The basics to advertising on Amazon (Step 1)

This article is step 1 of our step-by-step guide to Amazon PPC Advertising

General Knowledge

What is “Amazon PPC Advertising”?

By advertising your products you have the opportunity to have your product reach more shoppers, and therefore to increase your sales.

There are 3 different types of advertising options:

  1. Sponsored Products: This is the most common and popular way to advertise. It is open to nearly all Amazon professional sellers. This guide will focus on Sponsored Products exclusively.
  2. Sponsored Brands: This type of advertising is only available to sellers who have a registered trademark with Amazon as part of the Brand Registry.
  3. DSP – Sponsored Display: Re-engage shoppers off Amazon who viewed your products or similar products, and drive them to your detail pages.

How does Sponsored Products advertising work?

Amazon’s Sponsored Products (SP) is a way to advertise your products to customers at the top, the side or the bottom of a page.

When you run a campaign, Amazon charges you a fee per click (PPC – Pay Per Click), not by impressions (how often your ad appears on search result page).

The position of your advertisement (top of page 1, middle of page, bottom of page, page 2 etc) is determine by how much you are willing to pay compared to your competition. It works as an auction system, where the highest bidder gets the best position. If there are multiple equal high bids, Amazon will take into account several factors to determine which product is positioned where. This includes: Conversion Rate, Campaign Budget and other factors. The exact formula is not known.

Sponsored Products and Sponsored Brands advertising placements
Sponsored Products – Product Targeting adverts on your competitors listing

Why are Sponsored Products important?

To get your product on page 1 or 2 of the results requires sales. And, in order to get sales you need to be on pages 1 or 2.

To resolve this chicken and egg scenario you need to perform some marketing activities.

You can promote your product externally on promotional website to drive discounted sales as well as create promotions and lightning deals within the Amazon ecosystem, or take part in the Early Reviewer Programme.

One of the most effective method is to advertise your product on Amazon search results. This will generate your first sales much sooner that just creating your listing and hoping for sales. It does mean you have to be comfortable with the idea of not making any profit on the first few sales until your product starts to generate enough organic sales.

How are Sponsored Products structured?

Campaigns: Highest level. Here you set the overall daily budget for the campaign and the start and end date. There are 2 types of campaigns:

(1) Automatic: easy to set up and run but hard to optimise because you don’t have much control. Amazon automatically guesses which keywords are best. Read this article about when and how to use Automatic campaigns.

(2) Manual: You select which keywords to advertise on, and the individual bid for each keyword. You can create Ad Groups so that you can segment your keywords and products. Manual campaigns give you complete control, so they take more effort to set up and optimise but are where the majority of your profits will come from over the long run.

Ad Groups: Middle level. Here you can create different Advertising Groups. This allows you to segment your adverts. For example, in one Ad Group you might focus on certain keywords, or on a specific product.

Targets: This is what you bid on. There are 2 types of Targets: Keywords and Products (ASIN). If a customer types this word in the search bar in Amazon, then your product has a chance of appearing on the page. Whether your product appears at the top, middle, bottom, right or first page or later page(s) is depending on your bid and your competitors bid for that keyword.
Product targeting allows you to appear on product listing pages and steal traffic from your competitors.

Match Type: Match type determine how accurate a customers search needs to be in order for your keywords to trigger an ad impression.

There are 3 Match Types:

(1) Broad: This is the widest net you can cast. If your keyword appears anywhere in the customer search term, then your ad has a chance of appearing. For example your keyword is “swim shorts” and the customer searches for: “yellow awesome summer swim shorts” then your ad could appear (if your bid is higher than your competitors on this keyword).

(2) Phrase: If your keyword is actually more than one word then your ad will only appear if the customer searches for it in the way you have specified. For example, your keyword is “swim shorts” and the customer searches for “swim shorts yellow ” or “yellow swim shorts”. In these cases your ad could appear. Your ad will not appear if the customer searches for “swim yellow shorts” or “yellow shorts” for example.

(3) Exact: This is the most precise option. Your ad will only appear if the customer searches only for this. For example, if the customer searches for “swim shorts” then your ad could appear. But, if the customer searches for “yellow swim shorts” then your ad will not appear.

Each Match Type accounts for some misspellings, plurals and adverbial (e.g. Swim — Swimming)

Bids: When you set a bid, you tell Amazon what is the maximum you are willing to pay to get a click. It therefore does not mean each click will cost that amount. For example, if you place a bid of $1 it could well be that your actual CPC (Cost per Click) is $0.40. This means that your competitors on this keyword at that point in time were only willing to bid up to $0.39 per click. As you were willing to spend up to $1, you won by outbidding your competitor by 1cent.

There are many different bidding strategies, all of which are explained in this article.

Search Terms: This is what the shopper actually typed into the search bar.

Products: As well as running “Keyword” campaigns, you can also run “Product” campaigns where you will target specific ASINs for your advert to appear on. This only appears within a product’s listing page under the section “Sponsored Products related to this item”

Daily Budget: Each campaign has a daily budget. Once your daily budget is spent your ads will no longer appear.

Good to Know:

Data: Amazon reports do not show Sales data until 2-3 days later. However you do see clicks and impressions etc data. So when you’re looking at your campaign results, don’t worry if you see 0 sales in the last 2-3 days. This is completely normal. We recommend you always filter out the latest 2-3 days results when looking at your data. Otherwise your data will not be accurate. Our algorithm automatically do this.

You’re now ready for Step 2 “Bidding and Placement strategies”!

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