Understanding Amazon CPC: A Guide for Beginners

CPC on a laptop

Last updated on September 6th, 2023

Written by Himanshi Raj

Amazon CPC (cost per click) is a popular advertising option on the platform. With the increasing competition on Amazon, understanding what CPC is, how it works, how to determine bid prices and ad placement, and how to make the most of your total ad spend are crucial for a successful ad campaign. The knowledge can help you stand out and increase your sales.

This guide is designed to provide a basic understanding of Amazon CPC and equip beginners like you with the knowledge to start advertising and driving sales on Amazon. So, keep reading!

CPC on a laptop

Amazon CPC: A Brief Explanation

Cost-Per-Click (CPC) refers to the cost you pay each time potential customers click your paid ads. It is a statistic that applies to all forms of advertising, including text, graphics, and videos. CPC also applies to advertising on search engines, display ads, and ads on other platforms like social media and websites. 

This measure is vital for your Amazon PPC campaigns as it reflects whether the costs you pay for the clicks are worth it. You should be reaching your target audience and getting sales.

The Ins and Outs Amazon CPC Bidding

Launching ad campaigns on Amazon is similar to participating in an auction. To display your ad, you must bid on keywords and know how much to bid. The more optimized your biddings are, the higher the chance you’ll reach customers that will click through your ads and eventually buy.

Because CPC pricing is based on keyword targeting, more popular terms tend to cost higher per click. Hence, be wise with your budgeting. Allot a higher budget to keywords that will bring your ads to the customer searches with the highest buying intent.

CPC Calculation

CPC/Cost-per-click is the average amount paid for each ad click. It is calculated this way: total cost of clicks/total clicks. A large number of clicks on an ad indicates that the ad is attracting client attention. However, it is the sales that show a more critical number. When your CPC is proportionate to your sales, your Amazon ads work.

Maximum CPC

A brand’s maximum cost-per-click is the highest bid you are prepared to pay for keywords to get a good ad placement. Amazon seldom spends the maximum budget set by sellers, so the actual CPC will typically be significantly lower than the first bid.

Manual CPC Bidding

Once you have determined your maximum cost-per-click, you must select whether to employ manual or CPC bidding. Manual cost-per-click bidding entails determining unique bid amounts for the keywords you want your ads to be placed on.

Automatic and Enhanced CPC Bidding

Enhanced cost-per-click bidding is an automated bidding used on Amazon to alter your bid based on the campaign’s conversion. It is an alternative to manual cost-per-click bidding in which you can specify the total budget and then automate the bids.

Amazon PPC Tips and Strategies to Lower CPC

A low CPC always goes hand-in-hand with how well you do your Amazon pay-per-click (PPC) campaigns. Only when your PPC ads are optimized for the algorithm and attractive and informative enough for potential customers will they rank, get clicks, and improve conversion rates. 

So here’s how you can manage your Amazon PPC well to generate as many sales as possible while maintaining a low CPC. Let's check!

1. Utilize the Amazon Learning Console

The Amazon Learning Console is made to kickstart your way into a PPC Campaign. Whether it's your first time launching an Amazon ad campaign or you need a knowledge refresher, the course will guide you into Amazon CPC ads. It will help you navigate your way through the Amazon advertising platform. 

The Amazon Learning Console will walk you through Amazon's different sponsored ad types. From Sponsored Product ads, Sponsored Brand ads, Sponsored Display, and Amazon Store, the knowledge will help you determine the best model for your marketing strategy. You can also optimize your campaigns, maximize your ad spend, and save money on CPC. 

A woman reading on her laptop

2. Read Through the Amazon Brand Guidelines. 

The Amazon Brand Guidelines are a set of rules created by Amazon for sellers who are looking to venture into Amazon product ads. As a newbie to Amazon PPC campaigns, you should read this document before starting.

The document outlines several rules for any Amazon PPC campaign, specifically for typeface and sizing, logo and imagery graphics, and technical specs. For instance, a seller is highly discouraged from including Amazon logos on any of their ads, nor are they allowed to promote discounts without an Amazon legal review.

In general, this rule book allows Amazon to maintain a certain standard for any product ad that appears on their platform, so sellers should take a peek at it before launch to avoid any issues later affecting the continuity of ads or the pause thereof.

3. Be Smart About Your Amazon PPC Campaign Structure

Amazon PPC Campaign Strategy is crucial to reach more shoppers and increase conversion rates. You know your strategy works if you can maintain excellent performance for an extended period.

To start, make sure you do your calculations ahead of time. Analyze and calculate your search term bids, determine how much you will spend for your campaign, and adjust/change your keywords based on their profitability. There are three primary spending factors that you should be aware of:

  • Your product's price;
  • The estimated conversation rates of the product
  • The product's Advertising Cost of Sale (ACoS).

Once you have all these things written down, take the time to assess how much your default bids and ACoS will be. Overall, keeping an organized campaign structure will help you make fewer adjustments after launch and increase your campaign's chances of success.

4. Focus Your Efforts on Optimizing Ad Keywords

Take advantage of Amazon's automatic campaign to ensure that your low target ACoS is achieved while you are getting more sales. In this campaign type, Amazon makes your ad appear on search results where the algorithm thinks you’ll get more sales.

You can determine which keywords have the best product conversion rate through an auto-campaign. You can then switch to a manual campaign to bid higher on keywords that are giving you sales.

Another strategy is to test keywords related to your products. Most Amazon PPC businesses focus on bidding for either general high-volume keywords or the exact keywords of their products, but this may not always be the best route. Experimenting with other relevant keywords can be a stepping stone to gaining unprecedented ad traffic.

5. Make Bid and Budget Changes Only When Necessary

Do not make impulsive budget decisions. Creating a budget change 2 to 3 days after launching your first Amazon PPC campaign does not help you understand the full extent of your ads' potential and limits your understanding of how your product ads can be optimized.  

Give your campaign at least a week or two before making any budget changes to ensure adequate data is available for your budget analysis. It may even take a month before keyword optimization data shows up for manual campaigns, so make sure to allow any relevant PPC data to mature.

A man browsing Amazon’s Deals and Promotions page on his computer

6. Go After Top-Performing ASINs for Product Targeting

Search and target competitor brands with high traffic or views. In this way, you will have a chance to be seen alongside the most popular categories related to your brand. How do you know which brands or products have many views? In the search terms report, filter the clicks and click-through-rate (CTR) columns from highest to lowest.

You can also target categories that complement yours for more chances of sales. For example, if you are selling sportswear, you can target it with the category which offers gym equipment or energy drinks.

7. Target Product Listings That You Can Outperform or Vice Versa

You have a better chance of increasing your conversion rate when you place ads on ASINs you can outperform. Look for a listing with a higher product price but a lesser quality offer than yours. You can get these details from the search terms reports. Filter the ASINs and search for the following criteria:

  • Products with a higher price than you
  • ASINs with lower ratings
  • Products with a fewer number of reviews

On the contrary, the Item Comparison report can also show the ASINs selling products that were bought instead of yours. You can also target those to give you a second chance to sell your product against the ASINs that outperformed you. 

8. Target Products Purchased With Yours

It is not only the search terms report you should give attention to. You may also gather ASINs from the Market Basket Analysis and Item Comparison reports. You need to be a member of the Amazon Brand Registry to be able to do this. 

You can find the products purchased with yours in the Market Basket Analysis report. Try targeting these again to replicate the scenario, but this time, your ad will be displayed in the "Sponsored Products related to this item" section. Thus the term "market basket." 

9. Stop Showing Your Ad to the Wrong Audience

Prevent your ads from showing on search terms unrelated to yours, also called "Negative ASINs." These keywords increase CPC costs but lower your conversion rate. Adding negative keywords allows you to pay a lower CPC, lower your average CPC, and lower your ACoS because it keeps you from spending on clicks that will never convert.

Again, you can find it in the search terms report. In Amazon Seller Central, the negative targeting feature has a section where you can add Negative ASINs.

Manage Your Amazon CPC Ads With Seller Interactive

Understanding Amazon CPC is crucial for any seller or vendor looking to advertise on the platform. We hope to have provided you with a basic understanding of what CPC is, how it works, and how to optimize their PPC campaigns. 

By utilizing Amazon's resources and following best practices for a low CPC, sellers can reach potential customers and increase their sales while keeping their ad budget efficient. 

Seller Interactive can provide you with a comprehensive Amazon full account management services for Amazon CPC to ensure your advertising campaigns achieve maximum success.

Book a call with us today.

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