Amazon PPC: 12-Point Guide (2022 Update)

January 1, 2022
By The Badger

If you recently mistook “pay-per-click” advertising for “paperclip” advertising, then you’re likely unfamiliar with Amazon PPC. However, let’s quickly dive into the basics and Amazon PPC Optimization: Amazon Advertising, known for its sponsored ad placements, is also referred to as “Amazon PPC” or “Amazon Pay-Per-Click”.

You might even be intimidated by the million abbreviations that accompany PPC, like CPC/CPM, ACOS, NTB, and CVR, but don’t fret! The Badger is here to help you kick ROAS with your Amazon Advertising.

What is Amazon PPC or ‘PPC on Amazon’?

Amazon PPC, or pay-per-click, is an auction-style system where advertisers bid on keywords.

Consequently, when an Amazon customer searches for a product, the sellers who have placed the highest bids on relevant keywords win the auction. As a result, their product ads are displayed in their chosen placement.

Importantly, advertisers only incur costs at the bid price if their Amazon ad is clicked—thus the term “pay-per-click.

Since Amazon PPC campaigns are auctions, you will only ever have to pay one cent more than your competitor for the ad placement in the search results.

That is if you bid $3 for a keyword, but your competitor only bid $1, Amazon would only charge you $1.01 for the ad placement. But, remember, Amazon sellers only pay when their ad gets clicked, not every time it appears in the search.

What is Amazon PPC and How Does Amazon PPC Work?

Paid traffic has an interesting history.

It’s been around since 2000 and it is both a science and an art for many online businesses. It all started with Google AdWords, now called Google Ads. If you’ve done a Google search in the past 20 years, chances are you’ve seen some ads in your search results.

In 2012, Amazon introduced PPC Ads, thereby enabling Amazon vendors, sellers, authors, and even Merchandisers to gain additional visibility for their products on Amazon’s site. This development marked a significant turning point, as it offered a new avenue for enhancing product exposure on the platform.

While Amazon Ads and Google Ads have different missions in life, they are close cousins.

Amazon aims to show customers ads they are most likely to purchase, while Google strives to present searchers with ads they are most likely to click.

Amazon bases its ad rank on a variety of factors, like CPC, Conversion Rate, Revenue Per Click, Star Rating, and other related factors. Whereas Google bases its ad rank on CTR and CPC, often referred together as “Quality Score”. At the time of this writing, Amazon likely has a similar quality score feature, but has not detailed it explicitly.

If you’re interested, read more about the similarities and differences of Google Ads and Amazon Ads.

Is Amazon PPC Marketing Worth It?

Yes, Amazon PPC is totally worth it and it’s the number one way to increase traffic to your product.

This one of the most common questions we see on Amazon PPC forums. Here’s what our CEO said in an interview with Seller’s Choice:

One of my fundamental beliefs about paid traffic is that good paid traffic is good paid traffic no matter what.

Michael Facchin, Ad Badger CEO

What’s special about Amazon is they already have the visitors. Why would you start with an off-Amazon site to try to generating traffic there when Amazon is where the customers are already hanging out?

Additionally, Amazon visitors are ready to purchase when visiting the eCommerce site. In 2016 Bloomreach reported 55% of consumers begin their search on Amazon when making a purchase. Amazon has over 2.3 billion visitors each month.

All you have to do is get their attention.

The crazy thing is that advertisers are just now realizing the power of Amazon Advertising. Here’s what Kiri Masters of Bobsled Marketing said in a previous post for us:

Brands are finally realizing the importance of PPC on Amazon. Many are shifting budget to this platform in favor of other PPC platforms like Facebook and Google. An analyst from Atlantic Equities predicts that Amazon will quadruple its revenue from advertising by 2020.

Kiri Masters of Bobsled Marketing Tweet

Still not convinced? Check out this video on the importance of Amazon ads:

Amazon SEO Sales vs. Amazon PPC Sales

Like any search engine marketing, Amazon has organic search sales and paid search sales.

Organic sales on Amazon happen when a customer discovers and purchases your product without you sponsoring that product for better placement on Amazon’s search results. To optimize your organic sales, you want to focus on Amazon Search Engine Optimization (SEO).

Paid search sales, also known as Amazon PPC, occur when a customer finds your product through an advertisement in their search results.

Sponsoring your products with Amazon Ads is the fastest way to get your product to the top of Amazon’s Search Results Page (SERP) to generate more traffic. PPC campaigns are complicated so you might want to read more.

Here’s a full post on organic vs paid traffic on Amazon.

Typically, Amazon PPC ads make up about 30% of Amazon seller’s total sales. If organic sales are $1k/ day, they should expect $100-300/ day in Amazon PPC sales. Conversely, if someone has $1k/ day in PPC sales, they receive $3k-10k/ day in organic sales.

To go deeper, Michael sat down with paid specialist from Quiverr to discuss the ratio of organic traffic to paid traffic.

Seller Central vs. Vendor Central

There are two selling platforms for Amazon sellers: Seller Central and Vendor Central.

Seller Central is for third-party sellers. Think of third-party sellers as small business owners who sell their products directly to customers on Amazon’s website. These sellers may choose to personally ship products to their customers or let Amazon fulfill their shipping method, earning their product the Amazon Prime badge.

Vendor Central is for first-party sellers, usually larger businesses that sell directly to Amazon, and then Amazon sells to its customers. Because vendors are selling directly to Amazon, their product automatically receives the Fulfilled by Amazon (FBA) Prime Badge.

Here’s a full infographic comparing the two:

Automatic vs. Manual Amazon Campaigns

Upon logging into Amazon’s Advertising Campaign Manager in Seller or Vendor Central, you will be greeted with the option to “Create New Amazon PPC Campaign.”

When you select it, you’ll be prompted to create either a manual or an automatic PPC campaign. Later we’ll discuss which strategy is better for beginners, but for now, let’s go over the differences and similarities:

So you might ask: “Which ad campaign type is better? Automatic campaign or manual PPC campaign?”

The answer is neither. You need to run both!

To learn more about the differences between Automatic Campaign and Manual PPC campaigns and how to use the two symbiotically, check out our more detailed post here.

Automate your Amazon Ads like a pro.

Meet an Amazon Advertising software that’s so powerful it takes the guesswork out of your advertising needs.

Our software automates keyword harvesting and moves top-converting keywords from automatic campaigns to manual campaigns. Wow.

Amazon PPC The Three Ad Types

The three Amazon Ad types, essential for effective Advertising on Amazon, include Sponsored Brands Ads, Sponsored Display Ads, and Sponsored Product Ads. Now, let’s learn about them!

Amazon Sponsored Brands Ads

Also known as “headline search ads,” sponsored brand ads are primarily for top-of-the-funnel customers, giving your product the opportunity to grab a customer’s attention before they precisely know what they want.

Sponsored Brand ads appear in the following locations on desktop devices:

Above search results, hence the “headline search” nickname
To the left of search results
Below search results

Their ability to showcase multiple products allows you to advertise complementary products side-by-side.

Sponsored Brand Ads, a key component of Amazon PPC Optimization, are great for grabbing shoppers’ attention in several places. Moreover, there are also a variety of different formats within this ad type, including Sponsored Brands Video for extra eye-catching power.

Amazon Sponsored Display Ads

Amazon Sponsored Display Ads are great for boosting your impressions, capturing upper-funnel interest, and retargeting interested customers to close sales.

Where Amazon Sponsored Display Ads appear:

Product Detail Pages on Desktop and Mobile
Customer Review Pages
Top of the Offer Listing Pages

Sponsored Display possesses the unique ability to retarget shoppers who have recently viewed your Amazon product pages, browsed your competitor’s product pages, or used search terms relevant to your listing.

The unique advantage Sponsored Display Ads have is that they can be displayed both on and off Amazon, therefore increasing re-targeting opportunities.

Sponsored Display is great when you want to boost impressions, steal conversions from competitors, or help new product launches get off the ground.

Amazon Sponsored Product Ads

Sponsored Product Ads promote your products on product details pages and search results.

In recent years, companies have significantly ramped up their spending on Sponsored Product ads, driven by its remarkable ability to attract consumers and convert interest into purchases.

Like other Amazon PPC advertising options, Amazon only charges you for your Sponsored Product Ads when a shopper clicks on them. This feature provides your business control over advertising budget and bids for keywords.

Sponsored Product Ads appear in the following locations:

Within search results
On the right side of search results
On the bottom of search results
On product detail pages

The Sponsored Product Ad type is by far the most popular on Amazon PPC and appears in every step of the customer journey.

This is the best Amazon ad type for beginners, crucial for Amazon PPC Optimization, and it should make up the majority of your Amazon Advertising budget, even after you expand into Sponsored Brand and Sponsored Display ads.

Amazon PPC Keywords & Match Type

When creating an ad campaign, you need to choose the keywords you want to bid on. Keywords can be more than just one word. Then, if a customer’s search term matches your keyword, your ad qualifies to display in front of the customer in the search results.

For every keyword you choose, you will also need to select a match type. Match type refers to the way your keyword matches the user’s actual search on Amazon.

There are three match types:

Exact Match: Amazon will only show your ads in front of the customer if their search terms are an exact match to your keyword with the exception of plurals and slight misspellings.
Phrase Match: As long as the customer’s search terms contain your keyword phrase (without being broken up by other words), your ad qualifies.
Broad Match: The customer’s search terms contain all the words from your keyword in any order.

Keyword research is one of the main pillars of successful advertising campaigns and search ads, so it’s crucial not to neglect keyword research.

That’s a brief overview of keywords and match types. If you want to learn more, check out our complete guide here.

Negative Keywords

If keywords are the search terms where you want to show up, then negative keywords are the terms where you don’t want to show up. (Check out The Complete Guide to Negative Keywords).

Negative keywords help avoid wasting ad spend on irrelevant or unprofitable search queries. Consequently, Amazon’s algorithm will only let your product show for relevant terms, so there’s no need to worry about adding every keyword you can think of as a negative keyword.

Negative keywords have only two match types: phrase and exact. These work in much the same way as phrase match and exact match keyword targeting.

Along with both of these types, there is also a third type of negative: negative ASINs or negative product targeting. Negative product targeting is a form of negative exact that allows you to pick specific ASINs or brand names for which you don’t want your product to appear.

Get More Amazon Basics With Our Free Amazon Seller Starter Kit!

Amazon PPC Optimization for Beginners

Now let’s get to the good stuff.

Starting to sell on Amazon is daunting, but not for anyone who has Team Badger in their corner.

Why You Should Start With Sponsored Products

Remember when we said Sponsored Product Ads are the most seen ads on Amazon because they show up at every point in the customer journey?

Use Sponsored Products when starting out to get the best return on ad spend (ROAS).

Sponsored Product Ads appear below Headline Search Ads, to the right of the SERP and on product detail pages. With Sponsored Product Ads, you reach the most customers and reach a high conversion rate (around 10%). In Sponsored Product ad campaigns you can even retarget customers on third-party sites.

Here’s literally everything you need to know about Sponsored Products.

Amazon PPC ACOS (Advertising Cost of Sales)

What Is ACOS?

To understand ACOS on Amazon, start with this video:

What Does ACOS Mean?

ACOS stands for Advertising Cost of Sales. In layman’s terms, it means how much it costs to make sales using Amazon PPC.

What is the ACOS Formula?

ACOS = Total Ad Spend ÷ Total Sales.

What is the Average ACOS?

The average Amazon ACOS we see for Ad Badger users is 30.4%, but keep in mind that’s because they use an Amazon PPC tool to tame their ACOS.

What’s my target ACOS?

Before I answer this question. Figure out your Break-Even ACOS first.

Once you know your Break-Even ACOS, essential for Amazon PPC Optimization, decide what Target ACOS you need to earn a profit and which ACOS results in a loss.

How to Lower Amazon ACOS

When you’re given the option to bid on your first campaign, you may not have any idea what to bid. Use the Inch-Up Method when beginning your Sponsored Products Campaign.

What to Do If Your CPC Is Too High

You can simply calculate the perfect PPC bid every time. Yes, there is a formula! Use this foruula to find the perfect bid for your keywords according to your target ACOS.

Amazon Bidding Formula:

Average Order Value x Conversion Rate x Target ACOS = Your target CPC (and therefore your Bid)

We even wrote a post with a free bid calculator included!

Check out this video that goes more in-depth on bidding the perfect amount:

Amazon PPC Strategies for Higher Ad Ranking

We wrote a whole post on this topic, but let’s review.

Amazon’s ad ranking algorithm, or A9, is particularly drawn to ads that boast a history of selling, feature thorough descriptions, and accumulate plenty of reviews.

Amazon uses performance and relevance metrics to determine ad quality.

Performance Metrics: CTR, Conversion Rate, Overall Sales
Relevance Metrics: Product Tiles, Description, Search Terms, Seller Name

Amazon isn’t fully transparent about how it ranks ads, but given Amazon was very influenced by Google Ads, we concluded this is the closest to how Amazon determines ad rank.

We always recommend Amazon sellers focus on their product detail page optimization before advertising in order to get the best result. If your detail page isn’t set up correctly, you could get bad reviews for being misleading with your description.

How to Get Reviews on Amazon

The best way to get good reviews on Amazon is to provide a good product, be patient, and be transparent with your product descriptions.

Customers don’t like it when they pay for something they didn’t know they were buying; therefore, we do not support incentivized reviews because it’s against policy, and Amazon will suspend your account and prevent you from selling on their platform.

Here are some ways to fight bad reviews on Amazon.

Choosing Your Amazon PPC Software and Tools

If Amazon PPC seems like an overwhelming amount of manual labor, that’s precisely because it can be. Consequently, many Amazon Advertisers choose to use an Amazon PPC software or tool to save time and money.

Here’s what to consider when choosing your Amazon PPC software:

Support
Minimize Wasted Spend
Bid Optimization
Keyword Management

Full disclosure: This article was written by Ad Badger, a consistent leader and maker in Amazon PPC Software. This section of the article contains bias, but it’s bias rooted in millions of campaigns worth of data and decades of research so it’s safe to get our opinion.

Support

When it comes to your ad spend and profit, you want the best support available to answer any questions you may have to give peace of mind, around the clock.

Minimize Wasted Spend

Controlling wasted spend on Amazon ads directly influences your profit and overall ACOS for your campaigns; thus, don’t spend money that you don’t need to. Seek out an Amazon PPC tool that prioritizes reducing wasted spending.

Bid Optimization

The best way to avoid wasted spend is by bidding the perfect amount every time.

This means bidding the perfect dollar amount to ensure you win a keyword and don’t go over your daily budget at the same time. Bidding on Amazon PPC keywords is the hardest and most tedious thing to do. Imagine if you could sit in front of your computer every day and automatically receive bidding based on your conversion rate, cost of good, and Amazon trends.

Find a software that does that for you.

Keyword Management

Keyword research is also essential to great Amazon PPC campaigns. Positive and Negative Keyword automation takes your account to the next level of profit and ad ranking.

Find software that automates keyword research to discover what keywords are most successful for your product, thereby improving your PPC campaigns.

If you wish to compare, check out Ad Badger’s features when deciding on what Amazon PPC software to use.