Have you ever bought a product that wasn’t on the first page of Amazon?
Most likely, the answer is NO. More often than not, the product you want is sitting in the first few spots of page 1, which means the higher you are ranking, the more chances you have to sell your product faster than others.
Amazon has 1.9 million sellers, and this number is growing massively. At the same time, the ranking process is getting complicated. So, Amazon has added a program called Amazon Sponsored Ads, which gives sellers an extra edge in ranking their product in multiple locations on the Amazon SERP.
This article will discuss all the ins and out of Amazon Sponsored Product Ads and how you can utilize them to increase your sales at minimum cost.
What Is Amazon Sponsored Product 2022?
Amazon Sponsored Product is an advertising program that helps a seller generate more sales while improving their organic ranking.
According to the latest stats on the distribution of net digital ad revenue in the United States, only 10% of this is taken up by Amazon. This is why, according to many professional sellers, their net margin shrank to 20% after using PPC ads.
What Does Sponsored Mean on Amazon?
This is an advertising program similar to Pay-Per-Click ads, meaning sellers have to bid for a keyword to get a more profitable place on the search result and product page.
The “Sponsored” feature gives sellers the authority to promote their listings on Amazon.
According to authenticated resources, more than 31% of Amazon buyers utilize sponsored product ads to purchase their desired product.
Moreover, this figure is just for sponsored product ads; many other types of ads are also available on Amazon, which will be discussed in detail in upcoming articles.
How Do Sponsored Product Ads Work?
With Amazon Sponsored Product Ads, the main identifiers used to represent a product are the keywords, so sponsored product ads use keyword-based and ASIN-based targeting to add more spice.
You can either provide Amazon with the relevant keywords you have researched or let Amazon find the keywords automatically.
However, keep in mind that every click received on your ad will be charged; only target those keywords that you think will be highly profitable. Otherwise, you will be charged for nothing in return.
It is quite challenging to find the highest converting keywords then place them in the relevant campaigns along with constant optimization. However, there are tools like Amazon PPC Optimizer that can handle everything in a couple of clicks – Click here to learn more!
What Is the Process of Sponsored Product Ads?
- Select the product you want to advertise.
- State a set of targeted keywords or let Amz automatically decide the keywords.
- Then add an overall campaign budget and a bid for each click.
- Now the algorithm makes your ad appear according to the relevancy of your listing.
- The advertisement can appear at the top of the page, middle of the page, and sometimes on a competitor’s product page.
Keep in mind that the higher your bid is, the higher your chances to appear in the best places.
How Much Does It Cost to Advertise on Amazon?
There is no fixed answer to this question because every keyword has its own bidding value, and to get people to click on your ad, you have to pay that value.
Apart from this, there are no external subscription fees for this program; however, to take full advantage of the sponsored products program, you need to comply with Amazon’s basic requirements:
- The sponsored ads program is only available for sellers with an Amazon professional seller subscription.
- A seller must have at least one product listed.
- The listed product must be new.
- Your product page must be retail-ready and eligible for the Buy Box. Otherwise, your ad will not be displayed to visitors, and you will receive an error from your advertising manager. You might be thinking, why is Buy Box necessary? Well,assume you do not have the Buy Box but some other seller does. If you have to spend money on winning the bid and redirecting a potential customer to your product page, would you prefer those customers buy from somebody else? Because the one who owns the Buy Box gets the sale. In short, you are paying to bring traffic to your competitor.
If you want to make sure that your listing is retail-ready, then simply put your ASIN in the Listing Quality Check tool; in a couple of seconds, a detailed result will appear.
What Are the Targeting Options in Amazon Product Sponsored Program?
Targeting options are a feature that describes the representation of your product listing. For example, in Product Amazon sponsored, the representations are the keywords directly relevant to your product.
These targeting options are further segregated into automatic and manual targeting options.
Just by the name, it is clear that everything will be automated, and you do not have to put in that much effort.
With this targeting option, Amazon’s algorithm takes control of the keyword and ASIN targeting. It selects and deselects the keywords based on the relevancy of the listing and the generated results.
This means that while writing your listing, the front-end and back-end must be incorporated with the highly relevant keywords so that the algorithm can target the profitable keywords in the advertising campaigns.
Apart from this, the automatic targeting option is further segregated into four different keyword match types so you can get the best possible result in the overall niche.
- Close Match: Search terms that are almost related to your product.
You are selling “Kids Socks.”
Now, your ads will be displayed with similar search terms such as:
- Kids Athletic Socks
- Kids Socks Set
- School Kids Socks
- Loose Match: Search terms that are loosely related to your product.
You are selling “Paint Brush.”
Now your ads will be displayed with similar search terms such as:
- Acrylic Brush Set
- Drawing Brushes
- Artwork Set
- Substitutes: A product similar to yours but sold by other brands
You are selling “ BRAND Kids Socks.”
Now your ads will be displayed to similar search terms such as:
- UnderArmour Kids Socks
- Nike Kids Athletic Socks
This targeting option is a good way to steal your competitor’s sales, but it is risky as well because big brands have built brand loyalty in their consumers. For this reason, it is hard to convert such loyal customers.
- Complements: A product that could cross-sell with your current product.
You are selling “BRAND Baseball.”
Now your listing might appear on the product page for listings that are selling a baseball bat.
You are selling “Canvas Board.”
Now your listing might appear on the product page for listings that are selling paintbrushes.
If you are a beginner and do not have a list of keywords, automatic targeting is the best way to generate sales and grab some proven data.
However, keep in mind that you might not see good results at the start, as the algorithm will be looking for all the relevant data. But with time, it will continue to optimize the data.
Once you have created your automatic campaigns, check them after a week so that you have enough data to judge your progress. The data will include all the targeted keywords,spent budget, and generated sales. For the keywords that have been performing the most, you can place them in the manual targeting campaigns.
What is manual targeting? We’ll discuss it in a bit!
With manual targeting, sellers have a much stronger grip over their advertising campaigns, and they can run their ads on a specific set of keywords, which means less budget consumption and more accuracy.
However, this targeting can also backfire if you are a beginner and are targeting the wrong keywords; incorrect targeting can ruin the overall relevancy of your listing. So, it’s better to use a tool like Keyword Wizard to ensure the accuracy of your keywords.
Similar to automatic targeting, the keywords of manual targeting are also segregated into three different match types:
- Broad Match: The stated search term/keyword can appear in any order with multiple pre and post affixes.
You are selling “Athletic Shoes.”
- Big Shoes for Athletic Kids
- Athletic Shoes for Flat Feet
The broad match also targets variations of your keywords, such as plurals and abbreviations, which is why this match type is normally the less converting one and is often considered expensive due to less ROI.
- Phrase Match: The stated search term/keyword appears in the same format with different pre and post affixes.
You are selling “Marker Paints.”
- 12 Pcs Marker Paints for Kids
- Canvas Marker Paints for Kids
This match type generates more relevant results as the phrase form of the entered keywords remains the same.
- Exact Match: The stated search term/keyword appears in the same format with no pre or post affixes.
You are selling “Canvas Board.”
- Canvas Board
The exact match type targets the same entered keywords, which is why it is the most effective match type. However, the bidding value is always high on this match type because every seller is targeting it.
Now, you must be thinking, darn, this Amazon Sponsored Ads management is super tough. Don’t worry, there are many automated AI tools in the market, like PPC Optimizer, that help you create profitable campaigns in a couple of clicks.
What is the Best Profitable Bidding Strategy?
As stated earlier, on Amazon, you will be charged for every click you receive on your ad, and the amount per click is called a bid.
The bidding process is entirely dependent on how aggressive your competitors are, which means to get the best spots, you need to bid the highest.
Let’s assume you have created an exact match campaign for the keyword “stainless steel garlic press,” and the suggested bid is $0.70. If you select the exact amount but are not the highest bid, you will pay $0.70 per click.
However, if $0.70 is the highest bid, you will pay the second-highest bid, which could be $0.60.
Selecting the wrong keywords with the wrong bidding strategy can consume your whole daily budget without a single sale, so it is essential to go with the right bidding strategy.
In Amazon’s advertising console, three bidding strategy options are available that you can select based on your budget and ranking strategy.
1. Dynamic Bid-Down Only:
This is the best bidding strategy when you are on a strict budget and do not want to spend unnecessary money on non-converting keywords. In this strategy, Amazon automatically lowers the bid on the keywords with fewer chances of converting into a sale.
2. Dynamic Bid-Up and Down:
If you have a flexible budget and are ready to spend a little extra to get that top spot, then this bidding strategy is the best for your keywords. With this strategy, Amazon will automatically raise your bid price by up to 100% if the ad has a higher chance of generating more sales.
At the same time, it will lower the bid for those keywords that have fewer chances of converting.
3. Fixed Bids:
This bidding strategy depends on your goal, whether you want to save some money and generate a few sales or you want to spend some extra and get that top spot. Because Amazon will not change your stated bids in this option, you have to change them manually based on retrieved stats.
Have a clear goal for your advertisement campaigns, so you know which bidding strategies will work for you. Apart from this, Amazon shares each keyword’s suggested bids to give an initial idea to the seller.
How to Advertise Products on Amazon?
Creating automatic and manual campaigns is quite easy; all you have to do is follow the simple instructions given below:
Log in to your Amazon seller central, hover over the Advertising option on the top header, click on the Campaign Manager option, and Create Campaign.
Now you have three campaign types to choose from, click on the Continue button of “Sponsored Products.”
Now set your Campaign in a professional manner, including the Campaign type, product name, and date of creation. So that, in case you have created multiple campaigns, you won’t get into a mess.
Add the start and end date of your advertising campaign, assign a daily budget and in the end, select the targeting type.
Set up an Automatic Targeting Campaign
- Once you have selected Automatic targeting, select the bidding strategy as per your defined goals and budget.
- Assign a proper name to the ad group to keep things aligned.
- Select the product for which you want to run the ad.
- Now, assign bid by targeting group.
- In the negative keyword targeting, add all the keywords with fewer conversions and which consume more budget.
- Click on Launch Campaign.
Set up a Manual Targeting Campaign
- Once you have selected Manual targeting, select the bidding strategy as per your defined goals and budget.
- Assign a proper name to the ad group to keep things aligned.
- Select the product for which you want to run the ad.
- Now select among keyword and product targeting.
- Enter your keywords list.
- Select the match type for your assigned keywords list.
- In the negative keyword targeting, add all the keywords with fewer conversions and consume more budget.
- Click on Launch Campaign.
How to Optimize Your Amazon Sponsored Product Campaigns?
Daily optimizations play a critical role in keeping your ad campaigns profitable and sustainable for a long time.
However, make sure to always start with enough data, which is why we recommend performing your first optimization two weeks after a campaign creation.
Once you have enough data, start with the following techniques:
Shift from Automatic to Manual Campaign
An automatic campaign aims to distinguish all the keywords and ASINs that are profitable for your listing. Regularly check your automatic campaigns and shift all the top-performing keywords and ASINs to the manual campaign.
Step#1: “Athletic Shoes” is a search term with good results in the automatic campaign.
Step#2: Add that search term in the manual campaign with a broad match type.
Step#3: At the same time, add “Athletic Shoes” in the negative phrase keyword section of the automatic campaign, so both the manual and automatic campaigns do not start fighting for the same spots.
Conduct regular optimization and put all the non-performing and broad niches in the negative targeting, so your budget is spent on the right keywords and ASINs.
What is a good click rate for Amazon Sponsored Products?
The CTR percentage of your ads shows how many people clicked on your ads. The more the clicks, the higher the chances of getting good sales.
But a question comes here: how to figure out whether our CTR percentage is good or not?
Every category on Amazon has a separate average CTR percentage, making this question quite impossible to answer. However, the collective average CTR of the top categories is 0.44%. So, based on this percentage, you can compare the progress of results.
What is a good conversion rate for Amazon Sponsored Products?
The CVR percentage of your ads shows how many visitors came to your listing and made a purchase.
Like CTR, every category on Amazon has a separate average CVR percentage, making it hard to share. However, the collective average CVR of the top categories is 9.0%. So, based on this percentage, you can compare the progress of results.
If your results are below the average percentage, then work on building social proof, improving your images, and getting a converting listing copy. Your listing must be retail-ready, so it does not give a visitor enough time to think if they should buy a sponsored product on Amazon or not.
What is a good Amazon Sponsored Products cost per click?
The CPC, or cost per click, is the amount that you pay for every click you receive on your ad. The higher the CPC on a keyword, the more competitive that keyword is.
When it comes to CPC, even the same product’s keywords have different bid values, so it is impossible to get an exact figure. Moreover, CPC depends on the competition of the niche because the higher the competition, the more sellers will try to bid higher so that they acquire the top spots.
What is a good ACoS for Amazon Sponsored Products?
ACOS is the advertising cost on sales; it defines the efficiency of your ad campaigns, which means the lower the ACoS, the more efficient your ads are.
The ACoS of your ad campaigns depends upon your PPC optimization strategies and the short-term goal of your advertising campaigns. It means that if your initial goal is to secure the top spots, then your ACoS would be higher as you are paying the highest bid to get that first spot.
The average cumulative ACoS for the top 3 categories is 32%, but that does not mean that this percentage could be good for your product. The wellness of your ACoS depends upon your profit percentage.
Amazon product-sponsored ads play a major role in boosting your sales while sustaining your organic ranking. Due to its complicated structure, it is tough for beginners, but some automated tools in the market save you from all of this hassle, which means no need to hide behind the curtains anymore.
Amazon gives you two options in its advertising manager, whether you take full control over the ad groups by managing the manual campaigns yourself or let it handle everything in automatic targeting. However, keep in mind the first few days of both campaigns would be a bloodbath, as you need data to kickstart.
Don’t worry, keep a keen eye on your campaigns once you have enough data, and perform daily optimization to minimize your expenses and maximize your profits.
The Complete Beginners Guide to Amazon Advertising explains everything you need to know, including types of Amazon ads and strategies for optimizing your Amazon ad campaigns.