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Is Amazon PPC Advertising Worth It In 2023?

Should You Be Running Amazon PPC Ads in 2023? Learn How to Make the Most of Your Ad Spend and Skyrocket Your PPC Profitability!

  • February 24, 2023
  • /
  • CANOPY Management
young man in business suit in front of an open laptop raising his hands in triumph

As the global leader in sales, nothing matches Amazon’s e-commerce footprint. Unfortunately, that also means that it’s a competitive place to get noticed without a solid marketing strategy in place

That’s why many experienced sellers reach out to an Amazon management agency. If you’re looking to get more from your Amazon PPC efforts, hiring an expert is your best bet.

An Amazon PPC management agency works with you to optimize your ad campaigns, decrease your advertising cost of sales (ACoS), and increase your ROI-all while taking advantage of Amazon’s highly-effective advertising services.

If you sell on Amazon, you can’t afford not to be taking advantage of Amazon management.

The question remains however, should you focus your marketing efforts to drive outside traffic onto the Amazon platform, or is it more effective to run an ad campaign on Amazon itself? 

To dig into this question, let’s compare and contrast Amazon ads to the precursor of Amazon’s ad platform, Google AdWords. Google created the first self-serve online advertising platform in 2000. Amazon’s own paid advertising didn’t begin until 12 years later in 2012. 

In this post, we’ll look at how Amazon and Google structure and implement Pay per Click (PPC) ads. And, if you haven’t yet begun advertising with Amazon, we’ll also address how to get started.

The Benefits of Advertising on Amazon

The difference between people browsing for a product online and people browsing on Amazon is the degree of buyer intent. 

Compared to searching on Google (or other places online), people on Amazon are there primarily to make a purchase.

Positioning your products in front of an audience ready and willing to spend their dollars is a massive benefit that Amazon seller advertising offers, and that other platforms lack. 

While Google is an excellent algorithm for broad searches, their PPC results often send shoppers to a specific brand site. Compare that to Amazon, which allows you to view the product on a sales page and as well as recommending additional items similar to the original search result.

Google users also show up earlier in the sales funnel. They are further away from making a purchase decision, and these types of PPC ads have a very low conversion rate (1-2%). 

In comparison, Amazon searchers are much further along in the sales process, and these types of PPC ads have a much higher conversion rate (approximately 10%). 

So to answer the question, is Amazon advertising worth it? The short answer is yes. 

If your question is instead, “How do I advertise on Amazon?,” you can find the answer right here.

The reason is simple. Using pay-per-click ads on a platform where buyers are already located and ready to make a purchase just makes sense. Amazon sellers have the opportunity for higher conversions with their ad campaigns and they save money with their marketing campaigns. 

Amazon search ads allow the advertiser insights on a much granular level that shows how keywords are performing and how they compare to competitors’ ads. That will produce better data to optimize campaigns and increase product placement effectiveness.

Before we delve into the best practices for maximizing your Amazon PPC campaign, let’s look further into the differences and similarities between Amazon ads and Google.

The Big Differences Between Google and Amazon

With Google, shoppers are looking for a specific brand, seeking to become more educated or find a better price. In other words, they’re still early on the shopping journey. 

On the other hand, Amazon is a destination that people use when they are ready to make a purchase. 

The only thing that may be holding up the potential shopper are similarities between similar products, shipping costs (a significant benefit with Prime membership), or other minor differences between products. 

Now let’s look at performance metrics and the significant differences between Google and Amazon.

With Google PPC ads, performance metrics will highlight: 

Meanwhile, Amazon PPC ads highlight a lot more granular details: 

Additionally, Amazon PPC ads will detail the relevance of key metrics such as: 

Amazon doesn’t need to track landing page relevance as the platform itself is the landing page for each product.  

With an Amazon ad, you get better insights into keyword performance and converting terms to help you better target your ads and position products.

The Main Benefits of Amazon PPC Ads

The benefit of Amazon PPC ads is that they allow you to promote your products in a highly visible position. They also allow for a flexible budget and a great deal of metrics to determine your ads’ overall effectiveness. 

Sponsored ads target shopping queries or products. They show up in high-visibility placements on Amazon (for example, on the first page of an Amazon search result), as well as off Amazon.

With an Amazon ad, you use keywords to improve your chances of showing up for a specific search term. That means that your product appears more often based on your target keywords and phrases.

Sponsored ads are cost-per-click (CPC), so you only pay when customers click your ads. You can choose how much to bid per click and set your own budget.

Amazon has over 300 million active customer accounts worldwide. And, you’re never quite sure where those potential shoppers might be in the buying process.

This is where Amazon advertising really stands out. They are designed to help you use your campaign to reach customers at every stage of their journey.

Amazon Ad Products

Amazon Sponsored Product ads appear on Amazon and help promote specific products in shopping results and relevant product pages. It’s simple. When a customer clicks an ad, they are directed to the corresponding product page.

Amazon Sponsored Brand ads appear on Amazon and allow you to create ads that include multiple products, along with your brand logo and a custom headline. Prospective shoppers are sent from the Sponsored Brand campaigns to a selection of your products.

Amazon Sponsored Display ads help you engage audiences who either displayed interest in a similar product category, or just viewed your product’s detail page. Amazon says that “sponsored display ads reach relevant audiences throughout their shopping and entertainment journeys with self-service, programmatic display ads that can be created in just a few clicks.”

While both Amazon and Google PPC ad campaigns offer advertisers the exact targeting within their platforms, Amazon is a higher converting platform due to the nature of the users. 

After all, they’re on the platform to SHOP!

Keywords are King

Keywords are the terms a person enters into a search with their desired outcome in mind. A good keyword strategy will put your product squarely in the sights of your ideal buyers.

With Amazon advertising, users target products through the use of keywords (including negative keywords). You can specify Broad Match, Phrase Match, and Exact Match.

Broad Match: These types of keyword results are more general and are cheaper per click. However, they may lose relevance due to the general nature of the terms. Utilizing a long-tail version of a broad keyword is a great strategy to keep your bid cost low while expanding your brand exposure. The caveat is that these broad types aren’t highly converting, so you need to utilize a more specific keyword strategy for better conversions. 

Phrase Match: This type of keyword search is more specific than a broad search and is more targeted for the potential customer’s search results. If you sell laptops, a phrase term would be along the lines of “Apple MacBook Laptop” to show what is closer to the search a person is conducting.

Exact Match: With exact match type ads, your results will only show if the customer matches their search terms exactly with your keyword phrase. For example, if you’re selling laptops and your exact match terms are “Apple MacBook Pro 2022 Laptop,” your ad will only show results that have that exact phrase. 

Negative Keywords for the Win

Negative Keywords: Here’s where the strength of Amazon PPC ads differ from Google ads. 

Both platforms offer negative keyword match options, but with Amazon, you can utilize this feature to do two important things: 

1) Create search results to exclude irrelevant terms.

If you’re selling a laptop and exclude terms such as “Microsoft, Dell, Chromebook, and Desktop,” as you target your Apple MacBook Pro 2022 Laptop, your ad would NOT appear in search results for someone looking for a different product like a desktop computer.

2) Use negative keywords to optimize your ad targeting by analyzing the search results your ads are receiving. 

By eliminating specific terms and phrases (with negative keywords), you are better able to see the type of search results that perform well for your ads. You can continue to adjust them to include a negative term and see if that improves your ad performance.

Amazon PPC Campaign Strategies

With Amazon PPC campaigns, you can opt to run a manual campaign or use an automatic campaign to drive traffic to your product listing.

Manual targeting allows you to control the type of keywords and phrases your ad campaign includes, allowing you better control of cost-per-click and focusing on only those key terms that are converting with you. 

With automatic targeting, you can have Amazon set up ad campaigns and test if there are additional terms and phrases you should consider in your manual ads. This strategy is a great way to determine your higher-converting keywords without having to do the work of testing each one. 

By utilizing automatic targeting with your ad group, you can set a smaller budget for the ads and see what converts before incorporating those terms into your ads and product descriptions. That will save you a lot of time and money on experimentation and testing.

ACoS – Advertising Cost of Sale and Other Performance Metrics

Another significant benefit that Amazon has over Google is that with Amazon, you can analyze the Advertising Cost of Sale and iterate your campaigns for better efficiency. 

The way the ACoS is calculated is ad spend divided by ad revenue multiplied by 100 (ACoS = ad spend/ad revenue x 100). This data gives you better insights into your ads performance and conversions toward sales to allow you greater control of your ad campaigns.

Put in layman’s terms, your ACoS is a ratio of how much you spend on ads versus the amount of money you make in return. You ultimately want a low ACoS, which means that you’re earning a lot more than you’re paying in ad costs. 

Your ACoS will allow you insight into how effective your ads are compared to competitors, but the metric of ROAS or the Return On Ad Spend gives you data on how profitable your ad campaigns have performed. 

To calculate your ROAS, you take your ad spend and divide it by your ad revenue (ROAS = ad spend/revenue). 

Fine Tuning Your Amazon Ad Campaigns 

When it comes to ACoS and RoAS, utilizing these data points and the type of keywords you are using in your ads and product descriptions allows you to focus your ad campaigns much more precisely than other ad platforms. 

Amazon’s automatic targeting allows you to limit the cost associated with traditional testing and experimentation to help you better strategize the keywords you want to target in your campaigns. 

Finally, the flexibility to adjust your keyword targeting using these data points allows you to adapt your ad campaigns and product listings to optimize their performance. 

Whether it’s Amazon Sponsored Product, Brand, or Video ads, this optimization strategy will save you considerable time and money in your marketing while testing higher converting keywords. It’ll also direct significantly more traffic to your Amazon Store. 

How Canopy Management Can Help

Canopy’s PPC management experts can help you to build an effective strategy that aligns with your unique business needs. Canopy’s Amazon marketing services will help you get more from your digital advertising so you can do more for your business.

If you have any additional questions, reach out to our pros and get started on maximizing your ad spend with Amazon PPC advertising.

If you’d like to take your digital marketing to the next level, reach out to Canopy’s team of Amazon Demand-Side Platform (DSP) advertising specialists.

Canopy Management is a full-service marketing agency for Amazon and Walmart sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the many ways that Canopy Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy”:

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