This is a guest post by Greg Mercer, founder and CEO of Jungle Scout.
Why wouldn’t you sell on Amazon? In 2018, it’s the best side hustle or full-time job you can do. Trust me, I’ve been doing this for 5 years now. When I created the Jungle Scout product research tool, I wanted to help people like you find profitable products and start selling on Amazon right away. Finding a product is the most important step of launching your Amazon business, but after the launch, it’s all about getting your product in front of people to start turning a profit. That’s where PPC campaigns come in and that’s what we’re going to focus on today.
Amazon now has over two million active sellers on their marketplace. As of August 20, 2018, Amazon had already garnered 750,713 new sellers just in this year alone compared to Walmart’s 18,881 sellers. How do they all compete with each other? Marketing tactics, such as Amazon’s sponsored ads, or Pay-Per-Click (PPC), are a great way to get ahead of your competitors on today’s largest online retailer.
Are you selling to retailers like Walmart but not on Amazon? Maybe you think Amazon is too hard to infiltrate or it’s not worth your time. But, according to Marketplace Pulse, third-party sellers on Amazon account for 50% of their total sales and Amazon gets 5x more monthly traffic than Walmart.
As more and more retailers move into the Amazon space, it is increasingly important to be able to stand out from your competitors, and using PPC campaigns can help you do it.
Breakdown of PPC—Amazon Sponsored Advertisements
PPC campaigns are one of the most vital aspects to the success of your launched product. Without PPC, your product might not be seen when it’s mixed in with your competitors who have been selling their products longer or have more reviews.
Amazon businesses can be run into the ground if they run their PPC campaigns poorly. The biggest risk is if you don’t make a good return on investment (ROI).
Another potential downfall of Amazon PPC is that it’s not as well developed as other PPC platforms, such as Google AdWords. You could see this as a blessing, though, because it makes it much easier to manage, especially if you’re a beginner.
OK, but what’s the good news? Bottomline, when used correctly, Amazon PPC is a good way to get your product in front of more people, generate more sales, and make more profits.
How PPC works – keyword match types
PPC is one of those things that seems pretty complicated from the outside, but if you look at it this way, it looks a lot simpler.
Basically, PPC campaigns are broken up into three hierarchies. At the top, you have the campaign, then you have the adgroup, and finally you have the keyword types.
For the campaign tier, you group by the product and by the type of campaign—either manual or automatic.
Ad groups are where you break down the campaign into bite-sized pieces. It’s usually easiest to be as granular as possible, so that you can easily navigate your way around, adjust your keywords and see how your campaigns are performing at the top level.
Finally there are keyword types. There are three types of keywords: exact, phrase and broad. Exact is just what it sounds like—those exact keywords (including misspellings and singular/plurals). Phrase match is when you have the keyword within a phrase. For example, if your keyword is “bamboo skewers” phrase match would also include “eco-friendly bamboo skewers.” Broad match includes synonyms and variations. So, sticking with the same keyword, a broad match for bamboo skewers would be “marshmallow roasting sticks.”
You can continuously review your data and iterate the keywords you are targeting and what your bids are for those keywords. Additionally, Amazon allows you to download search terms reports so you can see the actual keywords consumers used to find your ad.
How much to spend on advertising
Right at the start, you want to make sure you have done the math so that you don’t spend too much. Step one is figuring out how much you’re willing to give up in order to generate sales.
If you’re selling a product for $40 and the cost of goods is $10, with FBA and other fees at $15, you have $15 profit to play with.
From here, take a look at your average sales before starting up your campaigns. If you are selling 8 products per day on average, that’s $320 revenue and $120 profit.
Over a month you are looking at an average of $3720 in profit. Now you can really start to see how much of that you are willing to put into your campaigns.
When you first launch a product, you may end up spending more on PPC than you’re making from your products, but it will generate more sales and get your product more reviews.
If your product has been around for awhile and you’re seeing your sales decline, you may want to back off on the PPC campaigns. You can always adjust the costs after a few weeks to find out what works best for you. The same would apply if your listing runs out of stock and drops on the organic search list.
The key thing to remember when deciding on your budget is that it’s totally flexible. You can amend, pause and cancel your campaigns at any time.
Setting up a campaign
So now you know the risks and rewards of running a PPC campaign. But how do you set one up?
You can start by creating two campaigns. An “Automatic Targeting” campaign, where Amazon determines which keywords to target for your product, and then a “Manual Targeting” campaign, where you choose your own keywords and ad group structure.
Here’s how you create a campaign:
In Seller Central go to Advertising >> Campaign Manager >> Create Campaign.
Additional Tip: Really simple. Just make sure you choose a good name, so that it’s easy to identify later when you have several campaigns.
Starting an Automatic Campaign
For an automatic campaign, that is literally all you have to do to get started. Amazon will use your product listing to generate ads, and select keywords to target based on your listing and commonly used search terms.
Just be careful not to blow all of your budget on this campaign and be aware that you will want to start honing it in eventually.
After the first few weeks, you can reduce the budget and add any successful keywords that you pull out into Manual Targeted campaigns as “negative keywords.” This means that you won’t be bidding on the same keywords from both an automatic and a manual campaign at the same time.
Starting a Manual Campaign
Before you start a manual campaign, you have to do keyword research. You can do this from right inside the Jungle Scout app on our Keyword Scout tool. You can also use tools like Google Keyword Planner or AHREFs.
The main aim is to generate a large list of keywords which you can import into your Manual campaign and then refine and optimize them later. Don’t get too hung up with your keyword research or you will never get started.
With that being said, make a list of keywords on a spreadsheet and then create your ad group and give it a name. Below this, you will select which of your product listings you are advertising and this will generate your ad for you.
Next, you can select your default bid, which is the maximum amount you are willing to pay when someone clicks your ad. This does not mean you will always pay this amount, it depends on the competition and their bids.
Usually, a default bid between $0.50 and $1.50 is a good starting point, but it depends on your niche and your keywords.
Then add your keywords in bulk and then decide what you want your bid to be for each keyword.
And that’s it! Now you can let your campaigns go! I recommend not touching your campaigns for 2-3 weeks so you can see the real effect your campaign has on your product listing.
How to manage your PPC campaigns
Once you actually have PPC set up and the campaigns have been running for a few weeks, you can tweak them to get the most out of your money.
You can easily find data from your campaigns by going into Seller Central and filtering by either ACoS (Average Cost of Sale), order numbers, or spend.
Overall, the key things you are looking out for are Sales (conversions) and and your return on investment after factoring in ACoS. Keywords could perform in a variety of ways. Some of them need attention to ensure you aren’t wasting money on clicks. Some of them, may need boosting because they’re bringing in sales.
Additional tip: add negative keywords into your campaign. This means that you can filter out keywords for irrelevant phrases or words.
Amazon PPC is an extremely useful tactic to help boost sales, which also has a positive effect on your organic performance on Amazon. The key to success is to set up structured campaigns and manage them efficiently.
Hopefully now you have a better understanding of PPC campaigns and are able to set up new, successful campaigns and manage older campaigns all at the same time! If you’re not running a campaign, you should start now! The best thing about PPC is you can be in control of your seller rank and the success of your product.
You can check out The Ultimate Guide to Amazon PPC and the Jungle Scout blog for additional PPC information and other Amazon seller tips. Additionally, follow along with our Million Dollar Case Study to learn how to sell a product on Amazon from start to finish, including our episode on how to ship goods using Flexport. All proceeds from the case study go towards Pencils of Promise.