How Does Advertising On Amazon Work

(And How To Make It Work Better For You)

Amazon is one of the highest-selling platforms on the internet. Its rate of growth in the seller space continues to grow. Recent estimates show that about 300 million users choose Amazon for many of their purchases. With so many buyers on the prowl for products and deals, Amazon allows heavy competition among third-party sellers all trying to sell their version of the product. While the number of sellers is also growing week by week, the sales of certain products can get very saturated. For these reasons, sellers need a way by which they can differentiate themselves and stand out. The key, after all, is to put their products in front of the eyes of as many buyers as possible.

With many modifications and refining to the Amazon process, many sellers find navigating the rough waters of product promotion challenging on a platform like Amazon. The effort it takes to seek out the best methods to do so can be tiring and overwhelming, so a lot of sellers get complacent, causing their sales to suffer. These sellers might be taking for granted the powerful tools that they have at their disposal, particularly in the form of advertising through Amazon. Much like Google retains and incorporates search data and Facebook tracks interest levels, Amazon has an implicit advantage of knowing not only what buyers are purchasing, but how they are going about it.

Ads placement on screen

How Does It Work?

Amazon Ads are a great tool to draw more attention to a product. They work in a similar way to the function of a Google search. As a shopper searches for a particular product utilizing certain keywords, they are linked to those listing most closely associated with the provided queries. However, if there are 5000 sellers of a similar product type, who gets their products showing up to the buyer before any of the others? This is often determined by sellers who pay Amazon for keyword associations in a type of a ‘keyword bid.’ The paying parties move up higher in the Amazon rankings, making it more likely that their product will appear alongside a competitor’s product, and potentially luring the prospective buyer away, enticing them to purchase their own version of the product instead.

Advertisements also work great in boosting sales. If your product has another product that compliments it or is needed for the primary product to function or function better, a seller can scale their sales by associating the two, or a different seller can piggyback on the sale by providing a supplemental item. Amazon ads also take into account the buyer’s history. This opens up a whole new dimension of products that a buyer might be interested in repurchasing.

This complementary item matching can provide customers more choices by introducing a seller’s item into their search. This type of cross-selling usually works for sales reps in brick and mortar shops. The online version of this same strategy simply has a product’s advertisement appear as a relevant association to purchasers.

Amazon Advertising Costs

As with any advertisement, Amazon’s structure is not free. Sellers pay for additional product exposure. These payments are done on a per-click basis. In other words, sellers pay Amazon to show their product in a more visible spot to the shoppers, and if the tactics work by getting the shopper to click on the product and at the very least explore it, the advertising campaign is regarded as successful as it performs its ultimate purpose. As it is successful, Amazon then collects a fee from the seller for getting them clicks and exposure. Estimates show that at most these clicks cost the seller only about $0.35. So if 100 people click on an ad for a $50 product, the seller will pay $35 in advertising costs. And even 5% (5 people purchase it), that is $250 worth of sales for $35 for advertisement.

To add to that, the more clicks an advertisement receives, the higher it organically grows in the rankings. That means that not only does the seller get the benefit of additional exposure, the clicks their products get compounded, and the product rises in popularity, forcing it to be more prevalent to appear more during other keywords and similar product searches as viable alternatives.

Types of Amazon Advertising

Amazon sellers can advertise with three types of ads: sponsored product ads, amazon product display ads, and headline search ads.

Sponsored product ads act much in the same way as they do on Google’s Shopping platform. These ads are intended to drive shoppers right to a specific product sold on Amazon. These ads are typically displayed above the results of an Amazon search page and are paid to appear ahead of the rest in the rankings. Because most buyers don’t go through pages and pages of potential choices, the higher the ranking the more likely it is that the shopper will choose one of the products on the first few pages of presented options. If the ads are ahead of the rest, it gives them a fundamental advantage of having the products be more readily considered.

Amazon product display ads work a bit differently. These ads will display when the product being advertised is relevant either in conjunction or association with another product. These ads may appear on the bottom of the search results, at the top of the listings page, on the customer review page, or maybe included in Amazon marketing emails. These ads are based on the potential interest in a product rather than being keyword driven.

Headline search ads do leverage keywords, but they always appear as headline banner ads above a product listing. These are cost-per-click ads (typically $.0.10 per ad, and will lead shoppers to a specified Amazon page for that product. These keywords can be used to promote 3 or more associated products together.

Tips for Amazon Advertising


Adding Thirty Keywords (At Least)

With Google advertisement, it is usually recommended that you do not exceed twenty keywords to each ad group to keep relevancy. The Amazon algorithm works differently to allow the advantage of casting a bigger net. In a recent discussion, Amazon recommended at least thirty keywords for each advertisement group.


Isolate Useful Search Queries

Sellers have the option of downloading their search report from Amazon and filtering the keywords that do not generate any kind of sales, only navigate to report. The idea is to implement the use of ‘negative keywords’. These are keywords that will potentially lead uninterested shoppers from clicking on pay-per-click links accidentally, without any intention of buying the product. If a seller is selling safety goggles, a keyword such as “safe” could lead to a whole lot of different items entirely unrelated to the glasses. Any clicks on those advertised links cost sellers money without any benefit from this ad-based investment. The negative keywords help to filter the keywords the use of which should not generate a showing of the product’s ad as it may not be interesting or relevant to the querying party.

Track Product Performance

Consider organizing your ad campaigns by how items perform. Sellers can make a campaign for their best selling items and dedicate a huge percentage of their pay-per-click budget to their ad campaigns while making a separate campaign with a smaller budget for items that do not sell as well.

Bid On Your Trademark Name

If a seller does not bid on their brand name, their competition will capitalize on it! If this occurs, clients might search for one trademark name and be met with items by competitors instead. This can siphon attention away from the product while diverting more attention to competitors’ brands. Bidding on a trademark name is a defensive tactic that lets the seller protect their virtual shelf space.

Optimize Ads For All Marketplaces

If the product is sold across many markets, it is worth optimizing advertisements and keywords for every market. This is where it pays to work with native speakers in the markets as they will be capable of providing the seller information about local colloquialisms as well as localizations that would not be selected by Google translate. Even if both markets are primarily English speaking, it is vital to do market-specific research.

Experiment With All Ad-Types

When selling a product, all attention is good attention. With different advertising options available, it is important to denote which one works best for every seller’s product. For instance, sponsored product ads have been shown to provide the most immediate ROI and yield faster results. Headline ads on the other hand have been found to lead to more loyal, repeat buyers. Once the seller has a better idea of what type of advertising systems works best for them, the advertising budget can be more thoroughly appropriated for the most optimal returns.


Specifics Are Essential

Once an advertisement draws a shopper in, there must be enough of an appeal to keep them there to boost the chances of converting the sale. This means a clearly defined, detailed listing, or any relevant details about the product that the user could need to find out. Simply asking oneself: ‘if I were buying this product, what would I want to know about it’ will go a long way in helping to determine what any other potential shopper for the product may want to know.