Amazon PPC Basics: Sponsored Ads, ACoS and Bids Explained
Amazon PPC (pay-per-click) advertising puts your product in front of shoppers who are already searching. You pay only when someone clicks. Used well, it speeds up early sales and protects your ranking. Used carelessly, it burns money. This guide covers the basics.
The three main sponsored ad types
| Ad type | What it does | Best for |
|---|---|---|
| Sponsored Products | Promotes a single listing in search results and on product pages. | Almost every seller. Start here. |
| Sponsored Brands | Shows your logo, a headline and several products at the top of search results. | Sellers with Brand Registry and a product range. |
| Sponsored Display | Reaches shoppers on and off Amazon, including people who viewed your product. | Re-targeting and defending your own listings. |
The key numbers
- Bid: the most you are willing to pay for one click.
- CPC (cost per click): what you actually paid on average. It is usually lower than your bid.
- Impressions and clicks: how often the ad was shown, and how often it was clicked.
- CTR (click-through rate): clicks divided by impressions. A low CTR often means a weak main image, title or price.
- Conversion rate: orders divided by clicks. A low rate points to a listing problem, not an ad problem.
- ACoS (advertising cost of sales): ad spend divided by ad sales. If you spent 20 and the ads sold 100, ACoS is 20%.
What ACoS should I aim for?
There is no single good number. Work out your break-even ACoS first: your profit margin before ads, as a percentage of the selling price. If your margin before advertising is 30%, any ACoS above 30% loses money on each ad sale. During a launch many sellers accept a higher ACoS for a short time to gain reviews and ranking, then bring it down.
Auto vs manual campaigns
- Auto campaigns let Amazon choose the search terms. They are the easy way to discover which words customers actually use.
- Manual campaigns let you pick keywords and match types (broad, phrase, exact). Move the winning search terms from auto into manual so you control the bid on each.
A simple weekly routine
- Look at the search term report. Add terms that sold as exact-match keywords.
- Add negative keywords for terms that get clicks but no sales, so you stop paying for them.
- Lower bids on keywords with high ACoS. Raise bids on keywords that convert well but get few impressions.
- Check that the daily budget is not running out early on your best campaigns.
- Give changes a few days before judging them. Daily swings are normal.
Mistakes to avoid
- Advertising a listing with poor images, a weak title or no reviews. Fix the listing first. See our listing optimisation guide.
- Setting a very high budget on day one without watching results.
- Never adding negative keywords.
- Judging a campaign after one or two days.
Want someone to run your ads for you? Our team plans, launches and optimises Sponsored Products and Sponsored Brands campaigns, with bid control, negative keywords and clear reports. See our monthly plans and services, or learn the whole process in our Amazon selling course.
This guide is general information, not financial or legal advice. Amazon's fees and rules change, so always check the current pages in Seller Central before you decide.