For FBA business owners, Amazon Sponsored Product ads are—and will continue to be—one of the most powerful tools for driving product discoverability and sales.
But with the number of sellers leveraging Amazon PPC growing significantly year after year, it's not surprising that sellers often ask us what they can do to secure the top spots for Sponsored Products on Amazon.
In this post, we’ll provide a brief overview of Amazon PPC and how it works, before diving into Sponsored Products and how you can optimize your campaigns to get the best placements for your Sponsored Products ads in the search results.
Amazon PPC (Pay-Per-Click) is an auction-style advertising model in which ads are sold by click. Sellers pay a fee to Amazon when a shopper clicks on their ad; hence the name Pay-Per-Click. Think of it as Amazon’s equivalent to Google Adwords.
Amazon Sponsored Products are Amazon’s flagship ad format. They are keyword-targeted ads that promote individual products. Sellers bid on keywords; those keywords drive traffic to a desired product detail page.
In short, running Amazon PPC ads allows brands to ‘buy’ visibility for their products at the top of Amazon’s search results and allow you to compete with top-ranking products, paid and organic.
Amazon Sponsored Product ads are by far the most popular on Amazon PPC and appear in multiple places:
Each seller submits a default bid (the maximum they are willing to pay) for their ad. The sellers with the highest bids on relevant keywords win the auction and get their product ads listed as a “Sponsored Products” in the search results.
Remember, you only pay when your ad gets clicked, not every time it's displayed appears in the search results.
How much you pay for the click, what's referred to as the 'Cost-Per-Click' (CPC), depends on the highest bidder. The highest bidder wins the highest ad position (ad rank #1) and pays the highest CPC but only $0.01 more than the next highest bid.
For example, let's say you have 3 sellers. Seller A bids $2.50; seller B bids $2.10; and Seller C bids $3.00. Seller C wins the auction with a bid of $3.00. If their ad is clicked, the CPC charged to Seller C will be $2.51.
On Amazon.com, the average CPC ranges from $0.02- $3.00. However, average CPC can also vary greatly depending on the product category you sell in, how competitive your niche is.
Amazon PPC is an auction, after all. Therefore, the more competitive a category, the more sellers there will be bidding, and bidding aggressively, to secure those ad placements.
So at this stage, you're probably thinking "okay, I get it. I just have to bid higher than my competitors to secure the top ad spots." Not quite.
Amazon wants to serve ads that are most relevant to its customers so getting those higher ad positions is not just simply about bidding higher, it's about being relevant.
The more relevant the ad, the greater the chance of the ad being clicked and converting into a sale. That's ultimately what Amazon wants. Yes, Amazon makes money on every click; but Amazon makes even more money by putting ads in front of the right customers who will buy.
Similar to Google Ads, Amazon's algorithm looks at several factors to determine the 'quality' of ads and where your ads should be displayed (or 'ranked') relative to your competitors. Factors such as selling history, product detail pages and the number of reviews.
Amazon uses a variety of performance and relevance metrics to determine ad 'quality'.
Ad performance metrics are concerned with how well your ads are performing, and include Click-Through Rate (CTR), Conversion Rate and overall sales.
We wrote a post on how to improve CTR and Conversion but here's a recap:
For your Click-Through-Rate, focus on optimizing the elements of your product listing that appear in your ads.
We're talking about a high-quality main image, a product title that immediately identifies what your product is, a competitive price, a high star-rating and as many reviews as possible.
For your conversion, focus on optimizing your product detail page. You want to have supplemental product and lifestyle images that visually convey the benefits of your product and how it will improve the customers' lives.
Make sure your bullet points focus on the benefits of the product and not just its features. Anticipate and answer any concerns or questions that customers may have in the product description. Improve customer experience further using visually appealing Enhanced Brand Content. And always provide excellent customer service to generate positive reviews.
Relevance metrics are concerned with how relevant your ads are to a shopper's search query. These metrics include Product Titles, Product Description and back end Search Terms
This is where the identification, selection and placement of relevant keywords come into play. You always want to ensure that your product listing and back end search terms are optimized with the most relevant keywords; those keywords that are converting into multiple sales.
This is why it’s important to regularly download and use the Search Term Reports on Amazon to identify which search terms are driving traffic to your product page so you can optimize your campaigns and product pages for maximum profitability.
We can also directly influence these metrics in our PPC campaigns by focusing on the most relevant targets and using negative keywords for further fine-tuning.
Taking advantage of the Sponsored Products targeting options allows you to refine your ads at the keyword, product and category level to further improve the relevance of your ads.
This form of targeting also provides for great control over the placement of your ads to make it even easier for relevant shoppers to find your products.
Adding negative keywords to your campaigns enable you to fine-tune the relevancy of your paid traffic even further by ensuring that your ads do not show for irrelevant customer search terms.
Let's say we are selling a silicone spatula. When we look at our Search Term Report, we find that the search term "silicone spatula set" is getting either lots of impressions and no clicks or lots of clicks and no sales against the keyword "silicone spatula".
Because we are selling a single spatula, any shopper who is searching for a set is not 100% relevant for our product. By adding the search term "silicone spatula set", our ads will no longer show for "silicone spatula set" we immediately improve our CTR and/or Conversion Rate for that keyword, which in turn can give us a higher ad rank for the same bid or the same ad rank for a lower bid.
Armed with this information, we now have yet another reason for always striving to improve our CTR and Conversion Rates.
If Amazon PPC was a straight-up auction, you could simply go ahead and buy ad rank just by bidding higher than your competitors. But because Amazon wants to give its customers the best possible shopping experience, and show only the most relevant products to a shopper's search, it's possible to get the best ad placements by optimising for a better CTR and conversion.
This levels the playing field for sellers knowing that you can be more competitive in the ad auction with your Amazon Sponsored Product ads without having to spend your way to page one.
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