How Much Does Amazon PPC Cost And 10 Tips To Lower Your Ad Spend

  • #Scale Insights Team
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Are you an Amazon seller looking to boost your product visibility and sales? If so, you might wonder, "How much does Amazon PPC cost?" Pay-per-click (PPC) advertising is essential for businesses to thrive in the Amazon marketplace.

This comprehensive guide will help you understand the cost of Amazon PPC and how to manage your advertising budget effectively.

We'll cover the basics of Amazon PPC, factors affecting its cost, key metrics, and tips for managing and saving your PPC budget. Let's dive in!

What Is Amazon PPC?

Amazon PPC (Pay-per-click) advertising allows sellers to promote their products in sponsored ads displayed in prominent positions on the Amazon platform. Advertisers only pay when users click on their ads. 

This cost-effective advertising model helps businesses reach their target audience, boost product visibility, and increase sales.

Types Of Amazon PPC Campaigns For Sellers

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There are three main types of Amazon PPC campaigns: Sponsored Products, Sponsored Brands, and Sponsored Display Ads. Each campaign type serves a different purpose and offers unique benefits.

Sponsored Products

Sponsored Products ads are designed to drive sales and visibility for specific items. They showcase individual products and can appear in search results, product detail pages, and even the "Customers who bought this also bought" section. Sponsored Products ads are particularly effective for:

  • Launching new products and gaining initial visibility

  • Promoting best-selling items to boost sales further

  • Reviving underperforming products by increasing their exposure

To create a Sponsored Products campaign, you must choose whether to create an Automatic or Manual Sponsored Product campaign. 

Sponsored Brands

Sponsored Brands ads help build brand awareness and drive sales by featuring a custom headline, brand logo, and up to three products. They typically appear at the top of search results, capturing shoppers' attention as soon as they browse. Sponsored Brands ads are ideal for:

  • Showcasing a range of products within your brand's portfolio

  • Highlighting seasonal promotions or special offers

  • Attracting new customers and encouraging brand exploration

When setting up a Sponsored Brands campaign, create a custom headline, choose the products you want to feature and select your target keywords. Amazon also offers Sponsored Brands video ads, which can further engage shoppers and drive brand recognition.

Sponsored Display Ads

Sponsored Display Ads utilize audience targeting to reach potential customers on and off Amazon. They can appear on product detail pages, search results, Amazon-owned websites (such as IMDb), and even third-party websites or apps. Sponsored Display Ads are effective for:

  • Retargeting shoppers who have viewed your products but didn't make a purchase

  • Cross-selling or upselling by targeting customers who have shown interest in similar products

  • Boosting brand loyalty by staying top-of-mind with your target audience

You can choose between audience and product targeting when creating a Sponsored Display Ads campaign. Audience targeting enables you to reach specific customer segments based on their shopping behavior.

Meanwhile, product targeting allows you to display your ads alongside related items. Additionally, Sponsored Display Ads offer customizable ad creative, enabling you to tailor your messaging to your target audience.

Each Amazon PPC campaign type serves a unique purpose in your advertising strategy. By understanding the benefits and use cases of Sponsored Products, Sponsored Brands, and Sponsored Display Ads, you can create more effective and informative campaigns tailored to your business goals.

Factors That Can Impact The Cost Of Amazon PPC

Navigating the world of Amazon PPC can be complex, with several factors influencing the cost of your campaigns. Understanding these variables is crucial to optimize your ad spend and maximize your returns effectively.

Bidding Strategy (Manual Bidding Vs Automatic Bidding)

The cost of your Amazon PPC campaign largely depends on your bidding strategy. There are two primary options: automatic and manual bidding. 

Each method has advantages and drawbacks, making it essential to understand their differences to optimize your advertising campaigns effectively.

Automatic Bidding

With automatic bidding, Amazon's algorithm sets bids based on your daily budget and target ACoS (Advertising Cost of Sales). This beginner-friendly strategy simplifies the bidding process by allowing Amazon to manage your bids on your behalf. Automatic bidding can be particularly useful for:

  • Sellers with limited experience in Amazon PPC advertising

  • Businesses with a vast product catalog that makes manual bidding time-consuming

  • Advertisers who want to gather initial data on keyword performance

However, automated bidding is only an option for Sponsored Brand ads where Amazon's algorithms manage bid amounts based on your target ACOS, optimizing for conversion rates. In contrast, Sponsored Product ads offer Dynamic Bidding strategies - these either decrease your bids in real-time when a sale is less likely (Down Only), adjust bids up or down depending on likelihood of conversion (Dynamic Up and Down), or maintain a consistent bid irrespective of conversion probability (Fixed Bids).

Note that relying solely on Amazon's algorithm may lead to higher CPC (Cost-per-Click) and less control over your ad spend. Additionally, automatic bidding may be less effective in targeting specific keywords or products, which could impact the overall performance of your PPC campaign.

Manual Bidding

Manual bidding allows sellers to set their bids for specific keywords or products. This strategy offers more control over ad spend and enables precise targeting. Manual bidding is ideal for:

  • Experienced sellers with a deep understanding of Amazon PPC advertising

  • Businesses focusing on a limited range of products or targeting a specific niche

  • Advertisers looking to optimize their campaigns for particular keywords, sponsored display ads, or sponsored brands

However, manual bidding requires more time and expertise to optimize, as sellers need to monitor and adjust their bids regularly. 

Furthermore, keeping track of changing market dynamics and staying competitive can be challenging without a comprehensive understanding of Amazon's advertising costs and performance metrics.

Targeting Options (Keyword Targeting, Product Targeting, Category Targeting)

Your targeting approach significantly impacts your Amazon PPC costs. The three main targeting options are keyword targeting, product targeting, and category targeting, each with its advantages and challenges.

Keyword Targeting

With keyword targeting, you bid on relevant keywords to drive traffic and sales. Conducting thorough keyword research is crucial to identify high-performing search terms and discovering long-tail keywords offering lower competition and costs.

For example, if you have an Amazon business focusing on office supplies, you might target keywords related to their product offerings, such as "Amazon business supplies" or "office products."

Competition for popular keywords can be fierce, leading to higher costs per click. For instance, a highly competitive keyword might have a cost-per-click (CPC) of $3, while a long-tail keyword might have a CPC of $0.80. 

Proper keyword research and monitoring ad success are vital for optimizing your PPC budget and future campaigns.

Product Targeting

Amazon Product Targeting allows sellers to target specific ASINs and brands to show their ads on similar or relevant product detail pages. With product targeting, sellers can reach customers who are searching for or viewing products similar to their own. This strategy may be less competitive than keyword targeting, but the cost varies depending on the products you target. 

For instance, you might target related products like camera lenses or accessories if you offer high-end cameras.

The cost-per-click in product targeting can range from $0.50 to $2 or more, depending on the ad placement, type, and competition. 

Continuously analyzing your ad success and adjusting your bids can help improve your advertising cost efficiency.

Category Targeting

Category targeting allows you to reach a broader audience by targeting entire categories. This approach can drive brand visibility and expose your products to potential new customers. 

However, category targeting may lead to higher costs and less targeted advertising, as your ads may appear for a broader range of search queries.

For example, an Amazon seller specializing in fitness equipment might target the entire "Sports & Outdoors" category. The cost-per-click for category targeting can vary significantly, from as low as $0.30 to over $2, depending on factors such as competition, ad placement, and the specific category.

Seasonality And Holidays

Seasonal fluctuations and holidays can significantly impact the cost of Amazon PPC. During peak shopping periods, such as Black Friday, Cyber Monday, Christmas, or Prime Day, competition among sellers tends to increase, leading to higher advertising costs.

As more sellers vie for the limited ad space, bid prices escalate, increasing CPCs and advertising expenditure.

For example, the average CPC during a non-peak season might be $1, while it could rise to $2 or even higher during peak shopping times. This increase in advertising costs can be challenging but also presents opportunities for greater visibility and sales.

Understanding Basic Amazon PPC Metrics

Running profitable PPC campaigns and managing your Amazon PPC advertising requires a thorough understanding of key performance metrics. Monitoring these metrics allows you to optimize your campaigns.

Advertising Cost Of Sales (ACoS)

ACoS measures the percentage of your ad spend relative to the revenue generated from your PPC ads. It's a crucial metric for determining the profitability of your Amazon PPC campaigns.

Lower ACoS indicates better performance and more profitable PPC campaigns, while higher ACoS may signal inefficiencies in your ad campaign. To lower your ACoS, consider refining your targeting, adjusting bids, and improving your ad copy.

Cost-Per-Click (CPC)

CPC is the cost you pay each time someone clicks on one of your Amazon ads. The CPC varies based on your bidding strategy, targeting options, competition, market trends, seasonality, etc. 

You can optimize your CPC by evaluating keyword research, adjusting bids, and focusing on high-performing PPC ads.

Click-Through-Rate (CTR)

CTR is the percentage of ad impressions that result in a click. A higher CTR indicates that your ads resonate with your target audience and that your spending on Amazon PPC is well-targeted.

To improve CTR, you can refine your ad copy, targeting, and bidding strategy. Additionally, split or A/B testing different ad variations can help identify the most effective messaging.

Impressions And Reach

Impressions measure the number of times your ad is shown, while reach refers to the number of unique users who see your Amazon PPC ads. Monitoring these metrics helps you gain insights into your PPC campaign performance and visibility.

Some techniques to increase your impressions and reach include: expanding your keyword selection, adjusting your bids, and exploring different targeting options.

Total Advertising Cost Of Sales (TACoS)

The TACoS gauges how well your ad spend drives overall revenue towards your Amazon PPC campaign. You can reach your targets by refining bidding, ad type, and product listings.

How To Lower Your Amazon PPC Costs

Lowering your Amazon PPC costs without sacrificing ad performance requires a strategic approach that balances efficiency with effectiveness. 

Here are some essential tips to reduce your Amazon PPC costs:

#1. Target Long-Tail Keywords

Targeting long-tail keywords (specific, low-volume search terms) can lower competition and advertising costs. These keywords often have higher conversion rates as they target more precise customer intent. 

For instance, instead of "running shoes," you might target "women's waterproof trail running shoes" to capture a more specific audience and reduce costs.

#2. Reduce Bids On Low-Performing Keywords Or Products

Identify and reduce bids on keywords or products not generating sufficient returns. This strategy frees up the budget to allocate towards high-performing ads, improving overall campaign performance.

If you notice a keyword consistently underperforming, consider lowering your bid or pausing it completely to reallocate funds to more successful keywords.

#3. Implement Ad Scheduling And Dayparting

Choosing specific days or hours to run your ads helps you reach your target audience when they're likeliest to convert.

For instance, your data might tell you that you get the highest conversion rates during evenings and weekends. Scheduling and dayparting allow you to schedule ads to run during those peak days or hours. They help maximize your ads' effectiveness.

#4. Use Amazon PPC Management Software

Amazon PPC management tools offer a range of features and benefits to help you streamline Your PPC management process, make data-driven decisions, and ultimately reduce advertising costs.

Try Scale Insights, which is a suite of AI-powered Amazon PPC tools. It offers performance tracking, keyword research and analysis, bid optimization, dayparting, and other features.

Learn more about Amazon PPC Tools in these related articles: Amazon Seller Analytics Software, Best Amazon Analytics Tools, and Amazon PPC Automation Software. 

#5. Set Key Performance Indicators

Establish clear objectives and KPIs for your Amazon PPC campaigns to ensure you allocate your ad budget effectively. Consider profit margin, competition, and seasonality when setting your goals.

For instance, if your objective is to increase sales by 20% during a peak season, set KPIs like ACoS and conversion rate that align with this goal. This approach will help you make informed decisions when adjusting your ad types and Amazon advertising campaign strategies.

#6. Regularly Monitor And Optimize Your Advertising Campaigns

Continuously track your Amazon PPC campaign performance and make data-driven adjustments to optimize your ad spend. Adjust your bids, targeting, and ad creative based on the abovementioned metrics.

Using a budget filter allows you to easily monitor your campaigns' spending and make necessary changes in real-time, ensuring that your advertising campaign remains cost-effective.

#7. Experiment With Various Ad Formats And Targeting Options

Test various ad formats (Sponsored Products, Sponsored Brands, Sponsored Display Ads) and targeting options (keywords, products, categories) to identify the most cost-effective strategies for your business. 

For example, you might discover that Sponsored Brands perform best for your brand awareness goals while Sponsored Products drive more sales. Continually experiment to find the right mix for your PPC ads.

Read more Advanced PPC Strategies.

#8. Use Negative Keywords

Adding negative keywords helps exclude irrelevant search terms, ensuring your ads only appear for relevant queries. This strategy can reduce wasted ad spend and improve your overall Amazon advertising cost efficiency.

Let's say you're selling leather shoes. Adding negative keywords like "vegan", "synthetic", or "fake" will prevent your ads from appearing to customers looking for cheap or non-authentic leather shoes. It saves you unnecessary spending on clicks.

#9. Maximize Amazon's Bid+ And Dynamic Bidding Features

Bid+ allows you to increase your bid by up to 50% for top ad placements, while Dynamic Bidding adjusts your bid in real-time based on the likelihood of a conversion. These features can help optimize your ad spend for better performance.

Bid+ can boost your ad's visibility during peak shopping hours, while Dynamic Bidding ensures you don't overpay for less valuable ad placements.

#10. Allocate Your Budget Based On Performance And Seasonality

Monitor your campaigns' performance and allocate your ad budget to high-performing keywords, products, and categories. Adjust your budget based on seasonality to capitalize on peak shopping periods. 

For example, during the holiday season, you may increase your budget for top-performing products to maximize sales opportunities.

Conclusion On How Much Amazon PPC Costs

Understanding how much Amazon PPC costs involves considering various factors, such as your bidding strategy, targeting options, ad formats, and competition. 

By optimizing these elements and implementing cost-saving techniques, you can effectively manage your ad spending and maximize your return on investment.

Enhance your PPC management and lower costs with Scale Insights' Amazon PPC automation tool. Try a free 30-day trial (no credit card needed), starting at $78 up to $688 monthly. Customized plans are available for up to 2,000 automated ASINs.

Contact us to learn more.

Frequently Asked Questions On How Much Amazon PPC Costs

How Are Amazon PPC Costs Calculated?

Amazon PPC costs are based on a cost-per-click (CPC) model, meaning you pay each time a user clicks on your ad. The actual CPC depends on your bid, competition, and ad quality.

How Much Should I Budget For Amazon PPC?

Your budget for Amazon PPC depends on your business goals, profit margins, and competition. It's essential to start with a realistic budget and adjust it based on your campaign performance and ROI.

How Much Does PPC Cost On Average?

The average cost of Amazon PPC varies by industry, competition, and targeted keywords. CPCs can range from $0.20 to $3.00 or more, depending on these factors.

Is Advertising On Amazon Free?

No, advertising on Amazon is not free. Amazon PPC operates on a cost-per-click model.

Are There Hidden Fees With Amazon PPC?

There are no hidden fees with Amazon PPC. You only pay for the clicks on your ads based on the agreed-upon cost-per-click (CPC) during the bidding process.

Can I Use Amazon PPC To Promote My Brand?

Yes, you can use Amazon PPC to promote your brand. Sponsored Brands ad format is specifically designed to increase brand visibility, awareness and drive sales for your products.

How Does Bidding Work For Amazon PPC Ads?

Bidding for Amazon PPC ads involves setting the maximum amount you're willing to pay per click for your ads. The competitive auction among advertisers targeting the same keywords or products determines the actual CPC you pay.

How Does Competition Affect My Amazon PPC Costs?

Increased competition for popular keywords or products can lead to higher bids and costs. To manage your Amazon PPC costs effectively, monitoring competition and adjusting your bidding strategy accordingly is essential.