If created and managed properly, an Amazon Pay-Per-Click (PPC) campaign on Amazon can help you sell more inventory faster, while increasing your organic rankings as well.
On top of that, Amazon’s sponsored ads program is quite simplistic, especially considering that it is developed by a $1 trillion dollar tech firm (I don’t mean to bite the hand that feeds; sorry Bezos…)
However, the simplicity of Amazon’s advertising platform is a double-edged sword. But let’s try to make it something that works for us.
In this guide, I will outline all the PPC optimizations that I use to juice my profits as much as possible for my private label products on FBA.
How Paid Search Works
Starting from the beginning, let’s break down exactly what Amazon’s paid search is and what it looks like.
People don’t go to Amazon to window shop.
First, Amazon receives millions of searches every month.
Second, a majority of those searches are long tail, meaning that consumers use three or more keywords to perform their search. They know what they want.
Users go to Amazon http://amazon.com and type in their desired product. From there, Amazon’s search engine returns the products that it deems most likely to satisfy the user’s desire. These are the “organic” results.
What we’re interested in, however, are the “paid” search results.
These are the listings you see mixed in with the organic results. In addition, these ads sometimes appear in the right column or below the organic results.
Amazon Pay-Per-Click Campaigns: The Strategy
Creating Amazon PPC ad campaigns is a very straightforward process. However, it’s important to understand the strategy and milestones before starting to advertise.
The last thing we want to do is make quick decisions that could undermine our campaigns!
Here is a brief outline of how we will run these PPC Campaigns:
- Run campaigns to find profitable keywords that convert to sales.
- Remove non-converting keywords.
- Increase bids for high-performing keywords.
Amazon PPC Terminology
Before we go further, let’s get familiar with Amazon’s key metrics. This is how they Amazon describes each one:
- Advertising Cost of Sales (ACoS) – The percent of attributed sales spent on advertising. This is calculated by dividing total ad spend by attributed sales. For example, if you spent $4 on advertising resulting in attributed sales of $20, your ACoS would be 20% (ie. $4/$20 = 0.20).
- Attributed Sales – The total product sales generated within one week of clicks on your ads. Your sales data can take up to 48 hours to populate. As a result, sales data is not available in the “Today” date range and may be delayed to the “Yesterday” date range. You can view the individual sales totals for advertised products and other products in the Campaign Performance report
- Impressions – The number of times your ads were displayed. Once identified, it may take up to 3 days to remove invalid clicks from your reports. Clicks from the last three days may be adjusted due to click invalidation.
- Clicks – The number of times your ads were clicked. Once identified, it may take up to 3 days to remove invalid clicks from your reports. Clicks from the last three days may be adjusted due to click invalidation.
A couple of assumptions I am making for this PPC Guide:
- You already have an optimized Amazon product listing. Ensure you’re doing everything possible to convert a visitor into a sale, by having the following. This is how the listing for Jungle Stix came together.
- high-resolution images
- keyword-rich descriptive title
- descriptive bullet points
- product description
- You are focusing only on your actual Amazon listings. We are only going to focus on sending traffic to your product page on Amazon (ie. Amazon Sponsored Products).
We will not focus on Amazon Product Ads, which drives traffic to your own website, away from Amazon. And you really don’t need a unique website outside of Amazon to start selling FBA successfully.
Low Barrier To Entry
The main things you’ll need to focus on, when setting up your campaign(s), are:
- Generating a list of keywords.
- Understanding different match types.
- Setting your budgets and bids.
- Creating logical campaigns and ad groups.
- Optimizing your campaigns.
What sort of ad budget should I start with on Amazon FBA?
For the budget, I recommend you start with $50-$75 per day. This is a maximum limit, and not the amount you’ll actually spend on the campaigns.
In my personal experience, hitting this maximum is rare. If that number scares you a little, though, consider it to be an investment. It’s much better to get exposure early on and make quick sales.
How To Calculate Your Ideal ACoS?
Amazon calls the cost per conversion as “Advertising Cost of Sale”.
Here is the information you need to know in order to understand what number works for you:
- Selling Price – The price you charge customers.
- Cost of Goods Sold (COGS) – Cost of one unit you purchase from your supplier
- All FBA Fees – Referral fees, FBA fulfillment fees, and flat fees.
- Miscellaneous variable costs – Cost of shipping, supply cost, etc.
- Note: we will not incorporate any promotions or discounts here
Let’s use Jungle Stix as an example:
- Selling Price: $27
- Cost of Goods: $4
- All FBA Fees: $11
- Miscellaneous: $3 (this is just the shipping cost from the Chinese supplier to the Amazon warehouse).
Subtracting the COGS, FBA fees, and Miscellaneous costs from the Selling Price leaves us with $9 in profit per unit:
$27 – ($4 + $11 + $3) = $9
So we can spend up to $9 to get a sale and still be profitable.
To calculate our ACoS threshold for our break-even point, we simply divide the net income from the Selling price (ie. $9/$27 = .33). This leaves us with a 33% ACoS threshold. That means we can make money on any keyword that has a Cost of Sale of 33% or less.
You can see your ACoS in the Keywords tab of the Advertising tab, and it looks like this:
As you can see, it’s really easy to see which campaigns, ad groups and keywords are performing within your target ACoS, allowing you to optimize accordingly.
How do I create an Amazon PPC campaign?
I like to create two campaigns when I first start my Amazon PPC campaigns.
The first is an “Automatic Targeting” campaign where Amazon determines which search queries to show my ad. The other is a “Manual Targeting” campaign where I choose the keywords to show my ads.
How do I start an automatic targeting Amazon PPC campaign?
Automatic Amazon PPC campaigns are very easy to create.
All you need to do is enter your campaign name, budget and start date. Amazon then decides what keywords and match types it should bid on based on the information it has about your listing. Next it runs the campaigns on your behalf, within your budget limits.
Usually it’s a good idea to run an Automatic campaign when you start out with PPC. Once you’ve let it run for a week or two, you can run an advertising report to show you which keywords are converting.
From there, you can feed the information into a Manual campaign (see below).
Don’t turn off your automatic campaign just yet, though! It’s nice to have it “running in the background”, so it continues to gather good keywords for your Amazon FBA product listing.
How do I start a manual targeted Amazon PPC campaign?
Manual campaigns allow you to upload a list of keywords of your own. You can source them from your automatic Amazon PPC campaigns, or they can be keywords you found using a tool like Keyword Scout.
One of the best parts of manual campaigns is that they have a little more flexibility than automatic campaigns. Within manual campaigns, you have three match types you can choose from: broad, phrase, and exact.
How can I find keywords for my Amazon PPC campaigns?
The best tool out there for discovering hot new keywords is our own Keyword Scout tool. If you’re an active Jungle Scout web app subscriber then you should have access to Keyword Scout already.
Using Keyword Scout is simple:
- Log in to your Jungle Scout web app.
- Click on the Keyword Scout tab.
- Enter an ASIN or search term in the search box.
- Click enter and watch the keyword suggestions populate.
How long should I run my Amazon PPC ads?
It’s important you stand back and watch the beauty of the Amazon FBA business model at work. That means: run your advertising campaigns for at least a week without making any adjustments.
Important Note: If you check your campaign results a few days after you start the campaigns, you may not see any sales. But don’t worry! Amazon’s advertising reports can be slow. Sometimes it takes 48-72 hours for conversions to be reported.
Just remember that old saying: “a watched pot never boils.” 😉
How do I optimize my Amazon PPC campaigns?
Once you have collected a good amount of data, it’s time to sift through it. Check to see what’s working, what’s not, and optimize your money-making machine.
When I refine my campaigns, I focus on these areas:
#1 – Filter the keywords by ACoS.
After a week or so, you should be able to identify which keywords convert to sales and at what ACoS.
At this point you need to scan through the keywords, slowly reducing your bids, or pausing keywords that have an ACoS higher than your threshold.
For Jungle Stix that threshold is 33% ACoS.
By the same token, you need to identify any keywords falling below your ACoS and consider increasing those bids. Doing this will help your ads appear more often.
#2 – Filter by Order Numbers
More than anything else, this metric tells you which keywords drive the most conversions.
Of course, just because something sells well doesn’t mean it’s profitable. The ACoS for a high-performing keyword could be beyond your budget. It hurts to “kill your darlings”, removing keywords like these or reducing the bid, but we’re here to profit, right?!
I’d rather make $10 on three sales than lose $5 on 10 sales.
#3 – Filter the Keywords by Spend
You need to filter by Spend just to make sure that you know all of the keywords you’re investing in. Keep the ones that are converting, and get rid of the ones that aren’t.
#4 – Bids
If a keyword is converting but at an ACoS that is above your targeted threshold, you don’t necessarily need to pause or delete the keyword. Instead, you can just adjust your bid accordingly.
So, if your ACoS is 75% with a $1.50 bid, and you want it to be closer to 50%, try reducing your bid to $1.25. Keep making small adjustments (usually at $0.25 per week) until it gets to where you want it to be in terms of ACoS.
Amazon PPC FAQ’s
When do you turn on paid campaigns?
I like to turn on PPC campaigns as soon as I have a few reviews.
Others may say to wait until you have 10 or more, and though it may be true that your conversion rate is higher as you have more reviews, I think it is more valuable to get a more active listing (remember that PPC campaigns often boost your organic ranking). Then you can start collecting data on converting keywords and incorporating them into your listing.
How long do you collect data before making any changes?
Ideally you would be able to collect data until you have hit a point of statistical significance, which some consider being at least a few hundred conversions.
But most people don’t have the luxury of investing that much time or money. Personally, I think running an automatic campaign for seven days is enough time to determine what is working and what is not.
What is the right number of keywords to include?
There is no ‘right number’ of keywords to include in your campaign.
However, I like to include 100 or more in my manual campaigns, and the keywords discovered in Automatic targeting campaigns. Amazon search is often about the long-tail keywords that may be four words or more, and it’s hard to identify those keywords if you start with too small of a sample set.
You can always trim down your keyword list after a week of running Automatic campaigns. Then you’ll see your ACoS improve and your ROI (return on investment) increase nicely.
If you haven’t started your campaign yet, why not learn on Bezos’ dime; there are always Amazon discounts and coupons floating around the internet. Track one down and apply it to your account!
And for a more in-depth look at launching your first PPC campaign through to optimizing like a pro, check out these recap posts from our Million Dollar Case Study:
There’s a full recap, webinar replay and a ton of extra insights in there, to help you run extremely profitable advertising campaigns.
Good luck with your PPC campaigns!
If you have any other hacks and tactics that have worked for you, I’d love to hear them. Please share them in the comments.