Amazon PPC Management Services: Pros and Cons

The average Amazon Prime user spends $1,400 annually and the conversion rate for Amazon is a staggering 13.5%. To put that into perspective, the average purchase-conversion rate online is only 4%. The caveat to the immense opportunities available on Amazon is that it has become increasingly competitive. After all, there are around 2-million active Sellers on Amazon, but only around 10% of those Sellers will reach $100,00 in annual sales.

PPC management services allow businesses access to the tools, technology and

expertise needed to take advantage of Amazon Marketplace without the cost of hiring in-house — in both time and money.

Targeted advertising is a critical component in reaching customers in this increasingly competitive marketplace. However, Amazon PPC advertising is notoriously convoluted and hard to make use of. 

Today, we’ll be looking at how expert PPC management represents a flexible solution to these difficulties.

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Why get help with Amazon PPC?

There are a number of material benefits for outsourcing your PCC management, including:

1. Access to technology

Outsourcing your PCC management to professional experts gives you access to critical analytics that can boost your bid and campaign management. After all, conducting an Amazon PPC audit can be tricky if you don’t have the right expertise or platform at your disposal.  

For example, an insights platform designed specifically to augment PPC in the Amazon ecosystem — allows Amazon Sellers access to critical metrics, such as their Break-Even Advertising Cost of Sale (ACoS) and Break-Even Return On Advertising Spend (RoAS).

Both of the above calculations can be adjusted by customer lifetime value (CLV) to define whether your current ad spend is profitable. The automated systems offered by Amazon insights providers can also make effort-intensive activities like bid price updating and search term optimization fast and effective. Dayparting and hourly sales breakdowns making sure your ad campaigns are cost-effective and don’t go over budget.

Suggested reading: Metrics like Break-Even ACoS and RoAS can be confusing and hard to quantify when adjusted by CLV, that’s why we’ve created this blog to help you understand and calculate your CLV-adjusted break-even ACoS/RoAS, check it out — Break-even RoAS calculator guide 

2. Access to expertise

Given the complexity of Amazon PPC ads, outsourcing their management to the experts is normally the best way to get the most out of your advertising options, including:

• Search term optimization: Since Amazon PPC ads are charged on a cost-per-click (CPC) basis, isolating the search terms with the highest conversion rate (CVR) is critical to helping you maximise the ROI of your spend. Having PCC experts to identify both high-cost high-CVR terms and low-cost mid-CVR terms lets you maximize the effectiveness of your Amazon marketing while keeping costs to a minimum. At the other end of the spectrum, using negative keywords to remove your worst-performing search terms prevents cross-matching and wasted spend. 
• Boost organic ranking: The ability to boost your organic ranking through the use of PPC ads is unique to Amazon. Having a professional team to help you navigate Amazon's complex A9 algorithm and construct complimentary PCC campaigns helps companies drive strategic outcomes.
• CLV-adjusted break-even ACoS: As we’ve mentioned before, your CLV-adjusted break-even ACoS is the vital dividing line between a profitable ad campaign and one that loses you money. However, gaining the expertise to properly calculate and apply a CLV-adjusted break-even ACoS takes time and effort and it's sometimes easier to get an expert to do the work for you.
• Full knowledge of ad types: Applying the right ad types, such as Amazon sponsored products ads, Amazon sponsored display, and Amazon DSP product, to the right strategic aims, is the best way to implement a profitable ad campaign. Outsourcing to an experienced PPC expert means that kind of in-depth knowledge is applied to your ad campaign. What’s more, Amazon is constantly changing and evolving their offerings, so you need to be up to date on what’s available and what developing best practices are and how to test them yourself if you want to operate effectively on the platform. 

Suggested reading: For more information on exactly what search term optimization is, check out our blog — What is Search Term Optimization? “Search term optimization”. 

3. On-demand support

Partnering with a PPC management company means you have full support in place on day one. As opposed to building an in-house team that might take months to come online, you can scale your ad-spend up or down for specific campaigns.

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The pros and cons of investing in an in-house team

When it comes to optimizing your approach to Amazon marketing services, the other option is to build your own in-house team, which comes with its own pros and cons.

Pros:

• Pro: Once built, an in-house team allows you to have access to 24-7 access to expertise from people who are entirely dedicated to building your business. (Although, it’s worth noting that without departmental cohesion, teams can still become siloed). 
• Pro: You have greater control over the team. PPC management teams obviously endeavor to meet all their customer’s needs. However, they can’t provide the same level of control over their approach and techniques as you would have over an inhouse team.

Cons:

• Con: Building an in-house team is a long-term project. The hiring and orientation process can be very lengthy, meaning that expertise doesn’t come online instantly in a way that an outsourced service does. Plus the team you build might not have the same expertise or experience as the professionals. 
• Con: Having an established full-time team limits your flexibility. When demand drops, you still have to pay your internal team the same amount, making them more expensive in the long run. It’s not a “take it or leave it” choice.
• Con: It can also be difficult to find the right skill sets, the required resources to support the team, and requires you to focus your business far more substantially around Amazon.

As you can see, there is a fine balance of pros and cons when it comes to establishing an in-house team.

The good news is that it's not a zero-sum game. You can and should attempt to build in some in-house expertise. However, you can build that expertise alongside partnering with expert Amazon PCC services for early support while you’re building your team or for more complicated issues. A mix and match approach can be the perfect solution for your business. 

Different types of Amazon PPC management services

In addition to choosing between an outsourced or in-house service provider, it is important to differentiate between the different types of Amazon PPC management services.

Choosing the right one comes down to how they fit in with your specific business model. 

• The freelancer: Freelancers with Amazon marketing experience are ideal for smaller businesses looking for a dedicated PCC expert. While they can be more flexible than larger companies they often lack the dedicated technology and infrastructure.
• Self-service platform provider: This is about how you get access to tools and some support, but it's all about delivering as-a-service access to the technology and analytics that you need.
• The full-service advertising agency: Amazon advertising management agencies often offer a dedicated campaign manager along with Amazon-specific support with ads and listings for example. This is ideal for larger Sellers whose account size means they can get the full account management focus that smaller Sellers might not. You should look for advanced analytics in your chosen managed support provider as analytics are so important to PPC success on Amazon. 

Access to third-party analytics remains important either way

As an Amazon seller, there is no real need for you to choose in-house over outsourced support or vice versa. The best option is usually a combination of both in a complementary solution that maximizes the pros while mitigating any of the cons. 

Where companies like Nozzle have the edge is in their cutting-edge analytics technology. Access to these analytics is crucial to implementing an effective ad campaign and adding in account management is the icing on the cake.

To find out how Nozzle and the correct use of data can transform your Amazon eCommerce strategy, check out our ebook —Differentiating Amazon Merchant Strategies | 4 lessons | Nozzle.