What are Amazon Sponsored Products Ads and How Does it Work?

guides | April 4, 2024 | 7 min read

Whether you're just starting with your first product or reselling on Amazon for 6 years, Sponsored product ads are an incredibly effective way to launch a new product to potential customers.

Highlights

Learn about Amazon's pay-per-click advertising system, where sellers promote products on the platform.
Approximately 75% of Amazon sellers utilize Sponsored Products ads, comprising about 78% of all Amazon advertising spending.
SwiftStart PPC management company offers detailed Amazon SOPs to enhance product rankings and visibility.
Learn strategies for monitoring ad spending and setting target ACoS.

Why We Wrote This?

We wrote this content to provide sellers on Amazon with valuable information about Amazon sponsored product ads and how they work. We help sellers understand the basics of Amazon advertising, optimize their ad campaigns, and improve their sales and visibility on the platform.

So, in this guide, we’ll discuss Sponsored product ads, how they work, and 9 optimizing tips to boost your product ranking on Amazon.

What is an Amazon Sponsored Products Ads?

A Sponsored Products ad that helps you promote your products on Amazon. It works on a pay-per-click basis, meaning you only pay when someone clicks on your ad. These ads appear in Amazon search results when people look for products related to your chosen keywords.

Unlike other Amazon ads, like Sponsored Brands or Videos, anyone can set up Sponsored Products ads. That's why they're popular among sellers. About 75% of Amazon sellers use them.

Moreover, Amazon-sponsored product ads make up about 78% of all the money sellers spend advertising their products on Amazon.

How Does Amazon Sponsored Products Ads Work?

how much does amazon sponsored products cost

In sponsored Products ads, you compete with other sellers to get noticed by customers on Amazon. You pick specific keywords or products you want to target, hoping that people will see your ad when they search for those things. Then, you decide how much you will pay for each click on your ad.

When someone searches for something related to your ad, Amazon's system decides where to show it based on your bid. Depending on the bid level, your ad will appear at the top, in the middle, or even on the product pages of other sellers.

If someone clicks on your ad, you pay the amount you bid, whether they buy your product or not.

Optimizing Amazon PPC for Sponsored Products: 9 Helpful Tips

When setting up your Amazon Sponsored Products campaign or tweaking your Amazon PPC strategies, you might wonder how to arrange your campaigns and ad groups best.

Here are some guidelines to follow when doing Amazon PPC management.

Keep Your Campaigns Organized In A Consistent Way

Your Amazon PPC campaigns lay out the groundwork for your advertising efforts. This can be both helpful and tricky. Normally, a campaign structure might follow one of these patterns:

Grouping by product category (like men’s shoes, keyboards, cameras)
Grouping by brand (such as Nike, Adidas, Puma)
Grouping by top sellers (the products that sell the most, like the top 10)

It's important to stick to one method of organization for your campaigns. Changing it up could result in duplicate ads.

Put Similar Products Together In The Same Ad Group

Each ad group is made for a specific set of products and keywords. Since all the products in an ad group should be relevant to the keywords, you need to choose products that match those keywords. So, group together products that fit well with those keywords.

But remember: when you analyze the profitability of your Amazon ads, be cautious. Even if products in the same ad group share similar keywords, they might have different profit margins. This could affect how profitable your ads are.

Also, you can hire our SwiftStart Amazon PPC agency. We'll highlight where you can improve your listing and give tips to boost your sales, views, and importance on Amazon.

Make Separate Ad Groups For Keywords Of Different Specificity Levels

The more products you have, the more keywords you'll have at different levels of specificity.

For example, let's say you sell shoes:

The keyword "shoe" applies to all your shoes.
"Men’s shoes" applies to some of them.
"Men’s sneakers" applies to some men’s shoes.

If you put "men’s shoes" in all ad groups for men’s sneakers, boots, loafers, etc., you might lose track of which ads appear for keyword bids.

A simple fix is to put more general keywords in separate ad groups. For instance, ‘men’s shoes’ and ‘shoes for men’. Then, you can include your top-sel l ing products in these ad groups. Also, by utilizing SwiftStart PPC management agency Amazon SOPs Library, you can boost your rankings and visibility. We utilize detailed Amazon SOPs to help your product rank ahead of competitors.

Use Amazon's Automatic Campaigns

Set up an automatic campaign alongside a manual one with the same products. Let the automatic campaign run for a while, then see which search terms bring in the most sales. Transfer these search terms to your manual campaigns. Follow these automatic campaign tips to increase your sales:

1 automatic campaign with 1 automatic ad group.
1 manual campaign with 3 ad groups: broad (keyword), exact match (keyword), and ASIN targeting.
1 manual campaign with 1 ad group for category targeting.

Make Sure Your Ads Show Up For All Relevant Searches

Amazon wants to ensure that the ads on its website match what customers are searching for. Usually, ads are only shown for keywords mentioned in the product listing, like the title, attributes, description, and search terms.

Check if keywords aren't getting any views in your Amazon product listing. If not, add those keywords to your Amazon listing to ensure your ads appear on top and reach a wider audience.

Cut Down On Unnecessary Costs By Filtering Out Unwanted Searches

Amazon ads might not always show up for the exact keywords you've chosen to bid on. Search queries can vary, so avoiding spending money on irrelevant clicks is important. Here are two options:

Use different match types for your keywords.
Add Amazon negative keywords to your campaign.

You can also define negative keywords, which prevent your ad from showing when certain words are included in the search query. There are two types:

Negative Exact: Your ad won't show if the search query exactly matches the negative keyword or has a minor variation.
Negative Phrase: Your ad won't appear if the search query contains the negative keyword as part of a phrase or in its entirety.

Moreover, Swiftstart Amazon Oddit Reports offer detailed insights into the performance of keywords used in Amazon advertising strategies. Our reports analyze how well specific keywords drive traffic, clicks, and conversions for your products on the Amazon platform. So, contact us now and find new chances to succeed!

Track Your PPC Ads Spending

Keep track of your ad spending based on your products' performance.

In most cases, multiple products in one ad group share the same keywords. Over time, you'll see which products sell best within each ad group.

Your goal should be to maximize sales within each ad group by gradually removing products with poor performance. This focuses your efforts on products that convert clicks into purchases effectively, saving money by avoiding spending on low-converting products.

Set Your Target Advertising Cost Of Sales (ACoS)

Your target ACoS should be based on your campaign's goals. Your target ACoS will depend on your profit margin if you aim for profit.

Typically, target ACoS figures range between 5% and 15%. In the short term, you may be willing to accept a higher ACoS in order to boost the visibility of a new product.

Adjust Your Bids (CPC) For Optimization

The ideal bid varies for each keyword, so adjusting bids individually for manual campaigns is important. Make sure you have enough data before evaluating and adjusting bids—wait at least a week between changes. Concerned about hitting your target ACoS? Use SwiftStart Amazon PPC management services to adjust your bids to meet your goals automatically.

Here are some general principles for CPC bid optimization:

If your ACoS exceeds your target, try lowering your bid to see if you can improve your ad spend-to-sales ratio.
If your ACoS is lower than your target, consider raising your bid to increase your ad's reach and potential sales.
If specific keywords aren't generating sales or enough impressions, testing a higher bid might make them more active.
Stop bidding on keywords that only incur costs without generating conversions or can't be profitable.

Summary

Knowing how to use Amazon Sponsored product ads well can help sellers do better on the site. By understanding the basics and following our tips, sellers can get more people to see their products, sell more, and make smarter choices about spending money on ads. Plus, using SwiftStart PPC management services can make running successful ad campaigns on Amazon even easier.

Become A Part of The SwiftStart Community

SwiftStart can help optimize your Amazon listings and supercharge your sales in a jiffy. Swift offers FREE 1 ASIN report (Amazon PPC audit), affordable Image stacking, A+ recharge, SEO Listing, and PPC services to enhance your product listing, visibility, and sales. Moreover, our Amazon Catalogue Course will help you become an experienced Amazon seller.

Also, if you want to streamline your brand's operations without hiring an agency, our 450+ Amazon SOPs Library is your solution. So, don't miss out on the opportunity. Contact us today and take the first step toward elevating your Amazon brand's CRO.

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Frequenlty Asked Questions

How Much Does Amazon Sponsored Products Cost?

The cost of Amazon Sponsored Products varies depending on factors such as your bid amount, competition, and the type of products you're advertising.