The Complete Beginners Guide to Amazon Advertising in 2023
Did you know that the average Amazon PPC conversion rate is 9.55% versus an average of 1.33% on other websites? This speaks volumes for Amazon advertising. Consumers are often already in the buying phase of the consumer journey.
Amazon PPC advertising is becoming a significant threat to both Facebook and Google's monopoly on the PPC market share. Consumers use Amazon to check and compare prices (9 out of 10 consumers price check a product on Amazon), find new products, begin product searches, and make immediate purchases.
With over 300 million active customer accounts, leveraging this powerful advertising channel is undeniably integral to any e-commerce campaign. Not to mention, Amazon is only getting bigger.
We’ve put together a comprehensive guide to further your knowledge and understanding of Amazon advertisement tools, products, and opportunities to equip your brand with the necessary knowledge to maximize its reach and boost results.
- What Is Amazon Advertising?
- 3 Amazon PPC Advertising Types: Sponsored Products, Sponsored Brands, Sponsored Display
- More Amazon Advertising Products
- Determining An Amazon Advertising Strategy
- Amazon Keyword Bidding
- Manual and Automatic Campaigns
- 4 Tips to Optimize Amazon Ads
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What Is Amazon PPC?
“What is Amazon advertising?” – this question comes up for every seller sooner or later.
Amazon PPC is pay-per-click advertising through Amazon Advertising, Amazon’s ad platform. Through Amazon PPC, brands, agencies, and third-party sellers can target specific keywords to create advertisements for their products. These appear in Amazon’s search results and competitor product listings. Advertisers only pay when a user clicks on the ad.
Here’s one of the most common questions in digital advertising today: is advertising on Amazon worth it? The short answer is yes, definitely.
Amazon already has the visitors and customer base, and these consumers are hanging around with a significantly higher buyer intent than any other platform. 55% of consumers are already looking to make a purchase when they begin their search on Amazon, according to Bloomreach.
Amazon is one of the best ways for sellers to:
- Drive sales fast
- Build brand awareness
- Show Amazon the right keywords to rank you organically
Amazon Advertising can be broken down into these services or products.
With a full arsenal of tools and products for you to use, Amazon Advertising can appear intimidating at first.
We will cover them all in detail, including the concepts and inner workings of Amazon marketing in general. And if you want to go on a full Amazon advertising learning journey, you can also check out Amazon’s own educational hub, which is called Learning Console.
If you're not ready to spend time getting to grips with the relevant processes, leave any challenging parts to automation and save your time and budget by using the PPC Optimizer for Amazon – a new smart solution by Semrush. You can run one campaign for one product without a paid subscription.
3 Amazon PPC Advertising Types
Nearly 3 out of 4 Amazon customers use Amazon to discover new products or brands (74%, according to Amazon). Amazon’s three main PPC advertising formats that are among the easily discovered are:
- Sponsored Products
- Sponsored Brands
- Sponsored Display
While Sponsored Products is the most popular format, they all share distinct advantages depending on the advertising campaign and several other factors.
The most widely used PPC type, Sponsored Products, offers a self-service, cost-per-click (CPC) advertising strategy for individual product listings.
These ads will appear at every step of the customer journey, in both shopping results and on product detail pages, and they use targeted keywords to promote a specific product.
Sponsored Products ads are optimal to gain visibility, increase direct sales, control advertising costs with CPC ads, and measure advertising success. If you haven’t run Amazon advertising before, start here.
Sponsored Brands, also referred to as “headline search ads,” are mainly aimed at top-of-the-funnel customers just beginning their Amazon search journey.
Also a self-service, CPC-based tool, these ads appear above the search results, to the left of search results, or below search results and highlight your brand specifically with a custom headline, brand logo, and multiple products.
Sponsored Brands ads are an effective tool to gain visibility, boost sales, connect shoppers to your products or store, and create a branded shopping experience.
Additionally, you can leverage the power of Video Ads to complement Display Ads and inspire immediate action, securing the most bang for your buck.
Amazon Video Ads are an engaging form of advertising content that expands your reach across Amazon subsidiary sites, such as IMDb, or on devices like Fire TV. These ads have a high chance of reaching relevant audiences by only playing when in view.
As Will Haire, BellaVix’s CEO and Founder, highlighted:
Sponsored Display is a self-service CPC ad tool that uses automatically generated display ads to target certain audiences based on relevant shopping behavior both on and off Amazon.
These ads appear on Amazon product detail pages or retarget consumers with specific interests or viewing history on other web pages.
Sponsored Display is best used to sway customers away from competitor pages or capture interest by displaying a related product or service. Amazon claims that over 64% of shoppers use more than one channel to make a purchase, so increasing your presence with display ads can often prove extremely valuable.
All three formats allow products to be shown in Amazon results multiple times. The more real estate for your listings you get, the more you increase your overall conversion and sales. Don’t miss the 8 Innovative Ways to Increase Your Product Visibility With Amazon SERP Features.
More Amazon Ad Placements
Amazon as an ecosystem offers a variety of products that you can use to deliver your ads to potential customers. You can create voice ads to play across Alexa-enabled devices, video ads to stream across Fire TV or Amazon-exclusive sites like IMDb, or display ads to attract audiences on both Amazon-owned and third-party sites and apps.
Let’s go through them so you can understand which places suit your business best.
Amazon Live is a livestream advertising tool that allows brands to interactively engage with consumers in real-time. By using the Amazon Live Creator app, you can further brand awareness, showcase your products or services with live demonstrations, increase engagement, and boost sales.
These livestreams appear in prominent places across the Amazon platform and prove extremely valuable on popular shopping holidays or for seasonal events.
Amazon Audio Ads provide a means of reaching consumers when they’re away from the screen. These audio ads are between 10 and 30 seconds long and surface periodically between songs on Amazon Music and Alexa-enabled products such as Echo and Fire TV, and even on desktop and mobile devices.
2% of Echo owners have purchased a product via Alexa. Considering that about 70% of all smart speaker users own an Echo, 2% doesn't seem insignificant at all. Amazon’s accessories give consumers more avenues to purchase products.
Businesses can use Audio Ads to more fully promote their brand, products, or services, as a majority of listeners still rely on free, ad-supported music platforms as opposed to subscription-based streaming.
As enticing as this may sound, this ad format is only suitable for brands with larger ad budgets. The entry bar is at $35,000, and this ad type is only available through managed services.
Amazon Posts offers an innovative new method to drive brand and product awareness as shoppers browse through relevant categories on Amazon.
Posts allows for the curation of images to specifically highlight your brand lifestyle and enables consumers to click on your pictures and explore your feed. These images essentially act as an “Amazon-based Instagram,” allowing you to share brand content for free on detail pages, related-product feeds, and relevant product-based feeds.
Amazon Stores are free, multi-page destinations for your brand, dedicated to all of the products and services in your portfolio.
Your brand store is an excellent tool for businesses, with several products to build brand awareness on Amazon, interpret consumer behaviors, and adjust campaigns based on Amazon’s insights.
Amazon Demand-Side Platform (DSP)
Amazon DSP is a product platform that allows businesses to “programmatically buy display, video, and audio ads at scale.”
However, Amazon DSP requires significant budget allocation, and if you are a smaller brand, reseller, or only getting started with Amazon advertising, it’s best to stick with the three key Amazon PPC ad types: sponsored products, sponsored brands, and sponsored display.
Amazon Attribution is a product specially designed to measure how non-Amazon advertising collateral and media perform on Amazon.
Advertisers can best use Amazon Attribution to provide uniform insights if they are executing advertising campaigns through several other mediums. This product analyzes the most effective ad channels, optimizes and adjusts campaigns accordingly, and helps brands discover which content drives results.
The most common use case for Amazon Attribution is when you are driving sales from social media ads to Amazon to allow you to track the effectiveness of your off-Amazon campaigns to your Amazon listings.
The most common use case for Amazon Attribution is when you are driving sales from social media ads to Amazon to track the effectiveness of your off-Amazon campaigns to your Amazon listings.
Determining An Amazon Advertising Strategy
If you are unsure where to begin with an advertising strategy on Amazon, you are not alone. Many brands lack experience with a platform like Amazon, as user-friendly as it is. When you decide to start advertising on Amazon, it’s important to set specific goals for your brand and determine specific objectives. This will help you hone in on the optimal advertising strategy for your brand.
- Advertising Goal: Awareness
Are you looking to develop or expand your brand awareness? Some brands are simply looking to become a part of the conversation in a given market. If your business is interested in maximizing its reach and impressions, Sponsored Display Ads, Video Ads, Audio Ads might be excellent choices.
- Advertising Goal: Conversion
Are you looking to drive sales by getting your products and services in front of a more targeted audience? By engaging with high-intent shoppers, your brand may be able to improve your return on ad spending and cost of sales. Sponsored Products ads could do the trick.
- Advertising Goal: Loyalty
Are you looking to increase customer loyalty and retention? Some brands could benefit most from convincing existing customers to make repeat purchases, make referrals, or subscribe to recurring services. If this is the case for your brand, your business might want to try creating an Amazon Store to run Sponsored Brands ads that drive people back to your store.
Amazon Keyword Bidding
Much of Amazon Advertising revolves around keywords. While many advertisers are familiar with keywords and how they work in terms of search engine optimization (SEO), familiarizing yourself with Amazon Keyword Bidding is imperative if your brand is going to take advantage of Amazon ads.
Amazon Keyword Bidding is a PPC advertising method that charges the seller on a per-click basis. The bidding algorithm that Amazon uses determines which ads appear for shoppers based on a bidding war between sellers.
For your product or service to show up for a relevant search, you must outbid competitors who are interested in and targeting similar keywords. For example, if you sell running shoes, you will want to target keywords such as “running shoes,” “sneakers,” “shoes,” and so on.
Amazon Keyword Bidding is what’s called a “second price auction,” which means that the seller who bids the highest wins the auction and gets their ad to show, but they are only charged the amount of the next highest bid.
For this reason, tracking and analyzing keyword bidding performance is integral to success when advertising on Amazon, as the data is always changing.
Manual and Automatic Campaigns
Amazon offers both manual and automatic campaign options. These different options refer to the way in which the customization is handled, either manually by the brand or business or automatically by Amazon’s algorithms.
Manual campaigns are ideal for brands that are more experienced with PPC advertising and for those that have the time and wherewithal to set it up and continually optimize. Bidding manually allows for significantly more precise targeting, as it is easier to effectively reduce bids or pause low-performing keywords.
In a manual campaign, Amazon provides three different types of keyword targeting: Exact, Phrase, and Broad. These keyword targeting match types align shoppers’ queries with relevant, correlating ads.
Keyword Match Types
- Exact: Search terms must match your chosen keyword word for word, including the same order and components.
- Phrase: Search terms must contain the same components as your chosen keyword in the same order but can include different words before or after.
- Broad: Search terms must contain all components of your chosen keyword in any order and can include additional words.
- Negative: Search terms for which your ad should not show up. Negative keywords can also be broken down into exact, phrase, and broad match types (the same logic as we described above applies), and they indicate to Amazon that your ads should not be triggered for specific keywords.
With Automatic campaigns, your brand can select its budget and allow Amazon to automatically find keywords for you. This option is simple and more optimal for beginners due to its easy setup. While automatic campaigns give brands less control overall, they can be effective for the right business with an ideal audience.
Additional Campaign Automation
Of course, you can manually optimize both manual and automatic campaigns. And if you want to build an efficient Amazon PPC strategy, chances are you’ll have to. But you can use third-party tools that will cover the hardest part of the job.
Semrush offers a smart tool that launches a PPC campaign for you and automates your ad management – the PPC Optimizer for Amazon. Even if you don’t know your keywords, you can start the campaign – the tool will gather a list of the most relevant and effective keywords for your product.
The great thing about the tool is that it learns from each new sale and constantly optimizes the campaign, so you won't be wasting your budget on ineffective strategies.
You can run one PPC campaign for one product without a paid subscription and get the most out of your advertising budget at no extra cost. This is a perfect solution for those who don’t want to waste their time on keyword research.
Amazon Advertising Costs
Now that we’ve covered almost all the basics of Amazon advertising, you may be wondering how much does it cost to advertise on Amazon?
The right answer is that it depends.
While you can consider the averages that are widely cited across the web, there are a few factors that will affect your advertising costs on Amazon:
- Goals (you can target clicks or impressions);
- Ad types and placements;
- Competition level (a lot depends on how much your competitors are willing to spend);
- Keywords; and
- Overall budget.
Amazon advertising is based on an auction model, meaning that it is the second-highest bid that will eventually determine the end cost of your ad. How so? Well, if you’ve set your bid at $1 per click, and the second-highest bidder is ready to pay $0.80, you will win the auction and only pay one cent more – $0.81.
This may sound straightforward, but the entry bar to Amazon advertising really depends on the ad type and placement.
Advertising Fees on Amazon
The simplest way to go about Amazon advertising is to start with self-service ads – they tend to have the lowest minimum bids and budgets:
- The minimum budget for Sponsored Product ads is $1, and the cost per click will really vary depending on your chosen keyword and competitors’ advertising tactics.
- As for Sponsored Brands ads, you are only limited by a minimum bid of $0.10, with no restrictions towards the overall budget.
- With Sponsored Display ads, you can’t go lower than $0.02 for your bid, and the minimum budget is also at $1. Here, you have the freedom to choose between CPC and CPM models.
When it comes to alternative Amazon ad placements, you have to be able to allocate some larger budgets as they come with stricter requirements:
- To launch your ad with Amazon DSP, you will need a minimum budget of $35,000.
- Audio and video ads also require minimum budgets ($25,000 and $35,000, respectively).
If you’re selling worldwide, make sure to check Amazon’s new Regulatory Advertising Fees that might add costs to your advertising depending on the country the clicks come from.
4 Tips to Optimize Amazon Targeted Ads
Before you roll up your sleeves and get started with Amazon advertising, one more thing to consider is how to optimize your advertising specifically for Amazon. And here, you have to consider the following four “rules” of Amazon ad optimization:
Specific, Compelling Ad Copy
Standing out is critical to success in the digital marketing world. Whenever you run Sponsored Brands or Sponsored Display campaigns, make sure your ad copies are compelling, witty, and original. Create a clear sense of urgency and call attention to special discounts or deals that will create a FOMO effect.
Create Organized Campaigns
Staying organized is imperative to any advertising campaign, especially when it comes to Amazon ads. Structure your Amazon ad campaigns in a way that gives you the most visibility of what keywords are actually performing. Sometimes, this will imply separating your campaigns by product or by child SKU (stock keeping unit). The higher the level of organization, the easier it will be to keep track of your results, allowing you to most effectively tailor your campaign as needed.
Use Well-Known Competitor Keywords
Including some of the same keywords your competitors target is a simple but effective tactic. You may consider bidding on extremely popular branded keywords linked to similar products. For example, if you’re selling shoes, you might bid on phrases such as “Nike running shoes.” This can create significant exposure from a massive consumer audience that may not have seen your product otherwise.
But make sure to only use this technique if your product is superior and very similar to the name brand.
Try All Three PPC Ad Types
Sponsored Products ads may be the most widely used, but they might not be the best strategy for certain brands, depending on the products or services and the target audience. Perhaps Sponsored Brands ads might deliver a more loyal consumer base than the other types. It’s important to experiment with all three PPC ad formats to find the best combination of tactics.
Over To You
To save time and budget on your PPC campaign setup and optimization, schedule your PPC campaign in the PPC Optimizer for one product at no extra cost. The tool launches and monitors the effectiveness of advertising campaigns, and based on that, constantly optimizes them. Set aside 2-3 weeks for a testing period and get results.
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