Why advertise on Amazon

Amazon wants two things. Shoppers who find what they want fast, and as many sales as possible. Almost everything about how products get shown follows from that.

So Amazon puts the products it expects to sell at the top of the results, because that’s where shoppers look first. Amazon doesn’t publish its ranking formula, but what sellers see over and over is that sales move rankings more than anything else. A product that sells faster tends to rank higher. Ranking higher brings more organic orders, more orders bring more reviews, and more reviews help the next shopper decide to buy. That loop is usually called sales velocity.

The loop runs the other way too. A new competitor or a slow season can slow sales down (so can a product that’s just getting older), and then the rankings and organic orders slide with it.

Ads are how you keep the loop moving. They buy the visibility that gets the sales that earn the ranking. That’s why an ad can be worth running even when it only breaks even on its own, as long as the organic lift is real.

It also means ads are a long-term investment. It takes time to collect enough data to know what works, and longer for reviews and rankings to catch up.

How to think about it

Strip Amazon ads down and there are two moves. Do more of what works, and stop doing what doesn’t.

Easy to say. The hard part is knowing which is which, and that only comes from data. So the whole job is a loop. Test something, collect enough data to judge it, then turn up what’s working and turn down what isn’t.

You’ll hear “it depends” a lot in PPC, and it’s true. What works for one product in one category won’t for another, and what worked last quarter can stop working this one. Test everything (it’s kind of the mantra of PPC). Your own account’s data beats any rule of thumb, including the ones in this course.