The Ultimate Amazon PPC Guide

Successfully creating ads on Amazon is very challenging and time-consuming. In our PPC Guide you will learn what you must pay attention to at all costs and how you can optimize your ads.

The following blog article is very long and therefore divided into 3 parts. If one part is not interesting for you, just jump to the next part.

The first part is mainly about the basics of PPC advertising and the different ad formats and playout options.

The second part is mainly about what you need to pay attention to before and during the creation of your ads.

In the third part, we will focus on optimizing your ads and measuring their success.

Part 1: Basics of advertising formats

What is Amazon PPC?
- How does Amazon PPC work?
Why should Amazon sellers advertise?
What Amazon Advertising formats exist?
When are PPC ads displayed?
What is the structure of Sponsored Product Ads?
- Auto Targeting
- Manual Targeting

What is Amazon PPC?

Amazon PPC means Amazon Pay Per Click and is a billing model for advertisements on Amazon. Only after a click on the ad is made, costs arise for the advertiser. Although Pay per Click stands for the payment method itself, the term PPC is generally equated with the digital advertising options that are billed via Pay per Click. PPC ads on Amazon are better known as Amazon Sponsored Ads. The most popular advertising format is the Amazon Sponsored Product Ad and can be placed on either a search results page or a product detail page. Amazon merchants who create PPC ads pay for them - as the name suggests - based on the number of clicks on the Sponsored Product.

How does Amazon PPC work?

The merchants first selects the products they wish to promote and can then select a maximum daily budget per product during the PPC ad creation process. From this budget the respective cost per click is subtracted after a prospective customer has clicked on the ad. If the budget is used up after several clicks, the ad is no longer displayed.

There are various ways to play out advertisements. The most common method is keyword targeting. The ads are played when the keyword matches the search term entered by a potential customer.

Example:
If you sell sunglasses and advertise a product with the keyword "sunglasses men", your ad will appear (if you have a certain relevance and make an appropriate bid) if "sunglasses men" has been entered into the Amazon search field.

However, search terms and keywords are not always the same terms. You can find out more in the section “When are PPC ads displayed?”.

The click price, i.e. the cost per click on the ad, depends on whether and how many other advertisers bid for the same keyword. Amazon proceeds after the second price auction. This means that the ad of the merchant who offers the most for a keyword is displayed, but the merchant only has to pay the cost of the second bidder's bid + 1 cent per click on the ad.

The goal of Amazon PPC management is to find the keywords that are used to display your ads, get clicks and generate as many sales as possible.

Caution: Just because you set a high bid for a particular keyword doesn't mean your product is guaranteed to be played for it. Amazon's algorithm takes many factors into account when ranking products, such as reviews.

High bids and daily budgets nevertheless increase the chance of clicks and sales. The difficulty in PPC management, however, is to keep the bids as low as possible in order to generate not only many sales but also profits with the sales. If, for example, the click price is higher than the margin of the advertised product, no profit can of course be made with the advertising campaign - no matter how many products are sold through it. Even if an ad triggers many clicks but no sales, it causes losses for the merchant. Therefore, it must be weighed and evaluated for which keywords high bids pay off.

Requirements to place Amazon advertisements

In order to perform Amazon PPC actions, you must have an active professional Amazon seller account or Advertising Console. You can act as a seller or vendor. Sellers sell their goods via Amazon to the end customers and vendors sell the goods directly to Amazon. Both seller types are responsible for the PPC measures themselves. Sellers manage their organic product sales as well as their Sponsored Products in Seller Central. Vendors have two different accesses - the administration of the "normal" product sales (product list creation etc.) is done via Vendor Central and for the management of their advertising they use the Advertising Console.

Why should Amazon sellers advertise?

The number of sellers and products offered on Amazon, as well as the quality of the product detail pages has increased significantly in recent years. Due to this competition it has become harder to show up in the organic search results on page 1. Organic search results are the unpaid search hits displayed by the Amazon search algorithm "A9".

A glance at the search results page reveals the importance of advertising on Amazon. If you don‘t pay, you have little chance of becoming visible to potential customers. Before they start scrolling, after entering most of the search terms, only advertisements (marked in red) can be seen.

Advertising Formats

This makes Amazon's advertising possibilities all the more important, because advertisements give advertisers the opportunity to reach the first position within the search results with each of their products.

This not only increases sales through the ad, but also has other positive effects: When campaigns work well, the number of product detail page views increases, which in turn leads to an increase in both sales and seller performance, resulting in a higher number of organic rankings and organic ratings.

It is a cycle:
An increase within the organic ranking leads to an increasing number of page views and this in turn leads to an increase in sales, which leads to higher purchasing volumes and thus to a reduction in product costs.

Magic PPC Roundabout

Amazon PPC measures are also important for obtaining information about customers' search behavior: The search term performance data from PPC campaigns provides insight into the exact wording used by customers to search for a product on Amazon and which keywords Amazon considers relevant to the product. This data is inaccessible to sellers who do not advertise.

Furthermore, important key performance indicators (KPIs) such as the number of impressions, the click rate, and the conversion rate for certain search terms are only displayed in Seller Central when you run ads. This is particularly relevant if, for example, A/B tests are carried out by varying images, titles or prices (more on important KPIs can be found in the "Performance values" section).

What Amazon Advertising formats do exist?

There are several ways to advertise on Amazon. Depending on whether you act as seller or vendor, you can use different advertising formats on Amazon. At the current time (January 2024) the following three main forms are available:

Difference between search terms and keywords:
Search terms are queries directly entered by the customer into the Amazon search field. Keywords are the terms used by Amazon advertisers for a product to be advertised so that the ad can be displayed - this happens when the search term and keyword match. A search term does not have to contain exactly the same words as the keyword.

There are basically four different Match Types, which define to what extent the keyword and the search term may "differ" so that the ad is displayed.

Auto Match
With Auto Match Type, keywords for which your ads are displayed are automatically selected by Amazon (based on the product listing).

Broad Match
The Broad Match Type offers the "widest" match of the ads. In addition to the keyword itself, Amazon allows other terms before, within or after it. Moreover, the search term can contain words of the keyword in any order. Even narrow variants such as the plural form of the search term triggers the ad. Since an ad with broad keywords appears for a large number of search terms, scattering losses can occur. In the case of Sponsored Brands, an additional closely related display occurs; for example, in the case of the keyword "sneaker" for the search term "shoes". This can be prevented with the so-called Broad Match Modifier via a plus symbol in front of the keyword. "+Sneaker" prevents the ad of being displayed for closely related search terms.

Phrase Match
The Phrase Match Type is used to display ads that match the keyword itself with the search term and other terms before or after it. The order of the terms is therefore fixed. Narrow variants such as the plural form also trigger the ad.

Exact Match
The Exact Match Type offers the lowest wastage. Only the keyword term itself and very narrow variants such as plural or supplementary filler words such as "off", "in" or similar allow the ad to be displayed. In this way, advertisers can precisely control the search terms for which their ads appear.

The following table gives an overview of the different Match Types and shows the possible search terms that would trigger a display for the example keyword "hand mixer white".

Match Types

In addition to these positive Match Types, there are also negative Match Types or negative keywords that are used to prevent the Amazon ads for being displayed for certain keywords.

Negative Phrase
With negative phrase all search terms are blocked which contain the negative keyword itself, the negative phrase or close variants. Negative keywords can contain up to four words. Negative phrase keywords can exclude a relatively wide range of search terms and should therefore be used with caution.

Negative Exact
If the exact match is negative, Amazon does not display the ad for buyers who are looking for the keyword itself or close variants such as the plural. Negatively exact keywords can contain up to ten words.

Based on ASINs

Sponsored Product Ads, Sponsored Display Ads and since end of 2019 also Sponsored Brands can be triggered by ASINs. Instead of keywords, ASINs of products that you want to target are stored accordingly. These can be ASINs of competitor products or your own products.

If ASINs are targeted with Sponsored Display Ads, the ads are displayed on product detail pages of the targeted ASINs. Sponsored Brands based on an ASIN are displayed either on the product detail page of the corresponding ASIN or on the search results page if the targeted ASIN is displayed organically for a search term on the first search results page. The latter is also the case for Sponsored Product Ads when ASINs are targeted. In 2022, product targeting for Sponsored Product Ads was also expanded. With the expanded targeting, you can target related products in addition to your intended product with one click. For example, if your targeted product is a camera, the expanded targeting can also include replacement products such as other cameras, complementary products such as tripods or lenses, and items that were frequently viewed and purchased along with the camera.

Playout based on ASINs is also called product targeting or product attribute targeting (PAT) and offers a wealth of opportunities to respond to competitors. More about this can be found in the 3rd part of this PPC guide or in even more detail and with concrete recommendations for action in our blog article on product targeting.

Based on categories

In addition to ASINs, categories to which the advertised products belong can also be selected for the Product Targeting of the Sponsored Product Ads, Sponsored Display Ads and Sponsored Brands. Further refinements can be made for the displayed ad within a category. In this way, it is possible to precisely control for which competitor products in a category the own product is displayed in the form of a Sponsored Product Ad.

Based on interests

Sponsored Display Ads can also be displayed based on interests. The advertiser selects the interests of his target group and the Sponsored Display Ad is displayed on the product detail page of a product that corresponds to one of the customer interests. The interests are determined, for example, on the basis of past product views and purchases by Amazon customers.

You can also use retargeting with Sponsored Display Ads. Here, ads are displayed on external pages if a potential customer has visited your own or similar product detail pages in the last 30 days, but has not yet made a purchase.

As described above, not every advertising format presented above supports all four of these targeting types. Here you can find an overview:

Advertising formats overview

What is the structure of Sponsored Product Ads?

The architecture of an Amazon advertising account is as follows: With a seller account it is possible to manage several marketplaces such as the english or german Amazon marketplace. On each marketplace it is possible to create advertising campaigns. Within a campaign, up to 20,000 ad groups can be created, for which up to 1,000 keywords can be entered.

Structure of Sponsored Product Ads

For a long time, ad groups existed only for sellers in Seller Central. In the Advertising Console, keywords were directly integrated into the campaigns. Since the end of October 2019, there have also been ad groups for vendors. Each ad group is given its own Match Type and the keywords are assigned to the corresponding ad groups depending on the Match Type.

Automatic and manual campaigns

The most common goal of advertisers is to be found for all relevant keywords and to appear on the first search result page. When using "Sponsored Products", advertisers can select automatic campaigns (Auto Targeting) or manual campaigns (Manual Targeting). While Amazon automatically displayed the ad for suitable keywords in Auto Targeting, the seller himself determines the keywords to be advertised in a manual campaign.

Auto Targeting

Amazon obtains the keywords in the auto campaigns from the listing of the product (product title, attributes, description, etc.) as well as from the categories to which the product belongs. The quality of the keywords can vary greatly and is usually not complete. All products in an auto campaign are displayed using the same keywords. Irrelevant keywords can be added as negative keywords.

Automatic Targeting is easy to use and start, but does not provide precise control, as it is only possible to bid on all possible keywords at ad group level (or for four automatic targeting groups). One way to control automatic campaigns in a more targeted way is to use keyword management. This means that keywords that perform well or less well are transferred from the auto campaign to a manual campaign and added as negative keywords in the automatic campaign. More about this in the section "Keyword management and bid adjustments".

Manual Targeting

In manual campaigns, keywords - as the name suggests - can be inserted manually. Auto campaigns can also be used to find keywords that "work" well or poorly and then transfer them to manual campaigns as keywords for further optimization.

Since auto campaigns usually only cover a small part of the relevant search queries of customers, you should additionally conduct your own keyword research and supplement your manual campaigns with further relevant keywords.

Important:
The manual campaigns are much more important for the success of your advertisements than the auto campaigns, because only in manual campaigns bids for individual keywords can be set and adjusted individually.

This fine control in Manual Targeting, however, requires a precise structure within the campaigns:

As already described above, the manual campaigns can have the Match Types Broad, Phrase or Exact. The advertiser can decide the structure of a campaign himself - either a campaign contains several ad groups or each ad group has its own campaign. We recommend the latter, as some advanced settings and the budget are only possible at campaign level, giving you more control. For more information, see the section “Keyword management and bid adjustments” in Part 3.

With each of these campaigns or ad groups, the keywords are structured according to Match Types.

Our recommendation is to create four campaigns with the four Match Types Auto, Product Targeting (ASINs), Broad, Exact for one product.

Each of these campaigns contains the corresponding keywords which, depending on their performance, can be transferred from Auto to Broad and from Broad to Exact after some time. In exact campaigns, keywords can be optimally controlled with individual bids. If a search term has performed well in a broad campaign and has been transferred as a keyword into an exact campaign, you should not forget to set the keyword as "negative exact" in the broad campaign. Thus, the ad is only triggered by the exact campaign keyword and the clicks can be clearly assigned to this campaign.

Recommended Campaign structure — Recommended campaign structure

Part 2: How to start your ads

How do I start Amazon Advertising?
How do I create a Sponsored Product Ad?
- Create a campaign
- Create ad groups

How do I start Amazon Advertising?

As sellers, advertisers must operate a professional seller account and own the Buy Box of a product in order to be able to advertise Amazon at all. For vendors, Amazon Retail must own the Buy Box to display Sponsored Product Ads. The display of Sponsored Brands is independent of the ownership of the Buy Box. If you own the Buy Box, you should follow the steps below.

Status quo analysis: Is your product "Retail Ready"?

Before you start marketing a product, you should invest time in preparation and check whether the product you want to promote is qualified. This will drastically increase the efficiency of all further steps.

According to a study by Feedvisor, almost 90% of Amazon customers would not consider buying a product that has less than an average of three stars as a rating.

1. Optimization of the product detail pages for the qualification of products

The relevance of Sponsored Products is based on the organic ranking and the product information stored by the Amazon merchant. In order to become relevant for the Amazon algorithm A9, all self-influenceable information should be optimized. That is:

Product title
Attributes
Product pictures
Description (A+ Content)
Reviews
Response time
Terms of delivery
Complete product data
Price
Backend keywords
Customer feedback

The result of good search engine optimization (SEO) is to appear within the organic search results on the first page. As long as this is not the case, Sponsored Product Ads will help to become visible to potential customers in important places. A search engine optimized product listing is also important for Amazon advertising. On the one hand because Amazon classifies the ASIN as more relevant and on the other hand because clicks on the ad and sales are more likely if the product detail page is of high quality (all necessary information as well as product images etc. are available).

2. Calculation of the Break-Even ACoS

There are different performance values with which the success of PPC ads can be measured. A well known value is the Advertising Cost of Sale (ACoS), which is the ratio of advertising costs to advertising revenue. It provides information about the efficiency of advertising, but not about absolute costs or revenues. The individual key figures are explained in more detail in the section "Performance Values". At this point, the importance of the so-called Break-Even ACoS is explained. Before you create an advertisement, you should always know the Break-Even ACoS of each advertised product, as this tells you the value above which your advertisement is unprofitable.

However, it is not possible to give a general answer from when advertisement is generally profitable, as each product has a different margin. What is a very good ACoS for one merchant can be an unprofitable value for another.

In order to determine the profitability of a campaign, the Break-Even ACoS of the product must be known. This is the value at which the costs incurred in selling a product, including advertising costs, are the same as its turnover. Neither profit nor loss is achieved.

The Break-Even ACoS is calculated by deducting all taxes, costs and fees from the sales price of the product as a percentage. If the profit margin of the seller with product X after deduction of all costs is 21%, for example, the seller with an ACoS of 21% makes no loss for this product - but also no profit. For this product and its campaigns, the ACoS should therefore be below the value of the Break-Even ACoS of 21% in order to achieve profit with advertising. We have visualized this in the following figure.

It is important that you know the Break-even Acos before you start your advertising campaign to see if it is profitable and if not, to be able to give in accordingly.

Note:
Of course, you can also consciously choose to act with a higher ACoS value. This depends on your individual strategy and can make sense depending on the life cycle of the product.

3. Keyword research

In order for your Sponsored Product Ads to be displayed, you must specify the keywords or ASINs for which your ad should be displayed.

As explained above, the keywords in auto campaigns are automatically integrated by the Amazon algorithm. As this is often not sufficient for a target-group oriented displayed ad, you should definitely do your own keyword research. For this you can either use a tool or carry out a manual search. We recommend doing both at the same time.

Consider both Fat-Head and Long-Tail keywords.

So-called Fat-Head keywords consist of only one or two words and usually have a high search volume and high competition.
Long-Tail keywords often contain a whole key phrase - several words - and usually have a low search volume and little competition.

Despite the rather small search volume, Long-Tail keywords are important because they often generate a high sales rate.

Tip:
Fat-head keywords are usually particularly suitable in a broad campaign to identify Long-Tail keywords and then transfer them into an exact campaign.

You can also use Amazon itself to help you find relevant keywords. In its search box, terms entered by customers are displayed in descending order of search frequency when a word is entered.

Amazon Keyword research

Amazon Brand Analytics has also been available since February 2019. Thus Amazon reveals the most searched terms on the Amazon platform. Since categories and time period can be filtered, Brand Analytics can be used for your own and seasonal keyword research.

However, with the help of this search term report, you can also identify current trends. Who doesn't remember the huge hype around the series Squid Game? About a week after the series came online on Netflix, the term "Squid Game" was in 4th place in the search frequency rank. In addition to current trends, the seasonality of certain products also has a significant impact on the search frequency ranks. This can be seen well on Mother's Day or Valentine's Day. Before the respective events, the search terms "Mother's Day gift" or "Valentine's Day gifts" rise significantly in the ranking.

In addition to the most popular search terms, Amazon also displays the three ASINs that were most frequently clicked on Amazon for this specific search query. In addition, the respective click and sales share is also displayed for these three products.

Sellers can therefore search for their own ASINs and see after which search queries users have frequently clicked on their products. In addition, they can see the click and revenue share of their products, if they are among the top 3 ASINs. In this context, it is of course particularly exciting to determine which competitors are listed for the same keywords and how high their click and sales share is compared to your own. You can then attack these competitors with ads, for example. Those who recognize trends in time can also push corresponding products and thus profit from the trend. Merchants should therefore regularly check the search term reports from Brand Analytics.

Before major sales events, such as Prime Day or Black Friday, you should also determine which keywords are currently ranking high. If you sell products from one of these categories, you should advertise them additionally or increase your budgets and bids for existing ads.

If you use Brand Analytics properly, you can take advantage of search trends and adjust your ads accordingly.

4. Target definition

There are some Amazon merchants who launch Amazon ads without realizing exactly what they intend to do with them. This makes it difficult to find the right strategy for each product to advertise. On the other hand, individual campaigns can be more difficult to evaluate in terms of their success or failure.

So for each product you want to promote, set a goal before you start advertising. These are goals such as increasing sales, maximizing profits, awareness, etc. Depending on which target you choose, you will define different advertising formats as well as budgets, bids and target values.

This also depends on the status of your product in the product life cycle.

After a product launch, for example, it can make sense to first introduce the product with high daily budgets and an aggressive strategy. Profitability does not have to come first. Once the product is established, the ACoS and profit should be kept in mind. In the decline phase, high bids can be used to try to catch the few interested parties for the "discontinued" product before the competition. Or you pay more attention to the fact that the advertisement remains profitable and accept little amount of impressions.

Also the decision for an advertising format depends on which goal you aim for with the advertisement. Sponsored Brands are therefore ideal for creating brand awareness and making your brand known. Sponsored Display ads, on the other hand, can be used to generate additional sales and increase sales when advertising products that complement the targeted product.

How do I create a Sponsored Product Ad?

After the optimization of the product listing and the keyword research have been completed and the target has been defined, you can start building campaigns.

Since the Sponsored Product Ad is the most widely used advertising format on Amazon, the creation of an ad of this format in Seller Central is described below.

Sellers can create Sponsored Product Ads within Seller Central and vendors can create Sponsored Product Ads within the Advertising Console. The interfaces look similar.

1. Create a campaign

After logging in, click on "Campaign Manager". By clicking on the "Create Campaign" button, a campaign will be created. After that, set up the campaign and select the following data:

Ad group name
Ad groups can be used to organize and manage ads within a campaign. So you can assign the campaigns to specific ad groups.
Products
Select the products for which you want to create the ad.
Targeting (Automatic targeting or manual targeting)
You can - as an easy start - start with an automatic campaign and immediately, or after a few days at the latest, create manual campaigns with the help of Amazon's search term report. With the search term report, you can see which keywords triggered which search terms for your ads. You will use these search terms as keywords in the manual campaign. However, we recommend creating manual campaigns directly with detailed keyword research so you can make adjustments to each keyword as quickly as possible.

If you select automatic targeting, you still need to set a default bid or set bids by targeting group. If you select manual targeting, next you need to specify whether you want to target keywords or products. Next, you must then store corresponding keywords or ASINs. Then, depending on your selection, you can set negative keywords or ASINs.
Set bidding strategy
The next step is to select the campaign bid strategy. You can choose from the following bid strategies:
- Dynamic bids - down only.
  Amazon lowers bids when the ad is unlikely to generate a sale. This has been applied to all campaigns prior to 2019 and is also our recommendation.
- Dynamic bids - up and down
  Amazon increases bids (up to 100%) when it is likely that the ad will generate a sale and decreases bids when it is unlikely.
- Fixed bids
  Amazon does not change your bids depending on the likelihood of a sale.

Bildschirmfoto 2023-01-06 um 11.16.20

You can read more about the advantages and disadvantages of bidding strategies in the corresponding section "Dynamic bidding strategies" in Part 3 of this guide.

You also have the option to "Adjust bids by placement". This can increase your bids by up to 900% if your ad has a chance of being placed within the first search results page or on a product detail page. Find out which strategy is best for the different match types in our Case Study.

• Campaign settings
Think about a consistent, easily identifiable naming syntax. This includes ASIN, match type, and focused strategy e.g. SPA | {SKU} | {ASIN} | {Short Title} | {Match Type} ] | {Focus}
Choose a start date and optionally an end date, or let the campaign run indefinitely. We recommend the latter. You will also need to set a maximum daily budget.

After that, click "Start Campaign" and your Amazon Sponsored Product Ad is ready. If you have not already done so, we recommend that you transfer search terms from the Auto campaign as keywords to a Broad as well as an Exact campaign and make the appropriate bid adjustments. Likewise, the bids of the targeting groups in Auto campaigns (e.g. replacement targeting) should be adjusted upwards or downwards depending on the performance. The next goal is also to identify good and bad performing keywords in the Broad campaign and to transfer them to an Exact campaign in order to be able to increase and decrease their bids individually to enable precise control.

2. Create ad groups

You can then create an ad group as a seller in Seller Central within the campaign. Enter a name for this and select only products for an ad group that are very similar, for example, all children of a parent ASIN, since they receive the same keywords. In principle, the relationship between the performance of a product and the keywords within the ad group or campaign is lost if there is more than one product. Similar products therefore often display variations according to size or colour.

For auto campaigns, you can now either define only the "Ad group default bid" at ad group level or define individual bids for four automatic targeting groups.

The bid is the maximum bid you are willing to pay for one click. We recommend working with crooked bids and starting with 0.27 EUR or the maximum CPC. This is calculated as follows:

max. CPC = RRP x Conversion Rate x Target ACoS

The Conversion Rate can first be derived from the total sales from the business reports in Seller Central. The Conversion Rate for advertising is on average up to 50% lower than the organic Conversion Rate.

Part 3: How to optimize your advertising

How to make Amazon ads more successful
- Keyword management and bid adjustments
- Performance values
Further possibilities for the optimization of Sponsored Products

How to make Amazon ads more successful

The main problem advertisers face is non-optimized advertisements. This can be due to wrong campaign structure, wrong targeting or the neglect of optimizing the keywords and bids on a regular basis. Especially the last point is one of the most important factors for the success of Amazon Advertising.

1. Keyword management and bid adjustments

Keyword management and bid adjustments are basically interdependent. Therefore, it is important to keep a close eye on the performance of the keywords with the different match types. The aim should be that individual keywords that perform well or less well from auto, broad or phrase campaigns are transferred as keywords into more precise campaigns. In exact campaigns they can then be better controlled with individual bids.

The keywords that perform well should be assigned higher bids so that the chance of even more purchases is increased. The bids for poorly performing keywords should be lowered accordingly so that unprofitable displayed ads and thus advertising costs are reduced.

If the search terms were not transferred into the corresponding exact campaign but the keyword bid in the broad or phrase campaign would be increased or decreased, this bid change would be valid for all search terms that match the keyword. On the one hand, this could result in unnecessary costs for poorly performing search terms. On the other hand, your ad for promising search queries may not be displayed if the bid is too low.

Amazon's ads are dynamic, i.e. their performance can change in real time depending on competition bids and click and sales figures. It is therefore obvious that the performance indicators of advertising campaigns must be regularly monitored in order to be able to react to changes.

Analyze your search terms and keywords regularly and apply the keyword transfer process as often as necessary.

Important:
Adjustments should not happen spontaneously (after 1-2 clicks or one day), but on the basis of long-term clicks gained from the past. This means that a certain number of clicks is required to recognize a pattern in the search and click behavior of customers. So give your campaigns some time to generate enough clicks and orders before you start making adjustments. After 72 hours, more than 80% of sales are assigned to the click, so it makes sense to look at the sales-related key figures from then on.

2. Performance values

The most significant advantage of online advertising is the ability to measure success. With this measurement option, it is easy to see which ads perform well and which don't. Unlike Facebook or Google advertising, Amazon does not require the complex implementation of a pixel or the values of the individual conversions - Amazon automatically does this for all advertisers.

As good and bad performance values have often been mentioned above, the most important key figures for the performance evaluation of Amazon advertising are again explained here. These are:

Click-Through-Rate (CTR)
Cost per Click (CPC)
Advertising Cost of Sale (ACoS)
Conversion rate (CR)

Click-Through rate (CTR)

Two of the relevant basic metrics are impressions, which is the amount the ad has been shown to customers and clicks, which is the amount of clicks on an advertisement. The first important ratio called Click-Through rate (CTR) indicates how many customers clicked on an ad after seeing it. This can be calculated by dividing the number of clicks by the amount of impressions.

The closer this value approaches 1, i.e. 100%, the better. It means that the ad was interesting for potential customers and they wanted to know more about the advertised product. At first glance, the search term and the product therefore seemed to fit together well. In addition, the product image and the product title seem to have been well chosen.

Which value is good and which is bad is not clear and depends on the goal and the campaign orientation. For example, a campaign that focuses on competitive products will probably have a relatively low CTR, as customers who are looking for a product from a particular brand will probably be less likely to click on the product from a competitive brand.

Note:
Our clients' campaigns have an average CTR of 0.3%. This means that out of 1000 potential customers who saw your ad, 3 people clicked on it.

Cost per click (CPC)

Each click on an advertisement costs the advertiser a certain amount. This amount is called cost per click (CPC) and comes about through Amazon's second price auction process. Each keyword has its own cost per click. The more your competitors bid for a keyword per click, the higher your bid must be in order for your ad to be displayed. This also increases your cost per click for the corresponding keyword.

To calculate the average cost per click of a campaign, the costs of the individual clicks are added and then divided by the number of clicks.

Tip:
Supposedly high CPCs should be accepted for important keywords. These are keywords that are responsible for many sales. You can calculate how high your maximum CPC should be in order to remain profitable with the following formula:
Max. CPC = RRP x Target ACoS x Conversion rate.

Advertising Cost of Sale (ACoS)

One of the most prominent KPIs related to Amazon Advertising is the above mentioned Advertising Cost of Sale (ACoS). This describes the ratio of advertising costs to revenue from advertising. What a good or bad ACoS is depends on your Break-Even ACoS, i.e. the point at which you generate profit with your advertising.

Basically, every campaign, ad group and even every keyword has an ACoS. Depending on which ACoS you want to calculate, simply add up the advertising costs of your campaign or ad group and divide them by the sales you made with the corresponding ads.

Note:
Our clients' campaigns have an average ACoS of 17%. This means that you spend on average 17 euros on advertising to achieve 100 Euro turnover through advertising.

Conversion rate (CR)

The conversion rate shows how many customers have ordered after clicking on the ad. To calculate the conversion rate the amount of orders is divided by the number of clicks.

If the conversion rate is relatively low, you should take a closer look at your product and listing. Doesn't the product hold what the product title suggests? Isn't the description sufficient? Also check similar competitive products and compare them and their appearance with your own.

Note:
Our customers' campaigns have an average conversion rate of 8%. This means that out of 100 potential customers who clicked on your Sponsored Product, eight also bought it.

To be able to interpret the performance values correctly, it is important to understand that they cannot be evaluated as good or bad in general. Each campaign can have a different goal - depending on which campaign is considered, different performance values can therefore be important and "good".

Please note that sales include all products in the seller's inventory or brand within the Advertising Console (for Sponsored Brands). With the report on the purchased products, sellers have an insight into how often the advertised ASIN itself was actually purchased. Please also consider that the costs are always and everywhere displayed as net values and the sales in Seller Central can also be displayed as gross values; this depends on the activated sales tax calculation service (VCS) of Amazon. Vendors always receive net values as sales figures.

In addition, the ACoS is useless for many vendors because they have a fixed selling price to Amazon and only a few participate in the selling price. Here it is advisable to compare the sales generated with Amazon with the advertising costs.

3. Further possibilities for the optimization of Sponsored Products

In addition to keyword management and regular bid adjustments, Amazon offers its advertising customers certain setting options in order to place the Sponsored Product Ads more specifically for the target group.

Two of these options are the dynamic bidding strategies mentioned above and Product Targeting.

Dynamic bidding strategies and bids by placement

Since the beginning of 2019, advertisers have been able to choose from three bidding strategies and thus decide whether they want to reduce or increase their bids in percentage terms depending on the sales chances. Amazon evaluates the opportunity in real time based on past customer behavior. This makes it possible for bid advertisements to be increased if, for example, a customer who is particularly eager to buy makes a relevant search query. By contrast, bids can also be lowered if a customer is less likely to buy. If you don't want this, you can set the "Fixed bids" option.

In addition to the dynamic bid adjustments, bids can also be increased by their placement chance (bids by placement), if an ad has the chance to be displayed within the first search results or on a product detail page.

The percentage by which bids can be increased or decreased depends on the strategy and placement. If the "down only" strategy is set, a bid reduction of up to 100% is possible. With the setting "up and down" for placements on the first page, bids can be additionally increased by up to 100% and for placements on product detail pages by up to 50%.

If additional it is worked with bids by placements, an increase of up to 1,900% is even possible for placements on the first page.

Bids by placement

We have conducted a case study on the selection of the optimal bidding strategy and recommend that you use the "lower only" strategy. Although the conversion rate is highest on average for the "lower and increase" strategy, it is at the cost of a significantly worse ACoS value. For placement bids, we recommend no increase for automated campaigns, a 104% increase for first search results for Broad and Exact campaigns with halved CPCs, and 304% for Product campaigns with quartered bids. You can learn all the pros and cons to these recommendations in our Case Study.

4. Strategic Product Targeting

Another way to make your advertisements more successful is Product Targeting or Product Attribute Targeting (PAT). Use PAT to pursue an efficient competitive strategy, because with your Sponsored Product Ads you can target specific products. This means that you are displayed on the product detail pages of competitors that you can determine yourself. We recommend that you develop individual strategies for your top products and thus "attack" your competitors. For example, show your 5-star rated products on the product pages of competitors who have fewer stars. Also use prime shipping as a competitive advantage and target your products with prime shipping on competitor products without prime shipping. Such measures can lead customers at the end of the purchase decision process to order your product instead of a comparable product from the competition.

We also recommend that you target your own products to increase a customer's shopping cart value and thus increase your sales. You can do this by placing additional products on the detail pages of your own products.

To learn what is possible with Product Targeting in detail and which settings you have to make, read our blog article "Product Targeting: Target competitive product pages with your own products".

Automation

For both, sellers and vendors, Amazon is a time-consuming business division that requires goodbroad knowledge. Starting from lacking knowledge on how to set up a campaign to the optimization of large portfolios with thousands of products, it is almost impossible to manage it manually.

The analysis of the individual performance values is decisive for the success of advertisements. Only then keywords can be optimally controlled and bids adjusted.

Since the performance of Amazon Advertising can change in real time depending on competition bids as well as click and sales figures, the analysis and PPC optimization process must be run through regularly.

The manual administration of keywords and their bids is probably one of the most time-consuming activities in the optimization of Amazon advertising, so it is often neglected. Among other things, the transmission of keywords is indispensable for their success, since it is only possible in manual campaigns to control individual keywords individually with a maximum cost per click.

The solution is to automate this analysis and control by a PPC automation tool. An algorithm continuously checks the performance of the advertising campaigns and reacts accordingly. Bid adjustments can be made on the basis of a self-defined target ACoS per campaign or product. If you want to learn more about how BidX handles automated keyword management and bid adjustments, read our Knowledge Base articles or just try our tool for free.