Beginner’s Guide to Advertising on Amazon

Selling on Amazon involves more than just buying, listing, and shipping products; you need to get your business and products in front of shoppers. Unless you’re the only one selling a unique product that’s in high demand, getting your business and products in front of shoppers is a huge challenge, especially when you’re just getting started.

You might already be involved in Google Shopping, the Display Network, Facebook, and Instagram, so why not tap into one of the largest remaining online ad networks? The use of Amazon ads should be a no-brainer for e-commerce businesses.

In this guide, I will walk you through the basic steps you need to take to get started with Amazon ads so that you can raise your sales.

What Are Amazon Ads?

When you type a keyword into the search box on Amazon and get results like when you search on Google, some of the top results will be sponsored posts, which are Amazon ads. Subtle “sponsored” or “ad” text lets you know that something is an ad.

Advertisers who want their products to show up higher in Amazon’s search engine results can get more attention for their products on Amazon by bidding on specific keywords. The advertiser will be charged when a shopper clicks on the ad. The Amazon advertising platform is similar to Google AdWords in a lot of ways.

Amazon ads can also show up on the pages for each product. If I look at the water bottle below, I can see an ad for sunglasses on the far right side of the page.

But Amazon ads are more than just sponsored search posts. In this guide, we’ll look at a few of them.

Should I Advertise on Amazon?

Are you selling something that can be bought online and held in your hands? If so, you should place ads on Amazon. Using Amazon is just another way to make more people aware of your products and most likely buy them.

If you are nervous, it’s a good idea to start small and sell something you already know will sell well online. If you sell sporting goods online and tennis rackets have always been your best selling item, start with an ad for your best selling racket. Once your investment pays off, add more brands and racket types to your campaign to expand it.

If you are running Amazon PPC, you’ll likely improve your organic rankings on Amazon as well. Sellics says that time and time again, it’s found that keywords that have done well in Amazon PPC ads also have better organic rankings. This is partly because Amazon AdWords sales have supported the product’s sales history. Sales history is an important ranking factor. The higher a product’s sales rank, the higher it will appear in search results.

Spending money on Amazon ads will not only help you sell more of your products but also move you higher in search results. How much better could it get?

Amazon Advertising Costs

How much do ads cost on Amazon?

Practical Ecommerce’s Rob Sieracki has found that Amazon’s average cost per click is usually less than $0.35. 

This makes Amazon’s CPC lower than search ads on AdWords or Bing Ads and similar to some of the lowest CPCs on Facebook Ads or Google Display Ads. Since a lot of Amazon searches show a desire to buy something, these numbers look good.

If you don’t want to spend a penny on ads, check out other ways to make money on Amazon

Getting Started with Amazon Ads

Before you can start advertising, you’ll need to log in to your Amazon seller or vendor account.

If you don’t already have one of these accounts, you can look at their prices and plans. If you are a first-party seller, you can only sign up as a vendor if you have been invited to do so. 

Someone who sells through Amazon Seller Central is a third-party seller. There are pay-as-you-go pricing options for independent sellers, and there is a pro option for sellers who make a lot of sales. 

Pro merchant sellers can also let Amazon take care of shipping, returns, and customer service, which is a great perk! If you want to be a vendor but don’t have an invitation, you might want to look into Amazon’s Vendor Express.

After logging into your Amazon account and choosing the right plan, you can start making your ad campaigns.

Different Ad Types on Amazon

Amazon is not only the largest marketplace in the United States and one of the largest in the world, it’s also a very popular online advertising platform. Its advertising products enable you to market your products inside and outside Amazon to boost sales, increase brand recognition, and expand your reach.

In this section, we introduce you to the different Amazon advertising tools, so you can decide which is best for you.

1. Sponsored Products

The advertising tool of choice for most sellers on Amazon is Sponsored Products. These ads appear at the top of the first page of search results and in various locations on certain product pages to call attention to the products that sellers want to promote.

With Sponsored Products, you choose the product you want to promote, enter the keywords that trigger the ad’s appearance, and specify how much you’re willing to pay per click and per day. When a shopper’s search phrase includes one of the keywords you specified, you bid against other sellers for premium ad placement, and Amazon automatically places ads based on the bid amounts. If the shopper clicks one of your ads, you pay Amazon the amount you bid for that click, which is why this form of advertising is referred to as pay-per-click (PPC).

Sponsored Products offers the following benefits:

  • Enhanced targeting: With Sponsored Products, you can target your ads to shoppers who are more likely to buy your product by specifying keywords best suited to your product or to specific product categories or brands. You can even narrow the criteria to target a certain price range, Prime-eligible products, or star ratings. Also, you can specify negative keywords — words in search phrases that tell Amazon not to display your ad.
  • Increased visibility: Even if you don’t win the buy box, your advertised products are sure to be seen by customers.
  • Increased sales: Increased visibility generally results in increased sales by driving more traffic to your product’s listing.

To start advertising on Amazon, you don’t need a lot of money. You only pay when a shopper clicks on one of your Sponsored Product ads, and you can set your maximum bid amount and daily budget, as well as suspend or cancel your ad at any time:

  • Set a maximum bid amount: The higher your bid price, the better your ad placement, but the fewer clicks you get for your daily budget. Amazon presents you with a suggested bid range, which is calculated based on winning bids for similar product ads.
  • Ad budget: You can set a daily budget for each Sponsored Product ad, which you can adjust at any time in response to your campaign’s performance.

2. Sponsored Brands

Sponsored Brands let Professional Sellers who have signed up for Amazon Brand Registry, vendors, book sellers, and agency reps raise brand awareness and show off a few products. Each Sponsored Brands ad shows up to three products, the brand’s logo, and a headline. Sponsored Brands ads show up when a shopper does a search that includes one or more of the keywords that were chosen to show the ad.

Four Sponsored Brands ad placement spots are available on every search results page, all of which are considered prime real estate for brand visibility:

  • One at the top of a shopper’s search results page
  • One on the left side of the page
  • Two at the bottom of the page

Sponsored Brands are a great way to generate some initial buzz around a newly launched brand and to showcase a small selection of products. When shoppers click on your brand logo, they’re redirected to your store or a custom landing page. If they click a product, they’re taken to that product’s listing.

As with Sponsored Products, you must set a bid amount and daily budget, and you pay the bid amount only when a shopper clicks your ad. Sponsored Brands are allowed for any brand and products that meet nearly the same eligibility requirements as those for Sponsored Product ads.

3. Sponsored Display

Sponsored Display ads are very similar to Sponsored Products. The ads are typically small, consisting of a product image, a brief description of the product (including its price and product rating), and a Shop Now button that links back to the product’s detail page on Amazon. 

The big difference is that Sponsored Display ads appear on and off Amazon — on third-party websites and ads. Another big difference is that you don’t need to specify keywords; Amazon uses information about a person’s browsing and buying habits to target your ads to people who are likely to be interested in the product you’re promoting.

Sponsored Display ads are available only to Professional Sellers enrolled in Amazon Brand Registry, vendors, and agencies with clients who sell products on Amazon in the United States.

4. Amazon demand-side platform (DSP)

Amazon DSP is a platform that provides an easy way for advertisers to buy advertising space from publishers of relevant content. For example, you can create a video ad for a plumbing tool, and Amazon DSP will display that ad whenever someone views a relevant plumbing video on YouTube or article on a plumbing website.

Amazon DSP is available to advertisers regardless of whether they sell products or services on Amazon. To find out more about Amazon DSP and to get started using it, visit advertising.amazon.com/products/amazon-dsp.

Amazon DSP supports display and video ads, as we describe in the following sections.

Display ads

Display ads are very similar to A+ Pages in that they enable you to create more professional–looking ads than what’s possible with Sponsored Products. In addition, display ads appear on or off Amazon, and instead of being charged per click, you’re charged by cost-per-thousand (CPM) of impressions, and prices vary according to ad format and placement.

Video ads

Video ads enable you to showcase your brand or demonstrate your products and services. Like display ads, video ads appear on or off Amazon and are available to advertisers regardless of whether they sell anything on Amazon. Video ads enable advertisers to extend their video ad campaigns from TV to digital. Pricing varies depending on format and placement.

Custom ads

Custom ads are typically multimedia ads consisting of text, graphics, audio, and video, and they’re designed to engage consumers online and offline, wherever they may be. These ads are available to advertisers regardless of whether they sell on Amazon.

Unlike Display and Video ads, which are self-serve, custom ads require working with an ad consultant. For more about custom ads and to launch a campaign using custom ads, visit advertising.amazon.com/products/custom-ads.

Deals

Deals are limited time promotional offers. The big advantage of deals is that they appear on the Today’s Deals page, which is a popular page among Amazon shoppers.

To be eligible to offer deals, you must be a Professional Seller with at least five seller feedback ratings in a month and an overall rating of 3.5 stars. In addition, the product you’re promoting must meet the following criteria:

  • Have a sales history in Amazon Stores with at least a 3.5-star rating
  • Include as many variations as possible
  • Not be a restricted or offensive product
  • Be eligible for Prime in all regions
  • Be new
  • Comply with customer review policies
  • Comply with pricing policies
  • Comply with deal frequency policies (you have to wait a certain number of days before you can offer another deal on the same product)

All eligible products satisfying the preceding criteria are automatically displayed on your Deals dashboard, so you can easily select a product to promote. To access the Deals dashboard, open the Advertising menu and select Deals.

If a product is approved for a deal and later found to be violating any of the preceding criteria, the deal will be cancelled and any deal charges may be forfeited.

Deals discounts are combined with any other discounts or promotions running on the same ASINs at the same time. For example, if you’re offering 25 percent off a product that normally sells for $100 and the same product has another promotional offer of 10 percent off, you have to sell the product for 35 percent off, so consider other discounts running on a product before offering your own discount.

Coupons

Amazon coupons enable you to offer shoppers a percentage or dollar discount on individual products. The discount is applied during checkout. Like Sponsored Products and Sponsored Brands, coupons appear in shoppers’ search results and on product detail pages.

Coupons have certain features that make them appealing to sellers, including the following:

  • Multiple placements: Coupon discounts appear on the Amazon homepage, in search results, on product detail pages, on the Offer Listings page, and in the shopper’s cart.
  • Ability to create a coupon for multiple products: You can offer the same dollar or percentage discount on up to 30 products, so you don’t have to create a separate coupon for each one.
  • Ability to set the discount amount and budget: The discount can be a dollar amount or percentage, but it must be between 5 and 80 percent off the item’s lowest price in the last 30 days. As soon as your budget is used, the coupon is discontinued.
  • Ability to schedule and target coupons: You can schedule your coupons to run a maximum of three months to cover year-end festival seasons and can target the customer segment of your choice.
  • Performance tracking: You can track the performance of each coupon to see which coupons work best.

To be eligible for a coupon discount, a product must meet the following criteria:

  • Be in new condition.
  • Have zero (0) reviews, one to four reviews with an average rating of 2.5 stars or better, or five or more reviews with an average rating of three stars or better.
  • Be fulfilled by Amazon, seller, or seller-fulfilled Prime.

Coupons can’t be created for the following products:

  • Collectibles or products in used or certified refurbished condition
  • Any of the following product types: Adult, sexual wellness, hunting and fishing, guns and gun accessories, books, music, video, or DVD
  • Product’s listing must not contain any offensive content

Don’t use coupons as an incentive to get reviews.

How To Optimize Your Search Rank with Sponsored Product Ads

To succeed as a seller on Amazon, your products must appear on the first page of search results, but they need to sell well to earn a top spot, so new sellers barely have a chance. Sponsored Product ads provide a way to break the logjam and move your products to the very top of the search results. With a Sponsored Product ad, you essentially buy one of the top spots.

Amazon provides two options for creating Sponsored Product ads: You can have Amazon target the ads for you based on relevant keywords or choose to target the ads yourself. In the following sections, we explain each method and then provide guidance on how to evaluate the success of your ad campaign.

Letting Amazon target your Sponsored Product ad for you

Amazon can create your Sponsored Product ad campaign for you and take on the hardest part of the job — the keyword research. To have Amazon create and target your Sponsored Product ad campaign for you, take the following steps:

1). Log on to Seller Central, open the Advertising menu, and select Campaign Manager.

2). After the Campaigns dashboard appears, press the Create Campaign button. Amazon prompts you to select the desired campaign type.

3). Select Sponsored Products. Amazon displays a screen prompting you to add details about your Sponsored Product campaign.

4). Follow the on-screen prompts to enter the following information:

  1. Campaign name
  2. Portfolio name: You can create a portfolio in the Campaigns dashboard to organize campaigns, set the budget cap per portfolio, and track performance of each portfolio.
  3. Start date and end date: You can omit the end date, but if you want to end the campaign, you’ll need to return to the Campaign Manager and cancel it manually.
  4. Daily budget: The most you’re willing to spend on this campaign per day.
  5. Targeting preference: Choose Automatic to have Amazon target your ad for you.
  6. Campaign bidding strategy: Dynamic bids – down only, Dynamic bids – up and down, or Fixed bids

5). Create at least one ad group and add the products you want included in each group.

6). Set the default (maximum) bid for the entire ad group.

7). Press the Launch Campaign button.

Targeting your own Sponsored Product Ads

Creating and targeting your own Sponsored Product ad campaign gives you more control over the keywords used in targeting your ads to shoppers’ interests and allows you to bid on each keyword separately, so you can bid higher for top-performing keywords.

To create and target your own Sponsored Product ads, take the following steps:

1). Log on to Seller Central, open the Advertising menu, and select Campaign Manager.

2). After the Campaigns dashboard appears, press the Create Campaign button. Amazon prompts you to select the desired campaign type.

3). Select Sponsored Products. Amazon displays a screen prompting you to add details about your Sponsored Product campaign.

4). Follow the on-screen prompts to enter the following information:

  1. Campaign name
  2. Portfolio name: You can create a portfolio in the Campaigns dashboard to organize campaigns, set the budget cap per portfolio, and track performance of each portfolio.
  3. Start date and end date: You can omit the end date, but if you want to end the campaign, you’ll need to return to the Campaigns dashboard and cancel it manually.
  4. Daily budget: The most you’re willing to spend on this campaign per day.
  5. Targeting preference: Choose Manual, so you can choose the keywords you want to bid on.
  6. Campaign bidding strategy: Dynamic bids – down only, Dynamic bids – up and down, or Fixed bids.

5). Create at least one ad group and add the products you want included in each group.

6). Set the default (maximum) bid for the entire ad group.

7). Select keyword targeting or product targeting. Keyword targeting enables you to specify the keywords that trigger the appearance of your ad. Product targeting enables you to specify products, categories, or brands that trigger your ad to appear.

8). Specify the keywords or the products, categories, and/or brands you want to trigger your ad’s appearance and specify the desired match type: broad, phrase, or exact.

9). Adjust the maximum bid for each keyword, product, category, or brand.

10). If desired, select Negative Keywords and specify any negative keywords you want to use. Negative keywords prevent your ad from being displayed if the negative keyword is included in a shopper’s search.

11). Press the Launch Campaign button.

Evaluating and adjusting your ad campaigns

Whether you choose to target your own ads or have Amazon target them for you, monitor your ad’s performance and make adjustments to optimize its performance. To see how your ad campaigns are doing, login to Seller Central, open the Advertising menu, and select Campaign Manager. The Campaigns dashboard appears. Examine the following metrics:

  • Impressions: Number of times the ad was displayed to the shoppers.
  • Clicks: Number of times the ad was clicked or the product page was visited through the ad.
  • Conversions or orders: Numbers of orders placed within a week from the time the ad was clicked. (Note that orders include other products not advertised.)
  • Turnover: Total turnover generated from the orders.
  • Click-through-rate (CTR): The percentage of impressions that resulted in a shopper clicking the ad.
  • Conversion rate (CR): The percentage of clicks that resulted in a shopper ordering the product.
  • Advertising Cost of Sales (ACoS): The ratio of advertising cost to sales revenue. The lower this ratio, the more profitable or successful the ad is.

To ensure that your ad campaign is earning you more money in sales than the ad is costing you, make sure your ad campaign’s ACoS is lower than your profit margin. For example, if your profit margin is 25 percent and your ACoS is 15 percent, you can still make 10 percent profit after accounting for the cost of the ad.

When you’re running an ad campaign that Amazon is targeting, consider making the following adjustments to improve the profitability of the campaign:

  • If the ACoS is too high, lower your default bid.
  • If the ACoS is too low, raise your default bid.
  • If you’re manually targeting your ad and the number of impressions is too low, check to see whether your campaign is missing any important keywords or try increasing your bid.
  • If Amazon is targeting your ad, generate a search terms report in Seller Central (via the Reports menu), identify the high-converting customer search terms, and use only those terms to create a new advertising campaign with manual targeting.
  • Identify all the search terms that are costing you money but not leading to conversions and add them to the campaign’s negative keyword list.
  • If the campaign is profitable, consider increasing the campaign’s daily budget.

Here are some additional tips to optimise your Sponsored Product ads:

  • Use the same keywords in your product listings as you do in your ads. Amazon displays an ad only if the product listing has the same or similar keywords. One of the best approaches is to run an Amazon-targeted ad for a week, generate a search terms report, and then add the keywords with the higher conversion rates to your product listing.
  • To increase the conversion rates for your ads, create great product listings and work on getting more positive reviews for your products. A successful ad campaign can drive shoppers to your product listing, but the listing and ratings still need to sell the product.
  • Monitor your ad campaign performance by tuning your ad campaigns and tweaking your product listings to optimize your conversion rates (CRs). By doing so, you give even a newly launched product a chance to beat a product that’s well-entrenched in a given category. CR is an important metric in Amazon’s ranking algorithm. A poorly optimized ad campaign results in a low CR, which drives down a product’s ranking, thereby driving down sales.
  • Use automatic targeting and manual targeting in tandem. Automatic targeting enables you to identify high-performing keywords, which you can then use to your advantage in manually targeted campaigns. For best results, make sure your automatic and manually targeted campaigns are for the same set of products.

How To Boost Brand Awareness with Sponsored Brands

If you’re a Professional Seller and you added your brand to the Amazon Brand Registry, you can use Sponsored Brands to increase your brand recognition. A Sponsored Brands ad features your brand logo, a custom headline, and up to three products you want to showcase. 

If a shopper clicks your brand, he’s taken to your Amazon store or a custom landing page with a selection of your products. If he clicks a product, he’s taken to that product’s details page.

To create a Sponsored Brands ad campaign, take the following steps:

1). Log in to Seller Central, open the Advertising menu, and select Campaign Manager.

2). Press the Create Campaign button. Amazon prompts you to select the desired campaign type.

3). Select Sponsored Brands. Amazon displays a screen prompting you to add details about your Sponsored Brands campaign.

4). Follow the on-screen prompts to enter the following information:

  1. Campaign name
  2. Portfolio name: You can create a portfolio in the Campaigns dashboard to organize campaigns, set the budget cap per portfolio, and track performance of each portfolio.
  3. Start date and end date: You can omit the end date, but if you want to end the campaign, you’ll need to return to the Campaign Manager and cancel it manually.
  4. Daily budget: The most you’re willing to spend on this campaign per day.

5). If you have more than one brand, open the Brand list and choose the brand you want to promote.

6). Choose the landing page for your brand: Amazon Store or New Product List Page. Vendors have a third option; they can choose to link to a custom website address.

7). Choose the Amazon Store you want to link to or the products you want to include on your new product list page. You’re then taken to the creative section, where you can customize your Sponsored Brands ad. If you create a new product list page, add at least five of your most popular products to the page for best results.

8). Use the options in the creative section to customize your ad with your brand name, a custom headline, your logo, and up to three products you want to showcase. If you chose to link to your Amazon Store, the product images are preselected for you, but you can choose to change them. For your ad’s headline, use a call to action and a brief description of what the user will find after clicking the link, such as “Save on office supplies.”

9). Enter your default keyword bid (the maximum amount you’re willing to pay each time a shopper clicks your ad).

10). Turn automated bidding on or off. With automated bidding on, Amazon optimizes your bids for best placement without exceeding your maximum bid amount.

11). Specify the keywords that will trigger the appearance of your ad, and choose the match type for each keyword: Broad, Phrase, or Exact. Amazon suggests some keywords, which you’re free to use, and you can enter your own keywords.

12). Enter any other preferences.

13). Press the Submit for Review button. Your campaign is sent to Amazon moderators for review. The review can take up to 72 hours before your campaign is approved and running.

Here are a few tips to optimise your Sponsored Brands ad:

Optimize keywords

Use generic (unbranded) keywords that are highly relevant to the three products you choose to showcase in your ad, such as “winter skincare products.” Avoid using competitive brand names, so you’re not wasting advertising money on customers who are unlikely to switch their brand allegiance.

Check your Sponsored Product ads for top-performing keywords

If you’re running Sponsored Product ads for items that are the same or similar to those showcased in your Sponsored Brands ad, check the performance of Sponsored Products keywords and use those that are performing best in your Sponsored Brands ad.

Monitor the performance of your Sponsored Brands ad

To access advertising reports in Seller Central, open the Reports menu and select Advertising Reports. Compare the performance of different keywords and make adjustments to optimize the performance of your ad overall.

Run A/B tests to experiment with different ads

A/B testing involves creating two versions of an ad and seeing which performs best. Try running your campaign with two or more versions of a Sponsored Brands ad. Experiment with different headlines, products, and keywords. Amazon offers the following advice for A/B testing:

  • Identify the criteria for testing based on your objectives, and identify the variables you want to experiment with.
  • Set up multiple campaigns, changing only one variable at a time.
  • Run tests for at least a couple of weeks.
  • Track the performance of each campaign to gain insight into how your changes impact your objectives.

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