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What is Amazon PPC? How does it work?
PPC stands for Pay Per Click. Cost Per Click is a type of advertisement that is used frequently on the internet. When advertising PPC, after choosing the Keyword you want to advertise, you place a bid for this keyword. If your bid is the highest bid, your ad will be displayed on the first page. The highest bids are shown on the first page, while the lowest bids are shown on the last page. In PPC ads, the fee is incurred when a customer clicks on your ad. Therefore, even if your ad is displayed on the first page, if no one clicks on your ad, there will be no cost.
Important terms to know before advertising:
ACoS: (Ad’s cost to sell)
It shows the ratio of your click costs to sales while advertising. It is calculated with the formula ACoS Advertising Expenses/Ad Revenue x100. For example, if you made $200 in sales in an ad campaign and paid an advertising fee of $80 for it. ACoS is calculated as 80/200 x100=40%. This shows that 40% of the expenses arising from your sales go to the cost of advertising. If the net profit margin of your product is over 40%, this shows that you have not made a loss. The most important part is the correct calculation of the net profit margin. When calculating the net profit margin, it is necessary to keep in mind issues such as returns.
The point where the product net profit margin and the ACoS ratio are equal is called the Breakeven Point. In the example we examined above, if your net profit is 40% and your ACoS rate is 40%, it means that you do not make any profit or loss from this advertisement.
Return on Ad Spend: (ROAS)
We can say Return on Ad Spend is Return of Advertising Expenditures in other words. ROAS ensures efficient use of advertising costs. It is calculated with the formula Advertising Revenue/Advertising Expenses x100. For example, if you made $600 in sales thanks to $200 advertising; It is calculated as 600/200 x100=300%. If we interpret this example; We can say that the advertisement was quite successful. This result tells us that you get $3 in revenue for every $1 of ad spend. It is necessary to take into account the worst scenarios in advertising studies. A ROAS value of 99% or less is considered a loss, and a ROAS of 101% or more is considered a profit. If it is 100%, there is no profit or loss, advertising expenses and revenue are equal. Calculating ROAS helps you determine your future advertising strategies.
Cost Per Click:
As the name suggests, Cost Per Click means paying per click. It is used to calculate the cost or equivalent of each click in the ad campaign. Cost Per Click determines your advertising cost and can also be seen as an indicator of how intense the competition in a category is. It is calculated by dividing the fee paid by the advertiser by the number of clicks. For example, if you paid $400 for an ad with 200 clicks, it would be 400/200=2.
Click Through Rate:
Click Through Rate is an online advertising expression used to measure how well your keywords and ads are performing. CTR is used to measure the success of advertising efforts made through various channels. The higher your CTR rate, the more successful your advertising work has been. The answer to the question of how much CTR should be may vary depending on the target customer group and campaign type. CTR Clicks/Impressions are calculated with the formula x100. For example; Your ad was viewed by 500 people and clicked by 10 people. In this case, it is calculated as 10/500 x100= 2%. CTR is of great importance to take advantage of advertising campaigns in the most efficient way.
Conversion Rate: (Conversion Rate)
It shows the percentage of the visitors who reach your site by clicking on the external advertisement perform the desired activity. Conversion rate is related to product selling, clicks, memberships, etc. may include a variety of activities. The most important issue when advertising is how much the advertisement we give contributes to our purpose. Conversion Rate gives us this rate. It is often not enough for your ads to just get clicks. If you have a site related to e-commerce, the fact that the customers coming from the advertisements have made a purchase from your site is a conversion for you. It is calculated with the formula Number of Orders/Clicks x100. For example, your ads were shown to 500 people, 100 of these 500 people clicked on your ads and 10 of these clicked on your site. In this case, the Conversion Rate is calculated as 10/100 x100=10%. Conversion Rate shows how persuasive your ads and products are. For this reason, as the Conversion Rate increases, the profitability increases.
How to Manage Advertising Processes on Amazon?
There are millions of sellers on the Amazon platform, so the competition is very high. It becomes difficult to find your products on a platform where competition is so intense. Consumers will have to make serious searches in order to find your products, and different factors such as price and positive comments will affect your sales. It will be beneficial to use Amazon’s own ads for reasons such as being ahead of competitors and increasing your brand awareness. With Amazon ads, you can highlight your products, increase the traffic to your store and increase your sales.
It is the type where you can create your ad campaign easily and quickly, but it is often the most costly. In the Automated Targeting option, Amazon advertises by automatically optimizing every keyword it assumes about the ad. Although it is assumed that Amazon uses the keywords in your product’s listing and similar products’ keywords, it is not known exactly what algorithm Amazon uses. In the Automated option, advertisements can also be placed on irrelevant keywords from time to time. Automated campaigns are often the most inefficient and costly in terms of optimization.
This ad needs a lot more time and optimization, but the campaigns that work best are created by a beautifully optimized manual targeting.
Exact Keyword Match
In Exact Match campaigns, your product is shown to customers who search for the exact keyword you typed. But Amazon adds minor changes to the keyword (like adding a plural suffix) to the keyword itself.
Phrase Keyword Match
In Phrase Match ads, like the Exact Match option we mentioned above, your ads are shown to those who search for the keywords you specify, but in addition, words are added before and after the keywords you specify, and spelling errors are also taken into account.
The type of ad with the largest target audience. Amazon shows your product in all the words it thinks are related to your product. It is not recommended for long-term use, as it quickly consumes the advertising budget.