UPDATED – October 23rd, 2019
Marketing on the Amazon platform is always evolving, but one of the few constants is the need for a solid Search Marketing strategy. At Kaspien, we’ve seen Amazon CPC ads increase our partners’ sales up to 30%. They’re kind of a big deal.
If you want to learn about Amazon SEO optimization, check out our posts on improving your organic discoverability and listing optimization.
How Amazon CPC 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.
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 three types of ads in front of potential customers.
Amazon Sponsored Products Ads
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.
In 2019, Amazon also introduced Product Targeting for Sponsored Products. Product targeting act 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.
Kaspien has created a self-service software for Amazon ad management. Kaspien AdManager automates bid management and keyword optimization for CPC ads on Amazon. To date, it has driven over $48MM in sales, with an average 10:1 return on ad spend.
We’ve used AdManager internally to run our partners’ campaigns for years. On average, we’ve seen AdManager increase Amazon sales by 30% and reduce ACoS by 50%!
To use AdManager yourself, apply to the Beta!
Amazon Sponsored Brand Ads
(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.
It’s worth noting that, 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 Display Ads (Beta)
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.
These campaigns have a lesser focus on ROI because of the nature of a Cost-per-Impression campaign; they’re intended to grow your customer base by increasing brand awareness and visibility rather than drive directly attributable sales. In that way, they are an investment in your brand’s long-term growth more than an immediate sales driver.
Determining Your Amazon Strategy
Before you start, define your objectives so you can create a purposeful Amazon strategy. With CPC campaigns, that means asking yourself do you want to focus on increasing brand awareness or driving sales?
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.
If your brand is relatively unknown, you want to spread the word to as many shoppers as possible. Rather than refining your traffic to a targeted niche group to drive conversion rates up, your first goal should be to increase 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, but you will develop brand recognition, helping you gain a foothold in the market for the long term.
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.
Think about it: CPC campaigns are the midpoint in a consumer’s journey. First, off-site marketing draws consumers to marketplaces, where they see CPC ads. They then click on the ads and enter 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.
Learn about a holistic Amazon marketing strategy in our free whitepaper, The State of Amazon Marketing.