What is Brand bidding in Amazon PPC?
Bidding on branded keywords (your own or your competitor’s) in Amazon Sponsored ads is called brand bidding. It’s common to see this when searching for a brand in Amazon and you see ads from competitors trying to steal some of their customers.
However, one of the most common questions that we get from sellers goes – “I’m already organically ranked number one. Should I still advertise for my own brand keywords on Amazon? Why should I pay for ads if the client is searching directly for me and will buy through my organic listing?”
This is a great question and as a spoiler, we definitely recommend advertising for your own brand on Amazon. We’ll break down all of the reasons why we recommend running ads and how to test the impact of not advertising for your brand if you are dead set against it.
Reason #1: Don’t Allow Competitors to Steal Your Loyal Customers
When someone browsing on Amazon types in a search, they will be shown a list of products which contain both paid and organic listings. Typically the top couple of listings will be Sponsored Product paid ads followed by the top organic listings.
Being familiar with the platform, it’s easy for us to recognize which listings are paid versus organic listings and realize the context of each. While we can easily tell the difference, many Amazon shoppers can’t differentiate between ads and organic listings.
In fact, a survey completed by Goat Consulting on 2000 Amazon customers revealed that about half of all shoppers weren’t aware of the difference between advertising and organic listings. Simply put, many Amazon shoppers don’t even realize that they are being advertised to on Amazon.
I’ve personally encountered this quite a bit when people ask me what I do. After telling them that I help Amazon sellers with their advertising on Amazon, about half the time I get blank stares. I’ll then pull out my phone and have them search for a product on my Amazon app. After completing the search, I’ll point out all the listings that are actually ads which helps to paint the picture on what we do. Many people I talked to simply didn’t even realize they were looking at ads.
Overall, this isn’t an accident that many shoppers don’t recognize what are ads since Amazon has set up their advertising to have the same format as organic listings. By having ads that blend into the page, this can help the shopping experience and also lead to better conversion rates on ads. Better ad conversion rates mean that ads have a better return, advertisers spend more on ads and Amazon makes more money.
As stated above, Sponsored Product ads usually make up at least two of the top spots when users perform a search (Amazon is constantly testing this so some categories may see more or less). Using data directly from Amazon, Search Engine Journal reported that 35 percent of customers click on the first product listing on a page and that the top three product listings account for 64 percent of the clicks. If the top two listings are sponsored product ads, these ads take up a huge amount of the total traffic.
So what’s this all have to do with advertising for your brand?
While you may be the top organic listing, about 50% of shoppers don’t realize the top listings in search results are ads and may assume that the top listing is the top organic ranking. Many will just click the top listing assuming Amazon knows best and purchase that product. If you’re not bidding on your brand keywords, you could lose a number of sales as competitors steal people searching specifically for you.
Reason #2: Brand Bidding is Cheap
If you are not advertising for your own brand, there is potential that your competitors could steal market share by selling to buyers searching directly for you. However, if you advertise for your brand and people click on the ad, then aren’t you giving up profits since you’re having to pay for the ad click along with all of the other Amazon fees?
Yep, and Amazon’s structured it specifically this way. Advertising for your own brand has become a voluntary fee that you get to pay to help protect your brand from competitors trying to steal your market share. Selling on Amazon is expensive but since we have to play in Amazon’s sandbox, they get to set the rules.
However, brand bidding in Amazon PPC isn’t as expensive as it may seem. Amazon is all about the customer experience so when they are deciding what ads to run, the relevancy of the ad is a huge factor. If someone searches for your brand, your ad is going to be much more relevant than a competitor so Amazon allows you to actually pay less than your competitor would need to for the top spot due to the higher relevancy weighting.
Since your customers are searching directly for you, you should have a high conversion rate with your ads so you should expect to see a good return on your advertising. Potentially since many shoppers don’t realize that ads are even being shown on Amazon, we tend to see a great conversion rate on those top ads since the customer assumes that they are the top-ranked products (this is why Top of Search advertising campaigns tend to do really well).
Overall, you’ll be able to pay much less than your competitors to advertise for your own brand (due to higher relevancy) and your ads should also convert much better than your competitors leading to a good return and lower advertising costs.
Reason #3: Organic Rankings Can Be Impacted By Not Advertising Brand Keywords
We’ve covered many of the outside benefits of Amazon Advertising and how this can impact your organic rankings. One of the key factors for ranking for specific search terms is your conversion rate and sales history for the search term.
If your competitor starts converting multiple people who came in search of your brand, it can improve their organic rankings for your brand’s search terms, further diluting your brand on Amazon. Maintaining organic rankings on Amazon is a long-term play and giving up momentum by not running ads can give up ground to your competitors that can be difficult to get back.
If people are specifically searching for your brand in the land of knock-off and cheaper products (which we call Amazon), wouldn’t you want to do everything you can to make sure they stay loyal customers instead of deflecting to your competitors? Running ads to maintain as many spots in the search results is a good way to do so.
Verdict: You Should Be Bidding On Branded Terms
Alright – If you are still not sold on the idea of advertising for your brand, here is a case study done by PPC Hero to show the importance (although it is done on Google Ads, the concept and strategy are still the same).
You can also do an analysis yourself to see if you lose or gain a considerable number of customers to figure out the right strategy. Do a split test where you bid for your branded keywords over a period of two weeks and compare it with the next two week period when these ads are off. Review total sales before and after brand advertising to see if you experience a drop in sales (and if so, how big).
By taking into account the drop in sales compared to the advertising costs you are saving, you can determine from a profit perspective if that was a good strategy. If you are considering not advertising for your brand, also take into account long-term impacts like potentially losing some spots in the organic rankings or having your competitor boost their organic rankings for your brand.
Final Thoughts
Brand bidding in Amazon PPC is a winning strategy for most brands due to all of the benefits above. Yes, it is an extra cost to your Amazon account but the pros definitely outweigh the cons. Look at it as a necessary investment to build out a long-term business on the platform. In most cases, it will not drain your revenue but will help in protecting your market share and fending off the competition.
If you want more insights on brand bidding or Amazon PPC in general, reach out to us for a free consultation.