As the online marketplace becomes increasingly competitive, Amazon is no exception. With so many sellers vying for customers’ attention, it’s essential to have a strong marketing strategy.
PPC (Pay-Per-Click) ads are one of the best ways for merchants to reach their target market while selling on Amazon. Advertise in search results and on product pages to increase visibility and drive more sales.
Understanding how to set an Amazon PPC budget can be challenging. If you're new to Amazon PPC, the costs and bidding strategies can make it tough to figure out what amount to set aside for your budget.
Here’s a guide to help you understand how much Amazon PPC costs and how to set a reasonable budget.
Amazon Pay-Per-Click (PPC) is a form of online advertising where sellers pay each time a user clicks on one of their ads on the website. In this model, sellers promote their products and reach their target audiences, increasing sales.
The cost of each click varies depending on the keyword and the competition between sellers to obtain it. They can set a budget and adjust their bidding strategy to maximize their campaigns.
When a seller seeks a keyword related to their product, Amazon will show all the relevant keywords. The seller can then bid on these keywords, with the highest bidder winning the auction.
The winning seller will display their product as a sponsored ad at the top of the search results and other product detail pages. In exchange, the winning seller must pay Amazon a small fee whenever a customer clicks on their ad.
There are three types of Amazon PPC advertisements. These are:
A sponsored product is an ad that appears when you search for a specific keyword or set of keywords with the “Sponsored” tag. It appears on the top of the search results and product detail pages. The goal of this ad is to drive sales toward a specific product.
Sponsored brands are like sponsored products but with a brand’s logo, headline, and up to three featured products. They aim to increase brand visibility and awareness, which can encourage customers to purchase their products.
You can find sponsored display ads on product detail pages, customer reviews, and Amazon marketing emails. These ads aim to urge customers who viewed the product but didn’t buy it to go back and complete their purchase.
Each type of Amazon PPC advertisement offers different targeting options, bidding strategies, and formats to help sellers reach their target audience and make revenue.
Advertising on Amazon typically costs between $0.02–$3 per click. The amount depends on several factors, such as the type of ad, the keyword, and the other sellers you’re competing with. If you’re planning to place a bid, here are some of the costs you should consider:
Before you start promoting a product, it’s a good idea to research how many competitors you have on the website. In the beauty industry, where you’ll likely have a lot of competition, expect bids for keywords to be high. Multiple sellers targeting the same keywords can drive the advertising cost up.
You can choose from three different bidding strategies. Dynamic Bidding (down only) means that Amazon can lower your bids if your ads are less likely to convert customers. If you’re using Dynamic Bidding (up and down), the system will raise your bid if the possible conversion rate is high and lowers it when it’s not. Fixed bids mean that you manually set and change your offer.
Ensure your goods and services are pertinent to the keywords you bid on. Your entire campaign must be relevant to the search terms, including the photos and product name. It’ll help you get more click-throughs and conversions, which can lead to lower costs overall.
The click-through rate (CTR) is the percentage of customers who click on your item after seeing it listed in the search results on Amazon. A high CTR means that the keywords you bid on and your product may be what customers want, allowing increased sales.
Conversion rates are the sales you generate after a customer visits your product’s ad. You likely have lower costs if your product has a high conversion rate. If your conversion rate is down, you must improve converting visitors into customers. Your ad needs to be more effective at getting people to buy.
Establishing an Amazon PPC budget is essential when you have multiple products you want to advertise. By setting up a budget, you can determine your performance and return on investment. Here’s how it works:
Your starting budget should be large enough to give you adequate data. If you're a smaller business with fewer sales than a giant corporation, your budget should reflect that difference.
The easiest way to start is by setting a budget generating 20-30 clicks daily. Amazon's suggested bid feature can be helpful to determine what competitors are bidding. By establishing a solid estimate for your niche's cost-per-click (CPC), you have the foundation for a solid Amazon PPC budget.
Your bid strategy can significantly impact your Amazon PPC costs. The two most common bid strategies are manual and automatic. Manual bidding lets you set your bids for each keyword, while automatic bidding allows Amazon to set your bids based on your budget.
Manual bidding is more time-consuming but gives you more control over your bids. Automatic bidding is less time-consuming but gives you less control. The best strategy for you depends on your goals and budget.
Negative keywords are those you don’t want your ads to appear for. For instance, if you sell shoes, you might want to exclude keywords like “socks” or “hats” because they’re irrelevant to your product. Negative keywords can help you reduce your Amazon PPC costs by excluding irrelevant search terms.
There are several ways to optimize your Amazon PPC campaigns to reduce costs. You can:
There is no one-size-fits-all answer to this, as the recommended ACoS for your Amazon PPC campaigns depends on your goals and budget. Aim for an ACoS of 50% or less if you're just starting. As you gain more experience, you can adjust your ACoS based on your goals and budget.
Yes, you can set a monthly cap for your Amazon PPC spending. This can help you control your costs and prevent overspending. To set a monthly cap, go to your Amazon Advertising console and click on “Campaign Settings.” Then, click on “Budget” and enter your monthly budget.
Amazon PPC can be a useful way to drive sales and increase brand visibility on the platform. However, it’s important to understand the costs and set an appropriate budget to achieve your advertising goals. Regularly monitor your ad performance and adjust your budget and bidding strategy to maximize ROI and achieve your advertising objectives.
If you’re looking for an Amazon agency or beauty marketing agency, consider BeBold Digital. From Amazon PPC to account management and more, our team can provide the solutions you need to stand out on the platform. Contact us today!