What is Amazon Advertising? A Beginner’s Guide

According to a recent research, more than half of the shoppers (56% to be exact), start their product searches on Amazon. Compare that to Google at 42%, Walmart at 29%, YouTube at 13%, and Facebook trailing with 10%. It’s clear: Amazon isn’t just a place that offers a great way to shop, it’s the place to discover products, making it an important player in the digital landscape. 

What started as an online bookstore has quietly evolved into one of the most influential advertising platforms in the world. And smart brands are taking notice. 

In this article, we are going to dive into the A-Z of Amazon advertising with a focus on the following questions:

• What is Amazon advertising? 

• What are the benefits of Amazon advertising?

• What are the different types of Amazon ads?

• How to optimize your Amazon ads? 

• How can atom11 help? 

  
  

What is Amazon Advertising? 

Amazon advertising (formerly called Amazon Marketing Services) is a service offered by Amazon that connects sellers with millions of shoppers through strategic paid placements. 

How does Amazon advertising work? Well, this platform operates on a pay-per-click (PPC) model — you only pay when a potential customer clicks your ad, regardless of whether they purchase.  It’s quite similar to the PPC model of Google.

 These strategic ad placements appear across high-visibility locations including:

• Search results pages (most common)

• Amazon homepage

• Product detail pages

• Competitor listings

• Third-party websites via Amazon DSP

Here is a sample Amazon ad on the search results page:

What are the Benefits of Amazon Advertising?

Here are some key benefits you will experience from adopting Amazon advertising:

Detailed Targeting Options

Amazon gives you flexible control over how you reach customers. You can target shoppers by selecting specific keywords, including exact matches, and even exclude irrelevant terms using negative keywords. Additionally, you can use ASINs (Amazon Standard Identification Numbers) to fine-tune targeting. 

Beyond keywords, you can place your ads directly on product detail pages, ideal for showing up alongside competitor listings and capturing high-intent traffic.

Highly Cost-Effective 

There are two reasons why we claim Amazon advertising to be highly cost-effective. One, it works on the CPC model. This means you pay only when someone clicks on your ad and get value out of every dollar spent. Two, the conversion rates on Amazon are generally higher than on other platforms. The average conversion rate of Amazon hovers around 9.58%. This is more than double the conversion rate of Google which stands at 4.40%. 

Thanks to detailed targeting options in Amazon and high intent audience, you can avoid wasted impressions and focus your budget where it counts most.

Cross-Device Reach

Today’s shoppers move between devices. They browse for products on mobile during a commute, compare them on a laptop at work, and complete their purchases on a tablet before hitting their bed at home. Amazon Advertising is designed to follow this behavior. 

Your ads can reach users seamlessly across desktops, smartphones, tablets, and even Amazon-owned devices like Fire TV. This ensures that no matter where your audience is browsing or what device they’re using, your brand stays visible and top-of-mind.

Access to High-Purchase-Intent Audience

Amazon users typically come with high purchase intent. After all, they’re actively searching for products to buy, not just trying to consume content. This significantly shortens the sales cycle compared to other advertising platforms where users need to access multiple touchpoints before converting. This is especially valuable for brands that want to drive quicker conversions.

Offers Powerful Analytics and Reporting Functions

Amazon’s advertising platform comes with detailed analytics and reporting tools. You can easily track how your campaigns are performing in real time, which helps you adapt quickly to shifting consumer behavior and fine-tune your targeting strategy.

Whether it’s adjusting bids, refining creative, or exploring new ad formats, Amazon’s data helps you make smarter marketing decisions.

How Much Do Amazon Ads Cost?

Good news! Amazon Ads are designed to suit any budget. This makes it very easy to get started, even with as little as $10. There’s no minimum spend required for any of the sponsored ads campaigns, and because they operate on a cost-per-click basis, you only pay when someone clicks on your ad. 

When setting up a campaign, you control how much you’re willing to bid per click and define your own budget. You’ll never be charged more than your bid. 

Having said that, the current average CPC on Amazon is $0.98. This means you will pay about 98 cents every time someone clicks your ad. For example, if 100 people click your ad, you will spend around $98 in total.

Pssst! Want to know if your Amazon ad spend is delivering optimal returns? Try our free Amazon PPC Spend Audit Calculator today!

For Sponsored Products and Sponsored Display, you set a daily budget (your maximum spend per day). Sponsored Brands, on the other hand, gives you the flexibility to choose between a daily budget or a campaign-level budget, which is the total amount you want to spend over the entire campaign. 

Note: Daily budgets can be adjusted up or down anytime, while campaign-level budgets can only be increased. So if you want more flexibility, a daily budget may be the better choice.

What are the Different Types of Amazon Ads?

Here are the three main types of Amazon ads that are prominently used by advertisers:

Sponsored Product Ads

The most popular ad format on Amazon, these ads display individual products directly in search results with a "Sponsored" label. Their effectiveness comes from:

• High visibility placement - appears above, within, or below search results

• Direct product targeting - targets specific keywords or product categories

• Simple setup process - just select keywords, set bids, and launch

• Immediate product page access - one click takes shoppers to your detail page

These ads effectively divert traffic away from competitors while giving your products premium positioning. They perform exceptionally well for both established products and new launches.

Sponsored Brand Ads

Amazon sponsored brand ads were formerly known as Headline Search Ad. This ad type lets you promote three or more products while driving traffic to one of three destinations: 

• Your Amazon Store

• Product-focused brand page

• Custom Amazon landing page like a best-sellers list. 

These ads appear prominently at the top of search results, giving your brand prime visibility. However, competition can be tough, sometimes even with Amazon’s own products. This means you might end up needing to outbid even Amazon for top ad placement. 

It’s also worth noting that sponsored brands ads are only available to sellers enrolled in the Amazon Brand Registry. When used strategically, they can be an excellent asset to boost brand awareness.

Sponsored Display Ads

Sponsored display ads, which are one of the sponsored ads solution,  allows you (whether you sell on Amazon or not) to reach relevant audiences within the Amazon store and across third-party websites and apps. These ads offer two main targeting options: 

• Contextual targeting: Shows ads to shoppers browsing products or categories similar to yours.

• Audience targeting: Shows ads to shoppers based on their interests and shopping behaviors.

Sponsored display ads can appear on Amazon product detail pages, the homepage, owned platforms like Twitch and IMDb, and across Amazon's broader advertising network. Ad placements are automatically optimized based on your targeting strategy. 

You can choose between cost-per-click (CPC) or cost-per-thousand viewable impressions (CPM) pricing models. This offers immense flexibility depending on whether the goal is driving traffic or increasing visibility.

You can experiment with different creative formats including static images and video creatives. This enables you to showcase products visually or through short, engaging videos.

How to Optimize Your Amazon Ads?

Here are some expert tips to optimize your next Amazon ad and get the most out of your ad spend:

Ensure that your PPC Strategy revolves around your Goals

Before launching your Amazon PPC campaigns, take time to define your primary objectives  beyond simply "more sales". Most common goals include: 

• Driving sales

• Improving organic rankings

• Moving out older inventory

• Building brand awareness

• Attracting new customers

Each of the above goals requires a distinct strategic approach. By having goals that go beyond the general desire for "more sales," you end up making smarter decisions around campaign structure and budget allocation. 

For instance, attracting new customers may involve testing broader keyword match types to expand reach. And, if your goal is improving profitability, you might be better off with a more narrow, exact-match keyword focus to reduce wasted spend.

Similarly, if your goal is brand awareness, focus on impressions and click-through rate. If it's sales growth, monitor conversion rate, ACoS, and TACoS. If you're targeting profitability, dive into SKU-level performance and identify where ad spend delivers the most margin.

Ultimately, your goals should drive your Amazon ad campaign and ensure that every element of your Amazon advertising strategy is aligned with what matters most to your business.

Focus on Keywords

Keywords determine when and where your ads appear, and whether they reach the right customers at the right time. To optimize for this, you need to conduct in-depth keyword research to uncover high-converting relevant keywords your audiences are actually searching for. 

While performing keyword research manually is time-consuming and resource intensive, you can always use tools like Search Harvester of atom11 that can give you enhanced control over keyword optimization. 

Through its customizable rules, you can automatically harvest high-performing keywords, filter out underperforming ones, and fine-tune your campaigns and bids to match your strategy.

Apart from this, you can adopt the following best practices when it comes to optimizing keywords for your Amazon PPC ad:

1. Target specific phrases like "chestnut brown hair color" instead of broad terms like "organic hair color" to reach high-intent shoppers with less competition and higher CTR.

2. Organize keywords by user types, materials, or features (e.g., weighted blankets for kids vs. adults). This clear segmentation reveals which audiences convert best.

3. Adjust bids based on data. Increase for converting terms, lower or pause underperformers. This performance-driven approach allocates budget to what's working.

4. Use negative keywords which are words or phrases that prevent your ads from being triggered by certain search terms. They filter against irrelevant traffic, ensuring your ads are displayed only to those genuinely interested in your product.

Optimize your Product Listings

When shoppers click your Amazon ad, they're already interested in buying. Your product detail page is where that interest either converts to a sale or disappears. With Amazon's average conversion rate of 9.5%, a well-optimized listing can push your performance well above the norm.

Here are 5 key areas in your product listings that you need to focus for maximum impact:

• Competitive Pricing: Your product’s price must align with market expectations to drive conversions and improve your campaign’s efficiency. Monitor what similar products are charging and adjust your prices accordingly. Even a small pricing advantage on Amazon can tip the scales in your favor.

• Product Titles: Titles heavily influence ad relevance and click-through rates. So use titles that are clear, keyword-rich, and focused on your product’s top selling points. A strong title will capture attention the moment a shopper lands on your page.

• Product Reviews: Products with social proof are more likely to turn clicks into sales. Remember, most shoppers trust peer feedback. So promote products with plenty of positive reviews and high ratings. This will build trust and reduce hesitation.

• Images and Videos: A good visual will communicate value to users who land at the product details page. Upload at least four clear, high-resolution images showing your product from various angles. Include lifestyle photos and a short video if possible.

• Product Benefits: Make your product benefits easy to digest. Use bullet points to clearly outline key features, specs, and use cases so shoppers can quickly see why your product is right for them.

Pro Tip: Test different elements of your listing to identify what converts best. Small improvements to your detail page can significantly increase your advertising ROI by converting more of those expensive clicks into actual sales.

Choose the Right Bidding Strategy

The right bidding strategy on Amazon can make or break your ad campaign. It affects how often your ad is shown and how much returns you get on your investment. Amazon offers several bidding strategies to suit different campaign goals. Here’s how each one works and when to use them:

• Dynamic Bids (Down Only): This strategy allows Amazon to lower your bid in real time when it's less likely that a click will lead to a conversion. It’s a conservative approach designed to save you money on low-performing traffic. It is best for:

  • Advertisers looking to minimize wasted ad spend

  • Campaigns testing new keywords or products

  • Conservative budgets

  
  

• Dynamic Bids (Up and Down): With this option, Amazon increases your bid when there’s a higher likelihood of conversion and decreases it when the likelihood is low. It’s ideal for advertisers focused on driving more sales through adaptive bidding. It is best for: 

  • High-performing, sales-driven campaigns

  • Products with good conversion history

  • Top-of-search or high-competition placements

  
  

• Fixed Bids: Fixed bids keep your bid amount constant, regardless of the chances of conversion. This method gives you the most control over what you’re paying but doesn’t adjust for fluctuations in buyer behavior. It is best for: 

  • Brand awareness campaigns

  • Predictable ad spend

  • Broad reach across placements

  
  

• Rule-Based Bidding: This strategy lets you set custom rules that adjust bids based on your performance goals, such as ROAS, CTR, or conversion rate. It’s suitable for advanced advertisers who want automation without giving up control. It is best for:

  • Experienced advertisers

  • Campaigns with clearly defined performance goals

  • Those using analytics to guide strategy

  
  

Not sure how to get it right? Try our free Amazon real bid calculator!

Start with Automatic Campaigns, then refine with Manual 

Amazon offers two fundamental targeting approaches for advertisers:

Automatic Targeting: Amazon's algorithm determines when to show your ads based on your product information. These campaigns match your ads to relevant searches and product pages automatically.

Manual Targeting: You select specific keywords (broad, phrase, or exact match) or ASINs to target. This gives you control over individual bids and greater budget efficiency.

If you're new to Amazon PPC, automatic targeting is the fastest and simplest way to succeed. Interestingly, auto campaigns aren’t just beginner-friendly; they’re also a goldmine for keyword discovery. 

After running your auto campaign for a while, you can review the search term report to see which terms customers actually used to find and buy your product.

Once you spot a winning term, add it as an exact match keyword in your manual campaign. This approach helps ensure your ad only shows for highly relevant searches. This drives better conversion rates and minimises wasted ad spend.

Monitor Ad Performance and Course-Correct

Optimizing your Amazon PPC campaigns should always end with closely tracking the right performance metrics. Keeping an eye on the below data points helps you identify what’s working, what’s not, and where to adjust for better results:

• Spends: This is the total money you have spent on your Amazon ads. It is quite useful for budgeting. 

• Impressions: This is the number of times your ad is displayed to users. High impressions indicate your ads are being seen frequently.

• ACoS (Advertising Cost of Sales): It is the ratio of ad spend to sales generated from those ads. A lower ACoS means you’re spending less to generate sales, indicating a more cost-effective campaign.

• ROAS (Return on Ad Spend): It is the revenue generated for every dollar spent on advertising. The higher the ROAS, the more revenue you're earning for each dollar spent, making it a key profitability indicator.

• CTR (Click-Through Rate): It is the percentage of impressions that resulted in clicks. A higher CTR usually means your ad content is compelling or your targeting is accurate. 

• CVR (Conversion Rate): It is the percentage of clicks that result in a desired action, such as a purchase. A high CVR means users are not only clicking but also buying, signaling strong post-click performance.

Amazon’s Advertising Console provides reporting tools to help you track these metrics in real time. For more effective performance management, you can utilize the powerful analytics tools of atom11. It offers the following features: 

• PPC Spend Profile: Analyze ad spend by ASIN, campaign type, or placement to uncover margin-improving opportunities.

• Sales Trend Dashboard: Track ASIN-level trends across daily, weekly, or monthly views. No multiple reports needed.

• Root Cause Analytics: Identify what caused sales fluctuations between periods, including shifts in ad spend, AOV, and page views.

• Digital Shelf Insights: Monitor organic and sponsored keyword rankings and automate bid strategies accordingly.

  
  

How Can atom11 Help?

Atom11, an Amazon PPC Optimization Software, helps streamline Amazon advertising by offering a unified platform that simplifies ad campaign creation, performance tracking, and ad optimization. With AI-powered insights, customizable dashboards, and automated reporting, our platform helps you make data-driven decisions around your Amazon ad campaign quickly. 

By removing the complexity of managing multiple campaigns across product categories, we ensure better ROI and more efficient ad spend. Book a free demo to start your journey with atom11 now.

Frequently Asked Questions on Amazon Advertising

What are amazon ads?

Amazon ads are promotional messages that appear on the Amazon platform, designed to drive traffic to product listings and ultimately generate sales. These ads can take various forms, including Sponsored Products, Sponsored Brands, and Sponsored Display ads, allowing sellers and vendors to showcase their products directly in search results or on product detail pages. By using Amazon's vast customer data, advertisers can target specific audiences based on their shopping behavior and preferences.

How does Amazon advertising work?

Amazon advertising operates through a pay-per-click (PPC) model, where sellers and vendors bid on specific keywords relevant to their products. When a customer searches for those keywords, Amazon's algorithm determines which ads to display based on multiple factors, such as relevance, bid amount, and historical performance. Advertisers create campaigns, set budgets, and choose their targeting options. This allows them to reach potential customers at various stages of the buying journey. Once an ad is clicked, the advertiser pays an agreed-upon amount per click.

How do I know if my Amazon ads are working?

Simple, you can track ad performance using Amazon Advertising Console or atom11’s analytics dashboard. Track key metrics like impressions, clicks, conversions, ACOS, and ROAS, as they will help you measure ROI and tell you whether your ads are working or not.

Who can qualify for Amazon advertising?

According to Amazon, to qualify for its advertising, you need to be a professional seller, vendor, author, or advertising agency. You also need to have an active account in good standing with Amazon and the ability to ship to the country in which you're advertising. A valid payment method is also a key requirement.

Who uses Amazon ads?

Amazon ads are predominantly used by sellers, vendors, advertising agencies, and brands to boost product sales. Interestingly, one need not be a seller on Amazon to utilize some of its ad products as the platform provides options for sellers who don’t sell on Amazon at all.