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How Amazon Ranks Ads?

There is an auction system on keyword targeting. Competitors are bidding specific keywords to win the auction and show their products as sponsored. While doing so, there is one more important parameter to win the auction. Despite the common knowledge, higher bidder doesn’t always win the auction. There is an ad ranking system on Amazon. Amazon gives you an Ad Grade to improve the overall ad performance. The reason behind this is to make Amazon more reliable and profitable. If a seller creates more clickable ads, Amazon gets paid, the seller gets charged and buyers finds what they are looking for. Basically;

MoreClicks = Better User Experience = AmazonMakesMore Money =  Amazon Rewards the Advertiser with Higher Ranking Cheaper Clicks There are two types of metrics to determine your Ad Grade. Performance metrics and relevance metrics. They are shown on the table below:

Performance MetricsRelevance Metrics
  • CTR
  • Conversion Rate
  • Overall Sales
  • Product Title
  • Description
  • Description
  • Description

As seen in the table, Click Through Rate (CTR) and Conversion Rate (CR) are the parameters needed to be considered seriously. So better performance drives a better Ad Grade and they add up to successful PPC campaigns.
Let’s show this on an example to make it super clear: If Harry bids $5 and his ad grade is 6, and Hermione bids $4 and her grade is 8 Hermione will win the auction. Hermione’s product will be shown on top of Harry’s product.
  • Harry’s ad rank will be: $5 x 6=30
  • Hermione’s ad rank will be: $4 x 8 = 32

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