What Is An Amazon PPC Auction And How Does It Work?

You’ve probably heard of Amazon pay-per-click (PPC) advertising or Amazon PPC Auction and how it does work if you’ve been selling on Amazon.

There’s no way you haven’t heard of it if you’re planning to sell on Amazon and have done some research.

Everyone is talking about Amazon PPC and how it can benefit your FBA business on Amazon.

What Exactly Is Amazon PPC And How Does It Work?

These are some of the most important questions that many first-time vendors have.

It’s also critical to master the fundamentals of Amazon advertising if you’re new to the platform.

When you pay to play, you want to get the most out of every dollar you spend.

This comprehensive Amazon PPC guide will address those concerns and explain the fundamentals.

It will assist you in creating profitable Amazon pay-per-click ads.

Conversion Study will provide you with automated and trustworthy data from your sponsored advertising.

What Is Amazon Pay-Per-Click (PPC)?

Amazon PPC, often known as sponsored adverts, 

Is a well-known advertising network that allows sellers to increase their online product sales. 

The advertiser only pays Amazon when you click on the ad in the pay-per-click (PPC) model. 

You will not have to pay for impressions if you conduct Amazon PPC advertising.

When a PPC campaign is properly managed and optimized, 

It can greatly increase the visibility and sales of a product. 

This will also improve the product’s organic rating, assuring its long-term viability.

What Is The Amazon PPC Auction And How Does It Work?

The Amazon PPC auction procedure is straightforward. 

Each advertiser submits a default bid and competes for ad slots against one another. 

The bid made by the government, on the other hand, was not accepted.

The highest bidder’s bid, on the other hand, is not always the cost-per-click.

Let’s say you paid $2.00 for a keyword. 

The default bid of the second-highest bidder is $1.50. 

You will get the ad place as the highest bidder, but you will not have to pay $2.00. 

You’ll only have to spend $0.01 more than the second-place bidder. 

As a result, Instead of paying $2.00, you’ll spend $1.51.

This means that the highest bid will determine the cost-per-click (CPC) for a keyword or targeted ASIN, 

But it isn’t always the highest bid.

Why You Should Use Amazon Pay Per Click (PPC)?

Advertising is not the first thing people think about when anyone mentions Amazon. 

However, over the years, the retail giant has become a behemoth in the advertising space. 

Amazon’s revenue from advertising hit $5.4 billion in the 3rd quarter of 2020 – a 51% increase from 2021. 

While Amazon has not dethroned Google or Facebook

It has rapidly improved its market share. 

So, why are people, especially sellers, crowding to use Amazon PPC? 

The answer is simple – return on investment. 

Since Amazon is a retail platform, the users entering a search term are already looking to buy a product. 

They are active buyers looking to make a purchase. 

Your ads are more likely to convert when the customer is already in the market for the product. 

The user base is also constantly expanding. 

This is particularly true for 2020. 

Most retail stores had to shut shop and customers turned to online retail to buy essentials and fulfill their shopping needs. 

The revenue figures for 2020 reflect this shift in consumer behavior. 

From $69.98 billion in Q3 2019, Amazon’s revenue in Q3 2020 rose to $96.15 billion!  

So, Amazon has a captive customer base that seems to be spending more and more every year. 

With Amazon PPC, you are targeting that consumer base. 

There is money to be made when a PPC campaign is executed well. 

When Should I Launch Amazon PPC Ads?

This is another question that new sellers usually have. 

What is the perfect time to launch a PPC campaign? 

Unfortunately, there isn’t a conclusive answer. 

We recommend launching Amazon PPC ads as soon as you create a new listing. 

To create an effective PPC campaign, you need data. 

To get actionable data, you need to launch your campaigns as soon as possible. 

The optimization process is iterative, so you need to keep at it to get positive results. 

Early on in the product life cycle, 

It is also difficult to gain visibility, and Amazon PPC helps solve that problem.

How Does Amazon Paid Search Work?

Here is a quick breakdown of how Amazon’s paid search works. 

It is not as complicated as it sounds. 

It is apparent that the Amazon Marketplace gets millions of searches each month. 

These include from short terms to long phrases (or what we call long-tail keywords). 

These shoppers are none other than people willing to buy products.

Understand that potential shoppers will never do window shopping on Amazon. 

They are not there to discover ideas. 

They are all set to buy. 

All they do is just go to the Amazon search box and type the product name they want to buy.

In turn, Amazon fetches a list of products that it feels will satisfy the customer’s needs. 

Now, this list of products displayed is called “organic” results.

However, there is something called “paid” search results. 

These are displayed above the organic results no matter what you search. 

Though placed above the organic results, they sometimes do appear in between the organic search results, on the right side, or below the organic search results.

The concept of Amazon’s sponsored ad program is simple. 

Every paid search advertising or marketing option of Amazon follows an enhanced auction-based approach wherein vendors and sellers set their day-to-day budget for ads. 

The higher a vendor or a seller is ready to pay for his/her ad, 

The greater are the chances for the ad to be displayed.

Vendors and sellers pay for their advertisements per click – this means that they pay an amount every time a buyer clicks on the ad. 

According to reports, this model has successfully worked for many retail giants. 

In fact, Business Insider states that Amazon’s paid search revenue in 2017 was $2.8 billion. 

So, you can imagine the impact of such ads.

Conclusion 

That concludes the fundamentals of Amazon PPC. 

There is a lot of data to digest, but a seller must understand the basics. 

But this is only the beginning. 

Before you begin, we recommend that you read through our other Amazon PPC tips and watch our videos. 

You might begin with an automated campaign to gather some crucial information. 

The campaign is also run reasonably well by Amazon’s algorithms.

Amazon, on the other hand, is a very competitive marketplace. 

Each dollar spent on ad waste equals one dollar less in profit. 

Manual campaigns are the most efficient technique to maximize efficiency.

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