How Does Amazon PPC Advertising Work?An overview of how Amazon Advertising works

The seller with the highest Amazon bid wins the ad placement for the targeted keyword or ASIN.

But sellers can't set a maximum price for each series of ads, which is really too expensive.

An effective Amazon bidding strategy is the result of extensive research; understand when to act aggressively, whether to target product detail pages or keywords, maximum cost-per-click (CPC) thresholds, and more.

This looks complicated, doesn't it?In fact, creating and managing PPC campaigns is not as easy as it seems.

How Does Amazon PPC Advertising Work?

So, how does Amazon's PPC advertising offer work?

• PPC advertising on Amazon is similar to traditional bidding, where sellers compete to sell their products to buyers through price competition.
• When customers click on an ad, they can be billed directly instead of paying for the ad slot itself.
• Another thing to note is that Amazon follows a "second price" auction rule, meaning its bidder will pay a penny higher than the second bidder.For example, if a bid for a particular keyword is $4.00 and another bid is $3.00, Amazon will pay $3.01.
• Other factors include sales velocity, CTR click-through rate (i.e. how likely a buyer is to click on an ad), and product conversion rates.

An Overview of How Amazon PPC Advertising Works

Still, there is one aspect of Amazon PPC that many sellers don't know:

• The longer a sponsored ad campaign runs, the more relevant it becomes to the targeted (and related) keywords.
• Simply put, the longer you run search ads, the more likely you are to get the best ad placement, even with the highest bid.

But how does it work?

• After launching an automated sponsored ad campaign, Amazon's algorithms began collecting data and better "understanding" the product.
• The effectiveness of these campaigns increases over time as clicks, impressions, and sales increase.
• When the algorithm finds that buyers are willing to buy a product, even if the offer is not high, it will favor the seller's ad over the new seller.
• Because of this, some Amazon PPC experts encourage the optimization of long-running campaigns rather than eliminating them entirely.