Amazon PPC spending can get out of control fast. Many advertisers waste thousands of clicks that never convert. So, how to reduce amazon PPC cost?
The answer lies in data-driven optimization. High ACoS and low RoAS signal inefficiencies. Poor keyword targeting, bad placement adjustments, and weak bid strategies burn budgets. Brands that optimize PPC see up to 30% lower ACoS and a 20-40% increase in RoAS.
In this content, you’ll learn proven strategies to cut Amazon PPC costs without losing conversions. From bid adjustments to keyword refinement, every step is backed by data.
Let’s get started.
How Does Amazon PPC Cost Structure Work?
Amazon PPC operates on an auction based model.
Every advertiser bids for visibility. Higher bids increase the chance of winning placements but also drive up costs. Advertisers who fail to manage bids effectively often burn through budgets without maximizing returns.
Cost per click depends on multiple factors. Competition level, keyword relevance, and bidding strategy all play a role. The average CPC on Amazon varies by category.
For example-
As of March 2023, the year-to-date data indicates a significant rise, with the average Cost Per Click (CPC) increasing to $1.35!
Ad relevance directly impacts costs.
Amazon rewards relevant ads with lower CPCs and better placements. Click-through rate is a critical metric. A low CTR signals poor relevance, leading to higher CPCs.
Our several campaigns achieved 18M impressions but had a lower CTR of 3.8%, reflecting a broader but less precise reach. Among them, one of the campaigns led with a CTR of 9.1%, driven by targeted audience engagement despite moderate impressions.
ACoS (Advertising Cost of Sales) measures ad spend efficiency. ACoS of 20% means spending $20 on ads to generate $100 in sales.
So, what is ACoS?
ACoS is a key metric that evaluates the relationship between advertising expenditures. Lowering ACoS without losing conversions is key.
On the other hand, TACoS provides a broader view. It tracks how ad spending impacts overall revenue. A rising TACoS signals overdependence on ads for sales growth. A stable or decreasing TACoS means organic sales are increasing, reducing reliance on paid traffic.
Bid adjustments make or break an Amazon PPC strategy.
Aggressive bidding in competitive categories leads to skyrocketing CPCs. Dynamic bidding prevents overpaying. Placement modifiers further refine costs.
In this case, you can get an Amazon PPC management service from one of the expert agencies to reduce the hassle. By doing this, you can focus on other aspects which are required for your business.
Perpetua reports that Amazon allows advertisers to use a top of search bid multiplier that can reach up to +900%. This enables bold advertisers to establish a maximum bid for top of search placements tenfold compared to their standard bids.
How to Analyze Your Amazon Ad Spend and Performance?
Amazon PPC spending can spiral out of control fast.
Poorly optimized campaigns waste budgets with little return. Fixing this starts with Amazon Advertising Reports.
Pull the Search Term Report. This indicates which keywords are consuming ad spend but not converting. A keyword with an ACoS over 40% and low sales is a significant warning sign. Rather than hastily adjusting bids, evaluating if the product listing or offer requires enhancements is essential.
Next, examine CTR (Click-Through Rate).
If the CTR is below 0.3%, the ad isn’t resonating with shoppers. The problem could be weak ad copy, irrelevant targeting, or heavy competition. Fixing this requires A/B testing different ad creatives rather than just adjusting bids.
Placement Report analysis is crucial.
If “Rest of Search” placements are draining the budget but not converting, shift spending to Top-of-Search, which converts 2x better.
Amazon’s bid adjustment feature allows increasing or decreasing bids for different placements based on profitability.
TACoS gives a long-term perspective.
A rising TACoS means sales rely too much on ads. A decreasing TACoS means organic sales are improving. Brands maintaining TACoS under 10% see healthier profit margins.
Branded vs. Non-Branded segmentation is key.
If branded keywords are performing well, but non-branded keywords have a high ACoS, it signals over-reliance on brand awareness rather than acquiring new customers. Scaling requires balancing both.
Run this weekly audit. Track bid changes, pause underperforming campaigns, and shift budgets to where ads generate the highest returns.
How to Optimize Keyword Targeting for Cost Efficiency?
Amazon PPC success starts with targeting the right keywords.
High ACoS keywords kill profits. Low-converting terms drain budgets. Optimizing keyword targeting cuts costs without sacrificing sales.
Start by analyzing the amazon search term report.
This time, focus specifically on keyword level performance rather than overall ad spending. If a keyword has high ACoS but still converts, instead of pausing it, lower the bid gradually.
Sellers who optimize keyword bidding rather than simply pausing keywords reduce wasted ad spend by up to 30%.
Match types dictate ad spend efficiency.
Broad match attracts irrelevant clicks, causing CPC inflation.
A broad match keyword like “running shoes” could trigger searches for “cheap running shoes” or “kids’ running shoes,” burning ad spend.
Exact match increases relevancy and improves conversion rates by 15-25% on average.
Negative keywords are non negotiable.
If search terms like “free,” “cheap,” or “best review” keep triggering ads, add them as negatives.
Bid adjustments based on performance make a huge difference.
Instead of setting static bids, use Amazon’s Dynamic Bidding.
This feature automatically lowers bids. It does so when the system predicts a lower chance of conversion, helping to cut wasted spend by 20% or more.
Branded vs. Non-Branded keyword strategies impact acquisition vs. profitability.
Branded keywords convert well but shouldn’t take up most of the budget. Non-branded terms bring in new customers but need more strategic bidding to remain profitable.
Improving keyword targeting weekly keeps campaigns profitable. Removing bad keywords, optimizing match types, and adjusting bids keep ACoS under control while maximizing returns.
How to Adjust Bids and Budget Allocation for Maximum ROI?
Amazon PPC burns money when bids are too high. If budgets aren’t optimized, campaigns collapse. Managing bids strategically keeps costs low while maximizing conversions.
Dynamic Bidding
It prevents unnecessary spending. Amazon automatically lowers bids when a click is unlikely to convert. This reduces wasted ad spend without sacrificing impressions. Sellers who switch to Down Only bidding cut costs by 15-30% on average while maintaining visibility.
Underperforming keywords drain budgets fast
If a keyword has high impressions but low conversions, it’s a red flag. Lower the bid in increments of 5-10% every few days. This prevents a sudden drop in visibility while improving cost efficiency. If the keyword still fails, it’s time to pause or replace it.
High-converting keywords deserve more budget
Increasing bids can drive more profitable traffic if a keyword has a conversion rate above 10% and a RoAS of 4.0 or higher. Jungle Scout data shows that sellers who reallocate 70% of their PPC budget to high-performing keywords see an overall 25-40% boost in ad profitability.
Placement analysis fine-tunes budget efficiency
Top-of-Search ads convert 2x better than other placements but cost 30-40% more. Product Page placements often generate high impressions with lower conversions. Adjust placement bids accordingly to maximize returns.
Budget reallocation is key. Instead of spreading spending thin across all campaigns, shift funds from underperforming ad groups to top-converting campaigns. This simple adjustment increases RoAS without raising total ad spend.
Optimizing bids is a constant process. Regular adjustments ensure budgets fuel profitable clicks, not wasted impressions.
How to Improve Ad Relevance to Reduce CPC?
Amazon PPC costs rise when ads lack relevance.
Higher relevance means lower CPC, better placements, and more conversions. Fixing this starts with product listings.
Amazon’s Quality Score affects ad ranking and CPC.
A poorly optimized listing increases costs.
A well-optimized one gets better ad placements at a lower bid. Top-ranking products on Amazon have an average title length of 80-100 characters. Titles should include primary keywords, benefits, and unique selling points. Bullet points need clear, scannable benefits. Images must be high-resolution and lifestyle-focused to increase CTR.
Ad copy must match high-converting keywords.
Amazon lowers its relevance if a search term triggers an ad but isn’t in the listing. This increases CPC. PPC audits show that aligning ad copy with search intent improves CTR by 20-35%.
Top sellers optimize descriptions with question-based long-tail keywords that match shopper queries. A/B testing reveals what works. Testing different titles, images, and bullet points helps refine ad engagement.
Amazon’s Manage Your Experiments tool allows split testing on live listings.
Data from Helium 10 shows that A/B-tested product titles improve conversions by up to 17%. Better conversions lead to lower CPCs over time.
Relevance determines ad efficiency.
Listings aligned with customer intent convert higher, cost less, and improve organic rankings. Brands that optimize continuously lower CPC by 25-40% while increasing overall profitability.
How to Influence Amazon Placement Adjustments for Lower PPC Costs?
Amazon doesn’t charge the same CPC for every ad placement. Where your ad appears directly impacts conversion rates and cost efficiency. If your bids aren’t optimized by placement, you’re losing money.
Start with Amazon’s Placement Report. This report shows where ads appear:
- Top of Search (First Page)
- Product Pages
- Rest of Search
Each performs differently. Adjusting bids based on placement performance lowers wasted spend and improves RoAS.
Top of Search: High-Converting, High-Cost
Ads in the Top of the Search convert 2x better than other placements. The average CPC is 30-40% higher, but the conversion rate justifies it. Increasing the placement bid boosts sales without overspending if a keyword has a RoAS above 4.0 and a conversion rate over 15%.
Real Data:
Brands that increase search bids by 10-20% see a 25-35% conversion boost without hurting profitability. If ACoS stays controlled, the bid will gradually increase and capture more high-intent buyers.
Product Pages: High Impressions, Mixed Conversions
Ads here show up on competitor listings. Traffic is high, but conversion rates are lower. If ACoS exceeds 40% and RoAS drops below 2.5, reduce bids by 20-30%. This shifts the budget to better-performing placements.
Case Study:
A brand selling electronics cut Product Page bids by 25% and redirected the budget to the Top of the Search.
What about the result? 18% higher conversion rates and a 12% lower ACoS in 30 days.
Improving only the product page is not the final deal. You have to keep a constant focus on the quality of the product.
According to one of our research studies, sellers had to follow higher standards for descriptions and images. Certifications became mandatory to ensure credibility.
These adjustments provided shoppers a reliable experience while minimizing the chances of encountering misleading information or subpar listings.
Rest of Search: Cheap Clicks, Low Conversions
Amazon reports that the Rest of the Search placements generate 60% of impressions but only 30% of total sales. Cheap CPCs don’t always mean better ROI. Cutting bids improves overall campaign profitability if this placement has low CVR and high ACoS.
Frequently Asked Questions(FAQs)
Check Amazon’s Placement Report inside your campaign manager. Identify placements with high spending but low conversions. If the rest of the search or Product Pages have high ACoS and low RoAS, reduce bids or eliminate them.
Increasing bids for search improves visibility and sales if a keyword has a conversion rate above 15% and RoAS higher than 4.0. Amazon data shows that raising the top of search bids by 10-20% boosts conversions by 25-35% without overspending.
Product Pages show ads on competitor listings and related products. Shoppers browsing these pages often compare options and are not ready to buy. If ACoS exceeds 40% and RoAS drops below 2.5, bids will be lower, and the budget will be shifted to better placements.
The rest of the Search generates 60% of impressions but only 30% of sales. CPCs are lower, but conversions are weaker. If a keyword performs well only at the Top of the Search, reducing bids for the Rest of the Search prevents wasted ad spend.
The ideal split depends on your category. Many successful brands allocate a significant portion of their PPC budget to various areas of the search. Specifically, they dedicate 60-70% to the Top of the Search, 20-30% to Product Pages, and less than 10% to the Rest of the Search.
Final Verdict
Amazon PPC spending can spiral out of control without proper placement adjustments. As a seller, you must be aware of this while bidding, choosing the right keywords, etc.
Before we finalize the content, here’s a summary:
- Check Placement Reports weekly to track ad efficiency.
- Shift budget to high-performing placements for better returns.
- Control placements to lower CPC and improve RoAS.
- Optimize continuously. Data-driven decisions win.
Better placement control lowers CPC while improving conversion rates. The key is continuous improvement. That’s all for today.
