A Comprehensive Guide to Amazon PPC: What to Know and Why?

Amazon PPC Guide: The A To Z Of Amazon PPC And How It Works

Looking to conquer Amazon PPC and boost your sales on the platform?

Stay tuned and succeed! 😉

Hi, welcome back to my Amazon FBA blog!

My name is Vova Even, and I'm an experienced Amazon FBA seller who has been selling on Amazon since 2016.

Over the years, I've learned a lot about what it takes to be successful on the platform, including the ins and outs of Amazon PPC.

In fact, I've become so knowledgeable about Amazon PPC that I've created an A to Z guide to help other sellers navigate the often confusing world of pay-per-click advertising on Amazon.

According to research, Sponsored Products Ads Campaigns on Amazon generate more sales per click than any search format.

However, according to Jungle Scout, up to 42% of Amazon sellers reveal managing PPC bids as the number one challenge while growing their business.

It's mentioned on page 7 of that guide above.

But don’t worry - here’s the good news: Amazon PPC is much easier than you might imagine!

With a bit of time spent learning common terminologies, you can start creating effective and profitable Amazon ad campaigns.

In this article, I'll walk you through the basics of Amazon PPC and provide you with a comprehensive guide to everything you need to know.

I'll explain common terms and their meanings, share tips on how to optimize your campaigns, and even provide insights from Martin Saunders from Perpetua, previously Sellics.

Whether you're new to Amazon selling or you're an experienced seller looking to improve your advertising game, this guide has something for everyone.

So let's dive in and get started!

Want a video version of the article? It's embedded right below! 😉

Understanding Amazon PPC

If you're an Amazon seller, you've probably heard of Amazon PPC or Amazon Advertising.

This unique platform is designed specifically for third-party sellers, vendors, and KDP authors who want to create ad campaigns and promote their products to a wider audience.

But what exactly is Amazon PPC, and how does it work?

Essentially, Amazon charges retailers each time a potential customer clicks on a related item or website.

This pay-per-click model is a popular form of online advertising, as it allows businesses to reach a targeted audience without having to spend a lot of money upfront.

With Amazon PPC, sellers have the ability to create and manage their own ad campaigns, selecting the products they want to promote and choosing their target audience.

They can also set their own budget and bid on relevant keywords, helping ensure that their ads are shown to the right people at the right time.

Overall, Amazon PPC is a powerful tool for any Amazon seller looking to expand their reach and drive more sales.

By using this platform effectively, you can increase visibility for your products, reach new customers, and ultimately grow your business in ways you never thought possible.

Before we proceed, here's some thing you absolutely must know before even turning on your Amazon PPC.

Advertising Cost of Sale

An abbreviation for Advertising Cost of Sales, ACoS is a popular Amazon PPC term used to measure the efficiency and profitability of Amazon ad campaigns.

In simple terms, ACoS is the percent or ratio of revenue generated from ads to the dollars spent on advertising.

You can calculate it by dividing total ad-generated sales by ad spend.

For example, if you spend $0.25 on advertising resulting in $1 in ad sales, your ACoS would be 25% ($0.25/1 = 25%).

Using ACoS, you can determine your SP ad campaigns’ efficiency and performance by comparing them with the median value of your industry.

Typically, the lower the ACoS value, the better your campaign’s profitability. 

Ad Spend

When it comes to Amazon PPC, one term you'll want to be familiar with is ad spend.

Essentially, ad spend refers to the total amount of money you spend on advertising for a particular keyword or set of keywords.

For Amazon sellers, ad spend is a crucial metric to keep track of, as it directly impacts the effectiveness of your ad campaigns.

By monitoring your ad spend and adjusting your bids accordingly, you can ensure that you're getting the most bang for your buck and driving the most sales possible.

So how do you calculate ad spending?

It's actually quite simple - just take the cost per click (CPC) for a given keyword and multiply it by the number of clicks you receive.

This will give you the total amount you've spent on advertising for that keyword.

Of course, there are a number of other factors that can influence your ad spending as well, including the competitiveness of your niche, the popularity of your products, and the effectiveness of your ad copy.

By staying on top of your ad spend and regularly analyzing your campaigns, you can optimize your advertising efforts and ensure that you're making the most of your advertising budget.

Average Order Value

When it comes to measuring the success of your Amazon PPC campaigns, one metric you'll want to keep a close eye on is your average order value per order (AOV).

AOV is a key indicator of how much revenue you're generating per transaction and can help you gauge the effectiveness of your advertising efforts.

To calculate your AOV, simply take your total ad revenue and divide it by the number of orders you've received.

This will give you the average amount of revenue generated per order, which you can then use to track changes in your campaign performance over time.

One important thing to keep in mind is that your AOV can be influenced by a number of different factors, including the types of products you're selling, the pricing strategy you're using, and the overall competitiveness of your niche.

By monitoring your AOV closely and making adjustments to your campaigns as needed, you can optimize your advertising efforts and ensure that you're generating as much revenue as possible.

Ultimately, your AOV is just one of many metrics you'll want to consider when assessing the success of your Amazon PPC campaigns.

By taking a holistic approach and tracking a variety of metrics over time, you can gain valuable insights into how your advertising efforts are impacting your overall business performance, and make data-driven decisions that drive growth and profitability.

Ad Sales

One of the most important metrics to track when it comes to your Amazon PPC campaigns is your ad sales.

Ad sales refer to the total revenue generated by your campaigns and are a key indicator of how effective your advertising efforts are in driving revenue for your business.

To calculate your ad sales, you'll need to multiply your total number of orders by your average order value (AOV).

This will give you the total revenue generated by your campaigns and can help you assess the overall impact of your advertising efforts on your bottom line.

It's worth noting that while ad sales can be a useful metric for evaluating the success of your campaigns, they don't tell the whole story.

Other factors, such as your conversion rate, click-through rate, and cost-per-click, can all impact your overall campaign performance and should be taken into account when analyzing your results.

By keeping a close eye on your ad sales and other key metrics, you can gain a deeper understanding of how your campaigns are performing, and make data-driven decisions to optimize your advertising efforts and drive growth for your business.

ASINs

ASINs, or Amazon Standard Identification Numbers, are a unique identifier assigned to every product available for sale on Amazon.

In the context of your PPC campaigns, ASINs refer to the total number of unique products that you're advertising across all of your campaigns.

Tracking the number of ASINs in your campaigns can be a useful way to assess the overall scope and complexity of your advertising efforts.

By monitoring the number of products you're promoting, you can gain insights into how effectively you're leveraging your product catalog to drive sales and identify areas for optimization and expansion.

It's worth noting that while ASIN count is an important metric to track, it should be viewed in conjunction with other key performance indicators like AOV, ACoS, and ad spend.

By analyzing multiple metrics together, you can gain a more holistic view of your campaign performance, and make data-driven decisions to optimize your advertising efforts and drive growth for your business.

Ad Groups

In Amazon PPC, ad groups are a way to organize your campaigns and target specific groups of products or keywords.

Each campaign can have multiple ad groups, each with its own set of keywords, bids, and targeting options.

Ad groups allow you to better control your advertising spend and optimize your campaigns for maximum ROI.

When creating ad groups, it's important to think strategically about your product offerings and audience segments.

You can use ad groups to promote specific product lines, target particular geographic regions, or tailor your messaging to different customer demographics.

By segmenting your campaigns in this way, you can increase relevance for your target audience and improve your overall campaign performance.

To create a new ad group, simply select the campaign you want to add it to and choose the "Create Ad Group" option.

From there, you can set your targeting parameters, choose your bid strategy, and start adding keywords and products to your new group.

As you launch and monitor your campaigns, you can adjust your ad group settings and refine your targeting to improve your results over time.

Ad Groups/Ad Campaigns

In Amazon PPC, ad groups and ad campaigns are two important components of your advertising strategy.

Ad groups are subsets of campaigns that contain a specific set of keywords and products, while ad campaigns are the overall structure that houses your ad groups and sets your advertising goals.

One key metric to track when analyzing your PPC campaigns is the average number of ad groups per campaign.

This metric can give you insight into how well you are organizing your campaigns and whether you are targeting your ads effectively.

A high number of ad groups per campaign can indicate that you are targeting a wide variety of keywords and products, which can be beneficial for reaching a diverse audience.

However, too many ad groups can also make it difficult to manage your campaigns effectively and optimize your advertising spend.

On the other hand, a low number of ad groups per campaign may indicate that you are not targeting enough keywords or products, which could limit your potential audience reach.

It's important to strike a balance between the number of ad groups and the scope of your targeting to ensure that your campaigns are both manageable and effective.

To improve your average number of ad groups per campaign, consider conducting keyword research and using tools like Sellics to identify new product opportunities and refine your targeting strategies.

By testing and iterating on your campaigns over time, you can find the sweet spot that maximizes your ad performance and drives business growth.

ASINs/Ad Groups

As the name suggests, ASINs/Ad Groups display the average number of ASINs per ad group, i.e., the number of products advertised in a single group.

As a beginner, it’s best to stick with one keyword per ad group to avoid complexities and challenges in analyzing performance.

Click-Through-Rate

CTR, or Click-Through Rate, refers to the percentage of viewers who click on your ad out of the total number of times it was displayed.

You can calculate it by dividing the number of times customers clicked on your ad by impressions.

CTR is a critical metric for identifying your brand’s performance and profitability. Generally, a low click-through rate indicates your campaigns fail to reach your target audience. 

To ensure a high CTR, you must integrate the right keywords, or you’ll lose valuable traffic.

For instance, if you’re selling a kitchen knife, you should use the keyword “Kitchen Knife.”

If you use, let’s assume, “Knife Multi-tool” and users visit your profile, your CTR will decrease rapidly.

You can analyze your CTR by comparing it with the niche’s median score. 

Clicks

In Amazon advertising, clicks are a key metric that can help you gauge the effectiveness of your ads.

Clicks refer to the number of buyers who clicked on your Amazon ad to view your product listing.

Clicks are an important metric because they measure the level of engagement your ads are generating.

If your ads are getting a lot of clicks, it means that buyers are interested in your product and want to learn more.

This can lead to higher sales and greater visibility for your product on Amazon.

To increase clicks on your Amazon ads, there are several strategies you can use.

One of the most effective is to make sure your ad copy is compelling and relevant to your target audience.

Your ad should clearly communicate the benefits of your product and why it's worth buying.

Another important factor is targeting.

You want to make sure your ads are being shown to the right people.

Amazon offers a range of targeting options, such as targeting by keyword, product, or interest.

By targeting the right audience, you can increase the likelihood that your ads will be clicked on.

It's also important to continually monitor and optimize your ads.

By analyzing data on clicks, impressions, and sales, you can identify areas for improvement and make changes to your ad campaigns.

For example, if you notice that certain keywords are generating a lot of clicks but few sales, you may want to adjust your bids or change your ad copy to better match buyer intent.

Conversion Rate

CVR, the abbreviation for Conversion Rate, is the percentage of people who purchased your product versus the number of buyers who viewed it.

You can calculate it by dividing the number of conversions by the total ad interactions.

For instance, if your product listing has 100 impressions, 10 clicks, and three buys, your CTR is 10%, and your CVR is 30%.

Typically, a low conversion rate indicates low traffic, an inability to captivate the target audience, and massive lost sales.

To improve your CVR, you must consider the persuasiveness of your offer and product detail page, including the imagery, sales copy, and keyword optimization.

Furthermore, you must ensure your product’s price aligns with the market and competition to improve your conversion rate.

Also, remember to compare your CVR to your niche’s benchmarks to analyze it better.

Here's how you can improve your conversion rate on Amazon.

Cost-per-Click

CPC, or Cost-per-Click, is the price you pay for the ad at auction.

It helps determine whether your campaign is profitable, allowing you to identify whether you’re overspending. 

Remember that CPC may increase due to competitors who outbid your offer.

Campaigns

Campaigns in Amazon PPC refer to the different ad campaigns created by a seller to promote their products on Amazon.

These campaigns can include Sponsored Products, Sponsored Brands, and Sponsored Display ads.

The number of campaigns you run can have a significant impact on your sales and revenue.

It is essential to create targeted campaigns that align with your business goals and drive traffic to your products.

Moreover, managing multiple campaigns can be a challenging task for sellers, especially those who are new to Amazon PPC.

It requires constant monitoring and optimization to ensure that the campaigns are performing effectively and delivering the desired results.

Therefore, it is crucial to have a clear strategy in place and to use the right tools to manage and track the performance of your campaigns.

This can help you make informed decisions and adjust your campaigns as needed to improve their effectiveness and profitability.

Overall, the number of campaigns you create and manage will depend on your business objectives and budget.

However, it is essential to keep track of your campaigns and optimize them regularly to ensure that you are maximizing your return on investment (ROI) and achieving your business goals.

Impressions

While it's commonly believed that impressions refer to the number of times an Amazon ad is displayed, it's actually the number of times an ad appears on a screen, whether or not it's viewed by a potential customer.

Therefore, impressions represent the total count of ad displays, rather than the number of buyers who actually view the ad.

Impressions are still an important metric to track, as they can give you an idea of the overall reach and exposure of your ad campaigns.

However, it's important to analyze other metrics as well to determine the true success of your Amazon PPC strategy.

Keywords

Keywords are the unique terms or phrases that you choose to target in your Amazon PPC campaign.

These are the specific words or phrases that potential customers might use to search for products like yours on Amazon.

When you bid on keywords in your ad campaigns, your ads will appear on Amazon's search results or product pages when someone searches for those particular terms or phrases.

Choosing the right keywords for your campaign is crucial to the success of your Amazon PPC strategy.

It's important to select relevant and high-traffic keywords that match your product offering and target audience.

You can use various tools and techniques, such as keyword research and analysis, to find the most effective keywords for your campaigns.

Once you've selected your keywords, you can then create ad groups and campaigns targeting those specific terms.

By monitoring and optimizing your campaigns over time, you can improve your ad relevance and drive more traffic and sales to your Amazon listings.

Keywords/Ad Groups

Keywords/Ad Groups are the numbers of keywords per ad group.

Martin recommends five to twenty keywords in a single PPC campaign to avoid losing customers. 

For instance, if you’re selling stainless steel kitchen knives, you must add up to five descriptive keywords to improve product discoverability.

Orders

Orders are an important metric in Amazon PPC campaigns as they indicate the number of times buyers have purchased your product after clicking on your ad.

In other words, orders are the total sales revenue generated from your PPC ads.

By tracking the number of orders, you can evaluate the performance of your ad campaigns and make data-driven decisions to optimize your advertising strategy.

It is important to note that orders may vary based on several factors such as your product's pricing, ad targeting, and competition.

The Bottom Line

Hopefully, by now, you have a better understanding of Amazon PPC campaigns.

The more you learn about PPC, the easier it will be to grow your brand and increase sales. 

You can learn more about setting up a new ad campaign, tracking KPIs, and leveraging Sellics features by visiting my YouTube channel or blog.

That’s all for today. Stay tuned!

Yours,

Vova :)

P.S. - Here's a review of ZonTools, a great tool for Amazon PPC.