Unlocking the Power of Amazon PPC Ads: Is It Worth the Investment?

With over four billion average monthly visits, Amazon is the world’s largest online marketplace.

However, learning how to build and manage Amazon pay-per-click (PPC) campaigns is a daunting task for most sellers. You’ll also probably be asking yourself:

“Is Amazon PPC worth it?” 

In order to answer this question – the answer is yes, by the way – we will explore:

At the end of this blog, not only will you understand how effective Amazon Ads is as a platform, but you will also be armed with the knowledge of what to look out for when devising your own campaign.

6 Benefits of Amazon Ads

1. Pay Just for Clicks

Whilst Amazon ads may not come cheap, their pricing model is undoubtedly cost-effective. There are no activation/subscription fees or charges for impressions – you only pay for the clicks on your ads.

Amazon’s platform also gives you full control over your advertising budget, allowing you to set daily or campaign-level spending limits. You have the flexibility to:

• Adjust your bids.
• Pause or resume campaigns.
• Optimise your targeting based on real-time performance and business objectives. 

Moreover, the PPC model allows you to allocate your budget more effectively by optimising according to actual clicks and conversions.

2. Choose from Various Ad Formats

Amazon offers several different ad formats that allow you to showcase your products in different ways, such as in search results, on product detail pages, or even off-Amazon sites and apps.

There are three main types of PPC ads displayed prominently on (and off) Amazon:

• Sponsored Product Ads (SPA): SPA can appear between, to the right of, and below organic search results, as well as on product detail pages. This ad format, known as the most popular among Amazon PPC options, effectively promotes individual products.
• Sponsored Brand Ads (SBA): SBA is displayed above, to the left of, and below search results. With SBA, you have the opportunity to showcase multiple products under your brand, along with your logo.
• Sponsored Display Ads: These ads can be displayed both on and off Amazon, including on third-party websites with relevant content. On Amazon itself, they appear on other product detail pages.

Regardless of the ad type you choose, your campaigns will be foregrounded on search results pages, thus capturing the attention of potential customers. Especially during product launches, Amazon PPC is an invaluable tool to raise brand awareness.

3. Highly Targeted Campaigns

Amazon provides powerful targeting options to ensure that your products are placed in front of the right audience. In other words, they will be shown to people who are most likely to be interested in them, thus increasing the likelihood of conversion.

These targeting options include:

• Keyword Targeting: Advertisers can target specific keywords that are relevant to their products. When users search for those keywords on Amazon, the ads will appear alongside the search results for those actively looking for similar products.
• Product Targeting: You can choose to target specific products or product categories, and so your ads will appear for customers who are viewing or purchasing similar products.
• Interest Targeting: The platform also provides interest-based targeting, allowing you to reach audiences with specific interests related to their products. This gives you the option to target users who have historically shown an affinity for particular product categories.
• Demographic Targeting: Advertisers can target their ads based on demographic factors such as age, gender, and location. This feature enables them to tailor their ads to specific customer segments and deliver personalised messaging. For example, check out our blog on PPC geo-targeting.
• Remarketing: With remarketing ads, you can retarget users who have previously interacted with your products or visited your product pages. Using the Amazon Demand-Side Platform (DSP), relevant ads will appear to users as they continue browsing Amazon and other websites within Amazon’s advertising network.

In 2022, Amazon unveiled an exciting addition to its advertising arsenal: expanded product targeting. This feature allows advertisers to go beyond targeting a single product and extend their reach to related products.

For example, let’s say a company is promoting a skincare product. By enabling expanded targeting, their ads will automatically encompass substitute skincare products, complementary items like moisturisers or serums, and frequently co-purchased products. In turn, this will open the doors to a broader audience interested in a range of skincare offerings, thereby enhancing the potential for conversions.

The beauty of expanded product targeting lies in its dynamic nature. It continuously updates the selection of related products, aligning them with the performance of the individual product target and thus eliminating the need for constant manual campaign management.

4. High Purchase Intent

Unlike search engines, social media, and other advertising channels where users may have diverse search intent, Amazon is a platform that people where people go exclusively to search for, learn about, and/or buy products. 

When users see your ads on Amazon, they are already in a shopping mindset. In other words, Amazon users tend to have a high purchase intent.

When we compare Amazon Ads with Google Ads in the next section, we will delve deeper into this advantage!

5. Valuable Insight Into Your Audience

Amazon Ads provides valuable data insights that are otherwise inaccessible. By analysing your campaign reports, you can gain a better understanding of your customers’ preferences e.g. the keywords that drive the most conversions to your product. This information enables you to optimise your listing content, refine your targeting, and improve your overall advertising strategy.

For instance, if you’re selling high-end home theatre systems on Amazon, you may find that the keyword ‘4K OLED TV’ generates a significant number of sales compared to other keywords. Given that customers searching for this specific keyword have a higher likelihood of purchasing your premium home theater systems, you can focus more of your ad budget on this audience.

Moreover, you can glean insights into the specific features and attributes your customers are seeking, allowing you to incorporate these findings into product development and presentation. 

To use the same example, you might find that customers who purchase these systems also show a preference for built-in smart capabilities and compatibility with popular streaming services. Armed with this information, you can incorporate these findings into future product development. This will ensure that your home theatre systems align with the desires and expectations of your target customers.

6. Enhanced Organic Rankings

Successful Amazon PPC campaigns yield a positive side effect: they greatly benefit your organic (unpaid) rankings. Amazon’s ranking algorithm, known as A9, prioritises products with a higher likelihood of being purchased. Factors such as overall sales and reviews play a role in determining organic rankings.

For new products without an established sales history or reviews, achieving favourable organic rankings – especially in highly competitive niches – is a serious formidable challenge. By running Amazon ads, you…

1. Drive traffic to your listings
2. Generate initial sales
3. Collect reviews

The A9 algorithm takes these performance indicators into account and rewards conversions, a strong conversion rate, and positive reviews with increased rankings.

By reinvesting the additional profits from organic sales into further Amazon PPC campaigns, this upward spiral is reinforced. Additionally, as sales increase, advertising costs tend to decrease, enhancing the cost-efficiency of your campaigns.

Google Ads vs Amazon Ads: A Comparison

Whilst Google has traditionally been associated with search, Amazon has emerged as the dominant force in product searches. In fact, 55% of all product searches now happen on Amazon.

Hear that eCommerce owners?

Google Ads is also a great platform, but it should not be used in isolation if you want to increase your market share and drive serious revenue growth. So, with this in mind, here are some unique advantages that Amazon has over Google:

Lower CPC

On average, Amazon offers a much lower cost-per-click (CPC) than Google. According to a recent study, the average CPC on Amazon is $0.89, whilst the average CPC for Google ads within the eCommerce industry is $1.16.

A lower CPC has a number of accompanying benefits…

• Cost Efficiency: A lower CPC allows advertisers to stretch their advertising budget further. With each click costing less, businesses can generate more clicks, impressions, and potential conversions with less budget.
• Increased Ad Visibility: With a lower CPC, advertisers can also afford to bid on more keywords and target a broader range of search terms relevant to their products. This increased ad visibility enables businesses to reach a larger audience and potentially capture more impressions and clicks.
• Enhanced Return on Investment (ROI): Ultimately, the two benefits above mean that advertisers can achieve a higher ROI by generating more sales whilst spending less on advertising expenses.

Higher Conversion Rates

On average, Amazon Ads also boasts a much higher conversion rate than Google Ads. In fact, a recent review found that the average conversion rate for Amazon’s Sponsored Products and Sponsored Brands is over 3X higher than Google Shopping ads.

The benefit of a higher conversion rate is obvious. A larger percentage of users who click on Amazon Ads ultimately complete a purchase, which translates into a more efficient and effective advertising campaign.

Higher Purchase Intent

Amazon is primarily an eCommerce platform focused on selling products. In turn, by advertising on Amazon, you exclusively present your products to individuals already in the mindset to buy. 

Given that Google is used for many things other than looking for products, the audience you will reach through Amazon will have a much higher purchase intent. This is one of the main reasons why Amazon Ads has a higher conversion rate than Google Ads!

4 Common Amazon PPC Mistakes to Avoid

Though Amazon PPC offers compelling advantages, it’s crucial to approach it with a well-thought-out strategy to avoid squandering your ad budget.

Random and poorly planned campaigns won’t simply be ineffective, but – given the pay-per-click model – will incur a direct cost. A low conversion rate may also signal to the A9 algorithm that your offer lacks relevance or appeal to customers’ search intent.

With this in mind, here are some of the most common mistakes we identify when conducting audits of Amazon accounts:

1. Inadequate Keyword Research

Poor keyword research is a common trap that many businesses fall into when running Amazon ad campaigns. It refers to the failure to conduct thorough and targeted research to identify the most relevant and high-performing keywords for your products.

Here are some specific aspects to consider when it comes to keyword research for Amazon PPC:

• Relevance to Product: It’s crucial to choose keywords that are highly relevant to your product. Avoid targeting generic or broad keywords that may attract a wide audience but might not be specifically interested in your product. Instead, focus on long-tail keywords that accurately describe your product and cater to the specific needs and preferences of your target audience.
• Long-Tail Keywords: Long-tail keywords are specific and highly targeted phrases that typically have lower search volume and competition but higher conversion potential. They allow you to reach customers who are further along in the buying process and have a clear intention to purchase.
• Search Volume and Competition: Whilst it’s essential to select relevant keywords, it’s also important to assess their search volume and competition level. High-volume keywords may seem appealing, but they often come with fierce competition. This can drive up the CPC and make it challenging to achieve a good ROI. Strike a balance by targeting keywords with a moderate search volume and manageable competition.
• Keyword Research Tools: Take advantage of keyword research tools specifically designed for Amazon PPC campaigns, such as Amazon’s own Advertising Console, as well as third-party tools like Helium 10, Jungle Scout, or MerchantWords.

2. Neglecting Negative Keywords

Although Amazon’s advertising platform allows you to target specific keywords to trigger your ads, there may still be instances where your ads are shown for search terms that are not directly related to your product.

For example, if you’re selling high-end headphones, your ads may inadvertently appear for search terms like “earbuds” or “cheap headphones”.

By identifying these irrelevant search terms and adding them as negative keywords, you can prevent your ads from being displayed to users who are unlikely to convert. In other words, negative keywords are the terms or phrases that you don’t want your ads to show up for in search results.

Remember, the key is to identify negative keywords that are not aligned with your business objectives or target audience. By excluding irrelevant or low-converting search terms, you can avoid paying for clicks that are unlikely to result in a sale.

3. Poor Ad Copy

Ad copy plays a crucial role in capturing the attention of potential customers and compelling them to click on your ads. So here are a few guidelines you should follow when crafting your ad copy:

• Relevance to Search Queries: It is essential to ensure that your ad copy aligns closely with the search queries and keywords you are targeting. Irrelevant ad copy may result in a low click-through rate (CTR) and wasted ad spend. By incorporating relevant keywords into your ad copy, you can improve its visibility and appeal to users searching for specific products or features.
• Clear and Compelling Messaging: Your ad copy should clearly communicate the unique selling points (USPs) and benefits of your product. Highlight key features, promotions, or offers that make your product stand out from the competition.
• Strong Call-to-Action (CTA): Including a strong and compelling CTA in your ad copy can significantly impact its performance. Encourage users to take action, such as “Shop Now,” “Buy Now,” or “Learn More.” A clear CTA directs users towards the desired action and increases the likelihood of conversions.
• Accurate and Honest Representation: It’s crucial to accurately represent your product in the ad copy. Misleading or exaggerated claims can lead to frustrated customers and potential negative reviews. Focus on highlighting the genuine value and benefits of your product to build trust and credibility with potential buyers.

4. Poor Campaign Monitoring and Optimisation

“Set it and forget it” is not an effective approach for Amazon PPC campaigns or any digital marketing strategy for that matter. Continuously monitoring your campaigns, analysing performance data, and making data-driven optimisations is key to success. In fact, it’s also related to all three common issues we’ve mentioned above.

Keyword research is an ongoing process – you need continuously monitor the success, identify new, emerging ones, and eliminate those that are underperforming. By investing time and effort in this process you can improve the targeting precision of your Amazon PPC campaigns and drive more relevant traffic to your product listings.

Equally, you should be continuously testing different variations of your ad copy to identify what resonates best with your target audience. A/B testing can help you compare different messaging, CTAs, or formats to determine the most effective approach. Here is a little guide you can follow to execute your A/B tests:

1. Define objective: Clarify the A/B test goal for ad copy.
2. Create variations: Develop two distinct ad copy versions.
3. Split audience: Randomly divide the target audience into two groups.
4. Determine sample size: Calculate the required sample size for statistical significance.
5. Set time frame: Establish a fixed duration for the A/B test.
6. Track and measure: Use analytics tools to monitor performance.
7. Analyse results: Compare performance and look for significant differences.
8. Draw conclusions: Determine the winning variation based on data.
9. Iterate and refine: Apply insights to improve future ad copy.