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15. December 2019

Amazon PPC Guide 2020 - Part 1: Basics of advertising formats

In the first part of our Amazon PPC Guide you will learn the following:

None of this is new to you? Then jump directly to Part 2 of the PPC Guide, where we explain step by step how to start advertising with Amazon and create a Sponsored Product Ad.  

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What is Amazon PPC?

Amazon PPC means Amazon Pay Per Click and is a billing model for advertisements on Amazon. Only after a click on the ad is made, costs arise for the advertiser. Although Pay per Click stands for the payment method itself, the term PPC is generally equated with the digital advertising options that are billed via Pay per Click. PPC ads on Amazon are better known as Amazon Sponsored Ads. The most popular advertising format is the Amazon Sponsored Product Ad and can be placed on either a search results page or a product detail page. Amazon merchants who create PPC ads pay for them - as the name suggests - based on the number of clicks on the Sponsored Product. 

How does Amazon PPC work?

The merchants first selects the products they wish to promote and can then select a maximum daily budget per product during the PPC ad creation process. From this budget the respective cost per click is subtracted after a prospective customer has clicked on the ad. If the budget is used up after several clicks, the ad is no longer displayed. 

Keywords are stored for each advertised product. The keywords are the basis of which the advertisement is displayed on Amazon. This is always the case if the keyword matches the search term entered by a potential customer. 

Example:
If you sell sunglasses and advertise a product with the keyword "sunglasses men", your ad will appear (if you have a certain relevance and make an appropriate bid) if "sunglasses men" has been entered into the Amazon search field. 

However, search terms and keywords are not always the same terms. You can find out more in the section “When are PPC ads displayed?”.

The click price, i.e. the cost per click on the ad, depends on whether and how many other advertisers bid for the same keyword. Amazon proceeds after the second price auction. This means that the ad of the merchant who offers the most for a keyword is displayed, but the merchant only has to pay the cost of the second bidder's bid + 1 cent per click on the ad.  

The goal of Amazon PPC management is to find the keywords that are used to display your ads, get clicks and generate as many sales as possible.

It is easy to be displayed with high bids and daily budgets. This increases the chance of achieving clicks and sales. The difficulty in PPC management, however, is to keep the bids as low as possible in order to generate not only many sales but also profits with the sales. If, for example, the click price is higher than the margin of the advertised product, no profit can of course be made with the advertising campaign - no matter how many products are sold through it. Even if an ad triggers many clicks but no sales, it causes losses for the merchant. Therefore, it must be weighed and evaluated for which keywords high bids pay off. 

Requirements to place Amazon advertisements

In order to perform Amazon PPC actions, you must have an active professional Amazon seller account or Advertising Console (AMS). You can act as a seller or vendor. Sellers sell their goods via Amazon to the end customers and vendors sell the goods directly to Amazon. Both seller types are responsible for the PPC measures themselves. Sellers manage their organic product sales as well as their Sponsored Products in Seller Central. Vendors have two different accesses - the administration of the "normal" product sales (product list creation etc.) is done via Vendor Central and for the management of their advertising they use the Advertising Console (formerly AMS).

Why should Amazon sellers advertise?

The number of sellers and products offered on Amazon, as well as the quality of the product detail pages has increased significantly in recent years. Due to this competition it has become harder to show up in the organic search results on page 1. Organic search results are the unpaid search hits displayed by the Amazon search algorithm "A9". 

This makes Amazon's advertising possibilities all the more important, because advertisements give advertisers the opportunity to reach the first position within the search results with each of their products. 

This not only increases sales through the ad, but also has other positive effects: When campaigns work well, the number of product detail page views increases, which in turn leads to an increase in both sales and seller performance, resulting in a higher number of organic rankings and organic ratings.

It is a cycle:
An increase within the organic ranking leads to an increasing number of page views and this in turn leads to an increase in sales, which leads to higher purchasing volumes and thus to a reduction in product costs.

Effects of Amazon PPC

Amazon PPC measures are also important for obtaining information about customers' search behavior: The search term performance data from PPC campaigns provides insight into the exact wording used by customers to search for a product on Amazon and which keywords Amazon considers relevant to the product. This data is inaccessible to sellers who do not advertise.

In addition, important KPIs (Key Performance Indicators) are not displayed in neither Seller Central nor Vendor Central, such as the number of impressions, click rate and conversion rate for specific keywords. This is particularly relevant if, for example, A/B tests are performed by varying images, titles or prices (more on important KPIs can be found in the "Performance Values" section in Part 3 of this PPC Guide).

What Amazon Advertising formats do exist?

There are several ways to advertise on Amazon. Depending on whether you act as seller or vendor, you can use different advertising formats on Amazon. At the current time (December 2019) the following three main forms are available: 

  • Sponsored Product Ads
  • Sponsored Brands
  • Sponsored Display Ads

A glance at the search results page reveals the importance of advertising on Amazon. If you don't pay, you have little chance of becoming visible to potential customers. Before they start scrolling, "Above the Fold", after entering most of the search terms, only advertisements (marked in red) can be seen.

“Above the fold” view
“Above the fold” view

Amazon Sponsored Product Ads or Sponsored Products

Sponsored Product Ads (SPAs) are the type of ads most commonly used on Amazon. They correspond to text ads on Google and appear above, between, or below organic search results. They can also be displayed in the "Sponsored products related to this item" section on the product detail pages or below the attributes.

A tiny "Sponsored" indicator (marked in red) is the only difference in appearance compared to organic search results. It is not possible to use special promotions, different prices, titles or images for the SPAs. SPAs can be created and used both by sellers and vendors.

Example Sponsored Product Ads

The ad itself does not have any other information than the organic image, title and price information of a product. When a customer clicks on one of the Sponsored Product Ads, they are directed to the product details page.

In general, Sponsored Product Ads are an advantage when it comes to increasing sales of newly launched products or products with low organic rankings. They also serve to occupy the advertising space for important search terms and thus ensure the company's own visibility. 

Sponsored Product Ads can be displayed through three variants, in which you can individually select your bid, i.e. your maximum CPC (the amount you are willing to pay for one click): 

  1. An automatic variant in which Amazon researches suitable search terms and products for you,
  2. a manual keyword-based variant in which you select a match type and keyword and
  3. a manual product variant in which you can target products or product categories. 

These options are explained in more detail in the following section "When are your PPC ads displayed?”.

Sponsored Brands 

Sponsored Brands (formerly Headline Search Ads or HSA) are presented to the customer at the beginning of the buyer decision process because they are displayed on top of every competitors product: directly beneath the search field and above both, the organic search results and the Sponsored Products. Since 2018, Amazon also displays Sponsored Brands below the filter options on the left side and up to three times at the end of a search page.

All NEW (since the end of October 2019) is the possibility to target not only keywords but also products (Product Targeting) with Sponsored Brands. 

Example of Sponsored Brands

Until October 2019 a Sponsored Brand was an exclusively keyword-based advertising format consisting of a primary image or logo, a headline up to 80 characters long and three products (ASINs). Due to the new possibility of product targeting within the Sponsored Brands, it is also possible to select ASINs and categories for which the ads are displayed. The Sponsored Brand appears within the search result page for keywords the targeted ASIN ranks for on the first page.  

ASIN:
Amazon has its own article number, the Amazon Standard Identification Number, for all available products on the website, similar to an ISBN for a book. Via the ASIN, each product listing or product detail page and thus the product sold on Amazon can be uniquely identified across countries. To avoid duplicates, an EAN or UPC is required to create a product. In the case of variations, e.g. according to the size of a shoe, a distinction is made between parent ASIN and child ASIN, whereby the parent ASIN serves as a cover and cannot be purchased. The ASINs of the individual sizes are called child ASINs in this case.

When a customer clicks on the Sponsored Brand logo or title, he comes to an Amazon Store, a custom landing page, or a custom Amazon URL with at least three branded products (for Amazon vendors only). The goal is up to you as the advertiser. When a customer clicks on one of the featured ASINs, they are redirected to their product detail page. Mobile, only the logo and the headline of the Sponsored Brand advertisement are visible. By "swipe" to the left of the display, the products are also visible. Since October 2019 it is also possible to insert a video of a product within a Sponsored Brand. This is currently still in the beta phase and only possible for SBs displayed on a mobile device. All Sponsored Brands require the consent of Amazon to be published. 

Important:
Sellers can only create Sponsored Brands or a Brand Store if they have registered a brand in the Amazon Brand Registry.

Sponsored Display (beta)

Since September 2019, the Sponsored Display Ads (SDAs) on the Amazon marketplace have been in the beta phase. They replace the Product Display Ads that do not exist anymore since the end of October 2019! The Sponsored Display Ads can be displayed both, on and off Amazon. If the SDAs appear on product detail pages, they can be found either below the Buy Box or under the attributes (like the former Product Display Ads) and can also contain your own logo.

The Buy Box is the "box" with the Call-to-Actions "Add to Cart" and "Buy now" at the right edge of a product detail page.

Example Sponsored Display Ads
Example Sponsored Display Ads

When they are displayed on an external page, the Amazon logo and a call-to-action are also integrated. They link to the product detail pages of the advertised products and can have different sizes

The Sponsored Display Ads can be used by sellers with Amazon brand registration, vendors and agencies with Amazon customers. 

Example Sponsored Display Ad on an external page (Source: Amazon)

They are displayed either based on a selected audience or products. For example, you can target potential customers who have already viewed your product detail page but have not yet purchased it. Learn more about the possibilities with the new Sponsored Display Ads in our blog article.

Amazon's advertising platforms 

The Amazon advertising platform, on which all information about the different advertising formats can be found, has been called Amazon Advertising since autumn 2018.

Until about a year ago, the typical advertising formats (Sponsored Products, Sponsored Brands and the former Product Display Ads) could be managed via Amazon Marketing Services (AMS). Display ads, on the other hand, were managed via the Amazon Advertising Platform (AAP).

Due to the restructuring of Amazon in autumn 2018, everything can be found under the umbrella of Amazon Advertising. The display formats can be booked via the sub platform Amazon Demand Side Platform (DSP)

Sellers create their advertising campaigns via Seller Central and vendors via the Advertising Console.

When are PPC ads displayed?

As already mentioned, there are different ways to display an Amazon PPC ad - based on:

  • Keywords
  • ASINs
  • Categories
  • Interests

These are presented here. Not all of the ad formats presented above can be displayed using each of these four types.

Based on keywords

Displayed ads based on keywords is the most common form. The ad is displayed when the search term entered by a potential buyer and the keyword entered by the advertiser match.

Difference between search terms and keywords:
Search terms are queries directly entered by the customer into the Amazon search field. Keywords are the terms used by Amazon advertisers for a product to be advertised so that the ad can be displayed - this happens when the search term and keyword match. A search term does not have to contain exactly the same words as the keyword.

There are basically four different Match Types, which define to what extent the keyword and the search term may "differ" so that the ad is displayed.

Auto Match
With Auto Match Type (see Auto Targeting), keywords for which your ads are displayed are automatically selected by Amazon (based on the product listing).  

Broad Match
The Broad Match Type offers the "widest" match of the ads. In addition to the keyword itself, Amazon allows other terms before, within or after it. Moreover, the search term can contain words of the keyword in any order. Even narrow variants such as the plural form of the search term triggers the ad. Since an ad with broad keywords appears for a large number of search terms, scattering losses can occur. In the case of Sponsored Brands, an additional closely related display occurs; for example, in the case of the keyword "sneaker" for the search term "shoes". This can be prevented with the so-called Broad Match Modifier via a plus symbol in front of the keyword. "+Sneaker" prevents the ad of being displayed for closely related search terms.

Phrase Match
The Phrase Match Type is used to display ads that match the keyword itself with the search term and other terms before or after it. The order of the terms is therefore fixed. Narrow variants such as the plural form also trigger the ad.

Exact Match
The Exact Match Type offers the lowest wastage. Only the keyword term itself and very narrow variants such as plural or supplementary filler words such as "off", "in" or similar allow the ad to be displayed. In this way, advertisers can precisely control the search terms for which their ads appear. 

The following table gives an overview of the different Match Types and shows the possible search terms that would trigger a display for the example keyword "hand mixer white".

Example Amazon Match Types
Example Amazon Match Types

In addition to these three positive Match Types, there are also negative Match Types or negative keywords that are used to prevent the Amazon ads for being displayed for certain keywords.

Negative Phrase
With negative phrase all search terms are blocked which contain the negative keyword itself, the negative phrase or close variants. Negative keywords can contain up to four words. Negative phrase keywords can exclude a relatively wide range of search terms and should therefore be used with caution.

Negative Exact
If the exact match is negative, Amazon does not display the ad for buyers who are looking for the keyword itself or close variants such as the plural. Negatively exact keywords can contain up to ten words.

Based on ASINs

Sponsored Product Ads, Sponsored Display Ads and recently also Sponsored Brands can be triggered by ASINs. Instead of keywords, ASINs of products that you want to target are stored accordingly. These can be ASINs of competitor products or your own products.

If ASINs are targeted with Sponsored Display Ads, the ads are displayed on product detail pages of the targeted ASINs. Sponsored Product Ads based on an ASIN are displayed either on the product detail page of the corresponding ASIN or on the search results page if the targeted ASIN is displayed organically for a search term on the first search results page. The latter is also the case with Sponsored Brands when ASINs are targeted. The ASIN-based display is also called Product Attribute Targeting (PAT) and offers a wealth of opportunities to react to competitors. More about this can be found in the 3rd part of this PPC Guide or even more detailed and with specific recommendations for action in our blog article on Product Targeting.

Based on categories

In addition to ASINs, categories to which the advertised products belong can also be selected for the Product Targeting of the Sponsored Product Ads, Sponsored Display Ads and Sponsored Brands. Further refinements can be made for the displayed ad within a category. In this way, it is possible to precisely control for which competitor products in a category the own product is displayed in the form of a Sponsored Product Ad. More about this in Part 3 of the PPC Guide or in the blog article Product Targeting under the paragraph Category Targeting.

Based on interests 

Sponsored Display Ads can also be displayed based on interests. The advertiser selects the interests of his target group and the Sponsored Display Ad is displayed on the product detail page of a product that corresponds to one of the customer interests. The interests are determined, for example, on the basis of past product views and purchases by Amazon customers. Sponsored Display Ads can also be displayed on external pages if a potential customer has already visited a product detail page but not yet purchased it.

As described above, not every advertising format presented above supports all three of these targeting types. Here you can find an overview:

Advertising formats overview
Advertising formats overview

What is the structure of Sponsored Product Ads?

The architecture of an Amazon advertising account is as follows: With a seller account it is possible to manage several marketplaces such as the english or german Amazon marketplace. On each marketplace it is possible to create advertising campaigns. Within a campaign, up to 1,000 ad groups can be created, for which up to 1,000 keywords can be entered.

Structure of an Amazon advertising account

For a long time, ad groups existed only for sellers in Seller Central. In the Advertising Console, keywords were directly integrated into the campaigns. Since the end of October 2019, there have also been ad groups for vendors. Each ad group is given its own Match Type and the keywords are assigned to the corresponding ad groups depending on the Match Type.

Automatic and manual campaigns

The most common goal of advertisers is to be found for all relevant keywords and to appear on the first search result page. When using "Sponsored Products", advertisers can select automatic campaigns (Auto Targeting) or manual campaigns (Manual Targeting). While Amazon automatically displayed the ad for suitable keywords in Auto Targeting, the seller himself determines the keywords to be advertised in a manual campaign.

Auto Targeting

Amazon obtains the keywords in the auto campaigns from the listing of the product (product title, attributes, description, etc.) as well as from the categories to which the product belongs. The quality of the keywords can vary greatly and is usually not complete. All products in an auto campaign are displayed using the same keywords. Irrelevant keywords can be added as negative keywords.

Automatic Targeting is easy to use and start, but does not provide precise control, as it is only possible to bid on all possible keywords at ad group level (or for four automatic targeting groups presented in Part 3 of the PPC Guide). One way to control automatic campaigns in a more targeted way is to use keyword management. This means that keywords that perform well or less well are transferred from the auto campaign to a manual campaign and added as negative keywords in the automatic campaign. More about this in the section "Keyword management and bid adjustments" in Part 3 of this guide

Manual Targeting

In manual campaigns, keywords - as the name suggests - can be inserted manually. Auto campaigns can also be used to find keywords that "work" well or poorly and then transfer them to manual campaigns as keywords for further optimization. 

Since auto campaigns usually only cover a small part of the relevant search queries of customers, you should additionally conduct your own keyword research and supplement your manual campaigns with further relevant keywords.

Important:
The manual campaigns are much more important for the success of your advertisements than the auto campaigns, because only in manual campaigns bids for individual keywords can be set and adjusted individually.

This fine control in Manual Targeting, however, requires a precise structure within the campaigns:

As already described above, the manual campaigns can have the Match Types Broad, Phrase or Exact. The advertiser can decide the structure of a campaign himself - either a campaign contains several ad groups or each ad group has its own campaign. We recommend the latter, as some advanced settings and the budget are only possible at campaign level, giving you more control. For more information, see the section “Keyword management and bid adjustments” in Part 3.

With each of these campaigns or ad groups, the keywords are structured according to Match Types.

Our recommendation is to create four campaigns with the four Match Types Auto, Product Targeting (ASINs), Broad, Exact for one product.

Each of these campaigns contains the corresponding keywords which, depending on their performance, can be transferred from Auto to Broad and from Broad to Exact after some time. In exact campaigns, keywords can be optimally controlled with individual bids. If a search term has performed well in a broad campaign and has been transferred as a keyword into an exact campaign, you should not forget to set the keyword as "negative exact" in the broad campaign. Thus, the ad is only triggered by the exact campaign keyword and the clicks can be clearly assigned to this campaign. 

Recommended campaign structure
Recommended campaign structure

You have now learned the most important basics of Amazon advertising and can start with advertising campaigns. Read Part 2 of our PPC Guide in which we explain step by step how to create a Sponsored Product Ad in Seller Central. 

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