The Ultimate Guide to Amazon PPC in 2020

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Table of Contents


With close to 120 million products listed on Amazon, it can appear very daunting to get your product to stand out from the endless sea of products, especially for new Amazon sellers.

However, if you’ve done your product research and followed the right product research criteria, you’ll most certainly be able to achieve tangible results with a robust Amazon PPC strategy in place. 

With that said, even the best Amazon advertising campaign would be a complete waste of money if you offer the wrong products to begin with. Advertising on Amazon is only something you should explore after you’ve mastered the strategy to offer a compelling product on Amazon.

You’ll also only want to run ads for listing with a decent conversion rate to make the most sales out of your Amazon PPC campaign. Conversion rates on Amazon is a complex topic, as it depends on so many factors, down to the quality of your products.

Optimising your listing is not only important for your organic conversion rate in terms of sales, but even more so for Amazon PPC, as a keyword match between the PPC ad and text in your listing, such as in your product detail section, product title, and so on will help significantly in ranking better in search results.

If you haven’t done so, we highly recommend that you check out our article on product research for Amazon FBA here, and why we use Jungle Scout, by far the best product research tool for Amazon FBA in our full review here. These are the fundamentals that you must absolutely get right before exploring Amazon PPC ads for your products.

In this guide, we’ll cover everything you need to know about running PPC ads on Amazon to push your product listing to the first page of Amazon search results.


Overview on Amazon PPC Ads


If you’re not familiar with the term PPC, it stands for Pay-Per-Click, and works like this:

We pay Amazon a certain fee to place our listing at the very top of Amazon search results for a certain type of search terms, usually in the form of a sponsored product, and we are billed for every click our listing receives that way.

If you’ve done your product research correctly, your product should already have pre-existing demand in terms of search volume on Amazon. Amazon PPC ads will give your listing exposure to that search traffic by appearing first in the search results in the form of an Amazon sponsored product, making your Amazon product stand out from the rest.

Amazon PPC is a simple yet effective way that is 100% compliant with Amazon terms of service that you should utilize for every product launch. PPC ads on Amazon can be categorized by 2 different types:

1. Automatic

As the name implies, this means that you let Amazon run your PPC ads automatically; by making your listing a sponsored product for any headline search that it thinks you might rank for. This is by far the easiest way to get started with a campaign but is usually not the most profitable.

Automatic campaigns serve as a great way to get data on which search term performs the best for your products, which is what you should do when starting out.

The beauty behind the Automatic campaign is that you’ll be able to get accurate data on how ads perform with your products and compile everything into a report that you can export to be analyzed later.


2. Manual

Manual targeting is where you select the specific search term that you want to spend money on.

There are a few match types that you have to decide with a manual campaign, but this type of targeting has incredible profit potential when done right. Granted, you’ll need to figure out which key phrases to seed into your manual PPC ads to begin with, which is why we only recommend you run manual Match type ads only after you gathered some data from automatic ads.


There are 4 Match Types when it comes to manual PPC campaigns:

• Broad Match

These ads allow Amazon to push your ad to search results that not only match your keyword but also search terms related to your products. This not only includes synonyms, misspellings, and variations of your keywords but can also include a completely different search term if Amazon thinks it’s related to your product.

For example, if your product is BBQ gloves, terms like ‘grilling gloves’ might be included as they are related products. Chances are, these products often appear next to each other in Amazon search results, something you probably noticed whenever you do a search on Amazon.

These are very similar to automatic campaigns where Amazon ultimately identifies search terms for you and is a great way to discover some search terms that you might not have found otherwise.

• Phrase Match

This match type of PPC campaign targeting will contain your target keywords but allows for additional words before or after the search terms.

In our example of ‘bbq gloves’ as our seed keyword, the words ‘bbq’ and ‘gloves’ need to appear next to each other in all of the sponsored product ads.

However, the difference here is that Amazon will inject words before or after your target phrase, so phrases such as  ‘red bbq gloves,’ ‘bbq gloves fireproof,’ and so on will be included in this campaign and quality as a keyword match. The key here is that the words ‘bbq’ and ‘glove’ will show up together in the phrase.

This form of Amazon PPC ads can also include misspellings and prepositions but will preserve the order of your keywords, which can be very important to identify your products.

This keyword match type allows for some variation where new search terms can be inserted by Amazon before or after your main phrase but preserves your main sponsored keywords to avoid losing their context.

This is mainly used to hone in on an ad campaign that already has proven results, and determine which variation of that keyword is the best performer for your Amazon products.

• Exact Match

Exact Match is the match type where you narrow down to focus your campaign on specific terms/phrases. This is as specific as you can be among other match types for your PPC campaign, and only targets search traffic for that have the perfect keyword match from what you’ve specified to Amazon.

Do note that misspellings and prepositions will still be included in Exact Match,  but any variations other than that will be excluded.

This is usually only used once your campaign has been tried and tested, and that you know is going to be profitable.

• Negative Keywords

Negative Keywords isn’t a type of ad targeting per se, but rather an option for the 3 targeting types we’ve just gone through.

Negative keywords can be applied to Broad, Phrase, and Exact Match campaigns, and excludes a specific keyword from the campaign.

This is used when you’ve identified a poor performing keyword and would like to Amazon to not experiment with that keyword in your Amazon ads. This reduces wasted ad spend on unprofitable keywords so that you can run your Amazon PPC campaigns more efficiently.


What about other ads on Amazon?


With the myriad of options available for Amazon PPC campaigns, it’s very simple to get things going with an easy-to-follow strategy that we’ll cover in this guide. But what about other forms of Amazon ads?

Amazon advertising actually goes way beyond PPC; there are display ads, listing targeted ads, headline search ads, and so on. There are also so many variants of ads where Amazon will run display ads outside of Amazon.com! At that point, you’re essentially paying to advertise for Amazon.

While we’re not saying that they don’t work, these ads are significantly more complex to set up and less predictable than the native Amazon PPC campaigns. You would also need a brand registry to run these types of ads, which isn’t applicable to every Amazon seller.

In short, we want to get the most out of our dollar, and by using Amazon PPC in the form of sponsored product ads instead of display ads, we are directly leading potential clicks to our sponsored products that fulfills that product search demand, which means less room for error or wasteful spending of our advertising budget.

On top of that, to truly spend money on Amazon ads profitably over the long run, you’ll need time and patience to meticulously collect data, analyze it, then optimize it, and repeat the process over and over again.

Imagine having to do this with even more obscure types of ads compared to PPC, like calculating sales generated from an Amazon sponsored banner in the form of a headline search ad.

In short, Amazon PPC is the only type of paid advertising that you’ll need to learn and master, and everything else should be treated as an option to explore only when you’ve mastered Amazon PPC advertising.

Other forms of Amazon advertising, such as product display ads, should only be considered once you’ve saturated your Amazon PPC budget and have consistently ran your product ads profitably over an extended period of time. Even then, we wouldn’t recommend any other types of Amazon ads as they are very hard to attribute to sales.


How do I optimize PPC on Amazon?


So, what are we planning to achieve with Amazon PPC then?

The goal with Amazon PPC is to optimize it so that our ACOS (average cost of sale) is lower than our profit margin. The lower the ACOS, the better.

This essentially means that for every $1 we spend on sponsored product ads, we want to generate more than or equal to $1 in net profit.

You might be thinking right now: What if I’m only breaking even on my Amazon PPC spend? Is it still worth running?

The answer would be a resounding yes. By breaking even on Amazon PPC, you’re still driving more sales to your listing than you would without it, and the correlating factors when it comes to Amazon SEO, such as sales velocity, reviews, and ratings are all getting a huge boost from these sales.

Even if you’re not making a profit with sponsored product ads, the extra sales that it drives will help your listing on other correlating factors to drive in more sales organically in the long run.

This is why PPC on Amazon is unlike paid advertising on other platforms such as Facebook or Google, where if you turn off your advertising budget, you are pretty much left with nothing.

On Amazon, you’ll keep your improved BSR (a metric that indicates how well you rank in search results) and, more importantly, reviews that came from those sales. This means that you can reap the rewards generated by your Amazon PPC ad spend for organic ranking indefinitely, a key distinction from Facebook or Google ads.

So long as you’re breaking even with your Amazon PPC spend, you’ll want to leave it on indefinitely. That way, you are boosting your BSR, accelerating your review count, and gathering more ratings, all of which will be very valuable in the long run in your Amazon FBA career.


How do I run an Amazon PPC campaign?


Step 1: Calculate ACOS


First things first, we need to know our net profit margins from our listing to gauge how much we can afford to spend on advertising, and our target ACOS (average cost of sale).

Your net margin is calculated by taking your net profit per unit divided by revenue. This should be a percentage, but keep the dollar value in mind as well.

For seasoned Amazon sellers, you should already know your profit margins if you’ve done your product research, but if you need to recalculate your net profit again, use the FBA calculator here.

Enter your product cost, shipping cost, and sale price, and the calculator will fill in the FBA fees and Amazon’s referral fees to calculate your net profit.

With this calculation done, you’ll now have a target ACOS and advertising budget from your net profits as your benchmark. This will be the benchmark on how much you can spend on Amazon sponsored ads for your product.

Remember, for any product you want to list on Amazon, the lower the ACOS, the better.


Step 2: Create your first campaign


Now, you’ll want to go ahead and create your first Amazon sponsored product ad in the form of an Automatic campaign.

The purpose of this is to let Amazon experiment with our product ad and try out different keywords. We’ll probably not make money with this product ad, but think of it more as a paying a fee to access data from Amazon for profitable keywords. After all, most Amazon sellers are not profitable with their first campaign, so don’t be concerned if you don’t see significant sales from this ad.

Log in to your Amazon Seller Central account, and go to the ‘Advertising’ tab, then go to ‘Campaign Manager’, then select ‘Sponsored Products’.


Name your campaign the name of your product, the date, and the type of campaign (automatic). Make this is verbose and easy to understand as you’ll need to come back to Amazon Seller Central later to export reports.
This is important because when you have multiple PPC campaigns running in the future, this can easily spiral into a huge mess, especially if your Amazon product has many variants.


For the Daily Budget, we recommend putting $10 per day or higher, if your budget allows. Set the targeting to automatic.

For the Ad Group, simply copy the name you’ve entered into the campaign name and enter it here.

Choose your product at the menu below and match Amazon’s highest suggested bid for the ‘Bidding’ section. 


For negative keywords, leave that blank. After that, click on ‘launch your campaign’ and you’re done!


Step 3: Let your automatic campaign run and export the results


After you’ve launched your automatic campaign, let it run for at least 5 days before proceeding with this step.

PPC ads require adequate time to run on the Amazon platform to obtain accurate results, so if you are impatient and make amends after only a day or two, you’ll run the risk of making decisions on non-statistically significant results. This could be very detrimental for your products, especially since Amazon does not bode well with sporadic product changes.

After 5-7 days have elapsed, we’re going to collect data from this campaign to craft our first manual campaign. Navigate to the ‘Reports’ tab in Amazon Seller Central, then click on ‘Advertising reports’ to access your report.


Select the campaign you just ran, and ‘Search Term’ for the Report type field. Adjust the Report Period option to match the time period when you ran your ad on Amazon.

Hit on ‘Create Report’ and then download it once it’s ready.


Step 4: Identify good and bad keywords from your report


With our report, we’re now going to identify good keywords that we want to narrow down on, and get rid of keywords that are wasting our advertising budget.

Open the report with Google Sheets or Excel. There will be a lot of data in the spreadsheet, but the main ones you want to pay attention to are: Keyword, Impressions, Spend, Total Sales, Cost per Click (CPC), and Total Advertising Cost of Sales (ACOS).

If the ACOS column is blank, it means that for that keyword, it hasn’t generated any sales on Amazon yet. 

Sort the sheet by Spend, with the highest spent amount on the top. For the top 5 keywords (in terms of spend) that didn’t generate any sales, you’ll want to make a note of them and add them to the negative keywords in your next campaign.

Let’s have a look at an example for this.


Here, you can see that only 3 out of the 25 keywords have made sales. This list is sorted by Spend, so we’ll take the top 5 keywords with blank cells on the ACOS column (the keyword column isn’t shown here) and make those our negative keywords.

By selecting negative keywords this way, we’re removing keywords that have consumed the most of our ad budget that did not generate any sales so that we can avoid them in our next campaign.

After all, if we’ve spent $44 on sponsored product ads and didn’t get any sales on Amazon for it, it’s most likely a keyword that isn’t working out for our product, as shown in our example.

For the keywords that have a profitable ACOS, make a separate list for these. These would be the keywords where the ACOS is lower than the benchmark that you calculated in Step 1 with the Amazon calculator, and you’ll want to target these keywords for your manual campaign.

If none of your keywords are profitable (or only very few of them are), just sort the sheet by ACOS and take the top 20 most profitable keywords from there.

If you haven’t made a product sale at this point, take the top 20 search terms in terms of Click Through Rate (CTR), but make sure these have decent Impression and Clicks to back up the numbers.

For example, a product might have 2 impressions and 1 click, which yields an incredible CTR of 50%. However, this wouldn’t be valid as the CTR is based on a sample size of just 2 impressions. You’ll want at least 30-50 impressions on the keyword to gauge it’s CTR properly.

You can do this by sorting the sheet according to Impressions, then manually pick out the top 20 CTR keywords.


Step 5: Create a manual Broad campaign based on your findings


Create your manual campaign using the profitable keywords we’ve extracted from the report. You can either choose to run multiple manual campaigns at once for all of your profitable keywords or one at a time if you prefer.

This also depends on the number of products you have on Amazon; we recommend doing this for one product at a time, as it would be hard to simultaneously do this process for multiple products at once.

For each of your manual campaigns on Amazon, add in the relevant negative keywords.

Make sure that when you do this, you choose the ‘Negative Exact’ option, and NOT ‘Negative Phrase’.

The Negative Phrase option might include additional keywords that could be profitable, which is something you don’t want your product to miss out on to rank for as many search results as possible.


Choose ‘Manual targeting’ instead of Automatic, select your product, then choose ‘Keyword Targeting’ under the Targeting section.

As for the bid, put in the suggested bid for now, or more if your budget allows. This would also heavily depend on how many product ads you’re running at one time, so allocate your budget accordingly. Again, we don’t recommend doing this for too many products at once to avoid spreading your attention to thin.

Also, don’t use the Bid+ option. That option would be great once we’ve identified our most profitable keywords, but we’re still experimenting for now. 

Choose ‘Broad’ under Match type, and paste in your top keywords here. 

Once that’s done, hit Launch Campaign and let the sales roll in. Let it run for at least 5 days before moving on to the next step.


Step 6: Narrow down your search terms into a Phrase Match campaign


By now, you should have a gist of what creating a campaign is like, and how we narrow down keywords based on sales. In the previous campaigns, we’ve narrowed down keywords from our Automatic ads to a Broad Match, and in this step, we’ll do the same from a Broad Match into a Phrase Match.

Repeat the steps in step 4, where you narrow down the top 20 most profitable keywords and target these for your Phrase match campaign, and add the top 5 most unprofitable keywords in your negative keywords list.

As with any campaign we run, let it run for at least 5 days so that your products have enough time to generate sales before checking back.


Step 7: Craft your Exact Match campaign


Once you’ve further narrowed down your most profitable ads from the previous step, you should have a solid list of keywords for your final Amazon PPC campaign.

Repeat the process (steps 4-5)  to identify the exact terms to be used for this campaign. From there, run your ad campaign and export your results after 5-7 days.

With this final report, you should be all set for Amazon PPC, as you’ve identified the best search terms to use on your products. The top 5 search terms from these ads are what you’ll use to run Amazon PPC ads indefinitely so long as your ad spend is profitable on your product and fulfillment cost.


Step 8: Discover more keywords with Keyword Scout


After step 7, there’s really nothing more to do for your Amazon ad other than monitoring every 5-7 days to check on product performance and adjust your budget accordingly.

If you’d like to take your PPC campaigns further, repeat the keyword filtering process by using top search results from Keyword Scout on the search volume column to discover more Amazon PPC ideas.

Keyword Scout is a feature that you get with a Jungle Scout subscription, and we have a detailed section on finding keyword ideas for your products with Keyword Scout in our full review here.

By repeating the process this way, you might be able to discover more search terms that you can use to with this Amazon PPC funnel.


Step 9: Turn on Bid+ for your most profitable keywords


For your Exact Match campaigns, you can consider turning on Bid+ for the keywords that you are 100% sure that you are profitable on, with proven performance over the course of at least 1 month.

Bid+ automatically adjusts your bid to ensure that you always get the advertisement spot for a certain keyword match by adjusting your bid price for the PPC ad spot, so you’ll obviously want to limit this to the profit margin of your products in this case.

That way, you’re pretty much guaranteed to make a profit or at least break even on your products whenever that sponsored product ad is running, and this is the point where you can leave those PPC ads to run indefinitely.


Conclusion


With the 9 steps that we’ve covered above, you should have a robust process that will give you your golden list of profitable keywords that you can safely run indefinitely for any of your products.

This process ensures that only the most profitable sponsored product ads move along the funnel, along with optimizing your budget by removing wasted ad budget on poorly performing ads.

We hope you found this guide useful in learning about the process of running PPC ads for your products on Amazon!

If you haven’t decided what to sell on Amazon yet, check out our guide on Amazon FBA product research here so that you can find winning products that will make the most use of this PPC strategy.

Let us know in the comments if you found this guide useful or if there are any additional topics that you’d like us to cover on Amazon FBA.

The Ultimate Guide to Amazon PPC in 2020

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