What is Amazon PPC, and How Does It Work?

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Good marketing is oftentimes the bread and butter of any successful business model. If you’re a seller on Amazon, then one of the major online tools used to develop your marketing game plan is through Amazon’s PPC (pay-per-click) advertising program.

With the right set up and strategy, Amazon PPC ads will help you accomplish the goals needed so your business can advance in the e-commerce space. A successful ad campaign can drive sales directly to your Amazon store and you’ll be able to reach your target audience (and even expand it) so that your brand can get the love it deserves.

Another reason why sellers use PPC ads is because Amazon shoppers already shop with an intent to buy, so investing in advertising on a platform that mostly guarantees quick sales is still a good bet. This article in Forbes even reported that 75% of Amazon sellers use at least one type of Amazon PPC ad to boost sales for their business.

But, considering the potential costs and creative process involved, is using Amazon PPC ads really worth it? We break it down for you below.

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How Amazon PPC Ads Work

Amazon PPC ads help drive sales to your online store by a click through basis. Merchants on the platform can set up a bid to have their ad appear whenever a shopper searches for a product, and you only pay when the customer clicks on your specific ad. The ad will then go to the highest bidder for the relevant keywords in the search.

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PPC Works as a Second-Price Auction

Once the ads appears and it’s been clicked by a potential customer, the “winner” will also be the only one paying for the ad. The cost will depend on two things: how much the highest bidder put on the specific keywords, and how much the second-highest bidder put as an offer.

If you’re the highest bidder, you won’t pay your full bid – only one cent more than the second-highest bid. For instance, if the second-highest bid for the keyword “pet spray” is $2.30 and you’ve bid a whopping $3.50, you’ll only have to pay $2.31 for the click on your ad.

As a professional seller, you have to think about things like how much you want to budget for the PPC ads and what to bid if you want the best shot at winning that coveted click.

Another important thing to note is that your ACoS (advertising cost of sales) doesn’t have to break the bank as long as you reach your ROI (return on investment) goals. And, who knows? Your ad success may totally exceed your expectations.

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Keywords are vital to a solid Amazon PPC ad campaign

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How Much Does Amazon PPC Cost?

If you’re looking to up your ad game and want to know how much Amazon PPC costs, you first have to factor in your seller CPC (cost-per-click). In general, cost-per-click means how much a merchant pays for a potential buyer to click on their product.

Amazon allows you to set a budget and time frame when you create your ad campaign. On average, your PPC costs can be anywhere between $0.10 to $6.00 USD per click.

Factoring in the average cost-per-click is how you’re going to calculate how much of a budget to allocate for Amazon PPC ads. It’s also a great way to gauge how much you should spend on ads if you want to thrive in the current market.

The exact cost of a PPC ad campaign is tricky to calculate because it works as a bid system. However, there are plenty of elements that make up what you’ll end up spending on an Amazon PPC ad, including:

Keywords: How competitive are they? If you make a bid on very competitive keywords, the price goes up per click.
Your competition: What are your fellow Amazon sellers bidding?
The type of ad: (Sponsored Brand, Sponsored Product, Sponsored Display, Video)
Creation costs: Keyword research, product optimization, and even costs of creating a video all mean time and money towards your ad campaign.
Manual or automatic targeting system for your product keywords.

Once you get your first PPC ad campaign going, then you can measure your ROI and increase or decrease your budget depending on the success rate of the ad.

According to experts from Mayan, for more mature/established products the general rule is to target a TACOS (total ad cost of sale) of ~10%. This means that 10% of your total revenue for a given product should go towards advertising. TACOS can vary significantly based on the lifecycle of the product. For example, when launching a new product you should expect TACOS between 50%-70% until the product gets better organic rankings, acquires some reviews and shows better sales velocity.

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Let our experts at Mayan help you develop a winning marketing strategy

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Examples of PPC Ads

Here are the three types of PPC ads that Amazon sellers can use in 2022:

Is Amazon PPC Worth It?

Whatever your marketing strategy is when it comes to experimenting with Amazon PPC ads, it’s always important that you plan for a return on investment.

Whether it’s worth it depends on a number of factors. One good thing about Amazon’s PPC ads is that you can set a budget that’s right for you, so you don’t need to worry about spending too much on advertising and going way past your means. However, it’s essential that you strategize before setting everything up so that you aren’t just throwing ad money away.

We recommend trying a mix of all types of ads if you want to attempt a successful marketing campaign and see an eventual ROI.

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Your Amazon PPC Strategy in 5 Simple Steps

Get the ball rolling and see those clicks and sales come to your Amazon store. Here’s how to set up your first PPC ad campaign in 5 simple steps from start to finish.

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#1: Pick Your products

Measure your competition in the Amazon marketplace and choose the products in your store that you want to see succeed for your first PPC ad campaign. However, know that this process is a work in progress. Lots of sellers have to try a few different ad campaigns before figuring out a successful strategy.

If you’re looking to set up a Sponsored Products ad, this is a good time to promote a new product in your shop and try a few different keyword strategies to find your target audience.

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#2: Keyword & Optimization

Now it’s time to strategize for the right keywords. If you’re going with automatic targeting, then Amazon will do that work for you. But if you want to try your hand at manual targeting then you’ll have to do your own keyword research.

Even if you’re going with automatic targeting, you’ll still need to optimize your Amazon store and make sure the product listings (especially the ones you’re planning on advertising) are properly optimized: product descriptions, titles, images, everything needs to be in order or else your advertising investment will go to waste.

Struggling with keyword optimization? Don’t worry. If SEO and keyword optimization isn’t your forte, then consider hiring an Amazon virtual assistant who’s an expert in SEO to help you out with this.

There’s also a handy tool called KeywordsEverywhere to help you find the keyword volume and competition on Amazon.

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#3: Begin Creating Your PPC Ad Campaign

Log into your Seller Central account and get ready to set up your ad campaign. Head to the Advertising tab and click “Create campaign”. Then, choose the type of PPC ad you want to try.

Once you select your PPC ad, you’ll then be asked to fill out your ad campaign name, the campaign start and end date, and set your daily budget. Afterwards, select whether you are going with manual or automatic targeting. Then select the products you want to advertise and your base bid.

Going for manual targeting means that you’ll have to upload your keywords for the next step. With Amazon PPC ads, you can target up to 1,000 keywords/search terms per ad type. Realistically, you should start with targeting between 20 and 40 keywords when launching your ad campaign. To make things easier, just upload the keywords via .csv file.

No matter which PPC ad group you’re creating, make sure you follow Amazon’s guidelines for the specific ad.

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#4: Set Up Your Ad Bids

Now, you’ll have to set up your bids for each target keyword. You can always go back in and update your bids, so know that they are not set in stone. Make sure to keep the cost strategy of each keyword in mind when doing your research.

In general, it’s good practice to bid on a variety of keywords related to your product, and place a higher bid on the keywords with a lower competitive rate because you’ll be more likely to win that keyword and get the ad.

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#5: Submit Your PPC Ad for Review

Just like when you launch your first Amazon store, you’ll have to submit your work and wait for Amazon to approve your ad campaign. This can take a few hours or even a day or two.

And when your PPC ad campaign is launched, you can begin measuring its performance!

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Ready to Up Your Ad Game on Amazon?

Now, you’re ready for your first Amazon PPC campaign.

If you’re interested in seeing what Mayan can do for your Amazon FBA business, sign up today . We’re excited to show you our platform and run an audit to show you the opportunities our platform can provide. Once we’re aligned on your goals, we can get started bringing your business to the next level. Ready to see how Mayan can help?