Amazon PPC Hacks to Outsell 99% of Sellers

In less than two years, Amazon's advertising revenue has exploded, growing from $14.1 billion in 2019 to $31.2 billion in 2021. It's not just the big players contributing to this growth - small and medium-sized businesses are increasingly recognizing the power of Amazon PPC to level the playing field.

The recent growth in ad spend is driven by a rapid increase in competition. Amazon has doubled down on its advertising platform under CEO Andy Jassy, and more than doubled its share of the digital advertising market from 7.8% in 2019 to 14.6% in 2021. It's expected that this share will cross 20% by 2023. The growth represents a YoY increase of 32%, which is staggering.

Equally importantly, Amazon is working on repositioning itself as more than just an e-commerce website. Its latest innovations in areas like streaming (Twitch), groceries (Whole Foods), and cloud computing (AWS) show Amazon as a place for... well, everything. Amazon's efforts to broad-base its audience do not stop at diversification. Recently it undertook an extensive third-party seller initiative, providing more tools and resources to help sellers succeed on the platform.

One could argue that the rapid growth in ad spend indicates that 27 years after launch, Amazon is finally on the right growth trajectory for sellers. But I believe that for individual sellers like you, it can do much better - if you know how to navigate the system.

Undervalued and under-monetized: The opportunity for sellers

As I mentioned earlier, even with the growth in ad spend, many Amazon sellers are still undervalued and under-monetized. To understand why, we'll compare the average Amazon seller with top performers on the platform. But first, let's give a quick overview of Amazon's PPC options:

1. Sponsored Products: These are the bread and butter of Amazon PPC. They appear in search results and on product detail pages, promoting individual product listings.
2. Sponsored Brands: These allow you to promote your brand and multiple products. They appear at the top of search results and include your logo, a custom headline, and up to three of your products.
3. Sponsored Display: These are display ads that can appear both on and off Amazon, targeting shoppers based on their interests and behaviors.

So if advertising is crucial for success on Amazon, how well are most sellers performing? To give us some perspective, let's look at some data:

It's pretty visible that the average seller is under-monetized. Top performers, for example, generate 366x more revenue from ads than the average seller. They also manage to do this more efficiently, with a lower ACOS and higher conversion rate.

The question is: why is the average seller's advertising performance so much worse than top performers? And, more importantly, what can you do to close this gap?

Amazon PPC: The great equalizer

Amazon currently captures about 14.6% of the global digital ads market. For the sake of comparison, Google has 28.6%, and Facebook has 23.7%. But here's the kicker - Amazon's share is growing faster than both of them.

There are a few reasons for this. One is that Amazon has a much more direct connection between ads and purchases than Google or Facebook. When someone searches on Amazon, they're often ready to buy. But as we saw earlier, not all sellers are capitalizing on this opportunity equally.

Let's walk through each reason why the average seller might be struggling, and how you can overcome these challenges:

1. Keyword Research: The foundation of success

Many sellers jump into PPC without doing thorough keyword research. They either target overly broad terms with high competition or niche terms with little search volume. The result? High ad spend with little return.

To avoid this, start by using Amazon's own tools:

1. Amazon Brand Analytics: If you're a brand-registered seller, this tool provides valuable insights into customer search terms.
2. Amazon Search Terms Report: This report shows you the actual search terms that led to clicks on your ads.

Additionally, third-party tools like Helium 10, Jungle Scout, or Sellics can provide more in-depth keyword analysis.

Remember, the goal is to find keywords that are:

• Relevant to your product
• Have decent search volume
• Are not overly competitive

2. Campaign Structure: Building for scalability

Many beginners create a single campaign for all their products, with a mishmash of keywords. This makes it difficult to optimize and scale your efforts.

Instead, structure your campaigns like this:

1. Create separate campaigns for each product or product group
2. Within each campaign, create three ad groups:
   • Exact Match: For your most relevant, high-converting keywords
   • Phrase Match: For keyword variations and long-tail keywords
   • Broad Match: For keyword discovery

This structure allows you to allocate budget more effectively and optimize each ad group independently.

3. Bidding Strategy: Start low, grow slow

A common mistake is to start with high bids in an attempt to win the top ad spots. This can quickly deplete your budget with little to show for it.

Instead, start with lower bids and gradually increase them as you gather data. A good starting point is to bid around 15% of your product's price for your most relevant keywords.

Use Amazon's Bid+ feature cautiously. It allows Amazon to increase your bid by up to 50% for ads that are eligible to appear at the top of search results. While this can increase visibility, it can also significantly increase your ad spend.

4. Budget Allocation: Don't spread yourself too thin

Many sellers set a single daily budget for all their campaigns. This can result in your best-performing campaigns running out of budget early in the day.

Instead:

1. Set individual budgets for each campaign
2. Allocate more budget to your best-performing campaigns
3. Use portfolio campaigns to share budget across related products

Start with a daily budget of at least $10 per campaign. This gives Amazon's algorithm enough data to optimize your ads effectively.

5. Ad Copy and Creative: Standing out in a sea of sameness

With millions of products on Amazon, your ad needs to grab attention. Many sellers use generic product titles and images, missing out on potential clicks.

To improve your ad performance:

1. Use benefit-driven titles that address customer pain points
2. Ensure your main image is high-quality and shows your product in use
3. Use all available image slots to showcase different features and uses of your product

For Sponsored Brand ads, craft a compelling headline that focuses on your unique selling proposition. Use lifestyle images that resonate with your target audience.

6. Performance Monitoring and Optimization: The key to long-term success

Many sellers set up their campaigns and forget about them. This is a surefire way to waste money on underperforming ads.

Instead, commit to reviewing your campaigns at least weekly. Look at metrics like:

• Advertising Cost of Sale (ACoS)
• Click-Through Rate (CTR)
• Conversion Rate

Based on these metrics:

1. Pause keywords with high spend and low sales
2. Increase bids on keywords with good conversion rates but low impression share
3. Add negative keywords to prevent your ads from showing for irrelevant searches

Use Amazon's new-ish search term isolation feature to move high-performing search terms from broad or phrase match campaigns into exact match campaigns.

Putting it all together: Launching your first campaign

Now that we've covered the key elements of a successful Amazon PPC strategy, let's walk through the process of setting up your first campaign:

1. Choose your product: Start with a product that has:
   • A competitive price
   • Good profit margins (to absorb initial advertising costs)
   • At least 10 reviews with an average rating of 3.5 stars or higher
2. Conduct keyword research: Use the tools mentioned earlier to find 20-30 relevant keywords. Categorize them into exact, phrase, and broad match types.
3. Set up your campaign structure:
   • Campaign name: [Product Name] - Sponsored Products
   • Ad Groups:
     1. Exact Match
     2. Phrase Match
     3. Broad Match
4. Set your bids and budget:
   • Start with a daily budget of $20-$30
   • Set initial bids at about 15% of your product price
5. Create your ads:
   • Use your best-performing product listing
   • Ensure your title, bullets, and images are optimized
6. Launch and monitor:
   • Let your campaign run for at least a week before making any major changes
   • After a week, start optimizing based on performance data

Remember, PPC is not a "set it and forget it" endeavor. It requires ongoing attention and optimization. But with persistence and data-driven decision making, you can turn Amazon PPC into a powerful engine for growth.

The road ahead: Scaling your success

As you become more comfortable with Amazon PPC, there are several advanced strategies you can explore:

1. Dayparting: Adjusting your bids based on the time of day or day of the week
2. Seasonal adjustments: Increasing bids during peak selling seasons
3. Product targeting: Creating ads that appear on specific competitor product pages
4. Sponsored Brand Video: Creating video ads to showcase your products in action

The key is to start simple, learn from your data, and gradually expand your PPC efforts as your skills and budget grow.

One final note: while PPC is crucial for success on Amazon, it's not the only factor. Ensure you're also focusing on:

• Product quality and customer service
• Optimizing your organic search rankings
• Building a strong brand both on and off Amazon

By combining these elements with a solid PPC strategy, you'll be well on your way to building a thriving Amazon business.

To conclude, I believe that Amazon sellers have a tremendous opportunity waiting to be tapped in the form of PPC advertising. It allows you to embed your products directly into the search results of interested buyers, capturing their attention at the moment of highest purchase intent.

However, if you keep focusing on organic growth alone, you'll continue to be under-monetized as the fundamentals of the Amazon marketplace are not in your favor.

Q1: What's the minimum budget I need to start with Amazon PPC?

A: You can start with as little as $10 per day. However, a budget of $20-$30 per day is recommended to gather meaningful data quickly.

Q2: How long should I run my first campaign before making changes?

A: Let your campaign run for at least 7 days before making significant changes. This allows Amazon's algorithm to gather enough data for optimization.

Q3: What's a good ACoS (Advertising Cost of Sale) to aim for?

A: A good ACoS varies by product and profit margin, but generally, aim for 25% or lower. Calculate your break-even ACoS based on your profit margin to set a realistic target.

Q4: Should I use automatic or manual targeting for my first campaign?

A: Start with an automatic targeting campaign to discover relevant keywords. After 2-3 weeks, use the data to create a manual campaign with the best-performing keywords.

Q5: How many keywords should I target in a campaign?

A: Start with 20-30 relevant keywords per ad group. As you gather data, focus on the top 10-15 performing keywords and add new ones gradually.

Q6: What's the difference between Sponsored Products and Sponsored Brands?

A: Sponsored Products promote individual items, appearing in search results and product pages. Sponsored Brands showcase your brand and multiple products at the top of search results.

Q7: How often should I check and adjust my PPC campaigns?

A: Review your campaigns weekly at a minimum. Daily checks can be beneficial for high-budget campaigns or during peak seasons.

Q8: What's a good click-through rate (CTR) for Amazon PPC ads?

A: A CTR above 0.5% is considered good for Sponsored Products. However, this can vary by category. Focus on improving your CTR over time rather than hitting a specific number.

Q9: Should I bid on my brand name as a keyword?

A: Yes, bidding on your brand name can be effective. It helps defend your brand space from competitors and often has a high conversion rate at a low cost.

Q10: How do I know if my product is ready for PPC advertising?

A: Your product should have a competitive price, good profit margin, optimized listing (title, bullets, images), and preferably at least 10 reviews with an average rating of 3.5 stars or higher before starting PPC.