PPC Campaign Setup Guide

You can run 3 type of Amazon ads:

Sponsored Product Ads

Sponsored Brand Ads

Sponsored Display Ads

KEY TERMS:

ACOS (Advertising Cost of Sales): The ratio of ad spend to sales, expressed as a percentage. It indicates the efficiency of your advertising campaigns.

ROAS (Return on Advertising Spend): The revenue generated for every dollar spent on advertising. It is the inverse of ACOS.

CPC (Cost Per Click): The amount you pay each time someone clicks on your ad.

CTR (Click-Through Rate): The percentage of people who see your ad and then click on it. It is calculated as (clicks/impressions) * 100.

CPM (Cost Per Thousand Impressions): The amount you pay for one thousand impressions of your ad.

Impressions: The number of times your ad is displayed.

Clicks: The number of times your ad is clicked.

Keywords: Specific words or phrases used to target ads to the right audience.

Negative Keywords: Keywords that prevent your ads from being shown for irrelevant searches.

Search Term Report: A report that shows which search terms triggered your ads and how they performed.

Bid: The maximum amount you are willing to pay for a click on your ad.

Budget: The total amount you are willing to spend on a campaign per day or over the campaign's duration.

Sponsored Products: Ads that promote individual product listings on Amazon.

Sponsored Brands: Ads that feature your brand logo, a custom headline, and multiple products.

Sponsored Display: Ads that allow you to target shoppers on and off Amazon with auto-generated ads.

Campaign: A set of ad groups sharing a budget, targeting, and other settings.

Ad Group: A set of ads and keywords within a campaign.

Placement: The location where your ads appear, such as top of search, product pages, etc.

Targeting: The process of selecting who will see your ads based on keywords, interests, behaviors, etc.

Auto Campaign: A campaign where Amazon automatically matches your ads to relevant search terms and products.

Manual Campaign: A campaign where you manually select keywords and products to target.

Sponsored Display (SD): Ads that allow advertisers to target, reach, and engage audiences across the shopping journey on and off Amazon.

Unit Session Percentage: Also known as the "Unit Session Rate," this is the number of units ordered divided by the number of sessions, expressed as a percentage. It indicates the conversion rate of sessions into sales on Amazon. This is important to track along with CTR


Creating Your PPC & Budget:
A Step-by-Step Guide

Set an exact amount in mind that will allow you to easily launch an effective campaign without compromising your Profits.

Example:

Let us say that you are selling eye creams for $25 each.

Selling Price: $25 (per jar)

Cost of Buying the Product: $4 (per jar)

Amazon FBA Fees: $10

Miscellaneous: $3

Profit = Selling Price – (Cost of Buying the Product + FBA

fees +Miscellaneous)

Profit: $8 (This figure indicates the amount you can spend

on advertising without compromising your profit.)

ACoS=Profit ÷ Selling Price ($8 ÷ $25)

ACoS: 32%

Important Note: Spending more than the indicated

percentage for ACoS can negatively impact your profits.

 As a rule, experts advise to keep ACoS initially at 30-35%. You

can monitor these details on your campaigns dashboard.

Determine Budget Allocation, which includes average 

daily budget and fixed daily account, for each ad campaign.

Calculation of daily budget for every ad campaign is done

over the calendar month using this formula:

Maximum Expenditure per Calendar Month

 = Daily Budget x Number of Remaining Days in the Calendar Month

Note: It is advisable not to use up the entire average daily

budget allotted for a certain day, so that the remainder can

still be used for the following days.

Fixed Daily Budget - You can set this for your overall

advertising account. It sets a specific limit on your day-today advertising for your Sponsored Products Account.

Note:It is not advisable to put a specific fixed limit on your

advertising budget at the account level. If your campaigns

turn out to be profitable, setting a limit means you may not

be able to continue once you have reached your limit, which

may compromise your sales.


Find out the amount you can set as your default bid.

Default Bid – This is how much you will be bidding for the

keywords that you want your ads to rank. You will pay this

every time a user clicks on your ad.

How to Calculate Your Default Bid

1. Know what your ACoS is. For example, your ACoS is

35%, which means that you will not spend more than 35%

of your sales in advertising.

2. Find out what your conversion rate is. For example,

your conversion rate is 10%. This means that 1 out of every

10 clicks you get converts to sales.

3. Divide your ACoS by the number of clicks your ad

Receives.

Default Bid = 35 (ACoS) ÷ 10 (clicks)

Default Bid = 3.5%

This means that you should not bid more than 3.5% of

your sales for each click your ad receives.


How to Calculate Your Default Bid to Improve Your Chances of Winning

Note: For this calculation, you need to take a bold

move by adding 20-30% to your default bid.

Formula:

Default Bid = ACos x Selling Price x Conversion Rate

Example:

ACoS = 35%

Selling Price = $20

Conversion Rate = 10%

Default Bid = 35% x $20 x 10%

Default Bid = $0.7 (per click for your keyword)

Important Reminders:

Your ACoS can be more than 30% given that your profit

margin is higher, which allows you to become more

aggressive in marketing your products.

It is important to know your conversion rate, so you

can calculate your default bid precisely.

Lowering ACoS on Amazon

Reducing your Advertising Cost of Sale (ACoS) is crucial for maximizing profits on Amazon. Here's how you can achieve lower ACoS with effective strategies.

Understanding ACoS

What is ACoS?

• A metric that shows the ratio of ad spend to sales revenue.

• Calculated as (Ad Spend ÷ Sales) x 100.

Why Lower ACoS Matters

• Increases profitability.

• Ensures efficient use of advertising budget.

Optimize Your Product Listings

Enhance Product Details

• Use clear, high-quality images.

• Write compelling SEO optimized titles, bullets and descriptions.

• Include relevant keywords naturally.

Note: A well-optimized listing improves organic rankings and ad performance.

Utilize Negative Keywords

Why Negative Keywords?

• Prevent ads from showing on irrelevant searches.

• Reduce wasted ad spend.

How to Implement

• Regularly review search term reports.

• Add irrelevant or non-converting terms as negative keywords.

Pro Tip: Update your negative keyword list weekly for optimal results.

Refine Targeting Strategies

Choose the Right Match Types

• Exact Match: Targets specific search terms.

• Phrase Match: Allows slight variations.

• Broad Match: Casts a wide net but can be costly.

Note: Prioritize exact and phrase matches to control spend.

Adjust Bids Strategically

Optimize Bids Based on Performance

• Increase bids for high-performing keywords.

• Decrease or pause bids for low performers.

Pro Tip: Utilize Amazon's Dynamic Bidding to automate adjustments.

Leverage Amazon's Advertising Features

Ad Types According to Product Launch Stage

1. Pre-Launch and Early Launch

• Sponsored Product Ads:

  • Ideal for initial visibility.

  • Helps in gathering early data on keyword performance.

• Sponsored Brand Ads:

  • Builds brand awareness.

  • Introduces shoppers to your product range.

2. Growth Stage

• Sponsored Brand Video Ads:

  • Engages customers with compelling visuals.

  • Note: Video ads have the highest Click-Through Rate (CTR), making them effective for driving traffic.

• Sponsored Display Ads:

  • Targets shoppers based on their browsing behavior.

  • Helps in expanding reach.

3. Maturity Stage

• Amazon DSP (Demand-Side Platform):

  • Offers advanced audience targeting.

  • Ideal for retargeting and reaching new audiences at scale.

Pro Tip: Align your ad types with your product's lifecycle stage to maximize effectiveness.

Timing Your Ad Campaigns

Run Ads After Gaining Social Proof

• Wait Until You Have at Least 20 Ratings or Reviews

  • Positive reviews increase conversion rates.

  • Ads are more effective when shoppers see social proof.

Get Video Reviews

• Encourage customers to leave video reviews.

• Note: Video reviews build trust and enhance product appeal.

Pro Tip: 

• Run ads only after 20 ratings or reviews. 

• Run video ads if you are brand registered. 

• Split test your video ads and main picture to increase conversions. 

• You must add A+ content as it increases conversions.

Utilize Automated Campaigns Wisely

Benefits of Automated Campaigns

• Easy setup.

• Great for keyword discovery.

Limitations

• Less control over targeting.

• Potentially higher ACoS.

Pro Tip: Use automated campaigns for research, then shift successful keywords to manual campaigns.

Monitor and Analyze Performance

Key Metrics to Watch

• Click-Through Rate (CTR).

• Unit Session Percentage [Conversion Rate].

• ACoS and Return on Ad Spend (ROAS).

Note: Regular analysis helps identify trends and areas for improvement.

2025 Strategy: Integrate External Traffic Sources

Use Google Search Ads

• Drive external traffic to your Amazon listings.

• Boost product visibility and sales velocity.

How This Helps

• Amazon's algorithm favors listings with high traffic and sales.

• Improves organic rankings on Amazon.

Pro Tip: Utilize Amazon attribution tracking tools to measure the impact of external traffic on your Amazon performance.

Conclusion

Lowering your ACoS involves continuous optimization and strategic planning. 

By refining your campaigns, leveraging Amazon's tools, aligning ad types with your product's launch stage, running video ads and integrating external traffic sources like Google Search Ads, you can achieve better rankings and higher profitability.

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