How Much Should You Spend on Amazon PPC Advertising in 2023?Admin
How Much Should You Spend on Amazon PPC Advertising in 2023?
All the amazing profits, the sales, and the revenue smashing top charts – you’ve probably seen it yourself. Every day, new Amazon-selling success stories are being shared all over social media. With over two hundred thousand sellers joining the Amazon marketplace in the past year and 7,500 unique products being sold every minute, I am sure you are dying to be a part of it too. But, what if I tell you hitting top sales consistently has one key secret behind it and that’s spending on Amazon PPC advertising campaigns?
For an increasingly competitive marketplace, it becomes imperative to have an exceptional marketing strategy. You might have cracked the best market-fit product but selling it to the right audience is a separate task. To earn money, you have to spend money. You can consider it as an investment that can give profits ranging from 10x to 100x and more depending on your product. Before we jump into the mathematics of calculating your Amazon PPC budget, let’s find out what it actually is and is Amazon PPC worth it.
What is Amazon PPC Advertising?
Amazon Pay Per Click (PPC) is one of the best marketing strategies that allow business personals to reach relevant customers. A smart organized Amazon PPC strategy can increase the visibility of your product, bringing in organic traffic to your listing which in turn will ramp up your sales.
The PPC model is based on how often the audience clicks on the ad. Let’s suppose you spend an amount of $50 on an advertisement and that ad receives 100 clicks. So, your CPC calculated is 50/100 = $0.5 per click (as per Amazon CPC estimator). That means you’re paying $0.5 to Amazon for each click on your ad. And of course, the more you spend, the more audience you attract.
How much should I spend on Amazon Advertising?
As per the rule of thumb, you should spend a minimum of 10% of your total revenue on Amazon PPC advertising campaigns. Suppose you are earning a total of $1000 Gross Revenue from your sales. From that revenue, your Amazon PPC budget should be around $100-$150. However, you always have the luxury of increasing or decreasing the amount spent depending on your business model. Like most sellers tend to spend more on marketing before the holiday season to boost their sales.
Identifying your ideal Advertising Cost of Sales (ACOS)
Amazon ACOS is a marketing metric used to estimate your Amazon PPC advertising campaigns. It compares the amount spent on PPC campaigns to the total amount earned. It also helps you to determine if your brand-generated campaigns were actually cost-efficient or not. Calculating your ideal ACOS depends on the selling price of your product and the profit you earn. If you earn a $10 net profit from a $30 product, your ACOS is 33.33%. It means that If you bid on any keyword that costs around 33% of your sales or lesser, you’d still be making profits.
Using this metric requires thorough research on the keywords of your brands. If you are new to all this, it is generally accepted to keep the ACOS about 30-35% (average ACOS on Amazon). An advertising cost of sales too high will dampen your profits considerably.
Finding the right Amazon PPC Strategy – Gaining more by spending wisely
Inside Amazon’s campaign manager, you will find three options where you can invest your money. Each category has its own pros and cons that can suit different types of businesses. As a seller, you can put your Amazon PPC budget into the following three schemes. However, the amount to be spent on each can vary depending on your type of business and the audience you are targeting.
This Amazon PPC advertising campaign is the most popular one. When customers search for something on Amazon, relevant ads appear on top of the search allowing customers to see your products first before others. This allows you to increase your sales within a short period of time.
Sponsored products are pretty easy to set up and can be selected as Amazon auto campaigns as well as manuals. There is a lot you can control with these campaigns including the geographical location of the audience. You also get a chance to generate quality data, which can help you in future campaigns.
For small businesses, this Amazon PPC strategy can help you reach more audiences with each product which will increase your sales as well as the much-needed reviews. Once you have more reviews on your listing, you can even decrease the amount you spend on Sponsored products. After all, ads will just attract the audience, whereas reviews will gain the trust in your product and increase your sales tally.
Unlike sponsored products, this marketing strategy is used to promote the brand rather than a single product. These ads are beneficial for building your brand presence and spreading the visibility and awareness of your brand. Customers will see your brands as top-listed ones and automatically will be attracted to the products you offer.
Sponsored Brands are ideal for large businesses that offer different types of products in different categories. We all know building a brand isn’t easy but this strategy will definitely help you in making your brand popular.
These ads are available to those Amazon sellers who are registered on the Amazon Brand Registry. So, if you are not listed yet, it’s time to get that done first.
Sponsored Display (Display Ads)
Display ads are a tool for targeting customers from outside Amazon. They are aimed at shoppers who are interested in similar apps that you offer. They help you increase your brand visibility on other platforms.
As per a conducted survey, 61% of the sellers spend their Amazon PPC advertising budget on Sponsored products followed by the rest who use Sponsored brands and Display Ads. The strategy used by most brands is as follows:
- 70-75% on Sponsored Products (as this help you attract the largest volume)
- 15-20% on Sponsored Brands (provided that you have a brand with multiple products)
- 5-10% on Sponsored Display
However, depending on how good your sales are doing, you can always tweak it a little to increase your brand awareness.
Always target your most-selling products
Every good business has a few main USPs that bring in the most revenue. These products are usually your top sellers and customers are most likely to click on them first before others. A smart way to utilize your marketing budget is by following the Pareto principle.
Pareto Principle: 80% of your results are a product of 20% of your action.
In marketing terms, this means that 80% of your sales volume is generated by 20% of your products. These products are the ones that you should spend 80% of your marketing budget on. That means focusing less on lesser revenue products and gaining more profits through your major USPs. It also ensures you are not spending too much money on unnecessary campaigns with low yields.
How to gain maximum revenues through your Amazon PPC budget
By following the above-mentioned Amazon PPC tips, you must have calculated a rough marketing budget in your mind. You must have also figured out your top-selling products and the type of marketing strategy you are going to adopt. The next step is to ensure that you are gaining good profits from your investments. After all, it’s all about how much money you are earning. For this, you need to have a good grasp of your brand’s keywords. Understand the market trends and always keep an eye on your competitors. A good way to proceed is to consult a marketing team. They will always guide you on how to ramp up your sales chart and keep your brand a step ahead of your competitors.
Is Amazon PPC worth it?
In one word, YES! As a wise man once said,
“A man who stops advertising to save money is like a man who stops the clock to save time.”
Amazon PPC advertising campaigns are one of the most rapid and convenient ways of increasing your sales. If your brand is relatively newer and your products are not making it to the first page, Amazon PPC will bring in a chunk of sales initially. The customers will always see your products first when they search for anything. It also helps you to create brand awareness that, in the long term, allows you to have more organic traffic. Where tons of sellers are coming every day with similar products as yours, advertisement marketing is one of the most reliable methods to always stay on top.
Amazon has changed the lives of many. Millions of individual-based brands are earning tons of money by using strategic marketing campaigns. If you are just starting your brand, using Amazon PPC advertising strategies can help you grow faster. For those who have had their brand listed for a long and haven’t gotten the sales they deserve, it’s never too late to invest in marketing. I hope this informative blog not only helped you in allocating your Amazon PPC budget but also solved the dilemma of spending that budget wisely on Amazon PPC Advertising.