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Ultimate Beginner’s Guide to Amazon Sponsored Ads (2021 Pay-Per-Click Advertising)

August 16, 2020

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Amazon Pay-Per-Click Advertising (known as "PPC") has evolved into a super profitable marketing system for knowledgeable sellers and for Amazon itself. 

When a seller or product vender knows what they are doing,

they can leverage Amazon Marketing Services (AMS) to buy the attention of many more shoppers than organic results alone. 

This is a very effective way to drive traffic to your product listing,

especially if your campaigns are fully optimized so that your ads are likely to surface on the first page of Amazon's search results after a shopper has plugged in your key terms. 

Simply put,

if you set up your ppc right,

you are in a great position to garner a considerable volume of product sales. 

This article is a in-depth instructional on how to maximize your amazon pay-per-click ad-spend to get the most sales possible as you grow your business in 2020.  

Sponsored Product Advertisements appear in a variety of places: 

1. Top of the Search Results
2. At the bottom of the rankings
3. At the bottom of product listings often after the "frequently bought with" section.

4. At the right of a product listing under the buy box

Just to get this outta the way right at the forefront,

Not sure how new you are with online businesses,

but I use the language of the PPC world,

so if you get confused by any of it,

hit up this library of terms

(an FBA glossary I made)

What is Amazon PPC exactly?

Well, let's break it down:

PPC means that sellers are paying for every time that their ad appears and is clicked on by a shopper.

The amount the seller pays is determined by an auction program (which I cover in depth later on).

Inside Amazon Marketing Services, there are a few ways that merchants and vendors can utilize PPC: 

1. Sponsored Products: these are keyword-targeted advertisements that give sellers/venders the ability to show off individual product listings.

2. Sponsored Brands (Headline Search Ads): this style of keyword-targeted ad enable registered brands to promote a customized headline + their brand logo + up to 3 of their products inside the same ad that appears just below the search

3. Product Display Ads: (available to vendors only.  Find out the difference between a vendor and a seller)


Here's an outline of what we're going to cover here: 

  • Setting up an automatic campaign
  • Getting your STR (Search Term Report)
  • Setting up a manual campaign
  • Structuring your manual campaigns (yeah you'll have multiple)
  • Optimizing Your Campaigns to MAX out your conversions
  • Organizing Your Manual Campaigns into Broad, Phrase, and Exact Match Groups
  • Knowing the Amazon Auction Program
  • Setting Goals for Your Amazon PPC Campaigns
  • Understanding Your Metrics So You Do More than Break-Even
  • Hiring out your PPC management so you can launch more Products or hit the Beach

I'll address each topic in the order I setup and optimized my own campaigns in. 

The first step is to run an automatic campaign. 


Setting up Automatic Campaigns

The first campaign you will set up is called an automatic campaign. 

Here's a quick 2 minute explanation, walking you thru how to do it. 

Best to spend a 35 dollars a day for 7-14 days to collect enough data for your manual campaigns. 

You'll get this data out of your STR and then you'll use it to formulate your 3 manual campaigns. 

Once you've set up your auto campaign and let it run for a week to two weeks, then you need to get your STR out of your Amazon Seller Account. 

Rather read how to set up an Automatic Campaign?

After you've run your automatic campaign, you'll want to access your search term report, so that you can export the terms to your manual campaigns.


4 Steps to Getting Your Search Term Report (STR)

Step 1: Login to your seller central account and click the "reports" tab and then the "advertising reports" tab
Step 2: Select your campaign, type of report, and put in a name for your report
Step 3: Click the yellow "create report" button
Step 4: Save your report to your computer by clicking "download"

After you download your search term report, it's time to set up your first manual campaign. 


Setting up Your First Manual Campaign

​For every product listing you have, you'll set up three ad groups for three different kind of keywords: broad, phrase, and exact. 

Below is an infographic showing the structure.

As you probably already have guessed, you'll move from left to right as you setup your campaigns and ad groups. 

This is a picture of the structure of Amazon PPC Campaigns. For every product, there's two campaigns: one automatic (to gather data) and then one manual. The manual campaign will sort the keywords generated by the automatic campaign by using three ad groups: broad match, phrase match, and exact match.

Step-by-step Guide to Setting up Your First Manual Campaign

Here's a step-by-step video guide to constructing your first manual campaign. It is just under 5 minutes long. 

If you would rather read it step by step,

scroll below the video. 

Manual Step by Step Guide:

Step 1: Click on the Advertising Tab

Step 2: Name the campaign, decide how much you want to spend each day, and input a start date and an end date. 

Step 3: Now name the ad group (I generally put "product-name-type-of-group" so a theoretical example would be "tumbler-broad-match")

Step 4: Select the product(s) you'd like to include in the campaign. 

Step 5: Assign a bid amount (Amazon provides suggestions, so you'll know what the average winning bid on that product is)

Step 6: Input your list of keywords from your Automatic Campaign and then at the bottom right, you'll click "save and finish." 

Step 7: After you click "save and finish," you'll be directed to a page that confirms your campaign has been created as well as your list of previously created campaigns. 


Manual PPC Campaign Optimization Explained

When you are building out your first ad campaigns (you'll make 2 campaigns per product), you'll go through 4 steps (visual learner? see infographic below):

  • Step 1: Create an Automatic Campaign and Run it for 2 weeks to get initial data (let Amazon do the keyword research for you)
  • Step 2: Create a Manual Campaign with a Broad Match Ad Group and run it for a while until you can see which keywords are the higher converting ones. 
  • Step 3: Create another Ad Group entitled "Phrase Match" and put the higher converting keywords in it. 
  • Step 4: Finally, create an Ad Group entitled "Exact Match" and put every keyword generates sales for that product in it. Make sure that you are setting a high enough bid price in this group to win the auction.  

Broad, Phrase and Exact Ad Groups

When you are optimizing your PPC campaigns, it's kind of like you are panning for gold. 

Your goal is to find the best keywords for every product you have listed. 

And the way you are going to do that is to "sift" the keywords through your manual campaign. 

What is a broad match?

The broad match option might show your ad show if your product is a "orange athletic sports drink mixer bottle," if you win the bid and someone searches for "water bottle." 

The broad match option shows related terms

What is a phrase match

To continue the previous example if you choose "phrase match," your water bottle will show up only when someone searches your keyword inside of a phrase like "water bottle for sports protein shakes."

The phrase match option shows your product if and only if the searched phrase includes your keywords and you win the bid. 

What is an exact match?

If you select this keyword setting, only your exact keyword that you are bidding on and some variants will prompt the showing of your ad if your bid wins. 

So, to continue the example, if your only keyword is "orange athletic sports drink mixer bottle," your ad will only show if a shopper inputs that exact phrase or its misspellings. 


ACOS: The Factor that will determine Your PPC Campaign Goals

Now that you know the basics of PPC on Amazon, you'll definitely want to become familiar with one acronym in particular: 

A.C.O.S.

What is ACOS?

ACOS is an acronym for "average cost of sales."

ACOS is a financial metric that refers to the average amount of money it takes for you to sell a given product. 

ACOS is comparison between how much money you are spending to sell a product and the money that the product is bringing in. (If you are spending more to bring a product to market than you are getting for it at the market, that means you are not making money, but losing money. And the goal is to make money, right?)

The metric ultimately tells you whether or not you are profitable, but more on that later. 

How is ACOS Calculated?

The ACOS of a product is calculated by adding up every cost that you incur by acquiring the product, imprinting it with your branding, having it inspected and shipped to the Amazon Warehouse and creating a fully optimized listing on the Amazon Platform (involves high-quality copywriting, keyword research and acquiring high-resolution photos). 

What is "Break-Even" ACOS?

Simply put, the break-even ACOS is your profit margin. "Break-even" means you don't make any money. You are spending exactly the same money that you would've made from the sale of each product. Both metrics display the delicate balance where you make nothing and lose nothing when you sell your product. 

Say that you are selling your product for 20 dollars. 

Your Break Even ACOS will be that 20 dollars minus all other expenses.

In the infographic below, I name the two major expenses: Cost of Goods Sold and Amazon's FBA Fees.

How does ACOS (average cost of sale) relate to profit margin?

Well, as we learned above, your break-even ACOS equals your profit margin. 

What does that tell us about ACOS and profit margin?

The more you spend on selling your product, the less you make in profit. 

The opposite is also true. 

The less you spend on selling your product, the more you make in profit. 

Example: 

You are selling a product of 20 dollars (which you'd never do by the way, you'd always sell it for like 19.97 as the psychological distance between 19.99 and 20.00 is ginormous; I'm just using 20 dollars for easy round numbers). 

You will pay a FBA Fee, which you can't control. 

You will also pay for your cost of goods sold, which is made up by every cost that you incur from acquiring the product to bringing it to market. 

Here's a brief (non-exhaustive) list:

  • Buying the product from a Manufacturer or Supplier (stay away from Alibaba, learn why here)
  • Designing the Product Packaging (Need a graphic designer) 
  • Buying Your UPC (Universal Product Code)
  • Producing Professional Images (You'll want all 3 types: Product, Infographic and Lifestyle)
  • Keyword Research (Generally you'll need a couple of paid tool subscriptions to do this well)
  • Copywriting (for Product Listing)
  • Shipping the product to an Amazon Warehouse from the Manufacturer
  • Product Transportation Insurance (Protects you from liability while product is being shipped)
  • Amazon Sponsored Ads Pay-Per-Click (PPC) Ad Spend 

How does ACOS relate to your PPC Budget (how much you should spend on PPC advertising)?

Well, The overall goal of starting a business is to be successful and one mark of success is profitability. 

So the balance that you need to meet is between lowering your cost of goods sold (spending less on materials, services and advertising) and spending enough to make more sales,

because the ultimate way to make more money is not by trying to save,

but by making more sales. 

But you know that. 

How much money does PPC Cost?

It depends on the auction. 

You see, Amazon has put together an algorithm that selects the highest bidder on a given keyword or key phrase. 

It's a way that they can guarantee that their platform is the most profitable that it can be. 

Take for instance the 3 bidders below: 

They are all bidding on the same keyword. 

In the illustration above, the 3rd advertiser would win with their bid of 4 dollars and should the shopper clicked the ad, the 3rd advertiser would pay 3.51, one cent higher than the 2nd highest bidder.

How does Amazon's PPC Auction Work?

The way that CPC (cost-per-click) advertising works that the highest bidder wins the auction, but doesn't pay their own bid, rather only one cent higher than the competitor immediately below them. 

Can Amazon PPC improve the organic rankings of my listing?

Yes, it can. 

Amazon's algorithm for organic rankings prioritizes those listings that have the most sales in their recent history.

So the more sales you get via PPC,

the more your organic rankings will increase. 

That gets into the relationship between Amazon PPC (Amazon Marketing Services) and Amazon search results rank placement. 

The way that those two (PPC & Organic) relate can be pictured like this:

How does Amazon PPC relate to Your Organic Rankings?

PPC, when done right can increase the amount of viewers that click to see your product listing. 

In the PPC world, these clicks have often been called "micro-conversions" as they are actions that the prospect takes, that aren't quite a conversion, but are indicative of interest.

Just keep an eye on clicks versus conversions ratio and if you see that they are relatively equal, you've got a pretty solid listing, but if you are getting a lot of clicks and few conversions, that means that your ppc isn't focused well enough or your listing requires further optimization. 

To conclude this PPC guide,

I'd like to leave you with 10 tips to help you get a solid start!

6 Tips to Get the Most Out of Your Amazon Sponsored Product Ads


1. Structure Your Campaigns the Same Way

It's pretty easy to stay organized when you are only advertising a single product, but when you start promoting multiple products it will become more difficult. 

Therefore, it's important to find a way to stay consistent so that you can keep track of what products or keywords you have where. 

When you add products, you can use the framework of your previous campaigns and insert the content of your new products.

That way you will be familiar with the process and now you are just duplicating it.

No need to reinvent the wheel with every new product. 

As they say, if it ain't broke...


2. Put 1 Product in each ad group

This tip builds on the first tip. 

Until you really have a handle on your PPC strategy and know how to keep track of what's going on where inside of AMS (Amazon Marketing Services), it's really an easy way to keep your Amazon Campaigns organized. 


3. Create different ad groups for terms that are similar

Eventually, 

as you expand your inventory,

you might find that you are selling products that are similar and that often convert for the same keyword. 

When you get more familiar with PPC, you can put more than one product in your manual campaigns as you find that the keywords that overlap between products. 

Just be sure that you label the ad group accordingly like products 1-3 exact match keywords. 

4. Use an Automatic Campaign to enable Amazon to find relevant keywords for you

If I were you,

I'd use this tactic with every new product I launched. 

In fact,

it's what I did. 

I found it to be quite a time saver,

as it leverages the resources of Amazon

to do the keyword heavy-lifting. 

Otherwise, you'll need to be doing a lot more work with various tools like Sonar (StartupBros) or Keywordtool.io. 

5. Optimize Listings (SEO) to Make Sure that Shoppers who land on the Page are likely to end up in a sale

You'll want to go through your entire listing before you start your PPC

and make sure that you've optimized it for both

The Amazon Search Algorithm (by including every keyword possible for your product)

and

The prospects (shoppers) that will no doubt view your listing as you promote your products using Amazon Sponsored ads. 

I've put together a complete guide to Listing Optimization. 

Hit the button below. 

I cover every part of the listing,

from title (make sure it's less than 80 characters in most categories),

to bullet points (put benefits in these sections, not just product features), 

to backend keywords (no need to repeat keywords more than 2x, in fact, you could get punished by the algorithm for doing so). 

6. Remove Search Terms that don't end up in conversions

A. Use the Keyword Match Feature 

B. Utilize the negative keyword option

One benefit of using the negative keyword feature is that you can refine your campaigns even further by running another auto campaign with the current exact match keywords from campaign keywords listed as negative keywords in your second campaign, so Amazon won't use them, but it will go find some other golden keywords for you. 

It's a secondary, easy way to get amazon to do more research for you after you've fully sifted your first set of keywords. 

PPC Optimization only ends when you are satisfied.  

 Let me tell you

I'll never be satisfied

You ever set some ginormous goal

that's like

way,

way out there?

Want to know why I was able to built the business on Amazon I did as fast as I did? 

I became obsessed. 

I drank the kool-aid of internet business

It took a lot of work, 

but I was ready because I already had a huge win in the bag, 

if you know what I mean. 

I had a already learned from experience that I could accomplish a lot in a short amount of time

if I applied myself and gave myself completely to the task of building a successful business. 

You see, 

building an Aamzon business wasn't my first round. 

Before that, 

I had put in over 5,000 hours

(if not more, I'm a night-owl, so I lose track of time)

honing my skills

working with small businesses

using the internet to make their phones ring with interested customers

that business was way easier to start than Amazon. 

Don't get me wrong,

it still took a lot of effort and a lot of hours,

there's just less moving parts

no physical items,

just you and the internet

making things happen. 

Well, 

to make a long story short, 

I graduated from college in 2011,

took a job selling car parts near Detroit

but soon was sick of the daily commute and content coworkers

you see,

I wanted more 

(As you might see through my instagram)

I wanted to travel and be able to hang with my homies

So I went on the internet after getting home from my soul-sucking 9-5

After a couple of years of browsing

of trying different things

(we've all done the MLM thing, right?)

I hit upon this guy's video

showing how he made businesses grow via the internet

and took a sliver to deliver 

(think 10%)

Exhausted from putting in the hours and coming home to do something on the side

I figured "what the hell" and scheduled a call

a week later, 

I bit the bullet and joined his coaching program

and 6 months later

I kissed my 9-5 goodbye 

to pursue my dream to live as an entrepreneur.

Fast forward 4 years

and I'm making more money than ever 

but more importantly, 

my life has so much more meaning

as I've been able to be a part of an awesome community

(and even move to California to live 5 min away from my mentor

who's become a close friend)

If you want to check out the lead generation coaching program

hit the button at the bottom of the infographic below. 

If you're still interested in Amazon FBA,

that's cool too. 

Here's the link to the complete guide

Follow Me
Ippei Kanehara
Founder/CEO Ippei Leads

$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2021, is to build your own 6-figure lead gen biz. You can learn more here.

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