Amazon Advertising: How to Utilize to Grow Your Business

In 2018, Amazon relaunched ‘Amazon Advertising’ a streamlined reinvention of its previous advertising options. Since then, it’s grown to massive proportions: in 2021, Amazon took a whopping $31.2 billion from advertising alone. 

In this guide, we’ll show you how to get started with Amazon advertising and maximize your Return on Ad Spend (RoAS). We’ll take a deep dive into the different types of ads available and how to master using keywords. We’ll also go in-depth on PPC (Pay-per-click) strategies, the bidding system, and other possibilities of advertising on Amazon. Ready? Let’s get started.

What is PPC and Why is it Important for your Business?

Pay Per Click (or PPC) is part of the internal advertising system that Amazon has created for its sellers. As with Google ads, the seller only pays when a potential customer interacts with an ad. Your ads will appear before organic listings in Amazon shopping results, on headers and sidebars, or on partner platforms. When you run a PPC campaign, you target various keywords that are relevant to your brand or products. If done well, this will position your ad in front of relevant consumers, and drive conversions. However, bear in mind that having a good keyword strategy, and understanding of your buyer, is essential to your products appearing in front of the right eyes.

Targeting

There are two different types of targeting: automatic and manual. 

With automatic targeting, Amazon does some of the work in deciding which keywords will sell your product(s). This is based on the products themselves, and an algorithm that determines related searches of relevance. Depending on how well your ads perform, Amazon will adjust the keywords to resonate further with potential buyers, so your ads will become increasingly optimized. 

With this type of targeting, there are four different kinds of keyword match categories that you can choose from: 

Close match – these target customers searching for closely related keywords. For example, if you sell organic strawberry jam, you might appear in search results for ‘organic berry jam’ ‘strawberry jam’ or ‘organic jam’. 

Loose match – these ads appear when customers search loosely related terms – E.g, ‘conserve’ or ‘fruit spread’. 

Substitutes – your ads will appear to customers who are considering products similar to yours, but a different brand – a good example here would be if you sold Breville toasters, you’d want to appear when customers search for Cuisinart toasters. 

Complements – this will have your ads appear when customers search for products that would pair well with yours – so, back to the jam example, if a customer is searching for peanut butter or sliced bread, they would see your advertisement. 

Generally, close matches and loose matches should be the main focus of your ad spend, as they will appear in the most relevant searches. But you can bid different amounts for all four, so play around with the budgets to find the perfect ratio.  

With manual targeting, you take control of this process and choose the words you believe will resonate most with your customers. This type of ad will only appear if your customer’s search matches your chosen keywords. This is a much more time-consuming, intensive approach, as you’ll have to monitor your conversions closely and adjust accordingly. However, it generally results in more relevant ad placement and lower long-term ad spending.

How the Bidding System Works

Amazon will have you set a budget for how much it’s allowed to spend on your advertising every day. Once you’ve used up this budget, your ad will no longer be shown for that day. The bidding process on Amazon then uses an auction-based model that allows you to bid against other sellers for premium ad space in the Amazon shopping results. 

Should you succeed, you pay for this spot whenever your ad is clicked. Whoever wins the bidding space only has to pay the amount that the second-highest bidder bid. So for example, if you bid $1.25 for space against a bidder who bid $1.20, you will only have to pay $1.20 whenever your ad is clicked. Your strategy here is to place bids high enough to get your ads placed, without burning through your advertising budget too rapidly should customers interact with them.

Understanding the Campaign Manager Tab

Located in the Advertising drop-down menu on your Amazon seller account, the Campaign Manager tab is where you can see a detailed breakdown of your advertising costs and effectiveness per campaign. From the right-hand side of your screen, these are the stats you’ll see displayed. 

Spend – This refers to the amount you’ve spent on click charges for a certain ad. 

Sales – These refer to the total sales amount you’ve accrued from the product(s) featured in that ad campaign. 

ACoS (Advertising Cost of Sale) – This number can be calculated by dividing your spending figure by your sales figure. It tells you what percentage of your sales revenue your advertising is costing you. 

Impressions – Impressions refer to the number of times your ad was viewed. These are not unique views, so if a customer views your ad, and then reloads the page later, that will be counted as two impressions. Amazon does not charge you based on impressions in the PPC model. 

CPC (Cost Per Click) – This is an additional metric that can be used to show you how much on average you’re spending per click. This is useful information as you’ll be aiming to keep this number as low as possible while still driving traffic.

Common Types of Ads

There are three main types of ads that Amazon offers on its PPC platform. We’ll go through each of them thoroughly.

Sponsored Product Ads

Best for – Showcasing Bestselling Products, Beating Organic Listings. 

Probably the most familiar form of Amazon Advertising, these ads will appear among your search results or on product detail pages. They closely resemble product listings, making them immediately scan as eligible choices. With sponsored product ads, you can shape what keywords your product appears under using automatic or manual targeting.

Sponsored Brand Ads

Best for – Overall RoAS, To Boost Brand Awareness

With sponsored brand ads – formerly known as Headline Search ads –  you can showcase three products and your brand logo at the top of search pages. This is an ideal option if your goal is to drive the discovery of your brand. As you can include short videos and more personalization, this allows you to stand out from the crowd and stay in customers’ minds. 

When you implement a Sponsored Brand Campaign, there are three types of keywords that you can target: Sponsored products, automatic targeting keywords, branded product keywords, and complementary product keywords. Sponsored product automatic targeting keywords use search terms you’ve previously had success running in other automatic targeting campaigns. Branded product keywords use a combination of your brand name and product. Finally, complementary keywords pair two products that influence each other’s demand and can be sold together (for example, peanut butter and jam).

Sponsored Display Ads

Best for – Retargeting Potential Customers

Sponsored display ads are a little different from the above two. With display ads, your ad can appear not just on Amazon, but also on Amazon’s affiliate sites like Google, Netflix, Facebook, and various mobile apps. Most of the time, it will appear as a sidebar containing products your potential customer has already viewed, tempting them back to your business. You can also place these ads in customer emails, and other kinds of promotions. The point is to persistently remind the customer of the products they are interested in until they act on that interest. Sponsored display ads haven’t taken off in quite the same way as brand and product ads have – it’s estimated only 25% of Amazon third-party sellers implement them. But they can be a useful tool if used strategically.

Sparking Successful Conversions: What Works and What Doesn’t

Choose the Right Ad Type

Generally, sponsored brand campaigns tend to be the most lucrative, but you need a registered brand for them. Sponsored brand ads allow you the creative control to differentiate your brand, and showcase your product(s) USP, and they dominate the top spot of the search page. If you’re trying to build recognition for your brand, this should be your first stop. 

Side note: when writing copy for your brand ads, be careful with your wording – claiming your product is a ‘Bestseller’ or ‘Number One’ will lead to your ad getting rejected. 

On the other hand, among Amazon sellers who use PPC, 77% use sponsored product ads (alone or in combination with brand or display ads) making them the most popular option, and they are great for highlighting your bestselling products.

It’s been estimated that 70% of customers don’t make it past the first page of search results. Besides speaking to today’s shoppers’ expectation of ultra-convenience, it also speaks to the trust Amazon has fostered – customers count on them to source the best items. As a seller, you can make the most of this trust using sponsored product ads, watch your organic traffic grow accordingly, and increase your likelihood of winning the Buy Box for your sponsored product’s product page.

Identify your Buyers

When it comes to Amazon advertising, researching who is purchasing your products is just as important as understanding your competition, as it allows you to adjust your targeting accordingly. When you truly understand your target online shoppers, you can greatly increase your RoAS.

Test, Test, Test

With Amazon advertising you should be testing different campaigns regularly – the landscape is ever-evolving. 

We recommend trying out each kind of Amazon PPC ad and experimenting with different audiences. While there are some great resources out there for extra guidance, the best way to optimize campaigns for the best results and conversions is through experimentation.

Take Advantage of Negative Keywords

Not as scary as they sound, using negative keywords prevents your product from showing up in irrelevant search results and wasting your ad spend. For example, if a customer searches for ‘sugar-free jam’ and your jam contains sugar, you’ll want that on your negative keyword list, as you already know it’s not what they are looking for. Similarly, if you sell foot baths, you might choose to make ‘clawfoot bath’ a negative keyword.

Make it Pretty

And of course, there is no substitute for creating thoughtful, engaging product detail pages. Remember, well-placed ads will drive visitors to your page, but it’s there you’ll ultimately convert them into customers. Don’t waste your PPC traffic by not taking the time to create a compelling product page for each of your products – use high-quality photos and videos, easily scanned product captions, and clear pricing.

Other Forms of Amazon Advertising

Amazon Native Ads

These can be placed on your own website. There are three types: Recommendation, Search, and Custom. With Recommendation ads, you can place the ad within an article on your website. As the advert is dynamic, Amazon will populate your most relevant products based on the article content or traffic.

With Search ads, the driving force is keywords – the content of these ads is based on popular searches on Amazon or your website. Custom ads take the automation out of this process, allowing you to choose which products you’d like to promote and place them within relevant articles. Used well, these function as a natural next step for customers – you’ve got an article that illuminates the problem they’re facing and a solution in the form of a ‘Buy Now’ button. So the key here is to make sure there is cohesion between the native ad and the web page you place it on.

Demand Side Platform

PPC, which we’ve covered above, is part of the Advertising Console half of the Amazon Advertising offer. Demand Side Platform (DSP) is the other half. Instead of being geared towards pay-per-clicks, DSP is geared towards pay-for-impressions. This can be great if you want more personalization – for example, to be able to target customers in a certain geographical area. These can include both audio ads on Alexa devices and video ads. 

With videos, these can appear on Fire TV, Amazon, and IMDB – and you can buy Amazon video ads whether or not you sell on Amazon, and you can place them elsewhere on the internet. If you’re marketing your product via social media sites, it may well be worth investing in this type of advert. Video ads are visually rich, so they linger in the mind in a way that simple photo ads cannot. Also, it’s good to know that Amazon offers video ad consulting, but you’ll need to spend over $30k in ads for it to be worthwhile.

In general, Amazon DSP can be a powerful way to grow your brand awareness and retarget potential customers, but it is not recommended for beginner sellers. Relatedly, there is now the option to include video footage in your sponsored brand ads. This improves trust in your products, as customers can see them in action, and draws the eye to the advert.

Next Steps for You

Regardless of what kind of Amazon advertising you invest in, good marketing always requires two things: a strong strategy, and the capital to make it happen. At Yardline, we can help with both.