Amazon PPC is relatively unique. Unlike other platforms, a targeted Amazon PPC strategy can have a dramatic indirect impact on your organic rankings — as well as optimizing direct conversions from advertising.
Amazon is estimated to be responsible for more than 40% of online sales. This makes Amazon a critical platform for merchants, it also makes Amazon PPC a linchpin of online success. But competition has never been steeper, and continued expansion of ad types and reporting options increases the complexity of Amazon PPC mastery. To keep up with change, you have to stay on the cutting edge.
This article is one in a multi-part series explaining how to better use Amazon PPC tactics to drive strategic outcomes. Here, we are going to look at how advertising on Amazon can improve organic rankings, and provide tips on best practices. Let’s get started.
Additional reading: Effective advertising requires understanding your customers. For detailed information on Amazon’s main reporting tool, check out our free ebook — Mastering Amazon Brand Analytics.
Step 1: Lay the groundwork and align with the algorithm
Amazon's A9 algorithm is a multi-headed beast. Appearance in organic search is determined by many different factors — including metadata, popularity and relevance. Pulling different levers that affect these various factors is how you impact your ranking. Your entire organic strategy needs to center itself around:
- Relevance: Demonstrating how your product is related to search terms and user intent.
- Popularity: Demonstrating the perceived value of your product to customers by increasing sales velocity.
- Competitiveness: Demonstrating the value of your product above and beyond comparable product listings.
Realistically, the A9 algorithm is a secret. We don’t know exactly how it determines ranking, and there is guesswork involved in piecing together the best tactics. With that said, our strategy has been developed over time and has demonstrated real-world results. But it has to be stated that this is not an exact science, nor can you achieve organic success solely on the back of PPC.
Strategies to help:
Before you turn to PPC to drive organic traffic, make sure to audit your existing listings from a more standard perspective. Consider the following:
- Pricing: Particularly for resellers, Amazon pricing strategies are critical to ranking and winning the Buy Box (remember, you need to be in contention for the Buy Box to even place PPC bids). Ensure competitive pricing in order to maximize success.
- Logistics: Amazon prioritizes products with quick delivery times. If you aren’t Prime eligible, you will struggle to list above products that are. If struggling with fulfillment, check out our article — FBA vs FBM.
- Listings: Make sure your listings include compelling copy, quality photos and relevant keywords within your listing copy and backend optimization. Also, consider upgrades like A+ content and make sure to pay attention to your reviews and star ratings.
Only after you have these basics covered will PPC be in a position to really impact outcomes. PPC can help push you over the edge — getting to the top of a listing page — but you need the right foundations in place to start with.
Step 2: Optimize sales velocity
The main way that Amazon PPC impacts organic ranking is sales velocity. Sales velocity is a measurement of how fast you're making money. It’s a compound metric that takes into account average order value (AoV), conversion rate (CVR) and sales cycle. The standard equation for calculating sales velocity is:
Sales Velocity = (Number of Opportunities * AoV * CVR) / Length of Sales Cycle
*For Amazon sales, “number of opportunities” is best represented by “sessions”.
Sales velocity provides a rough estimate of your revenue over time. However, it’s also a rough estimate of how popular and relevant your products are within the context of how they are currently being received by your audience — e.g. at what rate are customers buying your products when they are listed within results pages?
Because sales velocity is a stand-in for relevance, it’s believed that the A9 algorithm uses sales velocity as one factor in determining ranking.
Strategies to help:
PPC can boost sales velocity by artificially increasing your ranking for critical search terms. This can increase your overall number of sales, and effective targeting can also increase your conversion rate. By driving more sales and a higher percentage of conversions, you will increase the value of your listings to Amazon — which should result in increased organic rankings. There are two practical components to this:
- Conversion rate optimization: By isolating your PPC bids to the best-converting terms (using a process known as Search Term Optimization) you can dramatically increase conversion rates. This is most applicable to the use of Sponsored Product ads, and is a critical technique able to drive a number of different strategic PPC goals.
- Overall sales and impressions: By targeting high-volume terms, you can increase the total number of sales made, improving your total sales velocity.
Realistically, these two priorities will often stand in opposition to one another. The highest converting terms likely aren’t the highest traffic terms. Where a trade-off needs to be made, you should prioritize conversion rate, along with the relevancy of the term — which brings us to step 3…
Step 3: Prioritize relevant and aspirational keywords
Amazon learns about the products you sell based on who buys them, and the search terms those individuals used to find your products. Of course, Amazon can crawl your product listings, and learn about your products based on backend details. However, Amazon’s main goal is to sell products — and the main feedback mechanism they have for driving that is customer behavior.
This comes back to conversion rates. Amazon wants to put listings at the top of search results that are most likely to convert shoppers. PPC ads enable you to pay to get on search results pages. If those ads convert for those terms, that helps Amazon associate that product with that term — which then feeds back into organic ranking.
Strategies to help:
Non-branded terms increase your total addressable market by exposing you to new customers. By focusing on the top converting search terms using Search Term Optimization, you will hopefully be drawn to the most relevant terms. However, you should run tests to help you identify your key non-branded terms, and think aspirationally about what terms you want to organically rank for. By bidding on those terms you can increase the number of conversions for those terms, associating that product with those terms.
Obviously, you need to be careful with this strategy. Just because you think a term is relevant to your product, doesn’t mean that it is. Bidding on irrelevant terms can cause your conversion rate to plummet, which will damage your rankings. However, you should think about “aspirational relevancy” when prioritizing bids.
This also comes back to the basics of product listings. If a term seems relevant, but isn’t converting, audit that listing and consider different reasons why that might be the case. However, the overall goal remains the same — use PPC to drive conversions for key search terms that you want to rank for organically, helping Amazon associate your product with that term.
Step 4: Build brand awareness
The better your brand is known, the more direct traffic you will get. Your main goal might be to rank for non-branded terms in order to increase your total addressable market. However, if you increase the number of shoppers on Amazon using branded search terms (associated with your brand) you will see a spike in organic traffic.
Fundamentally, long-term customer relationships allow you to generate more revenue. Generating brand loyalty is a great way to increase the value of your business, and PPC is a tool that is able to subtly influence a positive outcome.
Strategies to help:
Most of the PPC tactics we have discussed to this point are most applicable to targeting Sponsored Product ads. However, Sponsored Brand ads are your go-to PPC tool for building brand awareness.
Use Sponsored Brand ads to target high-volume and relevant search terms. This will get your brand name on those results pages. In fact, Sponsored Brand ads are a great choice for targeting relevant (but under-converting) search terms — described in the previous step. This won’t have the same direct impact on product listings, but can help improve your overall visibility for those terms, while increasing brand awareness.
Want to improve your Amazon PPC Ad performance?
Get a FREE Audit with us today to optimize your budget and increase your revenue.
Customer lifetime value
Customer lifetime value (CLV) is another way to think about brand building. If you know that certain products are likely to generate repeat purchases, or you can identify “gateway” products that regularly lead to the purchase of additional products, those are great choices for PPC targeting.
Suggested reading: CLV is a complicated topic that generally requires additional tools to calculate and effectively use. For more information, check out our blog — Can CLV Calculations Ever Be Accurate?
Step 5: Drive traffic from off Amazon
Amazon might be the most important ecommerce channel, but it certainly isn’t the only one. If you sell and advertise in other ways online, directing some of that traffic towards Amazon can be beneficial to organic ranking.
Many Sellers believe that Amazon rewards driving external traffic to Amazon by sending Sellers even more traffic. While this isn't really proved either way, it makes sense. When Sellers direct outside traffic to Amazon, they help Amazon gain more customers and make more money. However, even if external traffic isn’t rewarded specifically, it will increase sales velocity, which will help boost organic rankings.
Strategies to help:
A good starting place is to add your Amazon store URL or landing page to your own campaigns and website to drive-up traffic. However, you should be cautious. Your direct-to-consumer traffic is valuable, and sending it to Amazon will cost you fees, and customer data. A good strategy is to have off-Amazon traffic drive to a landing page with a link to your Amazon store for them to buy. This will enable you to capture details that you can match with an order if someone buys on Amazon.
Your landing page can also serve as a filter. If you add a registration stage — maybe associated with a discount offer — those who are less likely to buy won't register and will never reach your listing. Those who do value your offering will reach your Amazon listing and be more likely to buy. With more sales and conversions, your Amazon rankings will increase.
Pro tip: Particularly when launching a new product, don’t forget about the value of promotional marketing and rebate offers, for example, from sites like RebateKey, for influencing customer purchasing decisions, encouraging customers to make that purchase on the platform of your choosing.
Measure results and incrementally improve outcomes
If you can’t measure something, you can’t improve it. Picking the right metrics is critical to making the right choices. TACoS (Total Advertising Cost of Sale) is the primary metric that helps you understand how PPC is impacting organic results.
When tracking TACoS, the goal is for it to remain flat or ideally to decrease over time. Decreasing TACoS shows that organic sales are becoming a larger part of total revenue. There are situations where both TACoS and ACoS (Advertising Cost of Sale) can increase — for example, when you are launching a new product, this is normal. However, as time passes, TACoS should decrease as your organic volume for that product picks up.
Again, customer lifetime value (CLV) can provide important additional context regarding the long-term value of making a sale. But what is critical to remember when tracking organic results is the impact that PPC is having on organic traffic. Ultimately, this should create a virtuous circle of CVR optimization through increasing relevancy. Customer data is the lifeblood of Amazon advertising. Make sure you understand your customer and target them appropriately. Good luck, and start planning.
Suggested reading: If you want to learn more about how to use Amazon customer data to your advantage, check out our free ebook — How to Make Sense of Your Amazon Customer Data.