Amazon PPC: A Complete Tutorial For Advertising Success (2023)

If you want to be successful on Amazon, you simply cannot ignore Amazon PPC advertising.

It’s a critical skill that every seller must embrace to maximize their sales and keep pace with the competition.

So, in this beginner-friendly guide, I’ll break down everything you need to know about Amazon advertising.

We’ll start with building foundations and understanding campaign formats.

Then we’ll look at how to create your first campaigns, optimize them for profitability, and finish up by helping you develop the ideal long-term Amazon PPC strategy.

Let’s dive in!

When you start selling on Amazon, getting your first Amazon PPC campaigns up and running as fast as possible is tempting.

But taking some time to understand key concepts can help build solid foundations that enable you to build stronger campaigns that can then be scaled faster.

What is Amazon PPC?

Amazon PPC (pay-per-click) is Amazon’s advertising platform that enables third-party sellers to run ads targeting certain keywords or competing products.

When customers search a particular query or visit a product detail page you can show an ad for your product.

This means you are tapping into a relevant, high-purchase-intent audience at a key time in their shopping journey.

Plus, the nature of the pay-per-click model means you only pay when someone actually clicks on your ad making them a very effective use of your advertising budget.

How much does Amazon PPC cost?

Amazon PPC works on an auction system whereby sellers can bid an amount they are willing to pay for a click.

You won’t always pay the maximum bid set for each click, but will instead pay one cent higher than the next highest bidder.

For example, let’s say you bid $1.50 on the keyword “blue yoga mat” and the next highest bid is $1.20, your winning bid would be $1.21.

As such, Amazon PPC costs will vary from product to product, but the key factors that will influence your overall costs will be:

1. The amount you bid
2. The amount competitors bid
3. How many clicks it takes to generate a sale

If your average cost per click (CPC) is $1.21 and it takes 10 clicks to generate a sale your cost per sale would be $12.10.

Most Amazon sellers will then look to allocate a certain percentage of revenue towards advertising and keep a close eye on a metric called ACOS, or Advertising Cost of Sale.

More on that later!

If you’re looking to get an idea of how competitive a product or category is before launching PPC, Helium 10’s Cerebro tool gives an estimated cost for each keyword:

If you see most relevant keywords are wildly expensive then it may be worth considering some alternative product options.

The importance of Amazon PPC

In an ideal world, you wouldn’t have to run any ads at all.

But in today’s market Amazon PPC is an essential skill to learn and deploy in your business for three key reasons:

1. You can reach page one on day one

Amazon PPC allows you to be in front of targeted, relevant and ready-to-purchase audiences from the very first day of a product launch.

And whereas other business models may require large investments in advertising campaigns upfront, Amazon PPC campaigns can be launched quickly and cost-effectively.

2. You can drive organic ranking

In recent years Amazon has changed both its terms of service and its algorithms to put an end to incentivized reviews and easily manipulated ranking strategies.

This leaves Amazon PPC ads as one of the most powerful – and safe – methods of driving initial sales that will boost your products higher in search results.

3. You get access to insightful data

Running PPC campaigns produces data points that are unavailable in other reports inside Seller Central.

For example, click-through rate is a metric that shows how often browsers are seeing your listing and clicking on it.

This is a vital metric in understanding how attractive your product offer is in search results, but the only way of seeing it is in Amazon PPC campaign reports.

These are just some of the benefits and an example of why PPC advertising is so essential for the modern-day Amazon seller.

Pre-launch optimization

PPC ads are a great tool but alone aren’t enough to bring you success on Amazon.

Spending money sending traffic to a poor-quality product or an under-optimized listing is like pouring water into a leaky bucket.

So before you launch an Amazon PPC campaign, ensure you’ve got these core elements in place:

1. Base product quality. A high-quality, well-differentiated product can become its own marketing machine and is one of the best investments you can make in your business.
2. Engaging images. Having a clear main image that stands out in search results will help attract more clicks on your ads. Then a set of well-thought-out infographics will inform browsers and convert them into buyers.
3. Benefit-driven copy. Make sure your listing copy doesn’t just describe what the product does (features), but also what the product does for the customer (benefits). Remember: features tell, benefits sell!
4. Attractive pricing and promotions. You shouldn’t wait until you have reviews before launching PPC on a new product, but running a special launch discount and/or coupon will definitely help.

The next stage in building solid foundations for high-performing Amazon PPC campaigns is understanding how you choose where your ads appear.

Amazon PPC is a form of search advertising that differs from social media ads you might run on Facebook or Instagram.

Rather than being driven by creative elements and interest or demographic targeting, it is – for the most part – built on a backbone of keyword targeting with some product targeting.

What are keywords?

Keywords are specific words or phrases that sellers use to target their ads to potential customers.

These keywords are what advertisers believe potential customers will use when searching for their products.

What are search terms?

Search terms are the actual words or phrases that shoppers type into the Amazon search bar.

In other words, these are real-life queries that shoppers use to find products on Amazon.

For instance, you might bid on the keyword “water bottle,” and when a customer searches “stainless steel water bottle for hiking,” your ad might show.

In summary, keywords are what you think your customers are searching for, and search terms are what they are actually searching for.

Both are crucial aspects of optimizing your Amazon PPC campaigns – a key part of the process we’ll get to later on.

What are negative keywords?

Negative keywords are a type of keyword that you can use to prevent your ads from appearing for certain search terms.

When you add them to your PPC campaign, you’re telling Amazon to avoid showing your ad for searches that include those terms.

This can help you avoid spending campaign budgets on irrelevant and poor-performing terms.

What are match types?

Match types define how closely a shopper’s search needs to match your keyword for your ad to appear.

They allow you to fine-tune how broad or narrow your keywords are.

Amazon provides three match types: Broad, Phrase, and Exact. Here’s a brief explanation of each:

Broad match keywords

This is the loosest match type.

If a customer’s search term includes all the keyword components in any order, your ad might show.

For example, if your keyword is “thick yoga mat”, your ad could show up for “thick mat for yoga”, “extra thick yoga mat”, or even “mat for yoga with thick padding”.

Phrase match keywords

This is more restrictive than broad match.

If a customer’s search term includes the exact phrase or sequence of your keyword, your ad might show.

For example, if your keyword is “thick yoga mat”, your ad could show up for “extra thick yoga mat”, but not for “thick mat for yoga”.

Exact match keywords

This is the most restrictive match type.

If a customer’s search term exactly matches your keyword (or its plural), your ad might show.

For example, if your keyword is “thick yoga mat”, your ad will only show up when a customer searches “thick yoga mat” or “thick yoga mats”.

The right match type to use depends on your specific advertising goals, budget, and the particular keyword you’re bidding on.

Later when walking through PPC campaign creation we’ll look at some factors that help you choose which keywords and match types to include.

When running ads on Amazon, you’re given three PPC campaign types to choose from:

1. Sponsored Product ads
2. Sponsored Brand ads
3. Sponsored Display ads

All three formats have their own benefits and use cases, so let’s look at a summary of each.

Sponsored Product ads

Sponsored Product ads are the foundational PPC campaign format all Amazon sellers should be using.

This format allows you to advertise products by targeting specific keywords and ASINs (product listings).

When launching Sponsored Product ads, you can use either automatic or manual campaigns.

Automatic campaigns

An automatic campaign is a type of PPC campaign that allows Amazon to use its own technology and data to choose where and when to show your ads.

Amazon uses information about your product, like the title, description, and category, to match your ads with relevant customer searches and products.

For instance, if you’re selling a yoga mat, Amazon might show your ad when someone searches for “yoga mats” or views a similar product.

Manual campaigns

Unlike automatic campaigns, a manual campaign will give you more control over where and when your ads show up.

You still set a daily budget for your ads, but instead of letting Amazon decide where to show your ads, you pick specific keywords, products, or product categories to target.

For example, if you’re selling a yoga mat, you might choose to target keywords like “yoga mats with straps” or “extra thick yoga mat”, or you might choose to show your ads next to specific brands of yoga mats.

Sponsored Brands ads

Sponsored Brand ads allow sellers enrolled in Amazon Brand Registry to promote their brand and a collection of their products.

The features of Sponsored Brand ads build upon the foundation of Sponsored Product ads and offer new creative and targeting options.

The options available to you are:

• Product collection ads: Formerly Headline Search Ads. Use your brand’s logo, a custom headline, and three or more products to drive traffic to an individual product page, brand storefront, or custom landing page.
• Store spotlight ads: Use your brand’s logo, a custom headline, and three or more product categories or subpages to drive traffic to your brand storefront.
• Video ads: Use a short video ad to promote a single product and drive traffic to that specific product detail page.

While many see the primary purpose of Sponsored Brand ads as increasing brand awareness at the top of the funnel, they can also act as a good direct response option and can convert sales just as well as Sponsored Product ads.

Sponsored Display ads

Sponsored Display ads are the most advanced form of Amazon PPC campaign with a number of unique features.

They are designed to help Amazon sellers reach relevant audiences both on and off Amazon throughout the customer’s shopping journey.

They can also be used to show ads to shoppers who have already visited your product details pages but not yet purchased – a strategy known as retargeting.

Sponsored Display ads are much more complex in nature and as such should generally only be explored once you’ve dialed in the other formats.

Overall, Sponsored Product ads make up 80% or more of an average seller’s Amazon advertising budget, so we’ll focus on this format for the remainder of this guide.

The first and easiest campaign you can set up is an automatic targeting campaign.

With this campaign, you won’t have to provide any keyword targeting or product targeting, but there are still a few things to set up.

1. Create your PPC campaign

To get started, head to Amazon Seller Central and navigate to Campaign Manager.

Click on the “Create campaign” button:

Then click “Continue” under the Sponsored Products option:

2. Define ad group settings

Ad groups sit within ad campaigns and can be used to separate out strategies such as using different match types.

When starting out, I’d recommend sticking to one ad group per campaign.

This helps keep things simple for you to manage but also is a best practice for having more control over how your budgets are spent.

You’ll be prompted to create an ad group name:

You can create one now, or what I do is come back later with my campaign name copied, then paste it here and add ‘ad group’ onto the end.

3. Select products to advertise

You’ll need to select at least one ASIN to advertise within each of your ad campaigns.

Again, to keep things streamlined and budgets under control I’d stick to one ASIN per campaign.

If you have closely related variations like color or size you can include these if you want to, but otherwise, keep it to just one product.

To select your product, find it in the list or search with some keywords and then click the “Add” button:

4. Choose a targeting strategy

Choose automatic targeting:

5. Set default or grouped bids

With automatic campaigns, you don’t give Amazon-specific keywords to bid on, but you do still get two options for bidding:

1. Set a default bid that applies at all times
2. Set bids by targeting groups

Amazon introduced four targeting groups to give you slightly more control with automatic campaigns.

Here’s what each one means:

• Close match: Search terms closely related to your product. e.g. for a coffee maker, terms like “coffee machine”.
• Loose match: Search terms loosely related to your product. e.g. for a coffee maker, terms like “coffee gift ideas”.
• Substitutes: Products that are similar to your product. e.g. for a coffee maker, your ad may show on listings for coffee makers from other brands.
• Complements: Products that are similar to those often bought alongside products like yours. e.g. for a coffee maker, your ad may show on listings for coffee.

If you want to keep things easy you can set a default bid, then adjust these groups later on based on how they are performing.

6. Set negative targeting options

In an automatic targeting campaign, you’ll have the option to add both negative keywords and negative products.

Remember, entering negative keywords means your ads won’t show for these searches.

The same is true for negative product targeting.

If you already have some performance data from previous PPC campaigns or have specific terms you are absolutely certain won’t convert, enter them here.

But for the most part, you can leave this blank for now and add negative keywords and products later when optimizing your PPC campaigns.

7. Choose a campaign bidding strategy

Amazon gives you the option to set a bidding strategy across each campaign.

This will take either your default or grouped bids and modify them as follows:

• Dynamic bids – up and down. Bids can be raised in real time by up to 100% when your ad may be more likely to convert to a sale and lowered when less likely to convert to a sale.
• Dynamic bids – down only. Bids can be lowered in real time when your ad may be less likely to convert to a sale.
• Fixed bids. Amazon will use the bids you set without any adjustments.

In our Amazon PPC Masters course I advise members to avoid “Dynamic bids – up and down” as you lose much of the control our Amazon PPC strategies rely on.

Then it’s a bit of a toss-up between the other options.

I used to use “fixed bids” exclusively, but more recently have been using “Dynamic bids – down only.”

I haven’t seen a great deal of difference in performance but it’s certainly something you can test out.

You also have the option to adjust bids by placement:

This allows you to prioritize certain placements like “top of search” which tend to have better conversion rates.

You can add a percentage modifier to increase the bid for that specific placement.

For example, you could bid $1 as a standard, but add a 100% modifier for top of search and would then bid up to $2 for the same keywords only to win top of search placements.

This is more of an advanced optimization and I’d recommend leaving it blank when creating your first campaigns.

8. Confirm campaign settings

Finally, you’ll need to set a few campaign-wide options in place.

You should give your campaign a name and I’d highly recommend using a naming convention to keep things consistent and organized.

I like to use a structure like “Campaign Format – Product – Campaign Type”, so a Sponsored Products campaign advertising my blue yoga mat with exact match keywords might look like “SP – YOGA-BL – Exact”.

You can add each Amazon PPC campaign to one portfolio to help with organization.

You’ll also need to set a start and end date. These can be left as they are – starting immediately and without an end date.

And finally, you’ll need to set a daily budget.

Start with a budget you’re comfortable with and keep an eye on it – ideally, you want to make sure it doesn’t run out through the day.

If you want more control over where your ads show, a manual targeting campaign will help you do just that.

Here’s how to set them up:

1. Create your campaign

Follow steps 1-3 from the automatic targeting campaign setup, then at the targeting strategy step, choose Manual targeting:

2. Choose keyword or product targeting

Next, you’ll need to choose between keyword targeting and product targeting:

3. Enter your list of targets

This is where your manual targeting campaign will start to look different.

Depending on whether you choose to target keywords or products, the setup will be slightly different.

Keyword targeting

When targeting keywords, you’ve got three options:

1. Use Amazon’s suggested keywords
2. Manually enter a list of keywords
3. Upload a file containing your keywords

For a quick, easy start you can use Amazon’s suggested list and choose the most relevant keywords.

Or to have a bit more control over the process, carry out some PPC keyword research and enter your list:

Don’t forget to choose a match type, again keeping it simple by sticking to one per campaign.

And finally, set a bid for each keyword.

You can use Amazon’s suggested bid, set a generic bid across all keywords (eg $1.00), or calculate a custom bid.

Product targeting

Targeting products differs slightly in that you can target individual products and also product categories.

For categories, Amazon will suggest those that are a good fit but you can search the options too.

When targeting individual products you’ll again get suggested options or have the ability to search, enter a pre-prepared list, or upload a file.

You can choose to target an exact product or choose the “Expanded” option to also target products that are a close match to your selections.

Set your bids just like you would for keywords, and you’re all done with this step!

4. Set negative targeting options

Both automatic and manual targeting campaigns give you the ability to add negative targeting keywords, and the process is exactly the same.

However, when launching your first campaigns this isn’t something you should focus too much on.

Instead, we’ll cover how you can use a negative targeting list effectively in the upcoming optimization and strategy sections of this guide.

5. Finalize campaign settings

Just like with automatic campaigns, you’ll need to finish up by setting a campaign bidding strategy, campaign name, start and end dates, and daily budget.

Your campaigns are now ready to launch and start making sales!

You’ll soon notice that just because you’ve launched PPC campaigns, it doesn’t mean your work is done.

In fact, it’s only just beginning.

Like a healthy garden that needs continual weeding, for Amazon ads to be effective over the long term you’ll need to apply a similar schedule of maintenance.

Thankfully Amazon will provide a lot of data to help you measure and improve the cost of your ad campaigns and the return they are generating.

You can then use this data to optimize PPC campaigns with these four steps:

1. Download your advertising report

The first thing you need is the data itself which you’ll find in what is called a Search Term Report.

Here’s how to find it:

1. Log in to Amazon Seller Central
2. Navigate to Reports > Advertising Reports

3. Click the Create Report button
4. Under “Report type” check “Search term” is selected
5. Choose the 30-day period

Your report will download and when open will look like this:

2. Locate the metrics that matter

Looking at your Search Terms Report for the first time can be a bit overwhelming, but don’t worry – you’ll get used to it in no time.

The key is understanding the metrics that matter, and that comes in two phases:

Phase 1: Target ACOS

ACOS means Advertising Cost Of Sales and is a unique Amazon metric that gives sellers a clear indication of how their ads are performing.

To calculate ACOS, you divide ad spend by ad sales and multiply by 100.

For example, if you have spent $20 on Amazon PPC and that has generated $100 in sales then your ACOS would be 20%.

ACOS is one of the columns in your Search Terms Report and locating this will help you quickly and easily analyze ad campaigns.

ACOS is essentially a summary metric that can only actually be improved by optimizing these other crucial Amazon PPC metrics:

• Impressions. The number of times your ad has appeared in search results.
• Clicks. The number of clicks on your listing once your ad has gained an impression
• Click-through rate (CTR). The percentage of shoppers who, having been shown your ad (an impression) go on to click through to your listing.
• Cost-per-click (CPC). The average amount each click has actually cost you. Differs from bid amount due to the Amazon ads auction system – you won’t always pay your max bid.
• Orders. The number of sales you have made that are attributed to your PPC campaigns.
• Conversion rate (CVR). The number of orders you receive in comparison to how many clicks your listing gets.
• Average order value. The average amount customers spend per order when buying from you.
• Ad spend. The total amount of money spent on Amazon PPC.
• Ad sales. The total amount of money generated with Amazon PPC.

The most important of these are CTR, CVR, and CPC, and we’ll cover how to improve them in the next part of this optimization section.

For now, though, we just need to set a target ACOS that will act as a reference point that we optimize toward.

Defining what that should be really depends on your business goals and timeline.

To be more aggressive and maximize reach set a higher target ACOS and to improve profitability shoot for a lower target ACOS.

Most sellers find a good starting point is a breakeven ACOS which is equivalent to your profit margin.

For example, if your profit margin before Amazon ads is 30%, your breakeven ACOS would also be 30%.

This means if you hit your target ACOS, your Amazon PPC investment is covered by the proceeds of the sale and is not costing you anything extra.

Worried about where the profit will come from?

Fear not – that’s where TACOS comes in.

Phase 2: Target TACOS

As the name suggests, TACOS is a very similar metric to ACOS.

TACOS stands for Total Advertising Cost Of Sales and is calculated by dividing total ad spend by total sales generated (from both ads & organic).

For example, if you spent $20 on advertising and generated $100 in PPC sales, plus a further $100 in organic sales, your ACOS would be 20% but your TACOS would be 10%.

This is such a crucial metric to analyze because it shows you how effective your Amazon PPC campaigns are at driving organic visibility and overall profitability.

The more a product matures, the more you want to see your ACOS and TACOS separate.

A static ACOS but a declining TACOS is a great sign that your ad spend is driving more and more organic sales and overall profitability.

Most sellers find a good long-term TACOS goal is 10%, but that can depend on a number of factors such as the competitiveness of your category.

3. Implement an optimization schedule

Once you’ve got to grips with the key metrics, the next step is optimizing them.

To do this, you need a regular schedule of tasks you perform to weed out poor performance and pour fuel on the fire of good performance.

The key is to consistently turn more impressions into clicks (CTR), more of those clicks into sales (CVR), and keep click costs (CPC) down.

Here’s how:

1. Optimize for relevance

Running ads for irrelevant searches will result in a sub-optimal click-through rate.

That can easily happen when launching new campaigns if your targeting is relatively broad.

To remedy this, the first step of a good optimization schedule is negating search terms with a low click-through rate.

Filter your advertising report for search terms or ASINs with at least 1,000 impressions and a CTR of under 0.2%.

Then add these results as negative keywords or ASINs by locating the ad group they were found in inside Campaign Manager.

Then click “Negative targeting”, and then the “Add negative keywords” button:

Add them as negative exact keywords and your ads won’t appear for these search terms anymore.

Remember though, improving CTR is not only an Amazon PPC issue but also a listing issue.

Getting more reviews, adding coupons, and testing variations of your main image all play a big part too.

2. Optimize for conversions

The next victim of our keyword cull is those that have at least 20 clicks but achieved 0 sales.

In time you can bring this click threshold down to 15 or even 10 to improve your overall conversion rate, but 20 is a good place to start.

Filter your report to find the culprits:

Then follow the same process to add them as negative targets.

Just like click-through rate, there are a number of listing optimization areas that play a big role in conversion rate.

Keep adding and improving images, A+ content, benefit-driven copy, and product videos to boost that CVR over time.

3. Optimize for profitability

This step is all about improving your cost-per-click.

To do this, filter your report for targets that are over your target ACOS.

Then lower the bids by:

• 10% if ACOS is 1-2x your target ACOS
• 20% if ACOS is 2-3x your target ACOS
• 30% if ACOS is >3x your target ACOS

For example, if your target ACOS is 30% and one keyword has a 50% ACOS, reduce the bid by 10%.

If another keyword has an ACOS of 70%, reduce the bid by 20%, and so on.

You can adjust these parameters to suit your needs, but this gives you a good guide to start with that will help reduce CPCs on expensive targets.

4. Drive expansion

When studying your report you’ll hopefully find some results where your actual ACOS is below your target ACOS.

While you may be tempted just to let these ride, they are an opportunity for expansion.

By increasing bids on these keywords & ASINs you can win more impressions, more clicks, and make more sales.

An easy place to start is simply by increasing the bids by 10%, but if the ACOS is super low you could increase it by more.

Carrying out these four steps each week (or as often as you feel necessary) will help keep your Amazon PPC campaigns heading in the right direction.

4. Use software to save time

Most beginners find a manual approach works just fine, but as your sales grow an Amazon PPC tool can help save a lot of time.

Optimizations can be applied automatically by using rule-based algorithms meaning you don’t have to go in and apply each and every change inside Campaign Manager.

Plus, many tools enable you to create campaigns, make manual adjustments, and a whole host of other functions.

I’ve tried a lot of tools over the years and, honestly, some are far better than others.

So, for an up-to-date guide on our top recommendations, you can read our full Amazon PPC tools guide here.

Or if you’re looking to outsource completely, check out our guide on the best Amazon PPC management agencies.

So, you now know how to create the different types of Sponsored Product ads, but how does each fit into your overall strategy?

There are three distinct phases to a good Amazon PPC strategy:

1. Launch

When launching new products – and therefore Amazon PPC campaigns – your number one focus should be driving page one organic ranking.

Amazon PPC is the perfect tool to do this as you can be very specific about the keywords you target.

To make the most of the so-called “Honeymoon Period“, we always recommend launch-specific manual campaigns.

These campaigns should be hyper-targeted using the most relevant, high-volume keywords in order to send key relevancy signals to the Amazon algorithm.

When shoppers search these terms then click on your ads and buy it will boost your organic ranking and help establish your product.

2. Establish

Once a product begins to mature you can add some broader targeting campaigns to get more reach and test more keywords and ASINs.

A simple starting point for this is a three-campaign structure for each product:

1. An automatic campaign for research
2. A manual broad match campaign for expansion
3. A manual exact match campaign for scaling

Over time, the goal is to “harvest” as many relevant and profitable keywords promoting them from one level to the next.

This should leave you with a highly concentrated list of long-tail keywords that you can pour as much budget as possible into.

While long-tail keywords often have lower search volume they are usually more specific, convert better, and have lower competition (and therefore click costs).

Following this process and establishing a healthy campaign structure will help lay the foundations to scale your advertising to the next level.

3. Scale

As you begin to get the hang of things you can also start to test a lot of other strategies and Amazon PPC campaign formats.

Using Sponsored Brands to add headline search ads and video ads targeting your best keywords is a quick and easy win.

Then as you begin to maximize the opportunities with Sponsored Products and Brands you can also look at Sponsored Display ads.

The key is to keep testing things in order to continually create new avenues for growth and increase your market share.

Amazon PPC is a complex skill to learn and develop, but by following this beginner’s guide you’ve got the foundations you need to move forward in the right direction.

Take one step at a time, stay committed to your learning journey, and make the most of the big opportunity advertising on Amazon provides.

If you are interested in more in-depth learning about Amazon advertising, explore our 11-module Amazon PPC course today.