Key Takeaways
- Judge ads on the whole business. ACoS tells you what one ad sale cost; TACoS tells you whether advertising is building total sales, including organic.
- Know your break-even ACoS before you bid. It equals your profit margin before ad spend, and every target you set should be measured against it.
- Structure decides whether you can scale. Separate branded, category, competitor and discovery campaigns so each gets its own bids, budget and success metric.
- Cut waste with rules, not gut feel. Remove a keyword only after it has had enough clicks to prove it will not convert, and after it has cost more than it could ever earn back.
- Ads cannot fix a weak listing or an empty shelf. Fix the detail page first, and pull bids back when inventory runs low.
Amazon PPC (pay-per-click) is Amazon's auction-based advertising system: you bid on keywords or product targets and pay only when a shopper clicks. For a brand, it is the fastest way to put a product in front of buyers who are already searching. It pays off when campaigns are structured by intent, measured against break-even margin, and managed weekly.
This guide is written for founders, heads of ecommerce and finance leads at product brands: consumer brands, CPG and food and beverage companies, and manufacturers selling direct. It pulls together what we have seen running Amazon advertising for brands over 15 years in Kansas City.
What is Amazon PPC and how does it work?
Every time a shopper searches on Amazon, an auction runs in the background. Advertisers who bid on that search term, or on the product the shopper is viewing, compete for the sponsored placements. Amazon weighs your bid and how relevant your product is to the search, then shows the winners. You pay when someone clicks, and the price you pay is set by the auction, never more than your bid.
Amazon Ads is available to brands selling through Seller Central (3P, third party, where you sell to shoppers yourself) and Vendor Central (1P, first party, where you sell wholesale to Amazon). Sponsored Products is open to any professional seller; Sponsored Brands and most Sponsored Display options require enrollment in Amazon Brand Registry.
The advertising flywheel
PPC does not work in isolation. Ads drive traffic, traffic drives sales, and sales velocity is one of the strongest signals in Amazon's organic ranking. Better organic rank means more sales you did not pay for, which lowers your reliance on ads over time. That is why we treat PPC as an investment in organic position, not just a cost per sale. It is also why ads and listing optimization have to be run together.
What types of Amazon ads can a brand run?
There are four main formats. Most brands should start with the first and add the others as the account matures.
| Ad type | Where it appears | Best for | Targeting |
|---|---|---|---|
| Sponsored Products | Search results and product detail pages | Direct sales, launches, keyword rank | Keywords, ASINs, categories, automatic |
| Sponsored Brands | Top of search and within results, with logo and headline | Brand awareness, Brand Store traffic, product lines | Keywords, products, categories |
| Sponsored Display | Detail pages, Amazon home page, and off Amazon | Retargeting, defending your pages, conquesting | Audiences, views, purchases, products |
| Amazon DSP | Amazon sites, Prime Video, Fire TV and the open web | Upper funnel reach and advanced retargeting | Amazon shopping audiences, programmatic |
Sponsored Products
Sponsored Products promote a single listing and send the click to its detail page. They are the workhorse of almost every account and usually take the largest share of spend, because they sit closest to the purchase. You can target keywords, specific competitor ASINs (Amazon Standard Identification Numbers), categories, or let Amazon choose with automatic targeting.
Sponsored Brands and video
Sponsored Brands show your logo, a custom headline and up to three products, or a short video, and can send shoppers to your Amazon Brand Store. Use them to own top of search for your brand name, introduce a product line, and build the branded search that converts cheaply later. Short product-focused video (15 to 30 seconds, readable with the sound off) is worth producing because it stands out in a results page full of static images.
Sponsored Display
Sponsored Display uses shopper behavior rather than search terms. The useful options are:
- Views remarketing: reach shoppers who viewed your detail page and did not buy.
- Purchases remarketing: bring past buyers back, which works best for consumables with a predictable repurchase cycle.
- Product targeting: appear on competitor pages, or on your own pages to cross-sell and keep competitors off them.
- Audience targeting: reach Amazon's lifestyle and in-market audiences at a lower entry cost than DSP.
Amazon DSP
Amazon DSP (demand-side platform) buys display and video ads programmatically across Amazon and the wider web using Amazon's shopping data. It is powerful for reach and retargeting, but it needs budget and patience to pay off. In practice most brands should not start DSP until Sponsored ads are profitable and they can commit a meaningful monthly budget, often $10,000 or more. Pair it with Amazon Marketing Cloud (AMC), Amazon's clean-room analytics, to see how DSP and Sponsored ads work together. See our DSP and AMC services and the complete DSP guide.
How should you structure Amazon PPC campaigns?
Structure is what lets you manage an account as it grows. A single catch-all campaign becomes impossible to read once you have dozens of products and thousands of search terms. Separate campaigns by intent so each one gets its own bids, budget and definition of success.
| Campaign | What it targets | Job it does | How to judge it |
|---|---|---|---|
| Branded | Your brand name and product names | Protect shoppers already looking for you | Low ACoS, high impression share |
| Category | Generic terms such as "protein powder" | Win new customers who do not know you | New-to-brand sales, rank on target terms |
| Competitor | Competitor names and ASINs | Take share where your offer is stronger | Conversion rate against price and reviews |
| Discovery (auto and broad) | What Amazon and broad match find | Harvest new converting search terms | Terms graduated to exact match |
| Defensive display | Your own detail pages | Keep competitor ads off your listings | Share of your own page placements |
Match types and the harvest loop
Amazon offers three keyword match types:
- Broad: shows for searches that include your words in any order plus close variations. Widest reach, most waste.
- Phrase: shows when the search contains your phrase in order. A balance of reach and relevance.
- Exact: shows for the exact term and close variants. Highest relevance and the tightest bid control.
The loop that makes this work is simple. Discovery campaigns find search terms that convert. Those terms move into exact match campaigns with their own bids. Then you add them as negatives in the discovery campaign so the two do not compete with each other. Repeat every week.
Keep traffic in the right lane
Add your brand name as a negative in non-branded campaigns, and competitor names as negatives in category campaigns. That routes each search to the campaign built for it, so a cheap branded sale does not flatter a category campaign that is actually losing money.
What is a good ACoS, and why does TACoS matter more?
ACoS (advertising cost of sale) is ad spend divided by ad-attributed sales. TACoS (total advertising cost of sale) is ad spend divided by all sales, paid and organic. Our ACoS guide goes deeper, but the short version is below.
Start with break-even ACoS
There is no universal good ACoS. The number that matters is your break-even ACoS, which equals your profit margin before advertising. If a product earns 30% after cost of goods, Amazon fees and fulfillment, then a 30% ACoS breaks even on each ad sale. Below it, ads are profitable. Above it, each ad sale loses money and must be justified by something else, such as rank, reviews or repeat purchase.
A common mistake is setting one ACoS target for a whole account. A product with a 45% margin and one with a 20% margin need very different targets. Set them per product.
Let the goal set the metric
The right measure changes with what you are trying to do with each product:
- Launch: spend above break-even on purpose to build velocity, reviews and rank. Judge it on rank and sales trend, for a defined window.
- Grow: spend near break-even to win share. Judge it on TACoS and new-to-brand customers.
- Profit: hold ACoS well below break-even on mature products. Judge it on contribution profit.
- Clear stock: tolerate a higher ACoS to move aged inventory. Judge it on units moved, not margin.
Why TACoS tells the fuller story
A rising ACoS alongside a falling TACoS usually means advertising is buying organic share, which is a good trade. A product whose ads look expensive may still be very profitable overall if most of its sales are organic. Before you cut ads on a product because its ad numbers look weak, check how much of its revenue depends on ads and whether the product is profitable in total.
How should you set bids and budgets?
Amazon's bid strategies
- Dynamic bids, down only: Amazon lowers your bid when a conversion looks less likely. The safe default for new and unproven keywords.
- Dynamic bids, up and down: Amazon can raise bids (up to 100% for top of search) when a conversion looks likely. Use it on proven, profitable keywords.
- Fixed bids: your bid stays constant. Useful for predictable spend or clean tests.
On top of these, you can add placement adjustments to bid more for top of search or product pages. A practical way to use all of this is a bid ladder: new keywords start with modest bids in discovery campaigns, graduate to exact match when they convert, and only receive aggressive bids once they have proven profitable over time.
How to split budget across ad types
There is no single right split, but the pattern by stage is consistent:
| Stage | Where most budget goes | What to add |
|---|---|---|
| New brand or launch | Sponsored Products, heavily weighted | Branded Sponsored Brands once the brand has search volume |
| Established, growing | Sponsored Products as the majority | Sponsored Brands and video for top of search, Sponsored Display for retargeting |
| Mature, strong organic rank | Sponsored Products still the base | More in Sponsored Brands, Display and DSP for reach and repeat purchase |
To size the total, work back from the revenue goal and the break-even ACoS of each product, not from a percentage of revenue picked from a blog post.
Protect budget when stock runs low
Running out of stock kills rank and wastes the ad money that built it. Tie bids to days of inventory cover. When cover drops to a few weeks, cut discovery and broad campaigns and keep only exact match. When it drops to about a week, pause everything except brand defense. When the restock is close to arriving, bring bids back up gradually. Our FBA and fulfillment team plans inventory and ads together for exactly this reason.
Want a second opinion on your ad account?
Book a free 30-minute strategy call. We will look at how your campaigns are structured, where spend is leaking, and what we would fix first.
How do you cut wasted ad spend without cutting sales?
A weekly search term routine
- Pull the search term report for every campaign.
- Find terms with clicks and no orders, and terms with an ACoS far above target.
- Add clearly irrelevant terms as negatives right away, at campaign level (for example "cheap" or flavors you do not sell).
- Graduate terms that convert into exact match campaigns, and negate them in the campaign they came from.
- Bid down, rather than kill, terms that convert but above target.
When to remove a keyword that has not converted
Do not cut a keyword on a fixed number of clicks. Use two tests, and remove it only when it fails both. The statistical test: has it had enough clicks that, at your normal conversion rate, you would expect several orders by now? A product that converts at 10% needs far more than ten clicks before zero orders means anything. The economic test: has it already spent more than an order would earn you? Cutting too early kills keywords that were about to work. Cutting too late funds terms that never will.
Read recent days with caution
Amazon keeps attributing sales to ads for days after the click, 7 days for Sponsored Products bought through Seller Central and 14 days for Sponsored Brands and Sponsored Display. The last week or two of data will always look worse than it ends up. Compare settled periods with settled periods before you judge a change.
Dayparting
Adjusting bids by hour or day can help when campaigns run out of budget by afternoon, or for products bought mostly during business hours. Look at at least 30 days of hourly data first. Amazon's schedule-based budget rules or rule-based automation can handle the adjustments.
A triage order for a messy account
If you inherit an account with dozens of campaigns, work in this order: campaigns hitting their budget cap early in the day; high spend with little or no sales in the last 30 days; ACoS well above target; campaigns getting no impressions; your top revenue campaigns, to protect their budget. Tidy structure and naming last.
What are the most common Amazon PPC mistakes?
- Advertising a weak listing. Ads send traffic; the detail page converts it. Fix title, images, bullets and A+ Content (enhanced brand content) before scaling spend.
- Set and forget. Bids, budgets and search terms need attention every week.
- Living on auto campaigns. They are great for discovery and poor for scaling.
- One ACoS target for everything. Targets belong at the product level, tied to margin.
- Judging ads on ACoS alone. Without TACoS and organic rank you cannot see what ads are really doing.
- Ignoring inventory. Spending into a stockout wastes money twice.
For more, see how to read your Amazon PPC reports.
How should CPG, retail-first brands and manufacturers approach Amazon PPC?
Brands that grew up in grocery, big box retail or distribution often come to Amazon with different economics and different risks.
- Low price points. A $12 product cannot support the same cost per click as a $60 one. Bundles, multipacks and Subscribe and Save offers raise order value and make ads workable.
- Brand defense first. If resellers or distributors already sell your products, your branded search is being contested. Branded campaigns and defensive display protect it while you get control of the listings with brand protection.
- Vendor Central brands advertise too. 1P brands run the same ad types through Amazon Ads. The difference is that Amazon sets the retail price, so margin math has to use your wholesale margin.
- Omnichannel lift. Amazon ads raise awareness that shows up in store and on your own site. Measure Amazon on its own profitability, but know the halo exists.
If you also sell on Walmart Marketplace or TikTok Shop, run ads with one view of inventory and margin across channels. Our multi-marketplace approach covers how.
When should a brand hire an Amazon PPC agency?
Running PPC yourself makes sense when spend is modest and someone on the team has hours every week to give it. Consider outside help when:
- Monthly ad spend is into the thousands and nobody owns it full time.
- You run more than 20 campaigns or more than a handful of products.
- ACoS or TACoS has been rising for three months or more.
- You want to grow but cannot do it without losing money.
We run PPC alongside listings, content, inventory and our own Kansas City 3PL warehouse, using our own AI analytics to watch bids, search terms and stock levels daily. For how agencies price this work, see our pricing page and our agency vs in-house comparison.
Frequently Asked Questions
What is a good ACoS on Amazon?
A good ACoS is one below your break-even ACoS, which equals your profit margin before ad spend. A product with a 35% pre-ad margin is profitable on ads at anything under 35%. Launch campaigns can run above break-even for a set period to build rank, and mature products should run well below it.
How much should a brand spend on Amazon PPC?
Work back from your revenue goal and each product's break-even ACoS rather than a flat percentage. Launches need heavier spend for a few months, while mature products with strong organic rank need less. Budget enough that your best campaigns do not run out of money before the end of the day.
Should I use automatic or manual campaigns?
Use both. Automatic and broad campaigns discover converting search terms, and manual exact match campaigns scale them with tighter bid control. Move winning terms from discovery into exact match every week and negate them in the source campaign.
How long does Amazon PPC take to work?
Expect two to four weeks before there is enough data to optimize with confidence, and around 60 to 90 days of steady weekly management before results stabilize. Remember that the most recent one to two weeks of ad sales are still being attributed, so they will look worse than they end up.
What is the difference between Sponsored Products and Sponsored Brands?
Sponsored Products promote a single listing in search results and on detail pages, and drive most direct sales. Sponsored Brands show your logo, a headline and several products or a video, usually at the top of search, and build brand recognition and Brand Store traffic.
Can Vendor Central brands run Amazon PPC?
Yes. 1P vendors run Sponsored Products, Sponsored Brands, Sponsored Display and DSP through Amazon Ads. Because Amazon sets the retail price, vendors should measure ad profitability against their wholesale margin, not the shelf price.