Hi, I’m Justin. I’m an advertising expert. Over the past 10 years, I’ve helped some of the largest names in the tech industry scale their businesses efficiently through paid advertising.
In 2017, I took an interest in selling on Amazon and quickly gravitated towards the Amazon’s Campaign Manager where I could leverage my deep expertise in PPC advertising. Since then, I’ve grown my e-commerce business to a multi-6-figure generating income stream.
While advertising is a joy for me, I realize it’s often a bane for others. Through this guide, I want to share some tips and tricks I’ve learned over the years in a 10-step format so you can create and optimize your own killer Amazon keyword PPC campaigns.
If you are an Amazon seller interested in more hands-on PPC help, apply below or here to receive a FREE expert audit and 1 month of optimization advice.
Getting Started with Amazon PPC
First things first, you MUST have a stellar product listing in order for advertising to be effective.
If you’re going to spend any money on advertising, you need to maximize the likelihood that when shoppers see your ad, they will see something they like and buy your product.
Amazon CTR benchmarks:
- Top of search: 2–5%
- Rest of search: 0.5–1%
- Product detail pages: 0.2–0.4%
Top of search: sponsored products ads at the top row on the first page of search results.
Rest of search: sponsored products ads shown in the middle or at the bottom of the first page of search results, and all sponsored products ads in the second page of search results and beyond.
Product detail pages: sponsored products placements on the product details page and certain other placements off search results such as the add-to-cart page. These ads show up as “Sponsored Products Related to XYZ”. Ads can appear here through keyword targeting campaigns or product targeting campaigns.
Amazon CVR benchmark:
- 10% (irrespective of placement)
If any of your metrics are far below these averages, consider improving your listing before scaling your advertising campaigns. Below are some terrific resources on boosting these metrics.
- Improving CTR
- Improving CVR
10 Steps to Keyword PPC Success
Now let’s get into the good stuff!
1. Implement match type mirroring
For keyword campaigns, I strongly recommend using a “match type mirror” setup.
Match type mirroring means duplicating every keyword so that each keyword exists twice, once in an exact match ad group and once in a broad match ad group.
Then, in the broad match ad group, add each keyword again as a “negative exact match” — a THIRD time. Example below of a list of coffee grinder keywords:
As you can see, each keyword exists 3 times under the same campaign. Once as exact match under the exact ad group, once as broad match under the broad ad group, and once as negative exact match under the broad ad group.
This setup forces all exact match search queries to the exact match ad group, giving you full control over bids for specific search queries. It simultaneously uses the broad match ad group as a prospecting ad group to find additional, potentially relevant keywords. The broad match ad group won’t be bidding on keywords in the exact group thanks to the negative exact keywords you’ve added. Altogether, this ensures you do not duplicate your efforts, and you can be more precise with your spend.
In summary, match type mirroring helps you save money while optimizing results
Bonus tip #1: I generally avoid having a phrase match ad group. This is because I find that having a 3rd ad group match type doesn’t provide much value and instead creates a significant amount of extra work to optimize. More on match type mirror optimizations in the later steps.
2. Adequate campaign types
Break your keywords into at least three different campaigns for each product you are selling. I suggest structuring your three campaigns as: Generic, Brand, and Competitor.
Using the coffee grinder example:
- The Generic campaign should house all of your generic coffee grinder related search terms like, “coffee grinder,” “coffee grinder electric,” and “coffee bean grinder.”
- If your brand is Cuisinart, then your Brand campaign will include all Cuisinart related search terms like, “Cuisinart coffee grinder” and “Cuisinart coffee grinder electric.”
- Finally, your Competitor campaign will include competitors’ brand names in the search terms like, “Hamilton Beach coffee grinder” and “Mueller coffee grinder.”
This setup accomplishes 3 things:
- First, you are targeting high quality generic keywords for users who are looking to buy a coffee grinder with no specific brand preference. This will drive sales and improve your organic rank.
- Second, you are defending yourself from competitors who will inevitably place their ads on your brand-related search queries. Bidding on your own brand terms ensures that whenever a potential buyer is searching for your brand product, a competitor’s ad won’t show up first.
- Lastly, you are doing a little bit of offense and capturing buyers who are searching for your competitors’ products. Let’s say your product is cheaper, has a better main image, or has a better rating. Then customers who see your ad, even when they’re searching for another brand, may end up purchasing your product instead. This is a killer way to improve your sales when you target specific competing brands that you know your product can outperform.
3. Calculate your breakeven costs
In order to have an efficient advertising campaign, you need to know where you breakeven.
Unit Breakeven = Per Unit Cost of Goods + Per Unit Inspections + Per Unit Shipping from Factory to Amazon + Per Unit Amazon Referral Fee + Per Unit Amazon FBA Fee + Per Unit Amazon Storage Fee + Per Unit Miscellaneous 3rd Party Warehouse Fees (if applicable)
Let’s say after adding together all of your costs above, your breakeven cost is $25. You sell your product on Amazon for $40 which means that each sale leads to $15 in profit. Great, now you know that your advertising campaigns MUST drive at least 1 sale for every $15 you spend in order to break even.
Amazon’s advertising dashboard provides a very easy way to compare profitability based on breakeven points. Amazon uses a metric called ACOS (Advertising Cost of Sale). If you don’t see this column, you can add it. Click on Columns, Customize Columns, then check the box next to ACOS.
ACOS = Advertising Spend / Advertising Generated Sales
Using the same numbers from the example above, your breakeven ACOS is 37.5%, calculated by dividing $15 by $40. This means that if your campaign’s ACOS falls below 37.5%, your campaign is profitable! If your campaign’s ACOS rises above 37.5%, your campaign is running at a loss.
Bonus tip #2: Creating a killer Amazon PPC campaign is more than about just keeping ACOS below breakeven. Sometimes, it very well makes sense for you to operate at a loss! I’ll explain why that is and more on what to do with your ACOS information later in Section 7.
4. Find your product’s conversion rate
This can be found quite easily through your business reports dashboard.
In Seller Central, go to Reports Business Reports under By ASIN select Detail Page Sales and Traffic. The column we’re looking for here is the one titled Unit Session Percentage, which is your product’s conversion rate.
Conversion Rate (Unit Session Percentage) = Orders / Listing Clicks
Bonus tip #3: I like using the last 30 days because it is a good hybrid between sufficient data and recency of data. Make note of your conversion rate because this will be an important benchmark for optimizing your ad campaigns later on.
5. Pull your advertising campaign data
Now that you have your benchmarks handy, you’ll need to compare them against your advertising data. To do this, you can simply look at the data in your advertising dashboard, making sure you have the ACOS column enabled (see Step 2).
Alternatively, you can pull the data into an excel spreadsheet. This makes analyzing the data significantly easier but you’ll need to have basic knowledge of excel functions and formulas such as pivot tables.
To pull your raw data, hover over the far-left side of your advertising dashboard.
Click reports → create report → choose “Search term” for report type, “Summary” for time unit, and “30 Days” for report period. Then click Run Report to download it.
6. Sort your campaigns/ad groups/keywords
I always like to begin my optimizations starting with the campaigns that have the largest spend because any changes you make will generally have a much larger impact on performance than campaigns with little spend.
So begin by sorting your keyword campaigns from highest to lowest in spend, then click into the campaign with the highest spend.
Once you’re inside your top spending campaign, filter your ad groups by spend from highest to lowest just like the previous step.
You’ll have a mixture of exact and broad match ad groups if you’ve followed the match type mirror structure outlined in Step 1. I’d recommend starting your optimizations with the ad groups with the largest spend for the same reasons as mentioned earlier.
7. Define the goal for each exact match keyword
Every keyword in your exact match ad group needs to serve a specific purpose. I like to group each keyword into one of three different buckets: testing, profitability, and maximum spend.
Keywords in the testing bucket are new keywords that you’ve never bid on before. Since you have no data, the goal for keywords in this bucket is to see if users who type in your keyword search query will convert on your product.
All of your exact match keywords when you launch a new product fall under this category as do new keywords that you mine from any of the major keyword research tools like Helium10 and Viral Launch.
This is an example of where you may wish to ignore profitability and breakeven ACOS because you are in testing mode.
Most likely, the majority of your keywords will be in the profitability bucket.
Unsurprisingly, the goal of keywords in the profitability bucket is to drive profit. Assuming that every keyword in your ad group is relevant to your product, there is almost always a bid price that makes each keyword profitable.
The final maximum spend bucket has a couple different purposes.
The first purpose is to maintain dominance on specific keywords that are absolutely crushing it for you in sales. These are your “hero” keywords. Keywords usually enter this list when the product is ranked #1–3 organically and the PPC for this keyword is phenomenal.
Another purpose for maximizing spend on a keyword is to boost your organic ranking for a keyword that is buried deep in the search results. If my coffee grinder product is on page 3 for the keyword “electric coffee grinder,” any sales that come from the “electric coffee grinder” PPC keyword will help boost my product closer to top of page 1. Your ad campaigns essentially are giving Amazon signals that your product is relevant for your converting keywords.
For these goals in the maximum spend bucket, you may wish to ignore ACOS and spend beyond your breakeven cost.
Bonus tip #4: In the future, you may want to have a separate campaign for each bucket so you can quickly make bid changes across keywords with the same goal, keep track of optimizations, and more easily manage campaign spend.
8. Optimizing your exact match ad groups
Let’s breakdown how we will optimize for each of the three buckets in the exact match ad groups.
I like to give each keyword in the testing bucket a trial period of at least 20–40 clicks. If a keyword is able to generate a sale within 20–40 clicks, move it into the profitability bucket.
Sometimes your keyword may have difficulty getting the required clicks due to a low bid or low search volume. If you can’t get the clicks over a span of 2 weeks, try increasing your bids in increments of 10–20%.
If the keyword doesn’t generate a sale, pause the keyword and potentially test the keyword again at a later date when the product is more competitive (has more reviews or a better rating). You can set your own rules of when to re-test keywords.
Bonus tip #5: I like to re-test keywords for every half star improvement in rating or for every additional 50-100 ratings/reviews depending on the competitive landscape.
In the profitability bucket, I only make optimizations for keywords that have had >20 clicks since the last optimization. Anything fewer than 20 clicks doesn’t provide you with enough information to make an informed optimization. Once you’ve filtered for the keywords that meet this requirement, go down the list and identify the keywords that have an ACOS above your breakeven point. These keywords are not profitable for you at the moment. Using the formula below, calculate what your bid price should be so your keyword can become profitable.
Keyword Bid Goal = Target ACOS * Product Price * Keyword Conversion Rate
Once you’ve made your calculations, apply the bids to each individual keyword.
For keywords that have an ACOS below your breakeven point, you may have a big opportunity to capitalize on even more traffic through higher bids.
First, compare the conversion rate of these keywords to your total conversion rate calculated in Step 4. If these keywords have a conversion rate greater than your total conversion rate, this means you can safely raise your bids without your ACOS going through the roof.
Two categories of keywords that often meet this requirement:
- Keywords that have the “Best Seller” or “Amazon’s Choice” badge
- Keywords that have weak competition.
Bonus tip #6: You should always be on the lookout for keywords where 1) the PPC conversion rate is higher than your overall conversion rate AND 2) ACOS is below breakeven. They have a strong potential to eventually be moved into the maximum spend bucket as a hero keyword.
For the final maximum spend bucket keywords, your goal is to make sure your ads are always at the top of the search results, preferably rank 1 for hero keywords and rank 1–3 for keywords that need an organic boost. You can do a quick Amazon search yourself to see where your ads rank or you can use any tool like Helium 10 or Viral Launch that has a keyword tracking tool.
It is very possible that some of your hero keywords may lose their profitability if your organic rank begins to drop. In that case, move these keywords back to the profitability bucket and optimize accordingly.
9. Optimizing your broad match ad groups
Now that we’ve tackled exact match optimization, it’s time to work on the broad matches. Broad match ad groups serve a prospecting function to help you find new keywords worth adding to your exact match profitability bucket.
To find search terms that triggered your broad match keywords, make sure you have clicked into a broad match ad group, then click “search terms” on the left.
Bonus tip #7: You can only view the last 65 days on the Amazon dashboard. This is another reason why I recommend pulling your raw data into an Excel spreadsheet as mentioned in Step 5.
From here, identify any keywords that have a conversion and add them into an exact match ad group to be optimized as part of the profitability bucket. At the same time, add the keyword as negative exact match in the broad match ad group you found it in so that your broad match ad group doesn’t compete with your exact match ad group for this keyword’s traffic.
Continue to scan through the search terms and negative exact any search terms that are blatantly irrelevant to your product. If there is an irrelevant word that continuously pops up in different search terms, you can negative phrase match that one word so that all iterations no longer get matched in your broad match ad group.
Bonus tip #8: If you see any keywords that are not irrelevant but also not converting, consider adding it as “paused” in an exact match ad group. You can put them in the testing bucket. And this will remind you to revisit and test in the future once your listing is more competitive. Make sure you also add it as negative exact match in the broad ad group you found it in!
10. Rinse, repeat, and fine tuning
You now know how to optimize your keyword campaigns. Next, go through all of the various exact and broad match ad groups one by one following the optimizations outlined above.
In the future, you’ll want to check-in and optimize your campaigns once every 1–2 weeks. A good habit is to schedule a specific day each week to work on your ad campaigns. I personally execute my PPC optimizations every Monday like clockwork.
I also strongly recommend keeping notes on:
- Keywords that you recently moved to a different bucket
- Top spending keywords
- Top converting keywords
Most campaigns contain hundreds of keywords and you can quickly lose track of where you left on in your optimizations.
One final piece of advice I’d like to provide to you is to pay attention to the “Placements” section of your campaigns on a monthly basis.
This breaks down the performance of the three placements where keyword ads are shown: Top of Search, Rest of Search, and Product Pages.
It also allows you to add a bid multiplier to “Top of Search” and “Product Pages.”
It has been commonly documented that keyword campaigns tend to perform better at Top of Search than other placements.
So if your data shows the same results, it would be wise to slowly add a multiplier to Top of Search that will essentially force more traffic to come from Top of Search than other placements.
Smarter and Easier PPC
I hope you’ve found this tutorial helpful. I’ve outlined the exact process that I use myself for my own campaigns and I guarantee you’ll find great results if you implement them on your own.
As you can see, there is quite a lot of work to be done when optimizing your campaigns and all of this may seem quite overwhelming. I haven’t even touched upon Product Targeting or Auto Targeting campaigns yet!
But with enough practice, you will be able to do your own keyword campaign optimizations with increasing speed and confidence.
For those who find running these campaigns daunting or who would rather spend time on other areas of business, I’m running a small agency and am offering my fully managed services to help make your advertising a breeze.
Want full-automation so you can be completely hands off and focus on other revenue driving areas of your business? Great!
Want a more involved role in your ad campaigns? Cool, you can understand what is going on beneath the hood, approve specific changes, and get hands on experience!
As an Amazon seller myself, I know that advertising is very much a make-or-break component of the success of our businesses. With my team’s service, you can have peace of mind knowing that your account is being taken care of by proven professionals. Apply here and I’ll reach out to get started.
Final bonus tip #9: For a select group of lucky sellers, I’d be happy to take a glance at your set-up using my 10 years of PPC advertising expertise and give a free audit and optimization advice.