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Amazon Marketing Services: Basics of Advertising

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by Travis F.posted on 16.06.2021

Amazon Marketing Services: Basics of Advertising

Amazon Marketing Services (AMS) offers a highly effective channel for Amazon sellers to increase their brand visibility and sales. Using these tools correctly can boost your sales while managing your advertising budget more efficiently.

However, it is an increasingly competitive environment online, so you need to really understand how AMS works to get the best results.

What Are Amazon Marketing Services?

Amazon Marketing Services is Amazon’s pay-per-click (PPC) ads platform. It enables Amazon sellers to display ads for their product listings on search results pages, product category pages, and specific competitor listings. Depending on the type of ad you are running, these ads can target site visitors based on their interests, browsing history, purchasing history, and search keywords.

Amazon Ad Options

All Amazon Marketing Services advertising methods involve paying per click. This means that your ad will be shown to customers based on the terms that you specify, and you will only be charged for the customers that click on your ad. 

To pay for those clicks, you set a total budget, weekly spending limits, and a maximum bid that you are willing to pay for a click. Bids up to that maximum price will be made automatically for ad placements that match your criteria until your budget has been spent. The winner of an ad placement pays 1 cent more than the highest bid, rather than the full maximum bid that you specified. 

As a result, competition for highly sought-after pages, keywords, and demographics can drive per-click costs much higher than less popular ad placements. This is why keyword research tools are critical to finding useful keywords that you can compete for without breaking your budget.

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Amazon Marketing Services offer 3 main ad placement options:

Headline Search Ads

Headline search ads appear before any product listings, and only one will be shown per search. A headline search ad shows a selection of up to 3 items, and clicking the ad will take visitors to a landing page that you have created for that selection.

What are Headline Search Ads on Amazon
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Headline search ads run as part of an ad campaign for a duration that you specify, using your bidding rules to spend your budget efficiently.

Product Display Ads

Product display ads are just below the buy button on product listing pages. With this type of ad, you can choose specific pages, products, and brands to show your ads on. Alternatively, you can also target visitors who look at specific product categories or related categories.

What Are Product Display Ads on Amazon
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These ads are often used to reach people who are currently viewing a competitor’s products to offer them an alternative. In addition, they are a great way to suggest a lower-cost or more fully-featured option to visitors who are browsing and comparing related products.

Sponsored Products

Making one of your products a sponsored listing gives that product a higher priority in search results for your bid keywords.

What are Sponsored Products on Amazon
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Along with making your product more likely to appear in search results for those terms, sponsored products are always shown at the top of the page, before any unsponsored listings.

Amazon Marketing Services Can Improve Organic Rankings

Amazon Marketing Services bring more visitors to your store pages through clicks on ads, and they also indirectly boost your organic search rankings. 

Amazon uses your sales data, the browsing and purchasing history of your page visitors, and many other factors to determine your products’ relevance to each user. For example, using Amazon Marketing Services to increase page visits and purchases from buyers in a demographic creates the sales performance data to show Amazon that your listings are relevant to those demographics, search terms, or product categories. 

As a result, the clicks generated by a paid ad can improve your products’ search rankings, and even when a user doesn’t click your ad, simply seeing it raises brand awareness and visibility. According to the Rule of 7, it can take seeing an ad for a product up to 7 times before a user decides to follow up.

Furthermore, once you have convinced a visitor to purchase through a paid ad, this enables more direct marketing to that customer in the future. For example, including a QR code or a business number that customers can use to sign up to your international texting allows you to reach out to them with new offers based on their purchase. With these options, you can deliver marketing information straight to people who have confirmed an interest in your business, without the need to bid for clicks on competitive pages and keywords.

Important Amazon Marketing Service Metrics

To decide when and how to spend on Amazon ads, you need to understand these metrics and what they mean for your marketing campaign:

Advertising cost of sale

Advertising cost of sale is the percentage of sales revenue that was spent on advertising, calculated by:

ACoS = 100(Total Ad Spending/Total Sales)

It is important to find a balance that keeps this percentage low while still effectively increasing the number of sales through ads. 

Click-through rate

Click-through rate is the percentage of ad views that result in the ad being clicked, calculated as:

CTR = 100(Total Clicks/Total Views)

CTR is a good measurement of how effective your ads are at getting users’ attention, though it does not account for the indirect influence of increased brand visibility and recognition from unclicked ads.

Conversion rate

An ad’s conversion rate tells you how many users who clicked an ad actually completed a purchase. It is calculated by:

Conversion Rate = 100(Total Sales/Total Clicks)

People who click your ad have some level of interest in the product on offer. As a result, conversion rates can be a reliable indicator of how effective your offer is at convincing interested users to buy. A low conversion rate could show that the ad itself was effective, but the offer or product failed to maintain interest.

Cost per click

Cost per click is the price you pay when a user clicks your ad. When placing ads with Amazon marketing services, you choose a maximum CPC you are willing to pay, and bids are placed automatically up to that maximum to generate the most clicks for your budget.

Return on ad spend

Return on ad spend is similar to advertising cost of sale, showing the overall profit you make from each conversion:

ROAS = Conversion Value/Total Ad Costs

Conclusion

Amazon Marketing Services provides a vital marketing channel for Amazon sellers, helping to generate additional sales and raise brand awareness among target demographics and competitors’ customers.

Using these services effectively is a mandatory skill to succeed as an Amazon seller, ensuring that your ad spending goes where it has the most impact.

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