoS, which is your break-even ACoS minus your target profit margin.
Amazon PPC Optimization Strategies
As a rule of thumb, if your ACoS is higher than the profit margin for a product, then you may wish to re-optimize your campaign.
At a more detailed level, you will want to re-optimize each keyword based on your Ads strategy for an Ads campaign, and the data in your Ads Report. However, keep in mind that relevance is key to every part of a successful ad campaign.
With that in mind, here are two optimization strategies you can try:
Strategy 1: Increase or decrease your keyword bids by $0.20 per week depending on if your expenditure is above or below your target ACoS. If the ACoS is higher than your target, decrease bids and vice versa.
Strategy 2: Adjust your keyword bids based on Zest’s Optimisation Formula:
Max Bid = (Total Sales $)/(Total Clicks) x Target ACoS
Zest Tip: If your new max bid is greater than a $1 difference, limit your movement on bids on a weekly basis ($0.20 per week).
Strategy 3: If you discover keywords that are not relevant and are not generating sales, add those to your “negative keywords” list for both your auto and manual campaigns for the product. Add them as an “Exact Match” but if really not relevant, add as “Phrase Match” as well.
Zest Tip: When you find keywords that work well in your Auto Ads campaign, add them into your Manual Ads campaign as a Keyword and then as a negative keyword into your Auto Ads campaign.
EXTRA RESOURCE: 6 Amazon Listing Optimization Fundamentals For PPC
Takeaways from this Amazon PPC Guide
There’s a TON of information in this Amazon PPC guide, and it may seem a little intimidating at first. But as you get started, remember these key takeaways:
- Amazon Ads are key to driving traffic to your listing
- Amazon Ads need consistent monitoring and optimizing
- Monitoring your ACoS is key to profits
- Amazon loves relevance in search terms
- Pay attention to conversion rates
- Test, test, test, and test some more.