Amazon PPC: Best-selling Free Guide to Pay Per Click Campaigns

If you take your time to create and manage your Amazon Pay Per Click (Amazon PPC) advertising campaign, you’ll find that it is a very valuable tool for boosting sales and organic rankings. Measure the performance of your Amazon Sponsored Products campaign automatic Vs. Manual CampaignsAmazon PPC Campaign Match Types

To add, Amazon has made its sponsored ads program one of the simplest around, especially given this is a product of a tech company which is one of the most valuable in the world.

The simplicity of Amazon's sponsored ads program does come with some problems of its own, but we’ll focus on how we can make it work for us in the long run.

This guide will look at how to create and optimize an Amazon PPC campaign to get as much profit as possible from private label products listed with FBA (Fulfilled by Amazon).

How Does Amazon Paid Search Work?

Let’s start at the basics and take a closer look at Amazon's paid search and how it works.

People Don’t Window Shop With Amazon

First off, people search on Amazon millions of times each month.

Second, most of these searches are long-tail searches, meaning customers use three or more keywords for their search. They know just what they’re after and looking for and that is what they type.

Users open up Amazon and search for what they want in the search bar. The search engine at Amazon brings up a list of products that it feels matches what customers’ want, known as “organic” search results.

What we’re after are the “paid” search results though.

These sponsored results will either appear with the organic results section or to the right of the organic results.

The Strategy for Amazon Pay Per Click Campaigns

It is simple to create an Amazon PPC campaign. The trick is understanding how to put together a strategy and the milestones to set before the advertisement begins.

The last thing you want to do here is rush the process and potentially undermine your campaign.

The following is a brief outline on how to advertise on amazon through running a PPC campaign.

Run campaigns to find the most profitable in converting keywords to generate sales
Get rid of non-converting keywords
Increase the bids on high-performance keywords

Amazon PPC Terminology

Before diving in, let’s take some time to learn about the key metrics at Amazon. Here is how Amazon describes these metrics;

Advertising Cost of Sales (ACoS) – Percentage of sales spent on advertising. The figure is calculated by dividing the total amount spent on ads by attributed sales. Let’s say that you spent $4 on advertising and made $20 from those ads, you would have an ACoS of 20% ($4/20 = 0.20 or 20%).
Attributed Sales - Total amount of sales generated within a week of clicks on adverts. The sales data may take up to 48 hours to process and populate. This means that the sales data isn’t available for sales made “Today” and might be delayed to the “Yesterday” range. Take a look at individual sales totals for products – advertised or not – through the Campaign Performance report.
Impressions – Amount of adverts that were displayed. It could take up to three days for invalid clicks to show up as removed reports. Clicks from this three-day period may be adjusted because of click invalidation.
Clicks – Amount of times ads were clicked. It could take up to three days for invalid clicks to show up as removed from reports. Clicks from this three-day period may be adjusted because of click invalidation.

Some assumptions we will make with our guide:

You already have an optimized Amazon product listing

Make sure that you are doing everything possible to convert visitors into sales. Here’s what you need to get it done:

A high-resolution image of the product
A descriptive title complete with keywords
Descriptive bullet points
A full product description

You’re focused on actual listings on Amazon

We’re focusing on generating traffic for your product pages on Amazon, such as with Amazon Sponsored Products. We aren’t focusing on Amazon Product Ads. These ads send traffic to your website and not to Amazon, and you don’t need your own unique website to sell products through FBA successfully.

Low Barrier to Entry

One great thing about the Amazon advertising platform is that it has a much lower barrier for entry than other similar platforms like Facebook Ads and Google Ads. All you need to focus on when building a campaign is:

A list of keywords
Setting good budgets and bids
Understanding match types
Creating a logical campaign and ad group
Optimizing ad campaigns

What Kind of Budget Should I Use with Amazon FBA?

When it comes to budget, we recommend between $50 and $75 a day to start with. That is the maximum limit, and note this is not how much you will spend for the entire campaign.

It’s rare to hit maximum and be spending that much. If you are a little intimidated by such a high figure, then think of it as an investment. It’s better to get as much exposure as you can from the start so that you generate sales quickly.

How to Calculate the Ideal ACoS

Amazon calls the cost-per-conversion for your campaign the “Advertising Cost of Sales” or ACoS.

Here is what you need to know to understand how to calculate your ideal ACoS:

The selling price of your products
The Cost of Goods Sold – how much it costs you to purchase a product from a supplier
FBA Fees – including FBA fulfillment fees, referral fees, and flat fees
Variable costs – such as cost of shipping and cost of supply
Note; we aren’t including promotions or discounts in our figures

Let’s look at an example using the Jungle Stix.

Selling Price; $27
Cost of Goods: $4
FBA Fees; $11
Miscellaneous Costs: $3 (the shipping costs of getting the product to the Amazon warehouse from the Chinese supplier)

Subtracting the cost of goods, Amazon fees, and the miscellaneous costs from the basic selling price gives us $9 of profit per item sold. This means that we could spend up to $9 to generate a sale and still end up in the black from it.

To calculate the ACoS threshold for the break-even point, we just have to divide the net income by the selling price. In this case, that would be $9/$27 which is 0.33. That means we have a 33% ACoS threshold and we can make money with keywords that have a Cost -3of Sales of 33% lower.

You can view ACoS in the Keywords tab of your Advertising dashboard. It should look like this:

You can see for yourself that this layout makes it easy to find the campaigns, ad groups, and keywords that are performing to your target AoS, making it easy to optimize your campaigns.

How to Create an Amazon PPC Campaign

We like to create two basic campaigns when starting out with Amazon PPC campaigns.

The first campaign uses “Automatic Targeting”. This is where ads are displayed in Amazon search queries. The other campaign uses “Manual Targeting”, which is where you choose the keywords that your ads appear for.

How to Start an Automatic Targeting Amazon PPC Campaign

It’s straightforward to create an Automatic Amazon PPC campaign.

The only things you need to do are enter the campaign's name, the budget, and the start date. Amazon then determines the right keywords and match types to bid based on the information in your listings. It will then run the campaign for you, sticking to the assigned budgetary limits.

It’s usually worth investing in an automatic PPC campaign with Amazon when you’re wetting your feet with PPC. After running the campaign for a few weeks, you can then create an advertising report to find the keywords that are converting the most.

With this information, you can then go ahead and create a Manual campaign, which we’ll get to in a minute.

It’s still worth running the automatic campaign though! It’s good to have it going on in the background for you, gathering information about good keywords for the Amazon FBA product listing to to boost conversion further.

How to Start a Manual Targeted Amazon PPC Campaign

Creating a manual campaign with Amazon PPC lets you choose your own keywords. These keywords can be sourced from an automatic campaign, or you could obtain them with tools such as Keyword Scout.

One great thing about using a manual campaign is that it is more flexible than an automatic campaign. A manual campaign gives you three different match types to choose from; Broad, Phrase, and Exact;

How Long to Run Amazon PPC Ads

Be sure to let the Amazon FBA business model unfold before your eyes. This means letting your campaigns run for a week at the very least before making any adjustments to them.

Please note that you might not see many sales if you check the campaign a few days after starting it. Don’t worry if that happens though! It can take a while for Amazon to generate accurate advertising reports. It could take up to 72 hours for conversions to record, so give it a few more days before panicking!

How to Optimize Amazon PPC Campaigns

After getting a healthy amount of data, you’re ready to go through it and find out what is – and isn’t – working, and the best ways to optimize the campaigns to make more money.

Here’s what to focus on when refining your campaigns;

1. Filter Keywords by ACoS

You should have a good idea of which keywords are creating sales after a week or so, along with their ACoS.

This is when you should look through the keywords, and reduce the bids on keywords that have an ACoS higher than your threshold. You may also want to consider just discontinuing the keywords.

You should also take your time to find the keywords that are below your ACoS. It may be worth increasing the bids on those keywords to get your ads in front of more people.

2. Filter by Order Numbers

This metric may be the best one for finding keywords that drive conversions. Of course, something isn’t profitable merely because it sells well. High-performing keywords may have an ACoS higher than your budget.

While it might sound counterintuitive to remove keywords (or just reduce the bid on them) that are performing so well, you want to make a profit. So you’ll have to do it. It’s better to make $10 with three sales than $5 with ten.

3. Filter Keywords by Spend

Filtering by spend ensures that you know the keywords that you’re investing in. Keep any keywords that are converting, and remove ones that aren’t.

4. PPC Bids

When keywords are converting but they have an ACoS that is higher than your threshold, you don’t necessarily have to get rid of it. Rather, you can just adjust your bid to fit your budget.

Let’s say you had a 75% ACoS and a $1.50 bid. You want to bring that number down to 50%, so you reduce the bid to $1.25 to make it happen. Continue making small adjustments like this (generally $0.25 a week) until you get to the ACoS you want.

Frequently Asked Questions About Amazon PPC

1. When do you activate paid campaigns?

We like to start our campaigns after getting some reviews.

Some might want to wait until they get ten or more, and you may have a higher conversion rate given that you’ve got more reviews.

We feel that having a more active listing is more valuable given that PPC campaigns will often boost organic rankings. From there, you can go ahead and collect data about converting keywords and start using them in your listing to boost conversion further.

2. How long should you collect data before making changes?

It’s worth collecting data until you reach a point of statistical importance, which some consider being a few hundred conversions at the least.

Of course, not everyone can afford to invest the time and money necessary to get that much data. We feel that letting an automatic campaign be for at least seven days should be enough to determine what does or doesn’t work for you.

3. How many keywords should you use in a campaign?

The short answer is that there’s no such “ideal” number of keywords to include in a campaign.

However, we like to use at least 100 with manual campaigns, including keywords from the automatic targeting campaigns.

Amazon searches are all about those long-tail keywords that could be up to four words long, if not more. It can be difficult to find those keywords if you don’t have an ample sample size.

You could always trim down the list of keywords after running an automatic campaign for a week. Then you can see the ACoS improve and you will get a nice increase in your ROI (return on investment).