Amazon Advertising Best Practices: CPC Ad Overviews

Jeremy Rossow

Table of Contents

UPDATED – August 5, 2021

Marketing on the Amazon platform is always evolving, but one of the few constants is the need for a solid Amazon advertising strategy. At Kaspien, we’ve seen Amazon cost-per-click (CPC) ads increase our partners’ sales by 30% on average. They’re kind of a big deal.

If you want to learn about Amazon SEO, check out our posts on improving your organic discoverability and listing optimization.

How Amazon Advertising Campaigns Work

CPC ads operate on a bidding system. Sellers choose keywords that relate to their product and then bid on it. When shoppers search a phrase that contains the keyword, Amazon’s algorithm considers a variety of things including relevance, category rank, conversion rate, star rating, and much more with the bids. Of the products that Amazon deems most relevant and likely to be purchased, the brand with the highest bid will win the ad placement on the Search Engine Results Page (SERP). No matter how large your bid is, if you win the placement and a shopper clicks on the ad, you will only be charged one cent more than the next highest bid.

We suggest updating your keywords and maximum bids at least weekly, ensuring your keywords are still relevant and adjusting your maximum bids to elicit the results you need. Pay extra attention to your keywords and bids during peak shopping seasons, like Prime Day and the Q4 holiday season.

Amazon has also released Product Targeting options for several ad types, which allow sellers to target ASINs instead of keywords.

Types of Amazon CPC Ads

Conversion rates are higher on Amazon than on search engines like Google because shoppers have a stronger intent to buy when they go to marketplaces. Amazon CPC campaigns allow you to capitalize on marketplace traffic by placing one of four types of ads in front of potential customers:

  • Sponsored Product Ads
  • Sponsored Brand Ads
  • Sponsored Brand Videos
  • Sponsored Display Ads

When deployed effectively, these ads can drive dramatic sales growth on Amazon, which you can see in the below case study from one of our partners.

Amazon Sponsored Products Ads Overview

Sponsored Product ads give you the most bang for your buck out of the three CPC ad types. There are manual and automatic targeting campaign types. Manual targeting is where you will choose all your keywords and bids. Automatic campaigns give Amazon the control of what keywords to bid on and you set a maximum bid. We’ve found that a mix of both campaign types tends to drive the greatest success.

One of the main reasons for Sponsored Product ads’ superb performance is that there are nine opportunities per SERP for your ad to place. Furthermore, these ads do not look like as a typical ad; they resemble a normal listing, so shoppers are typically less hesitant to click than they are with other ad types.

Sponsored Product ads also provide opportunities to place your ads inside other product listings under “Sponsored Products related to this item.” This placement typically gives you more visibility, but it yields a smaller return than SERP placement.

Product Targeting for Sponsored Ads

In 2019, Amazon also introduced Product Targeting for Sponsored Products. Product Targeting acts essentially the same as traditional Sponsored Product ads, but you target specific products and product categories instead of keywords. You can even be as granular as targeting certain star ratings, price points, and brands in a specific category or sub category. These ads appear in the same SERPs as the product/category you are targeting, as well as inside product listings.

The last placement you can have for Sponsored Products is a display/retargeting ad outside of the Amazon platform. This is only possible with automatic targeting (as opposed to manual targeting). Amazon controls the campaign, so unfortunately you have no control over the keywords or products being targeted, only the maximum bid.

Amazon Sponsored Brand Ads Overview (formerly Headline Search Ads)

Sponsored Brand Ads are banner ads that feature 1-3 products (of the same brand) and a custom call out to shoppers. They appear at the top of the SERP, making them the first thing shoppers see after entering their search terms. Sponsored Brand ads are a great way to grow brand recognition, and if done correctly with the right landscape, can be a great way to drive more sales.

Because they have only one placement per page, Sponsored Brand ads are very competitive, making it tough to get traction. Additionally, if there are multiple sellers in a listing, these ads are particularly tough to generate a strong ROI because sales are brand-attributed.

Sponsored Brand ads run continuously, regardless of who is in the buy box. This is in contrast to Sponsored Products, which only run when you are in the buy box. In other words, if you aren’t the only seller in the listing, you may be paying to generate sales for other sellers as well.

This trait means that you need to maintain a certain channel landscape to use Sponsored Brand ads effectively. They are best suited when you are the exclusive seller and the products already have good rank, as the strong rank will help your Sponsored Brand ads win the placement. With those conditions met, Sponsored Brand ads are an excellent way to promote multiple product lines and even introduce new product lines.

Amazon Sponsored Brand Videos Overview

Similar to Sponsored Brand Ads, Sponsored Brand Videos are CPC ads on Amazon that generate brand awareness and support conversions. These ads appear on the SERP for desktop and mobileAccording to a survey by Wyzowl, 68% of consumers prefer to learn about products or services through video. 

At Kaspien, we’ve seen very promising results from Sponsored Brand Videos, with our ads delivering an average advertising cost of sale (ACOS) of 9%. Amazon also reports that some advertisers see 55% lower CPC’s for Sponsored Brand Videos compared to Sponsored Brand Ads, which can be attributed to lower competition for the ad type.

Currently, Sponsored Brand Videos can direct shoppers only to the product page, but Amazon notes that advertisers will be able to point shoppers to Brand Stores soon. In 2021, Amazon did release a Product Targeting option for Sponsored Brand Videos, allowing advertisers to target specific ASINs instead of keywords.

Amazon Sponsored Display Ads Overview

Sponsored Display ads are a good way to retarget relevant shoppers that have searched for, viewed, or already purchased your product or a similar product. This ad type is similar to an automatic campaign because you are not targeting keywords; instead, Amazon identifies specific shoppers to target and you set a maximum bid for the impression or click.

These ads can place both on and off the platform, which means these ads offer the greatest potential reach of the three ad types. There are three ways you can target shoppers with Sponsored Display Ads. The first is a CPC option, where you target shoppers who have viewed your product with off-platform display ads. The other two options use a Cost-per-Impression model. They target shoppers who have searched for or purchased your product (or something similar). These ads populate on and off the Amazon platform.

After a major update in late 2021, Sponsored Display Ads are driving a much higher return on investment, and are especially effective at capturing new-to-brand (NTB) sales. You can learn more about the update in this blog post.

Amazon DSP Advertising

Amazon Demand Side Platform, or DSP, is Amazon’s option for programmatic advertising. Amazon DSP allows brands to market to consumers off and on Amazon, targeting them using Amazon’s exclusive first-party data. Amazon DSP is a powerful tool for growing brand awareness. However, this tool stands apart from the aforementioned ad types, as it requires a minimum budget of $35,000, making it inaccessible for smaller brands.

For a deep dive into Amazon DSP advertising, check out this blog post.

Amazon Advertising Software Automation

Kaspien AdManager

Because Amazon advertising has been so important for growing brands on Amazon, we created our own software that maximizes its efficacy. AdManager is the leading campaign management software for Amazon pay-per-click (PPC) advertising. Powered by AI and created by us, a $1 billion+ Amazon seller, AdManager maximizes profitability for Sponsored Product Ads and Sponsored Brand Ads.

In 2020, Kaspien used AdManager to drive extraordinary results for our brand partners.

  • 55% avg. increase in ad sales YOY 
  • 39% avg. increase in ad orders YOY
  • 41% avg. decrease in ACOS YOY
  • 6% avg. ACOS on over $90M ad revenue

AdManager is available as a self-service software or as part of our Amazon advertising managed service. AdManager is provided complementary to our Retail and Agency partners’ ad campaigns.

Interested in Learning More?

Learn how to maximize Amazon advertising performance by downloading our whitepaper, Architecting Amazon Sponsored Ad Campaigns.

Determining Your Amazon Advertising Strategy

From the beginning, define your objectives so you can create a purposeful Amazon advertising strategy. With CPC campaigns, that means asking yourself do you want to focus on increasing brand awareness or driving sales?

Established Products

If you already have good brand recognition, your marketing efforts can be more specific and focused on building relevance. Identify very specific keywords, branded and non-branded, to bid on. We call this “refining your traffic.” Consumers already know what products or services you offer, so your Amazon marketing can focus on winning ground in your category. This strategy also tends to be less expensive than the alternative because more specific keywords have less competition than more general terms.

New Products

If your brand or product is relatively unknown, you want to spread the word to as many shoppers as possible. Rather than refining traffic for a targeted niche group, focus on increasing impressions. Bid on more general keywords, especially non-branded keywords, so that you can place your ads in front of as many shoppers as possible. Initially, your return may not be as high and bidding on general terms becomes expensive; however, you will develop brand recognition, helping you gain a foothold in the market for the long term.

Download our New Product Launch Amazon Strategy Guide.

The Big Picture

Running and optimizing Amazon CPC campaigns is a crucial part of successful marketing, but their impact is magnified through a holistic marketing strategy. The shopper journey often begins off-site, where social media marketing drive consumers to Amazon. Once there, shoppers see Amazon CPC ads. They then click on the ads and enter optimized product listings, where compelling photography and copy make the final sell, convincing shoppers to buy.

If you invest in quality marketing at every stage, you can increase the traffic entering listings and drive conversion rates up, ultimately growing your total orders.

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More About the Author

Jeremy Rossow