Selling on Amazon in 2025 involves more than just listing a product. With millions of products live on the platform, visibility depends on how effectively a seller uses Amazon's advertising tools.

Amazon Pay-Per-Click (PPC) is one of the main ways sellers get their products seen. PPC ads appear on search results and product pages, and sellers only pay when someone clicks an ad.

This article explains how Amazon PPC works, how its ad auction is structured, and how sellers can navigate that system to win placements and increase sales.

Understanding Amazon PPC And The Ad Auction

Amazon PPC is an advertising model where sellers pay only when shoppers click their ad. These ads appear in search results, product pages, and other placements across the Amazon platform.

Amazon uses a second-price auction to determine which ads appear and in what order. Each advertiser sets a maximum bid for a keyword. The winner is the advertiser with the highest bid, but they only pay $0.01 more than the second-highest bid.

For example, if Seller A bids $2.00 and Seller B bids $1.50, Seller A wins the auction. However, they pay only $1.51 per click, not the full $2.00.

Ad placement is not decided by bid alone. Amazon also evaluates how relevant a product is to the search. This includes factors like:

• Product title and description

• Keyword match

• Historical ad performance

• Click-through rate

• Conversion rate

In practice, Amazon's ad auction balances bid competitiveness with relevance. A lower bid can still win if the ad consistently performs well. This creates an environment where strategic bidding and listing optimization both play a role in ad visibility.

Choosing The Right Ad Types For Your Brand

Amazon offers three primary ad formats that serve different purposes in your amazon ppc strategy:

Sponsored Products Ads

Sponsored Products are ads that promote individual product listings. These ads appear in Amazon search results and on product detail pages.

When to use them: These ads work best when targeting shoppers who are already looking for a specific product and are close to making a purchase decision.

Cost and performance: Typical cost-per-click (CPC) ranges from $0.70 to $1.50. Conversion rates often fall between 10% and 15%, depending on the category.

To improve performance, optimize your product listings with high-quality images, clear titles, and bullet points that use relevant keywords.

Sponsored Brands Ads

Sponsored Brands ads feature a brand logo, a custom headline, and multiple products. These ads appear at the top of Amazon search results.

When to use them: Use these ads to increase brand awareness and promote a product portfolio, especially in earlier stages of the customer journey.

Key benefits: These ads can direct shoppers to your Amazon Store or a custom landing page featuring selected products, helping build brand recognition.

Sponsored Display Ads

Sponsored Display ads allow targeting based on customer behavior, not just search terms. These ads appear both on Amazon and on external websites and apps.

When to use them: These ads are effective for retargeting customers who viewed your product but didn't purchase, or for reaching new audiences with similar interests.

Targeting options: You can target by product interest, similar products, or even specific Amazon Standard Identification Numbers (ASINs).

Setting A Solid Starting Bid

A starting bid in Amazon PPC is the amount you're willing to pay when someone clicks your ad. Using a simple formula helps calculate a profitable bid:

Starting Bid = Product Price × Conversion Rate × Profit Margin

For example, if a product sells for $25, has a 10% conversion rate (0.10), and a 30% profit margin (0.30), the starting bid would be:

$25 × 0.10 × 0.30 = $0.75

This means $0.75 is a reasonable starting point for what you can spend per click while staying profitable.

Amazon provides suggested bids, but these don't account for your specific product performance or margins. They're helpful as a reference but may not be the most efficient option.

Amazon offers several bidding options:

• Dynamic Bids – Down Only: Amazon lowers your bid when a click is less likely to convert

• Dynamic Bids – Up and Down: Amazon adjusts your bid up or down based on conversion likelihood

• Fixed Bids: Your bid stays exactly as you set it

For beginners, "Dynamic Bids – Down Only" offers a good balance of control and optimization.

Structuring Your Campaigns For Success

A well-structured amazon ppc campaign helps organize ads by objective and manage your budget efficiently. Good structure directly affects how Amazon distributes your ad spend.

1. Automatic Campaign Setup

Automatic campaigns let Amazon decide which keywords and products to target based on your product listing. To set up an automatic campaign:

1. Select the product to advertise

2. Choose automatic targeting

3. Set a daily budget (typically $20-$50 to start)

4. Launch the campaign

These campaigns help discover which search terms lead to clicks and sales. After running for 1-2 weeks, review the search term report to see what's working.

2. Manual Campaign Setup

Manual campaigns give you full control over keyword selection and bid amounts. You can organize these campaigns by product category, campaign goals, or keyword themes.

Manual campaigns use three match types:

• Broad match: Ads may appear for search terms that include the keyword in any order or include synonyms

• Phrase match: Ads appear for search terms that include the keyword in the same order, possibly with other words before or after

• Exact match: Ads appear only when the search term exactly matches the keyword

For beginners, start with phrase and exact match keywords from your automatic campaign results.

3. Negative Keyword Management

Negative keywords prevent your ads from showing for irrelevant searches, reducing wasted ad spend. For example, if you sell premium headphones, you might add "cheap" or "free" as negative keywords.

Review your search term report regularly to identify terms that get clicks but no sales, then add these as negative keywords.

Essential Keyword Strategies

Keywords are the search terms that shoppers type into Amazon. Effective amazon ppc strategy depends on finding and using the right keywords.

1. Keyword Research Process

Finding good keywords involves using tools like:

• Amazon's search bar suggestions

• Helium 10

• Jungle Scout

• Amazon's Brand Analytics (if you're brand registered)

When selecting keywords, include both high-volume and mid-volume terms:

• High-volume keywords: Attract more clicks but can be expensive due to competition

• Mid-volume keywords: Often cost less and may convert more efficiently

Look at competitor listings to see what keywords they're targeting in their titles, bullets, and descriptions.

2. Keyword Harvesting Tips

Keyword harvesting means moving successful search terms from automatic campaigns into manual campaigns. This process:

1. Identifies which search terms are generating sales in your automatic campaigns

2. Moves these terms to manual campaigns as exact or phrase match keywords

3. Adds these terms as negative keywords in your automatic campaign to prevent overlap

Check your search term report weekly to find new converting terms and adjust bids based on performance.

Advanced Tactics To Reduce Wasted Spend

Reducing wasted ad spend helps improve your overall amazon ppc campaign performance. Two effective tactics include:

Using Negative Matches

Negative keywords come in two types:

• Negative phrase match: Blocks any search containing the phrase in order

• Negative exact match: Blocks only the exact search term

For example, if you sell premium coffee makers, you might add "cheap coffee maker" as a negative phrase match to avoid showing your ad to price-sensitive shoppers.

Add negative keywords at both the campaign level (affects all ad groups) and ad group level (affects only that group) depending on your needs.

ASIN Targeting For Competitor Products

ASIN targeting lets your ads appear on specific product detail pages. This works well for:

• Targeting competitor products with similar features but higher prices

• Promoting complementary products that go with what the shopper is viewing

• Defending your market share by appearing on similar product pages

Start with lower bids when targeting competitor ASINs, then increase bids for those that convert well. Monitor performance closely to ensure your ad spend generates positive returns.

Dayparting And Placement Optimization

Controlling when and where your ads appear helps maximize your amazon ppc advertising budget.

1. Setting Time-Based Bids

Dayparting adjusts bids based on the time of day or day of the week. This focuses ad spend during periods when conversions are higher.

To identify peak converting times:

1. Use Amazon's "Performance Over Time" reports

2. Look for patterns in when your sales occur

3. Increase bids during high-converting hours

4. Decrease bids during low-performing times

For example, if your products sell best between 7-10 PM, you might increase bids by 20% during those hours and decrease them overnight when fewer people shop.

2. Prioritizing Top-Of-Search Positions

Amazon offers multiple ad placements, with top-of-search generally performing best. To increase your chances of winning these premium placements:

1. Use placement modifiers in your campaign settings

2. Set a percentage increase specifically for top-of-search placement

3. Monitor performance by placement type

4. Adjust modifiers based on results

For example, if top-of-search placements convert at 15% while other placements convert at 8%, it makes sense to bid more for the top positions.

Measuring Performance And Scaling Up

Tracking the right metrics helps evaluate your amazon ppc campaign strategy and guide future decisions.

1. Tracking KPIs Like ACoS And ROAS

Key performance indicators for Amazon PPC include:

• ACoS (Advertising Cost of Sale): Ad spend divided by ad revenue (lower is better)

• ROAS (Return on Ad Spend): Ad revenue divided by ad spend (higher is better)

• CTR (Click-Through Rate): Number of clicks divided by impressions

• Conversion rate: Number of orders divided by clicks

Different business goals require different target metrics:

2. Split Testing Bids And Creatives

Split testing compares two versions of an ad to see which performs better. To run effective tests:

1. Change only one variable at a time (bid, keyword, or creative)

2. Run tests for at least two weeks

3. Gather enough data (100+ clicks per variation)

4. Compare results using ACoS, CTR, and conversion rate

For Sponsored Brands, test different headlines, product selections, or images to see what resonates with shoppers.

Where To Go From Here For Long-Term Growth

Winning Amazon ad auctions depends on three core strategies: relevance, data-informed bidding, and ongoing optimization. Amazon evaluates both bid amount and how relevant your product is to the customer's search.

A complete amazon ppc strategy combines keyword targeting, bid calculation, and campaign structure—each adjusted based on performance data. This helps ensure ads are shown to the right shoppers at the right time.

PPC campaigns work best when coordinated with other aspects of your Amazon presence:

• High-quality product listings

• Competitive pricing

• Consistent inventory availability

• Positive customer reviews

As your advertising grows more complex, consider using specialized tools or expertise to maintain efficiency. Agencies like Darkroom develop data-driven Amazon advertising strategies customized to each brand's goals and customer segments.

Schedule an introductory call to explore how Darkroom can help your business grow through effective Amazon PPC management.

Frequently Asked Questions About Amazon PPC

What is a good ACoS target for Amazon PPC campaigns?

A good ACoS varies by product lifecycle and margins—established products typically target 15-30% while new product launches may accept 40-70% to gain initial traction and reviews.

How often should I adjust my Amazon PPC bids?

Review high-volume keywords weekly and make adjustments, while conducting a comprehensive campaign review monthly to identify broader optimization opportunities.

What budget should I allocate for Amazon PPC when launching a new product?

Start with a daily budget of at least $50 per product for the first 30 days to gather enough data while maintaining visibility throughout the day.

How can I lower my Amazon PPC costs without losing sales?

Focus on improving your listing quality, implementing negative keywords, adjusting bids by placement, and using dayparting to concentrate spend during high-converting periods.

How do I know if my Amazon PPC campaigns are actually working?

Beyond ACoS, measure your total ACOS (including organic sales), track new-to-brand metrics, and monitor your organic rank improvements for targeted keywords.