What is Amazon PPC?
Amazon is the world’s largest store, boasting somewhere between 120 million products for sale on any given day. In order to get their products to fly off the virtual shelves, Amazon sellers are able to bid on that much-sought-after sponsored ad space just below the search bar. This bidding is called Pay Per Click, or PPC, and it is what we’re here to talk about today.
PPC Comparisons: Amazon vs. Google & Bing
Also called Cost Per Click or CPC, Pay Per Click is often discussed with search engines like Google and Bing, two companies that make their money off of PPC. Pay Per Click is exactly what it sounds like: when a customer searches for something and then clicks on the ad as a result of that search, you get charged. If you show up and they don’t click on you, or if you lose the auction and don’t show up at all, there is no cost to you. It’s an elegant solution that works well for smaller budgets and businesses because you only end up paying for the things that work!
The difference between Google and Amazon is that search engine PPC doesn’t always involve a product; often, it can be people searching for a recipe, or the phone number for their dentist, or the birthday of their favorite actress. Amazon, however, is always going to turn up a product when you search on its website, which actually makes things easier for the seller.
Second Price Auctions: A Unique Amazon Approach to Keyword Bidding
Amazon’s approach to the keyword auction uses a second price auction model, and if you’ve ever seen The Price Is Right, you already know how this works.
Imagine three people bidding on the keyword “Drew Carey BobbleHead.” Contestant A bids $1.00 per click, while B bids $1.25, and C bids $2.00. Contestant C is the lucky winner, but they didn’t need to win by $0.75 cents; they could have only been $0.01 cent higher and they still would have won. And the “Second Price” part of “Second Price Auction” means that Contestant C is only charged the price of the second place contestant, plus a penny, for their Drew Carey BobbleHead sponsored advertisement. So at the end of the auction, Contestant C pays Amazon only $1.26 every time their bobblehead product listing gets clicked on, instead of the full $2.00.
This entices sellers to bid higher, knowing that they won’t be liable for the full amount if they win, only the amount that is required to beat the person in second place. Hence, second place auction. The danger of this, though, is apparent to any frequent Price is Right viewer: if you think you’re safe bidding $5.00 and it turns out the other guy bids $5.01, you’re out of luck… which means you’ll likely need to look at the selling metrics Amazon gives you and make adjustments.
The Amazon Keyword Auction and You
Doing keyword research is vital when selling products on Amazon because a long-tail keyword is going to have a lower Cost Per Click than a commonly searched phrase like “Christmas Gifts” or “Books for Kids.” It can also be beneficial to use negative keywords (which typically don’t have a cost) to narrow your search so that when someone searches for “Monster Mask,” your beauty product doesn’t pop up with latex ghoulie faces.
Understanding your user’s intent and what they are trying to find can be a great help when starting your Amazon advertising.
Advertising On Amazon FAQ
Here are some answers to the most common Amazon advertising and PPC questions.
What is a Keyword versus a Search Term?
A Keyword is the word or phrase you are bidding on, like “BobbleHead of Drew Carey.” What someone enters into the search bar is the search term, and it is what triggers your ad to pop up (if you win the second price auction).
What products can I sell using Amazon’s PPC and Sponsored Product Slots?
Currently, Amazon allows most products to participate in the second place auction for the coveted “sponsored product” slot. The exceptions are “adult products, used products, refurbished products, and products in closed categories.” If your product is outside those parameters, you are good to start doing some Amazon advertising.
What is the difference between an automatic targeting campaign and a manual campaign?
Amazon offers two ways to manage PPC ad campaigns: automatic targeting and manual. An automatic campaign is a great way for PPC beginners to start selling because it does most of the heavy lifting for you. An automatic campaign means Amazon is choosing the short and long-tail keywords you are bidding on for you, (though you still get to set how much you want to spend on a daily basis). This is great for people who haven’t had time to do keyword research. The drawbacks of an automatic campaign are that the words Amazon bids on for you aren’t necessarily the best ones; they are just the keywords that their algorithm finds relevant. And relevant isn’t always the same thing as profit-producing. Additionally, if all the competition is using the same algorithm to determine the keywords you are bidding on, you might get second place more often than first in the keyword bidding, unless you’re willing to up your bid ceiling.
A manual campaign is a lot closer to what you’d expect to see with a Google PPC campaign in the sense that you are in control. You choose each keyword, how much to spend, the day’s budget, and so on. This process is time intensive (downside) but offers greater dexterity of control and a chance to find a hidden keyword market nobody was aware of (upside). There’s not a lot of downside to running both types of campaigns if you can afford it, though. So if you can’t choose, don’t!
What is a broad match versus a phrase match versus an exact match?
Broad match, phrase match, and exact match refer to keyword relevancy for an Amazon PPC ad. When you’re doing a manual ad campaign, you also get to choose how exact you want the search term to be before you are entered into the bid space to compete for the keywords.
A broad match contains all the words of your keyword phrase and the order doesn’t matter (just like the points in Whose Line). Phrase match means the customer has searched for the keyword phrase you want to bid on in the exact order you want the words to be in, but there can be other words before and after the phrase. An exact match is when a customer searches for the exact thing you are bidding for, with no extra words and in the exact order.
That got a bit technical, so let us examine our Drew Carey BobbleHead search again.
If you are a seller of all kinds of bobbleheads, you are probably okay with a broad match result; meaning when the phrase “Funko BobbleHead Drew Carey,” is searched, you’ll enter the fray of the keyword auction to try and get your product to show up because you are bidding on the keyword “BobbleHead” and the rest of the words are less important to you.
If you specialize in hilarious TV show bobbleheads exclusively, you would probably want a phrase match instead. When someone searches something like “Drew Carey BobbleHead Whose Line,” your ad would appear because the phrase “BobbleHead Whose Line” is included in the search terms exactly, with no extra words in the middle of the phrase. The “Drew Carey” part isn’t important to your bid because you want to show up to anyone searching for any bobblehead from that show.
If, however, you are a seller that works exclusively in Drew Carey products, you would want an exact match, meaning you don’t come in swinging until someone searches for the exact phrase related to your product, “Drew Carey BobbleHeads.” You’re saving your ad budget until this very exact phrase is searched because you sell a very specific product, and it’s probably not worth spending your money in the Amazon keyword auction unless it is over this exact keyword phrase.
Resources Straight From Amazon
If you have an Amazon PPC question that isn’t answered here, Amazon has their own large list of frequently asked questions and their answers available here.