Does Amazon PPC Sales Cannibalize your Organic Sales?

Does Amazon PPC Sales Cannibalize your Organic Sales?

Understanding the relationship between Amazon PPC and organic sales is crucial for sellers. The common concern is whether PPC campaigns will cannibalize your organic sales. While PPC often complements organic rankings, it's essential to know when and how cannibalization occurs to optimize your strategy effectively.

What is Amazon PPC and How Amazon PPC Works?

Amazon PPC is a form of advertising on the Amazon platform where sellers bid on keywords to display their products in prominent positions on search results pages. When a user clicks on the ad, the seller is charged a fee. Amazon PPC is to increase visibility and drive paid sales for the promoted products.

PPC advertising works based on keyword targeting. Sellers choose relevant keywords for the products, and when customers search for those keywords, the ad is displayed in the search results. The position of the ad is determined by the bidding and relevance of the keyword to the product.

Usually, there are 3 types of Amazon Sponsored ads: Sponsored Products, Sponsored Brands, and Sponsored Display.

Sponsored Products

Sponsored Products ads are the most common type of Amazon PPC campaign. These ads appear in search results and on product detail pages. Advertisers bid on relevant keywords, and when clients search for those keywords, the sponsored products appear as sponsored listings.

Sponsored Brands

Sponsored Brands allow advertisers to showcase their brand and multiple products in a banner-style ad. These ads appear above search results and feature a custom headline, logo, and up to three products.

Sponsored Display

Sponsored Display ads target shoppers both on and off Amazon. These ads can appear on product detail pages, customer review pages, and other placements on Amazon, as well as on external websites and apps. Advertisers can target audiences based on interests, behaviors, or products they viewed or purchased.

amazon campaign types

Does  PPC Sales Cannibalize your Organic Sales?

Organic sales can not be cannibalized by your PPC strategy most of the time. Normally PPC campaigns on Amazon can have a significant impact on your Amazon organic ranking. On Amazon, recognizing the symbiotic relationship between PPC advertising and organic search results will help you achieve better advertising performance.

Investing in PPC advertising can positively impact your organic sales in several ways.

  1. Increased visibility: When you run a PPC campaign, your sponsored product or sponsored brand ad will be featured prominently on search results and product detail pages. This increased visibility can lead to more clicks and exposure for your product.
  2. More CTR: If your PPC ads are highly targeted and relevant to shoppers' search queries, they are more likely to receive clicks.
  3. Generate conversions and sales: Your PPC ads will generate more clicks and conversions by higher share of voice and visibility.

Through these parameters, Amazon A10 algorithm gradually realizes that your product is popular and valuable to customers. So PPC advertising has a positive effect on improving organic rankings. In return, Amazon may rank your product higher in organic search results, giving your product more exposure and traffic in organic search.

When Can Organic Sales be Cannibalized?

We mentioned that Organic sales can not be cannibalized by your PPC ads on Amazon most of the time. Now you wonder, when can Organic Sales be Cannibalized?. This happens only when one of your products ranks very high organically and is able to attract enough clicks and sales, but you still bid on sponsored ads on this product. Finally, the product appears twice on top of search results (your sponsored ad and organic search result).

When you are running PPC advertising, it means that you have already won a highly competitive product ranking and your product will be one of the first choices of potential buyers. When customers search for relevant keywords, they are likely to see your product ad, click through it to browse and buy it. As we mentioned earlier, an effective PPC strategy will help increase your seller authority, increase high-quality reviews, etc., which will improve the organic ranking of related products due to Amazon A10 Algorithm.

However, since your ads are displayed in the same search results page as the organic product listing, customers are likely to click on your sponsored ad despite your organic ranking already at the top, wasting advertising budget.

This situation can lead to organic sales cannibalization. Now, you will feel that you have obtained a very competitive position for relevant search terms through organic ranking, but at the same time you pay extra advertising costs to promote products!

How to Avoid Cannibalization and Optimize PPC Strategy?

Try to stop bidding on relevant keywords

First, if this happens to you, do a thorough analysis of how your product is performing on specific search terms. Try to think: Would you generate the same sales if you stop bidding on these related keywords?

Organic ranking is critical for product exposure and sales. If you have a high organic ranking on a certain search term, if you find that your organic ranking on a certain keyword is already high, the organic ranking is on the same page as the ad you are running, and it is obvious that the position If you’re trying to drive sales without advertising, then you might consider pausing or reduce your ads spend on those specific keywords to test whether your organic rankings are already helping you attract enough clients. This way, you can also focus your advertising budget on other niche keywords to boost products that are performing weaker in organic rankings.

However, organic ranking is dynamic and is affected by a variety of factors. If your organic rankings for certain keywords start to drop after you stop spending on those keywords, it may be because your competitors have increased their advertising on those keywords resulting in your dropping ranking. In this case, you may want to restart to bid on Amazon again to support your current ranking and encourage better growth. Advertising like this can help you stay ahead in a competitive market.

Utilize Amazon PPC Optimization Tools

Another way is to take advantage of Amazon PPC tools that automatically solve the problem of cannibalizing organic sales for you. But there are very limited tools for this situation on the market now, but [Top of Search Rankings Optimizer] available exclusively on the m19 platform can help you solve this problem. With this rankings optimization tool, you can avoid appearing twice on top of search results. And it's an opportunity to give more exposure to other products that are not well ranked organically, since it creates space for other valuable products from your brand.

The relationship between ad serving and organic rankings requires ongoing monitoring and analysis. Regularly reviewing ad performance and organic ranking changes, and continuously optimizing your advertising strategy based on data will help you achieve greater success in the Amazon marketplace.

top of search rankings optimizer by m19
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Xuan Xie
April 10, 2024
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