How Does Amazon Advertising Work?

Amazon has its own professional advertising platform built into the Seller Central Account that you can use to help increase your sales when launching a new product or to give things a push from time to time and this can all be managed from your laptop!


In fact, this is where probably many of my long-standing clients spend most of their time.  Their products are being fulfilled by Amazon, so the main area to concentrate their time on is the promotion of their products and getting their products seen by all of those Amazon customers out there!


Sponsored Ads

With the Paid Advertising side on Amazon, you pay a fee every time someone clicks onto your Ad, regardless of whether they buy or not.  New Sellers often give me a worried look when I mention adverts-at the thought of spending money.  Amazon Ads though are fairly easy to monitor and if the Ads are not generating sales then you can jump in and ‘change things’ quickly and relatively easily, once you know how and you can also set a maximum daily budget.


You might not use these Paid Ads all the time. They are often really used to get your product seen ahead of the competition and start generating some sales and some great reviews to help your product rank better within an ‘organic’ Amazon search.


This important advertising tool that is available to you through the Seller Central platform is called ‘Sponsored Ads’.  This basically means that your ‘Sponsored Ad’ could appear at the top of a search for a specific keyword or phrase.  Why would you do this?  Well, for example, when you first launch your new tennis racket onto Amazon, you might be on page 3 for ‘tennis racket’ in the ‘Organic Listings’ but with sponsored ads you could be seen on the first page immediately and you are charged on a ‘cost per click’ basis.


Once you launch a Sponsored Ads campaign, you will begin bidding against other sellers who are using the same keywords that you have selected!  Don’t worry though, you can set a maximum daily budget on how much you are willing to spend!




Manual or Automatic Campaign

When creating a Sponsored Ads Campaign, you can select either a Manual Campaign or an Automatic Campaign.


An Automatic Campaign means that Amazon does the work for you and decides whether your product is relevant to what a customer is searching for.  A Manual Campaign, on the other hand, is where you manually enter the keywords you want your product to be found for.


I personally would start with an Automatic Campaign, to begin with, and from there you can download a ‘Search Term Report’ which will show you the actual keywords Amazon customers used to find your product.


You can then use the relevant keywords from this report (and other keywords you want the product to be found for) in a Manual Campaign.  What do ‘Sponsored Ads’ look like then?  Well, they look just like a normal product listing but they have ‘Sponsored’ next to it!


Managing your Campaigns/Analysing your Sales

It is very important to keep an eye on your Advertising Campaigns to check that they are generating sales and making you money!  You can do this through the ‘Advertising’ Section in your Amazon Seller Central Account.  The key thing to look at here is your ACOS (Average Cost of Sale).

The ACOS is calculated by this formula ACOS = Ad Spend divided by Sales x 100 (%)

So, you want to generate a lot of sales, but you also want a low ACOS, to make sure that you are still making a profit.

For example, after your Amazon Fees and your Shipping Costs are deducted, let’s say you are left with a profit margin of 40%.  Depending on the client I am working with we would typically tend to be aiming for an ACOS of below 10%.


I need help with Amazon Selling & Amazon Ads…

Just get in touch or arrange a free call with an Amazon Specialist.

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