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Amazon PPC Complete Guide
How to place ads on Amazon
In this Amazon PPC complete guide we will show you which parameters are important for your Amazon PPC campaign. Find out why profit is not the most important metric when running Amazon ads in our Amazon PPC Guide.
Amazon PPC Complete Guide - What to consider
Also in this episode we have a guest again, but you probably won’t know him yet. Lorenz, our Amazon PPC expert, will explain to you what PPC is all about, which other parameters it includes and which are actually the most important ones you should pay attention to in order to be able to assess whether your Amazon ad is performing well or only moderately.
If you want to inform yourself here, but prefer to leave the implementation to the experts, then eBakery is the right partner for you. Whether Amazon PPC or Amazon SEO, we will gladly take over the implementation and optimization for you as an Amazon agency. Our corresponding pages are linked in the video description, on which you can then also make an appointment directly. We are looking forward to your project.
Amazon PPC = Amazon Advertising?
But now for the general explanation of Amazon PPC. First of all, this is simply the possibility to advertise on Amazon.
This display can be played in different places, which Lorenz will explain to you in a moment. But then why PPC? You pay per click, similar to Google. Hence Pay Per Click. But why should you place ads on Amazon at all?
To convince you in advance – 7 reasons for Amazon PPC.
First, you clearly increase visibility.
Amazon PPC Complete Guide - The Advantages
Second, by doing so, you boost sales. Because if the basics are right, more visibility also means more clicks and if your product detail page is convincing, also more sales. You can use it to push new products or defend top positions for already active products.
Conversely, you can also use it to promote sales for slow-moving items. Or drive traffic to longtails. And last but not least, a point that Lorenz will go into in a moment – you also automatically improve your organic visibility through Amazon PPC campaigns. Lorenz from eBakery will now explain why and why.
What is Amazon PPC?
Today’s blog is going to be about Amazon PPC. I will
both explain a few basics and try to correct old ways of thinking. Because many especially new sellers, I think, don’t quite understand why we’re actually running the ads or what’s behind them and what the objective is.
To get started, what is Amazon PPC?
Amazon PPC also called “Amazon Advertising”/
“Amazon Ads” / “Amazon Advertising” actually all means the same thing, and that is that we are actively advertising in our Amazon account.
Place advertisements on our products.
Where is this advertising displayed?
There are several places. The most common are once in the search results. Means, customers enter search terms, also called keywords, and within this search bar, on the search page quasi in the catalog, our ads are then shown, next to other products.
Amazon PPC Complete Guide - Where to place ads?
The next place where the advertisement can be shown is on product detail pages. Means we can also target our advertising on other products. Means customer would click a competitor product. We can place ourselves below on this competitive product. When customers search for products, they are always shown two types of products. These are firstly organic results, that is, organic products displayed by ranking, sales, reviews, sales history and secondly sponsored products. Means advertisements.
The point is relatively important, I’ll come back to it later. He will explain what the purpose and the goal behind the advertising is. This means – with Amazon advertising we place certain campaigns on our products and then they are shown in search results or on other products.
The Amazon bidding system
What does the term Amazon PPC stand for?
Amazon PPC or simply called PPC stands for “Pay Per Click” – which actually already explains the payment system in the whole story of how we generate costs. In this sense, “Pay Per Click” now means i.e. “pay per click” or “per call”. so to speak. That means every time a Amazon customer clicks on our advertising, we have to pay money to Amazon. But how how high are these costs? This is a bit more difficult to explain. The varies very, very much.
By and large, it is a bidding system. This means that there is a certain volume on search terms, i.e. how many people search for a search term in a month or even in a day. And that means there is a certain number of offers, quasi available advertising clicks for these search terms. But now it is so that we as dealers are not the only ones who advertise, but also very, very many other dealers. This means we have the customers who are looking for this term and we have the dealers who offer on this term, virtually that their advertisement is placed there. Now it’s like this – the more the dealers so we can sort of say “okay for one click we would like to go to the example, pay one euro”, then the next dealer says: “Okay me it’s two Euro worth” – The higher you bid, the higher the probability that the ad will be aired and also clicked, but the more you pay. In another video, I go into a little bit about the auction system, how the click prices are made up, how the bids work. Not yet today. In general, however, you need to know, we offer on these terms or on the placement, on other products and other merchants offer with, which also place advertisements. The more that is offered, the more expensive the clicks become.
Amazon PPC Complete Guide - The Most Important Terms
Before we go into what the objective is and so on, I would like to explain a few terms first. We therefore have “PPC”. That’s “Pay Per Click.” That means every time someone clicks, we pay Amazon a certain amount, so that Amazon in the end effect continues to switch the advertising. Then there is “CPC”. That would be “cost per click” in that case. That would mean, “How much do we pay per click?” means after 100 clicks, if each time was €2, the Cost Per Click would be €2. Or we have 100 clicks – 200€ expenses, then of course you can also extrapolate it will then be but also displayed directly on Amazon. CVR – “Conversion Rate” describes the number of customers who buy the product compared to the number who only looked at it. This means that if we have 100 potential customers on our listing, which means 100 clicks on our offer and of those ten customers buy the product, we would have 10% conversion rate. Always percentage of the Comparison between visitors and buyers or clicks and buyers. The next is the ACOS. This is probably the value that most new sellers pay the most attention to. I’ll explain that one a bit further in a moment. This stands for “Advertising Cost of Sales”. These are the important terms.
ACOS vs. ROAS value
ACOS now means we have generated a sale in advertising – for example 50 euros of sales, so a product sold with 50 euros worth. If we now spent 25 euros on advertising to generate this sale, that would be 50%. Next is: “ROAS” which in turn is “Return on Ad Spend”. In the end, this is very, very similar to ACOS, only it’s a different way of extrapolating the whole thing. Here we would now say okay we have spent 25 euros in advertising and have generated 50 euros in sales through it. Means we have double our expenses in turnover – 25 x 2 would be 50€ turnover. In our example, we would have 50 euros as a VK, our advertising costs were 25 euros. Means – ACOS would be 50% and ROAS would be 2.0. We have virtually doubled our advertising costs, our effort and thus generated 50 euros.
In my opinion, Amazon tries relatively hard to push the ROAS value, means quite, quite often the ROAS is automatically displayed. ROAS always sounds pretty positive because when we hear now we have doubled our money , we have now spent 25 and generated 50 euros in sales with it, it sounds pretty positive. But the thing is, if we look at the ACOS now, in the sense just sort of the equivalent to that, says the same thing from 50% spend on sales, we have on Amazon products on average before advertising costs so between 20 and 30 percent win, means now if we spend 50% it’s definitely still a losing business. You can see this very very quickly at the ACOS. Unfortunately, this is not quite as easy to see on the ROAS. Means, new sellers who see a ROAS value and may not convert that directly in their head, may then think that advertising is doing very, very well, when it may not be.
Why is the TACOS value the most meaningful?
Another value we look at is called “TACOS”, which means “Total Advertising Cost of Sale”. So what is the difference with ACOS?
ACOS we had clarified. In the advertising on the sales that we have generated, we have certain costs and they are virtually offset with the Turnover. With Amazon as a platform, though, it’s pretty good compared to a lot of other markets, because it’s not just revenue coming in through advertising, that’s quite important. There are also revenues coming in through organic sales.
What is organic now?
So organic at Amazon means, you often say organic ranking, organic sales – organic means: Amazon places you on certain search terms, customers find you without advertising and thus sales can be generated, organic sales, so to speak sales that can be generated completely without advertising costs at this moment. be booked and then your full Bring profit.
Organic sales vs. PPC sales
Why is this important to us now? New sellers are really fussy about this ACOS value and forget that the goal is to be found better organically through Amazon advertising. On every search term on Amazon there is a “ranking”. This ranking says that if a customer is looking for a product, then there are products that have a top ranking, i.e. the first best, the second best, the third best and so on. The products that have a very, very good ranking, they sell pretty well. Means, if I am on “rank 1” for some search terms. then I get quite a lot of organic sales. And any Amazon seller who is doing very well is drawing their profits from organic sales.
Gain reach through advertising, gain profits through outreach
Now comes a bit of a change in mindset, so to speak: As a salesperson, you have to move away from just focusing on the ACOS to be fixed. In the end, this only says: Within the advertising, within the campaigns how much money do I spend to increase sales in the Generate advertising. But the advertising revenue is actually not where we want to make our money, it’s just a goal or let’s say a step for us to earn organically. Means very important advertising at Amazon does not primarily serve the goal or purpose in these sales to be profitable.If we lose money in advertising – as stupid as that sounds , it is not always bad. The goal is not at all necessarily to make a profit in advertising sales. Because even if that’s possible, assuming you have 30% profit margin, your advertising salespeople have 25% ACOS, that would mean you have 5% still made profit, also when the turnover which is big 5% not so super. Means now, we know the advertising probably won’t be too profitable and if it is then very very little or maybe we will break even. The goal is now also not at all that we are in the Advertising earn a lot of money, but we use the advertising as a tool to rank our product on Amazon. Means we can through advertising sales Amazon quasi show: “Hey our product sells doing well, our product is often bought on the day on the right keywords” and Amazon will be our product accordingly to these Place search terms.
This brings the real profits at Amazon
We place it in advertising, we can choose where. Amazon places that based on sales. And if we now manage through this advertising generate enough sales, on the right keywords and in the best Case even now not really lose money in advertising, we have a super result. Because when that happens we now make many many sales for example, we now have our Soccer sell the a day 50 times in advertising, then Amazon realizes: “Hey this Product on these search terms “soccer or something like that sells very very good we should maybe in the ranking, i.e. in the search results place further up”. Then what happens all of a sudden? We sell, sell, sell only in advertising, make no profit nothing and then but organic sales come and place us with more visibility, which then leads customers to us even without the Find advertising. And these sales, organic sales generated by ranking generated, so to speak, which are to Bringing profits to Amazon, not the Advertising per se.
Difference between ACOS and TACOS
Therefore, if I now explain again thevalue that I just mentioned: Tacos is “Total Advertising Cost of Sales”. The value now takes not only quasi the advertising costs and the Advertising sales but the following: We take the advertising costs, divide these by the account turnover or by the whole product sales, means not only the advertising sales, but also the organic sales. And then we make it percent so times 100 and that gives our TACOS. So an important tip is – we don’t use advertising to generate profits at this moment, but we use advertising to build rankings, build visibility, and then we want to maximize our profits through that visibility. Don’t just focus on the ACOS value, we want that to go down too, let over time , through optimization we want to get the ACOS better, that means less percent cost per sale, but the real profits on Amazon are not realized in advertising, but through organic ranking. The fact that Amazon places us in the first places for the respective search terms.
Amazon PPC Complete Guide - Summary
So let’s sum it all up once again.
The primary goal of the Amazon PPC campaign should not necessarily be to make a big profit with it alone.
This would be e.g. reflected in the ARCOS value, i.e. Advertising Cost of Sale. This value is calculated by advertising spend divided by advertising revenue x 100. As we learned from Lorenz, the ARCOS value is also preferable to the ROAS value as an indicator. However, both values focus only on the sales of the products generated by the ads. This is an important point. Since for you as a retailer should not count the profit of the products sold, but the amount of products sold. This is exactly what Amazon will notice and will organically rank you higher in the search results. This means that the actual relevant value at the end is the TACOS – i.e. Total Advertising Cost of Sale. This is made up of the advertising costs divided by the account turnover x 100. This means that organic sales not generated by ads are taken into account. So much for the theory. In the near future, we will delve further into the subject and also show you one or two practical examples in deepdive. Otherwise, the eBakery Amazon experts will be happy to advise you and, if necessary, take over your PPC and SEO optimization.
Do you have questions or need an individual offer? Do not hesitate to contact us.
Haben Sie Fragen oder brauchen ein individuelles Angebot? Zögern Sie nicht, uns zu kontaktieren.
