It’s an unfortunate truth, but advertising is an inevitable part of any ecommerce business, which is why your ecommerce PPC management strategy is so important.
Of course, like you, I want to keep as much profit as possible to grow the business. But, the honest truth is, you’re never going to get as much traffic by yourself as Google or Amazon can provide for you.
PPC (Pay Per Click) is only one element of your overall advertising strategy, but it is one of the most important. 96% of ecommerce brands use PPC to drive traffic to their listing and PPC clicks have a 50% higher conversion rate. This means that, if you’re not using PPC, then your competitors are taking sales that could have gone to you.
PPC advertising isn’t just a cost to your business. If used correctly, it can be a great tool to bring growth to your brand. In this guide, we’ll go through the pros and cons of PPC advertising and some practical tips for getting the most out of your advertising budget.
What Is PPC?
PPC (Pay Per Click) is a type of online advertising whereby a brand pays each time someone clicks on their ad. The ads are usually displayed on a search engine, such as Google or Bing. However, they can also appear on a marketplace such as Amazon, on social media, or even as a display advert on a different site.
The reason PPC is so powerful is that you are essentially buying visitors to your site. Making your website appear organically in a search engine can be quite tricky at first because search engines filter through millions of results, so the competition is high.
This is called Search Engine Optimization, or SEO, and having good SEO is a must, but it can take a long time to start appearing organically for popular search terms.
PPC advertising allows you to get the traffic before you’re ranking organically.
As a quick example, let’s say you sell sunglasses.
If I search ‘sunglasses’ on Google, then the first results are from Sunglasses Hut and other brands like that. It’s going to be difficult to compete with these huge brands.
However, you can pay to appear in the advertising slots at the top of the search, as Sungod did here. A customer may click on these, go to your site, and buy your sunglasses instead.
This is the power of PPC and, as long as the amount you pay in clicks is less than the amount you make in profit from a sale, then you are profitable.
What Is Ecommerce PPC Management?
Managing your PPC spend is so important because, without keeping track of your spending, the costs can quickly outweigh the benefits. On top of this, you need to understand how your campaigns are performing, so you can adjust them.
Managing your PPC is an important task, and can even be a full-time job if you have a big enough budget. In fact, bigger brands have teams focusing solely on PPC. Over the last few years, the PPC market has exploded. You’ll now find ecommerce PPC management services and agencies specialising in one particular area of PPC, like Amazon PPC, or agencies that use AI solutions to manage PPC spend, such as Perpetua.
So as you can see, PPC is an important part of your overall advertising strategy and is something that big brands take very seriously.
The most common platforms for ecommerce PPC are Google ads, Bing Ads, Amazon and Facebook, and each has a different approach. For example, Google has simple ads that appear at the top of searches and they also have Google Shopping links that take a customer directly to a particular product. Social media ads are much more interactive, and you can design videos or images to capture a customer’s attention.
Each PPC method should have its own strategy for success, and different KPIs to measure the success.
Pros Of PPC For Your Ecommerce Business
Pro 1: Targeting
Whilst other forms of advertising can be a bit of a shotgun approach, with ecommerce PPC ads, you can hone in on your target demographic. This is especially helpful for social media advertising.
Say, for example, you sell trendy men’s trainers. You can set your Facebook target audience to men, aged 18-25, living in California, who are interested in fashion. You can even choose what time the ad will go out to your target audience, so you can catch them at a specific time in the day.
Pro 2: Measure your success with PPC Analytics
Ecommerce PPC ads usually give you a huge amount of data with which to measure their performance. One example is keyword targeting.
When you’re making organic sales, it can be tricky to understand exactly which keywords a customer is using to find your brand. With PPC, you can attribute an actual sale to a click on an ad, and which keyword that ad was targeting.
With Amazon PPC advertising, this is particularly important as you can see exactly which keywords a customer used to buy your products. This is very helpful, as you can then use those keywords in your listing to help you improve your organic rank.
Understanding keywords like this will help you to target keywords in the future with different types of marketing, and can save you money in the long run as you don’t need to target keywords that don’t convert for you.
All the data in a PPC ad will help you understand the return on investment (ROI) of your ad spend. On top of the ROI, the data will also show you lots of very helpful information about your audience.
Pro 3: Fast results
PPC has the fastest results out of any marketing method. As soon as you turn on a PPC ad, you are potentially opening up your products to a huge audience. If you have a site that has a great conversion rate, simply sending that extra traffic to your site can get you a lot more sales, fast.
Pro 4: Manage your marketing money
Marketing is expensive, but with PPC ads you can set budgets when creating the campaigns. This means you can make sure you don’t overspend one day without seeing any results.
Cons Of PPC For Your Ecommerce Business
Con 1: PPC is time-consuming
Managing your PPC can take up a lot of time, which is why many companies use agencies or employ someone full-time to focus entirely on ads. Whilst you can set budgets so you don’t overspend, PPC can become expensive if you aren’t actively managing and adjusting your campaigns.
Con 2: PPC can be confusing
If you don’t understand the basics of keyword targeting, customer segmentation, display ads, retargeting, and other technical terms associated with PPC, then you might get frustrated with your results.
Some of the big PPC tools don’t help here as they come with a large learning curve. For example, Facebook’s ads manager platform has so many options to choose from it can be very confusing.
On top of understanding different platforms, there are also a lot of different types of campaigns you need to understand. Facebook, Google, Amazon, and other platforms all have different ad types that you can use in different scenarios.
Con 3: PPC isn’t a long-term solution
Most ecommerce businesses will always need some PPC in order to grow. However, PPC by itself isn’t a long-term solution as it requires constant investment. Once you stop a campaign, your listing or products won’t be shown to customers anymore.
Other marketing such as SEO will help you to get more customers for less outlay, but these are longer plays.
Ecommerce PPC Management Best Practices
1. Understand the different platforms
Amazon, Google, and Facebook are the three biggest platforms, but they’re very different and each requires a different type of advertising.
If you’re just starting out with PPC, I recommend starting with the platform that you think will get your products in front of your target customers fastest.
The best way to choose which platform to concentrate on is to think about the goals for your ad. If your products are on Amazon, then using Amazon PPC is the best option. But Google and Facebook might have different target audiences.
For example, Facebook Ads also includes Instagram Ads, so, if you’re targeting a younger, trendier audience, this could be a great way to showcase your products. These ads can also include imagery and videos, so they are perfect for brand awareness.
Google Ads will target a more general audience, but the customers are often more ready to purchase, especially with Google shopping. If your aim is to just make sales, then this could be the best place to start.
2. Understand your KPIs
KPI stands for Key Performance Indicator, and it is essentially the benchmark by which you measure the success of an ad campaign.
The main KPIs for PPC ads are:
Sales, Profit, and Advertising Cost of Sales
Understanding your profitability is key in any business, but especially in ecommerce as margins are often tight.
When you’re doing PPC ads, you need to know how much profit you have on each sale so you know how much you can spend on advertising and still remain profitable. For example, if you sell a pair of jeans for $50 and the total cost of goods including overheads is $20 then you have a maximum of $29.99 to spend on advertising and still remain profitable.
If you spend $20 in clicks for each sale, then your advertising cost of sales is $20 and your profit is $10. If your KPI here is just to make more sales, then the goal is to keep PPC ad spend below $30.
Customer Acquisition Cost
Your customer acquisition cost, or CAC, is the amount it costs you to get a customer. PPC is a part of your wider advertising and marketing strategy, so understanding all the costs that go into acquiring a customer allows you to plan your PPC spend.
Lifetime value (LTV)
LTV is how much the customer is worth to your business over their lifetime. This is an important metric to understand along with Customer Acquisition Cost because if your customers have a high LTV then it may be worth spending more on customer acquisition.
An example of this is a subscription box customer. Your profit margin per box might be $10 but the CAC is $15. This means it costs more to acquire the customer than the profit you make.
This sounds bad, but you need to factor in the fact that the customer is going to buy another box, and this time you don’t need to spend any money to make that sale, so it is probably worth a higher CAC at the outset.
Some website hosting companies make huge losses upfront, right?
Cost Per Click (CPC)
This is the amount it costs for each click. Different keywords, geographies and target audiences (amongst other factors) have different CPCs based on how competitive they are. A cheap item might have a CPC that is cents, but the CPC on an expensive item might be many dollars. This is because the ROI on a big purchase, such as a car, might be very high for the brand.
Different geographies might also have different costs, as they have different levels of competition. The cost per click for lawyers is a great example of this. In New York City the CPC is over $100, but the CPC for lawyers in Toronto is much cheaper. Expensive US lawyers can afford big advertising budgets!
It is vital you understand the CPC before you start your campaigns, or you could be in for a nasty surprise. Luckily, for most ecommerce keywords, the CPC is lower, meaning you can afford more clicks for your budget. Amazon PPC Campaign Manager makes it very easy to understand your CPC, as you can see in the image below.
3. Understand your goals
For most PPC campaigns, the goal will be to make more sales, but it is worth considering using PPC for other purposes. In the KPIs example before about Life Time Value, we looked at how a business can use PPC to build a long-term customer relationship. But this isn’t the only factor.
Some questions to ask are:
- Who is the target market? If you are targeting new customers, then you might want to present your best-selling items. If you’re targeting returning customers then you might want to show the customer your newest range.
- Are the customers ready to purchase? If you’re selling an expensive item such as a car, then it is extremely unlikely that a customer will make a purchase based on one ad. In this scenario, you might want to collect customer information so you can send them follow-up info or use retargeting ads to improve brand awareness.
- What is your organic rank? For marketplaces such as Amazon, PPC clicks and purchases can help you with your organic rank for those keywords. In that situation, you might not care that the advertising cost of sales is higher than the profit margin, as you are aiming to get your product higher up the organic ranking.
4. Understand how to track your PPC performance
For most sites, Google Analytics will be able to tell you most of the information you need to know about your performance. Make sure your Google Analytics account is set up correctly to track your goals and traffic.
For other platforms, such as Amazon and Facebook ads, take time to understand how to read the PPC data so you can see what your performance is for your KPIs.
5. Understand keyword research
Keywords are the search terms customers use to find something on a search engine. Sometimes keywords are single words and sometimes they’re phrases.
This is important because different keywords have different intent. For example, if a customer is searching for ‘best football shirt’ they might be trying to see which football shirts are the best this season, and the results will be rankings of all the Premier League football shirts.
But if a customer searches for ‘Manchester United shirt for boys’ then you know that customer is looking to buy a Manchester United football shirt for a boy.
Understanding the intent of the customer is really important for your PPC campaigns, as the keyword needs to align with your goal.
When you’re searching for keywords, it is tempting to simply choose the highest search volume keywords, because these are the ones that have the most searches per month. However, it is a much better tactic to target long tail keywords that have a good customer search intent like the example above. That way your ad will get a better click-through rate and conversion, and this will improve your quality score.
It is also important not to choose keywords that are too competitive. The more competitive a keyword is, the higher the cost per click will be and the faster you will run out of budget for your campaign. I always like to target lower search volume keywords at first that have a good purchase intent. Once I’ve collected some data for these keywords, I look at moving on to targeting some of the more high search volume keywords.
Ad platforms can help you find the right keywords for your ads, and services such as Google Adwords and Facebook Ad Manager can really speed up the keyword-finding process. Another alternative is to hire a PPC agency or a PPC expert to help find the best keywords.
6. Understand campaign optimisation
Once you understand the goals for your campaign, you can track how the campaign is performing. If you have keywords that are performing particularly well you might want to double down on them.
If you find you have keywords that are taking all your ad spend, but producing no sales, you might want to consider adding these keywords to your ‘negative keywords’. These are keywords that you block the campaign from targeting.
For example, if you sell corded vacuum cleaners, but you find a lot of customers are clicking on your ad for the keyword ‘battery vacuum cleaners’, then you are wasting money because the customer doesn’t want your products.
7. Understand different ad types and placements
There are many different types of ad placements you can use, and each one can be used for a different purpose. For example, Google has multiple different ad types:
Paid Search Ads
Paid search ads are the most common type of Google ads and they are the ones that appear on Google searches at the top and bottom of the page.
For these ads you ‘bid’ for a keyword, and then Google shows the best bidder to the customer. They don’t just decide if your ad is good based on how high you bid, they have an algorithm that judges the ‘quality’ of your ad, as they want to show the most relevant ads to the customer.
The quality score is decided by factors such as your click-through rate, conversion, geography, size of bid and other factors to decide which ad the customer should see.
Display ads are ads that appear on other websites. Google shows these ads to the customer through their ad network, and uses the same relevancy factors as paid search ads. Display ads can include images, so they can showcase your brand more than paid search ads.
Another difference with display ads is that they can also include retargeting or remarketing ads. This means if a customer has been onto your site or shown an interest in your brand before, Google can follow that customer around the internet showing them ads in order to get them to visit your site again.
This can be very powerful if you have a product that is time-limited e.g. if you have a sale ending that week or your product is for a holiday such as Mothers’ Day.
Google Shopping ads
Google shopping ads appear both in Google searches and on the Google Shopping page. Customers can be shown products here that are directly related to the search that they’re doing. For example, if a customer searches for “Air Fryer”, they will be shown air fryers that they can purchase. These ads have a very high conversion rate as they often show customer reviews as well.
Gmail ads are text ads that appear in Gmail inboxes. These ads can also use retargeting, so potential customers will see ads that look like emails in their inbox. These ads have a great click-through rate and are a great way to get customers to visit your site again. A good tactic here is to offer a discount to customers to get them to click on the ad and come back to the store.
Other Ad platforms
The examples above are just Google Ad examples, but each ad platform has different types of ads that you can use. Most of them follow a similar formula, so understanding the basics of Google Ads first is a good place to start.
8. Test geographic location targeting
Google and Facebook ads both allow you to target different geographies. This is useful for location-based businesses as customers are usually looking for services in their locality. Say you have a shoe repair shop, for example, most of your customers are going to need to visit your store in person. You might therefore want to only target customers within a specific radius of your store.
For ecommerce this is slightly different, as you have more options for shipping. But some stores might only want to ship within the country they are based in. For example, if you are a shoe store in the UK, you might not want to ship to Germany because of import taxes. Targeting UK-only customers here would be a great option.
Advertising is a big topic, and it can take a lot of patience and testing to get it right. When I first started out selling online, I only used Amazon PPC as I wanted to understand one platform well so I didn’t overstretch myself.
In hindsight, I think this was a good idea as advertising can be expensive if you don’t do it correctly. Once you have a good idea of what your budget is, try and get an in-depth understanding of one platform before expanding. Another option is to use a PPC agency or expert to help you out. Whilst they can be expensive, they can often save you money in the long run and help you to achieve your goals.
Advertising is a great way to get more traffic for your business, and it should be used alongside other marketing methods such as SEO and content marketing. Whilst other marketing can take a long time before you see results, PPC ads are almost instant. This is why all successful businesses have PPC as a part of their overall strategy, rather than their only strategy.