Amazon PPC is an important feature to make use of, and knowing exactly how to use it will have incredible benefits. Anyone using Amazon for their business should be aware of just how useful this advertising platform is, but that doesn’t mean that it isn’t confusing.
One of the most important things to consider when it comes to Amazon PPC is budget. How much should you be spending? How much should you be saving? Is there a right and wrong way to do things?
Truthfully, it can be a difficult thing to navigate, especially if you have little or no experience in the field. Lucky for you, we will go through what you need to know in order to be successful and budget accordingly with your Amazon PPC (see more about how you should structure your Amazon PCP campaign).
A Quick Run-Through of Amazon PPC
Before we jump in, it’s worth mentioning what Amazon PPC actually is. This is the advertising platform that Amazon uses! It works by helping to promote various sellers’ products and pages within the Amazon Marketplace.
The PPC stands for “pay per click”. This works by only charging the sellers for every time a potential customer actually clicks on the ad they have put up. In other words, if you get no clicks on an ad, you don’t have to pay anything, so you don’t have to worry about hefty advertising fees.
How Important is Amazon PPC Advertising?
If you want to be successful, then Amazon PPC is an incredibly important feature to use! Using it can increase your sales as well as have a variety of other benefits down the line. It will improve organic sales, which is something that many businesses struggle with – so why wouldn’t you use it?
With that being said, in order for your Amazon PPC to be effective, you need to put the work in and have patience. It’s not a sprint – it’s a marathon. Things will take time, and you need to constantly be on the ball.
For long-term success, you need to know when to spend your money, where to put it, and when to hold it close.
We’ll cover what you need to know about budgeting below.
How Much Should You Spend On Amazon PPC?
There is no real right or wrong answer for how much. We can’t tell you exactly how many dollars will get the job done. However, we can give you some rules to follow and guidance on what to do. Namely, in percentages and where to put your money.
There are three distinct options when it comes to Amazon PPC:
- Display Ads
- Sponsored Brands
- Sponsored Products
It’s important to know what each of these options means, so be sure to do your research on that before moving ahead. To make things easy, just take a look at this article. Each one has its pros and cons, so you will need to figure out what will best suit your particular sales plan.
If you want to follow in successful businesses footsteps, you may want to consider splitting your budget so that it looks something like this:
- Display Ads – 5%
- Sponsored Brands – 20%
- Sponsored Products – 75%
Sponsored products usually offer the largest volumes in terms of CTR (click-through rates). As a result, Amazon retailers are more likely to see better results if they focus most of their budget on this area. Doing this will also give you the opportunity to generate quality data. This data can be incredibly important for your future campaigns!
Amazon Sponsored Brand Ads are a great option if you want your products to be listed right at the top of the search results page. This will mean that potential customers can click on the posts and go directly to a product that is listed on your Amazon Store page.
Sponsored Display Ads give you the chance to promote your products to any shoppers who have viewed similar items to the ones you sell, or your products themselves.
Picking the Right Type of Sponsored Ad For Your Business
Again, there is no right or wrong answer, because every business will be unique. Each of the above options gives you different results, so picking one should be determined by what you would like to achieve.
For things like a Brand Awareness Campaign, picking Sponsored Brand Ads would be the best option.
If you want to promote related products to online shoppers, then a Sponsored Display will be your best bet. This can guide shoppers in the right direction after purchasing something previously. For example, if they bought a coloring book, you can direct them to different coloring pens or another coloring book!
It should be noted that these two options won’t always work out. If you are a new retailer, it might not be worth investing so much money in these. Instead. Opting for Sponsored Products is likely to be more effective and result in more success.
Amazon PPC Budget
The general rule for an Amazon PPC budget to follow the Pareto Principle or 80/20 rule dictates that 80% of the outcome comes from 20% of the actions. This means that, in scaling and advertising, it’s common for 80% of all paid sales to be the result of 20% keywords or campaigns (see more about scaling Amazon ads here).
You should maximize sales and return on that 20% of keywords or campaigns. The remaining 80% can be used to pay for different advertising methods and research.
However, if you are just getting started, you may want to be careful. Follow the rule, but only try to spend 10% of your total revenue on your advertising campaign if you are a new seller unless you want to be aggressive right out of the gate. Most of our clients invest around 10-20% of their overall retail sales back into their advertising budget.
When your sales begin to grow, your budget will, too. You need to ensure that you aren’t stretching yourself too thin because there will always be expenses to cover.
Ensuring Your Amazon PPC is Effective
One of the great things about Amazon PPC is that it is never stagnant. There are always changes happening, and you can change things as you go.
As long as you can check in frequently and see how things are going, you can make the necessary changes. You will be able to see how specific campaigns are going, and if you need to make changes to improve them.
With that being said, it’s important not to jump to conclusions when it comes to Amazon PPC (see more about how long it might take for Amazon PPC here). To get accurate results on the success of a campaign, you should give it at least a week. Better yet, give your campaign two weeks to do its thing, then come to a conclusion based on that.
If you do decide to make changes to a campaign, do it one by one. Although this can take a while, it will pinpoint exactly what is and is not working in the campaign, so you can use it for future reference. Don’t jump the gun, and make informed decisions.
Knowing how much money to spend on your Amazon PPC can be tough, but there are simple tips and tricks you can follow to make it easier. In this article, we mentioned the 80/20 rule and spending 10-20%. It’s a good rule to follow in this area, and will often get you great results.
Just remember to take your time and get things right. You’re in it for the long haul, so you need to make sure things are done right.
With that being said, try not to stress too much. You can make all the changes you need along the way!