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Amazon PPC – 8 Common Questions Answered

Amazon PPC

Through my relentless crawl across the web to really get into the mindset of our customers about the Amazon PPC (pay-per-click) advertising model, I came across a handful of the same questions littered from deep within Google and Amazon’s seller forums.

Whilst the scope goes to quite deep lengths and covers complex subject matter, these 8 questions cropped up time and time again, and I thought today I would filter and answer them the best way I possibly could.

Here is a typical screenshot of both Sponsored Brands (which is a feature box of 3 products for a brand) and below it is an image showing 4 “Sponsored Products”. Sponsored Products are the basis of Amazon advertising and are what we will be discussing today.

Amazon PPC

Is Amazon PPC Worth It?

In one word, absolutely. Amazon’s Sponsored Products model helps new products with no visibility get initial eyeballs and puts buying recommendations in front of  prospective customers. Initially it may be expensive to get a good return on investment but once your product has reviews, sales history and refinement this should become more cost effective.

A typical product “ad”

What does Sponsored Products cost?

It runs on a PPC (pay-per-click) model. This means you will only pay once a customer clicks on your advert. Pricing is dictated by several factors including what other advertisers are willing to pay, the relevance of your product and the strategy of your campaign.

How long does it take for Amazon PPC to work?

Unlike Google Ads, we see that budgets don’t get throttled immediately. In other words, spending £10 on the first day is unlikely because ads (and we recommend starting with “automated” ads to begin with…more below!) take a while to “fit” alongside the many other products that are also competing for your keyword.

When we say “work” we also mean to “convert” and make you sales. For this it is also key that your product listing is optimised and perfectly matches what a customer’s search entails.

Why hire a PPC specialist for Amazon Sponsored products?

The process and competitive nature of Amazon’s sponsored advertising can be quite complex and it’s important to remember that your ad campaigns are only as good as your product listings. This is a common problem for many specialist “ad” agencies. Experienced PPC experts can help you get a better return on your investment and get your products setup correctly.

What is the PPC management process?

Whilst all accounts are different, a common process we follow to manage your ads is by creating “ad groups” – usually by the product or parent product, if your item has multiple variations such as size and colour. This allows us to see clearly in the reports which keywords work and which don’t. Keywords that are not making you sales are reviewed and two questions are asked. The first is “is this keyword relevant to the product?” whilst the second is “does the product listing match what customers are searching for?” It’s this second question which is so essential as automated ad software and large scale ad accounts can find this metric very difficult to deal with.

What is ACoS and RoAS?

ACoS (advertising cost of sale) is a percentage metric that works out the sale versus the spend, for example, if your item sold for £1 ad spend and your product’s retail price is £10, then your ACoS is 10%.

RoAS (return on advertising spend) is a multiple based on the cost of sale versus return, for example, if your item sold for £1 and your product’s retail price is £10, your RoAS is 10. If your RoAS was 1 it would be that it cost you £10 to make a sale of £10.

What is a “good” ACoS/RoAS?

In general you want to make sure your ACoS numbers are LOW and your RoAS numbers are HIGH. If your ACoS is 100% or above it means you have invested more into your advertising than the retail value of the item. 

If your RoAS is low – as in 1 or below, it means that your ROI is less than what you’re spending on advertising.

A good number depends on your category but typically our clients ACoS range from 7% – 22%, which in ROaS calculation is typically 5.5 – 10.25.

This will not happen instantly and it can take months before your products hit these numbers.

The top 2 lines here contain a terrible return on investment, however the bottom line’s return is nearly optimal!

How do you optimise a PPC Campaign?

We will let you into a couple of trade secrets. We usually always start with an automated campaign with our optimised product listings, which allows us to see what searches customers are actually typing when finding and buying our products.

Once we have this framework in place and we filter our bad keywords into the “negative targeting” list, we can then look to optimise and refine our processes further with manual campaigns.

Conclusion

It takes time and effort, but when set up correctly and fully-optimised, Amazon Sponsored Products are a great way of driving sales on Amazon.

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