PPC (Pay-Per-Click)

What Is Amazon PPC?

Amazon PPC (pay-per-click) is advertising on Amazon where you pay only when a shopper clicks your ad, not when the ad is shown. You buy it through Amazon Ads: you tell Amazon which keywords or products your ad should appear against and the most you are willing to pay for a click, and an auction decides whether your ad shows and what the click actually costs.

Sponsored Products has no monthly or upfront fee. You set a daily budget, and you are charged for clicks. Not everything in Amazon Ads is pay-per-click, though: some campaigns are sold per 1,000 viewable impressions (vCPM) or at a fixed price instead.

How Amazon PPC Works

1. Choose the products to advertise. They must be in an eligible category and eligible for the Featured Offer (the Buy Box).
2. Choose how the ad is targeted. Let Amazon match it to relevant searches and products automatically, or pick the keywords and products yourself.
3. Set a bid and a daily budget. The bid is your starting point for each click. If you choose a bidding strategy that adjusts bids, or add placement adjustments, Amazon can raise the bid above that figure. The daily budget is averaged over a calendar month, so spend on a single day can run above it: up to 25% or up to 100% more, depending on the setting you choose.
4. The auction runs when a shopper searches or browses. Amazon says the final cost per click is usually set by an auction and is based on your adjusted bid plus other factors, so a higher bid alone does not guarantee the best placement.
5. You pay when a shopper clicks. In a pay-per-click campaign, purchases made within Amazon's attribution window after a click are reported as ad-attributed sales. Campaigns priced per 1,000 viewable impressions (vCPM) can also count sales from shoppers who only viewed the ad.

Amazon Ad Types That Use Pay-Per-Click

• Sponsored Products promote a single listing. They can appear at the top of, alongside or within shopping results and on product pages. They are charged per click and are available to Professional sellers and vendors.
• Sponsored Brands put your brand in front of shoppers with image, video or collection creatives, in placements such as the top of search results. Sellers need to be enrolled in Amazon Brand Registry. Not every Sponsored Brands campaign is pay-per-click: Amazon also offers cost per 1,000 viewable impressions (vCPM) and fixed, upfront pricing.
• Display ads (previously called Sponsored Display) reach audiences across Amazon and beyond, including placements on Twitch, Fire TV and the wider internet. They are targeted using Amazon's shopping and streaming insights rather than only keywords, and can be priced per click or per 1,000 viewable impressions. Self-service display ads bought per click are available to Professional sellers enrolled in Brand Registry and to vendors.

Ad types, eligibility and features vary by marketplace, so check what your Amazon Ads console offers before planning a campaign.

Automatic vs Manual Targeting

With automatic targeting, Amazon matches your ad to keywords and products similar to the one you are advertising. With manual targeting, you choose the targets yourself and manage each one separately. Amazon suggests starting with an automatic campaign to learn how shoppers find your product. Search terms that convert there are natural candidates for a manual campaign.

Manual campaigns target in two ways:

• Keyword targeting with three match types. Broad match reaches searches that contain your words in any order, including plurals, synonyms and related terms. Phrase match is narrower. Exact match is the most precise.
• Product targeting shows your ad against specific products, brands or categories, which you can refine by attributes such as price range and star rating.

Negative keywords stop your ad showing for searches that waste spend. They can be set at the campaign or ad group level.

Amazon PPC Metrics That Matter

For pay-per-click campaigns, these are the numbers to watch:

• Cost per click (CPC): your average cost per click, total ad cost divided by clicks.
• Click-through rate (CTR): the share of ad impressions that led to a click.
• Conversion rate: the share of clicks that became orders.
• ACoS: ad spend divided by ad-attributed sales, times 100. Lower means each ad dollar brings in more sales.
• ROAS: the inverse of ACoS, ad-attributed sales divided by ad spend.
• TACoS: ad spend divided by total sales, including organic sales. It shows how much the whole business leans on advertising.

Is Amazon PPC Profitable?

It depends on your margin, not on your ACoS alone. Your break-even ACoS is your profit margin before advertising: as Amazon puts it, to stay profitable your ACoS needs to be lower than your profit margin. The same 20% ACoS is profitable on a product with a 35% margin and loses money on a product with a 15% margin.

That margin has to include every cost: the referral fee, FBA fees, product cost and shipping. Leave one out and a campaign can look profitable while each sale loses money.

How SellerLegend Helps

SellerLegend's Sponsored Products dashboard breaks performance down by campaign and ad group, with impressions, clicks, CTR, cost per click, conversion rate and ACoS. It separates sales of the advertised SKU from sales of your other SKUs that the ad led to, and for each advertised product it shows profit and ACoP. Profit here is the advertised product's own ad-attributed sales minus its product cost, estimated Amazon selling and FBA fees, and ad spend; sales of your other SKUs are reported separately and are not counted in it. ACoP is ad spend divided by that profit, shown as a percentage, and is a different measure from ACoS. Together they show whether ads are making money rather than only generating sales. Profit here is a contribution figure: storage, returns and overheads are not included. Sponsored Brands and display campaigns have their own dashboards.