The Amazon market is a challenging arena for businesses online. And Amazon Advertising, with its multiple features rolling out time and again, has only made it more competitive. Stakes are high, so the execution of Amazon PPC strategies has to be near perfect.
But with much to learn about Amazon PPC, where do you start? It’s best to familiarize oneself with all the common PPC terms before any deep-diving.
Advertising placement
Advertising placement is the area where an advertisement is displayed. Amazon ads are commonly found at the top of search results, alongside search results, and on product display pages.
Budget
The maximum amount of money that can be exhausted for a campaign. If you fix a daily budget at $30, you will not be able to spend more than $30 on that day.
Bid
The amount of money one is willing to pay for each click on their ad. Sellers can choose between automatic or manual bidding and avail benefits.
Keywords
Keywords are the most basic PPC tactic for pulling customers. Sellers can target keywords that customers utilize as search terms to find products. There are two types of targeting: automatic and manual targeting.
Search Term
Search Terms are not the same as keywords. They are terms within Amazon reports that refer to where your ads show up.
Keywords are about what you’re targeting, while search terms are about where your ads are getting delivered.
Demand-Side platform (DSP)
Available across only certain countries, DSP is an Amazon software platform enabling advertisers to programmatically purchase video, display, and audio ads on and off Amazon.
Advertising Cost of Sales (ACoS)
It is used to assess the performance, effectiveness, and profitability of sponsored product advertising campaigns. You can calculate it by dividing Total Ad Spend by Total Sales.
Target ACoS (TACoS)
Target ACoS, also known as TACoS, is the advertising spend as a percentage of total revenue generated, including organic revenue. The latter gives a more integrated perspective to your promotional efforts.
Return on Ad Spend (RoAS)
A popular benchmark across digital advertising, RoAS is the inverse of ACoS. It represents the dollars earned per dollar spent.
Conversions
It is the desired action that a customer completes, be it “Add to Cart” or a “Buy Now”. It is a measure of the times your ad ended with the desired result.
Conversion rate
The conversion rate is the percentage of clicks received on your ad that bring about the desired result, for example, the sale of a product.
Cost-per-click (CPC)
CPC is the average cost you pay each time someone clicks on your ad. It is calculated by dividing the amount of money spent on an ad by the number of clicks. CPC can be thought of as being mutually beneficial to Amazon and the sellers, as the sellers only pay for ads that get a click.
Click-through Rate (CTR)
The percentage of people who have clicked on your ad to those who have viewed it. In other words, CTR is (clicks/impressions) x 100.
New-to-brand metrics
The metric used to describe buyers purchasing your brand or product for the first time on the platform over the past year. These estimate the cost of nurturing new customers and determine the best channels and tactics to achieve their campaign goals.
Automatic Campaigns
Easy to use and offering access to data gathered through the e-commerce platform, Automatic Campaigns are a campaign or targeting type where Amazon itself decides when and where ads will be displayed. They take away the control out of a seller’s hands.
Manual Campaigns
Manual campaigns where sellers and advertisers have things in their hands. It helps to strategize and optimize campaign setup and running more effectively.
PPC Spend
The total amount assigned to advertising efforts on Amazon PPC.
Target ACoS
This isn’t TACoS or tacos. It’s Target ACoS. It is your profit margin before advertising divided by your target profit margin post advertising. This number will be different for every seller and is determined by the various costs of making your product available.
This wraps up Part I of ABC of PPC on Amazon. And for A to Z PPC management, don’t forget to contact us!
