Amazon is continuously growing and becoming a more relevant factor in people’s lives. You can pretty much find anything you wish to buy on Amazon and as time goes on you can shop on Amazon in more areas of the world.
It’s no secret that digital advertising has completely changed the way we view marketing. It goes without saying that if you want to advertise something, you need to have social media added to your marketing mix. However, when it comes to advertising potential, Amazon is the only platform where people are actually showing up with their wallets in their hands looking to spend money on something. This rarely happens anywhere else.
This is precisely why understanding how advertising on Amazon works is a crucial skill that can pay off immensely when it comes to cultivating a brand of products. If you want to learn how to start a business on Amazon, you cannot do that without learning about how Amazon advertising works.
How Amazon advertising works
On the surface it seems simple. Shoppers come to Amazon and search for something that they wish to buy. They do this by typing a phrase into the Amazon search bar that describes what they are looking for. When they search, they receive pages and pages of results that match their search term.Some of those results are sponsored ads for product listings. The sponsored ads look just like they would if you found them organically, with a small “sponsored” badge at the top:
What determines how high in the searches your ad gets displayed is how high of a bid you have placed on that particular search term/keyword. This is called a Pay Per Click system, which is why people call Amazon advertising Amazon PPC. This is the most basic form of advertising on Amazon, and arguably the most effective one. Your goal while advertising on Amazon is not simply to find a way to show up in the customers search results in order to get sales. Of course, sales are the point of selling on Amazon. However, there are also long term benefits to showing up on any search term consistently.
As you can see the listings that show up from any search didn’t get there by default. You rank higher in the searches by advertising on those search terms, and the more sales you make, the higher in the search you rank organically. Selling on Amazon is all about the real estate you can secure on the platform for your listings. Using advertising is the way you can cultivate that.
Research and setting your goals for the new Amazon PPC structure
When it comes to setting up your initial Amazon PPC structure, your first goal is to find viable targets for your advertising campaigns that will have a chance at converting into sales and in turn into organic ranking positions in searches over time. You also want to be cost-effective while doing this. This means that you don’t want to spend too much money before figuring out what works and what doesn't. In general, you need to follow these steps:
1) Do keyword research first
Before you do anything in the Amazon seller central interface , you will need to get yourself a list of search terms to use in your campaigns. You can do this intuitively or you can use software. Using software provides you with a lot of information you couldn't gather otherwise.
The best place to start is by finding keywords that other products similar to yours are ranking on organically already. A great tool for this is the AMZScout Reverse ASIN lookup. You can simply pick up the ASIN of any listing you wish to investigate and put it into the search bar of the tool and locate all of the keywords that item is ranked on, along with monthly search volumes. Let’s say you're selling a backpack. You simply pick up the ASIN from a well established backpack listing and get your keywords:
You can do this several times and get keywords from multiple backpack listings.
2) Cast a wide net
You want to organize your campaigns in such a way that you hit as many targets as possible. This will help you to find those that work that you can bid for more aggressively in the future. You need to use all of the options you have available to you in order to secure the highest number of potential sales and organic ranking moving forward.
3) Identify well performing targets
As you start running your campaigns, you should be keeping a close eye on what you are spending your money on and what is actually resulting in sales. You want to do this efficiently since you can’t afford to waste time. If something is working, increase the bid. If something is failing, reduce it, or if it’s failing more severely, remove the target altogether.
Now that you have a basic understanding of what your initial goals are, let’s move onto what you can accomplish.
The different types of Amazon Campaigns
There are 2 main types of Amazon campaigns based on the mechanisms available: the Manual Campaign and the Automatic campaign. You can also group your types of campaigns based on targeting, where you run product targeting campaigns and keyword targeting campaigns. We’ve already seen what a keyword targeting ad looks like. The product targeting ads actually show up under any given listing, much like this:
The Amazon targeting system works by using competitor ASINs as targets and bidding on those. It’s a parallel system that exists alongside the keyword targeting. Here are some specifics:
Automatic targeting campaigns
Automatic targeting campaigns are very much hands off. Amazon will do the targeting for you based on what sort of keywords can be found in the textual parts of your Amazon listing as well as the type of product you are selling, and the category you are selling in. You do have options to refine the auto campaign. You have 4 different targeting options available:
Close match is a keyword targeting option that targets keywords that are more closely related to your product.
Loose match is another keyword targeting option that targets keywords that are more general and might be related to other similar types of products or are more general to your niche and category.
Substitutes is a product targeting option that targets your direct competitors ASINs that are selling the exact same type of product.Complements is the other product targeting option that targets similar products that are either related to your product or the general category it's in.
Manual targeting Campaigns
Unlike the auto campaigns, for the manual campaigns you need to enter in the targets yourself. There are 2 types of campaigns as we discussed. There are Keyword targets which give you 3 match types for your keyword targets:
Exact - When you target a keyword with the exact matchtype, you will show up in the search only when someone types in that keyword exactly or the plural of it. For example if you were to enter the keyword School Backpack you would show up in searches for:
School Backpack and School Backpacks
Phrase - The phrase matchtype works by using the keyword you provided and placing you in any search that contains the targeted keyword where the words are in the same order. Using the example from before, here are some search results you can show up in:
Blue School Backpack
School Backpack with straps
Broad - This is the least specific matchtype and it will show your product in basically any search that contains the keyword you have targeted. Once again, using the same example, you would show up in the following searches:
Small Backpack for School
Girls School Pink Backpack
When it comes to manual product targeting campaigns you have 2 options:
ASIN targeting campaigns - Where you target specific competitor listings.
Category targeting - Where you can target an entire category or subcategory. This option allows you to refine your targeting using a variety of criteria such as the ratings of the products you are advertising for, their brand and price range:
There are also several types of campaigns that are only available to brands that are a part of the Amazon Brand registry. These campaigns work using the same mechanics while having slightly different options, such the leading the customer to the storefront of the brand rather than to a specific product listing, as well as some other customization options such as slogans and video ads:
How to optimize your Amazon ads
Now that you have an understanding of all the different campaign options available, let’s move onto some tips about how to actually optimize those campaigns:
- Group your campaigns by relevance - You can roughly divide both your keyword and product targets into groups based on relevance. The keywords that directly describe your product are your most relevant keywords and target. Product ASINs are a slightly less effective target but still important. Both of these types of targets have to work. If you are unable to convert sales from customers that are searching for something that directly describes your product or is a comparative and worse alternative you might not have a product that is worth continuing to sell. This is the first thing you need to settle. The other relevant group are the targets that might work or will work less consistently. Those would be targets that can be used to describe your product in general terms or ASIN of items that might be complementary to the product you are offering. These are targets that are worth testing since they have a logical chance of converting. These 2 relevant groups should be treated separately and preferably in separate campaigns. The highly relevant targets should have higher bids and should be pursued more aggressively and should not be quickly removed from the campaign. On the other hand you want to bid lesser amounts on the less relevant targets since you are merely interested in how they interact with your product.
- Start with conservative bids - Of course, you don’t want to break the bank while simply trying to find out what works and what doesn’t. Initially you will be spending money more on collecting data than on collecting sales. With that being the case, you need to be careful about how you spend your money, especially considering the fact that you might find hundreds if not thousands of keywords that you will need to test out. Your bids on the highly relevant targets should be slightly higher. However, you should only have a small number of those highly relevant targets. With the rest of your bids, be very careful with your spending.
- Listing images and product photography - It goes without saying that none of these efforts work if a customer doesn’t buy your product after they arrive at your listing. Product images play a key role in your conversion rates. A well written listing copy does go a long way. However, images are the most impactful part of your listing. This is why it is crucial to obtain clean and crisp product images. You also need to find a way of educating the customer about your product using the images. Ensure that your images are conveying the most valuable features of your product.
It’s time to achieve the highest efficiency
The Amazon advertising system is very straightforward and easy to get acquainted with. However, it is difficult to master. If you have the proper software and your goals are clearly defined, along with a good product, you are well on your way to establishing your Amazon store and brand. Remember to:
- Do proper keyword research.
- Cast a wide net.
- Remove poor performing targets, increase bids on well performing ones.
- Group your targets and campaigns by relevance.
- Start with relatively conservative bids.
- Evaluate results on a weekly basis.
- Extract and keep advertising reports both for managing your PPC structure and for future reference.
It’s important to note that managing your Amazon PPC is an ongoing process and it requires constant attention. There is never going to be a target that performs consistently at any given time. Shopping habits change, competitors behavior changes, there are also seasonal shopping trends and events. The longer you run your Amazon ads the more adept you become at customizing and adjusting them. Good luck sellers!
About the author
Milos is an Amazon Advertising PPC/SEO Expert with 3 years of experience. He is currently a contributor at AMZScout. His expertise is in creativity and productivity.