If you’re looking for ways to set the proper budget for Amazon PPC ads, you shouldn’t miss this article. So let’s get into the details!
The main goal of every seller is to make their product stand out from the competition. One of the most effective solutions for that is Amazon Pay-Per-Click or Amazon PPC.
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This helpful article will give you an overview of Amazon PPC campaigns and budgeting for them. Hence, you can set the optimal budget for your ad campaigns.
What is Amazon PPC?
Amazon PPC is an advertising platform operating on a pay-per-click (PPC) model. That means you have to pay for each time a user clicks on your ad.
If you optimize your PPC campaign well, this platform can improve visibility and amplify product sales.
Is Amazon Pay Per Click (PPC) Worth It?
Advertising is not the most vital point of this e-commerce site. But, it has become a popular platform in the advertising field in recent years. The proof is that their ad revenue in the third quarter of 2020 was $5.4 billion, and this number is on the rise.
Although it has not been able to surpass Google or Facebook in terms of advertising, Amazon is still a formidable competitor.
So why is Amazon PPC a potential advertising platform?
Making profits is one of the popular reasons why many sellers use Amazon PPC. As mentioned above, Amazon is the most popular e-commerce site today. Therefore, it owns a vast customer base.
Their customer base tends to increase. For example, most retail stores closed in 2020, so customers have to switch to online shopping.
In general, Amazon’s customer base tends to be more significant each year. So if you choose Amazon PPC, you can take advantage of that potential consumer base.
Benefits of Using Amazon PPC
If you are a seller looking to drive sales, you should use Amazon PPC for many good reasons. Here are some advantages of using Amazon PPC.
1. Boost Sales
Of course, boosting sales is the essential factor for salespeople. Running PPC campaigns is one of the most effective ways to help them get there.
2. Improving Organic Rankings of Highly Competitive Keywords
Thanks to applying PPC campaigns for highly competitive keywords, you can improve your product’s visibility.
Having keywords appear on the first-page result can improve your sales. Furthermore, you might be able to increase your product’s organic rankings for keywords over a while.
3. Enhancing the Potential for New Products
The best-selling products, of course, will be on the top results pages. That means new products will have a hard time ranking for keywords. That’s one of the reasons you need PPC campaigns. They help boost the sales potential of new products.
4. Increasing visibility of seasonally trending goods
Actual figures show the most significant sales during seasonal trends like Thanksgiving, New Year’s Eve, Christmas, Halloween, etc. So, depending on the product, Amazon PPC can be a great solution to drive sales by increasing customer interest thanks to seasonality.
Factors That You Need To Consider To Optimize Your Budget
Once you understand the basics of Amazon PPC campaigns, it’s time to learn what factors to consider when deciding on a budget for Amazon PPC campaigns.
1. Cost Per Click (CPC)
Cost-per-click (CPC), or pay-per-click (PPC), is a term that refers to the amount you pay Amazon for each click on an ad.
The higher your CPC, the more you pay per click on an ad. As a result, your budget should generate enough clicks for potential customers.
For example, if you are spending $50 to get 100 clicks, your CPC would be:
CPC = 50/100 = $0.50
With the same budget, CPC allows you to generate fewer clicks. But, conversely, with a low CPC, you can generate more clicks and make more sales.
So you should analyze your CPC to optimize your ad campaign.
2. Advertising Cost of Sales (ACOS)
You should thoroughly analyze your advertising cost of sales (ACOS) before undertaking any campaign. It shows the percentage of sales you spend on advertising.
ACOS = Amount spent on product / Total sales from advertising
Therefore, the higher the ACOS, the more you spend to generate per unit sold; that means you tend to get less profit. Conversely, the lower the ACOS, the more profitable your campaign will be.
For example, if you spend $10,000 on paintball gun advertising to generate $50,000 in revenue, your ACoS would be 25%.
So, it is wise to think carefully about ACOS before budgeting your Amazon PPC strategies.
3. Campaign Duration
It would be best to decide on the campaign’s duration before setting a budget for your campaign.
Will you only run the campaign for a week or a month? Or won’t you set an end date for your campaign? You need to answer these questions before creating a campaign.
Through this step, you find the proper budget for your Amazon PPC campaign. In general, after deciding on the campaign’s duration, make sure you have enough money to run the campaign during that time.
For example, if your Amazon PPC campaign is intended to run for a week, you need to make sure your budget allows your campaign to last for at least a week.
How Much Should You Pay for Amazon PPC Campaigns?
After considering the above factors, it’s time to think about your ad campaign budget.
Through Amazon’s default bid amount, you can get an estimate of the expected CPC. For instance, if you get one sale every ten clicks, you will spend $10 if CPC is $1.
In addition, through the duration of the campaign and ACOS, you can set the proper budget to maintain your advertising campaign.
So, once you have these factors in mind, you can estimate the total budget needed over a certain period to be profitable.
If you want to optimize the budget for your Amazon PPC campaigns, it is wise to seek the help of a professional Amazon PPC agency.
Conclusion
By setting the proper budget for your Amazon PPC campaign, you can minimize costs to increase your profits. Although it is not a simple process, it will bring great results for you if done effectively.
If you are inexperienced, visit olifantdigital.com to get help from Amazon PPC experts.
