What is Amazon PPC? A Beginner's Guide to Paid Ads on Amazon

You’ve launched your Amazon store, created your product listings, and hit that satisfying "Publish" button. Now, all that's left is to wait for those organic sales to pour in, right? Well, not exactly.

The truth is, in a marketplace with millions of products, relying on organic growth alone is like shouting into a crowded room. You might be heard eventually, but it could take months, even years, to reach the front of the line.

Enter Amazon PPC, the faster way to boost your visibility and drive targeted traffic. In other words, your key to reaching the front of the line. Many sellers ask what is Amazon PPC and how does it work; here's everything you need to know that we will cover in the blog post:

• What is Amazon PPC and how does it work?

• Why is Amazon PPC important for sellers?

• What ads can you use for Amazon PPC?

• How much does it typically cost to run an Amazon PPC campaign?

• How do you get started with Amazon PPC?

• How can atom11 help?

  
  

What is Amazon PPC?

Amazon PPC is an advertising model used by sellers and vendors on Amazon to improve their products’ visibility and sales. In this model, you pay for the ad only when your potential customers click on the ad and not when they see it. This ensures that the ads always bring value to your spending. 

Based on the type, Amazon PPC ads are displayed on the search results page, the product details page, and even on third-party websites. Here is a sample Amazon PPC ad:

Now that we've answered what is Amazon PPC, let's explore how Amazon PPC works.

How Does Amazon PPC Work? 

To understand how does Amazon PPC work, we need to first understand the concept of bidding and auctions. 

Bidding is the process where you (seller or advertiser) set the maximum amount you are willing to pay when an Amazon shopper clicks on your ad. This bid amount reflects the value you place on each potential customer visiting your product page.

For example, if you are selling laptops and are willing to pay up to $2.00 (your bid amount) for each click from a shopper searching for "Windows laptop."

Auction, on the other hand, is the mechanism Amazon uses to determine which ads get displayed when a shopper searches for a particular keyword. When a user searches for a product on the Amazon search bar, Amazon runs a real-time auction among all advertisers targeting that keyword. The ad that wins the auction gets displayed in a prominent spot, such as at the top of the search results.

Amazon uses a second-price auction system, which means you typically pay less than your maximum bid amount. This makes advertising more cost-effective and encourages competitive bidding.

Here's a simple example showing how Amazon PPC works:

1. You have set $2.00 as the bid amount for the keyword "Windows laptop". Advertiser B has set it as $1.50, while Advertiser C has set it as $1.25.

2. A shopper searches for the product "Windows laptop" on the Amazon search bar.

3. Amazon runs a real-time auction and scans its ad inventory for relevant ads targeting the keyword "Windows laptop."

4. Since you have the highest bid amount, Amazon displays your winning ad on the search results page.

5. When the shopper clicks the ad, you are charged for that click.

6. However, instead of paying your exact bid of $2.00, you only pay slightly more than the second-highest bid, which is $1.51 (second-highest bid + $0.01). This approach, known as a second-price auction, means advertisers on Amazon often pay less than their maximum bid, making the process more competitive and cost-effective.

Note: Amazon does not only consider the bid amount but it also takes into account the ad relevance and Amazon’s quality score (a measure of how likely your ad is to satisfy a customer’s needs. A higher quality score can help you win auctions even if your bid is lower than your competitors).

Why is Amazon PPC Important for Sellers? 

Amazon hosts 9.7 million sellers competing for customer attention. Without PPC, your products risk getting buried among billions of listings. Here's how Amazon PPC directly benefits your business:

Get Found by More Customers: PPC places your products at the top of search results and on high-traffic pages where shoppers actually look. This means more eyes on your products and more potential sales from customers who would never have found you organically.

Boost Your Organic Rankings: Successful PPC campaigns signal to Amazon that customers want your products. Amazon responds by improving your organic search rankings, giving you better visibility even when you're not running ads. It's like getting a permanent boost from your advertising investment.

Build Your Brand Recognition: Sponsored Brands and Sponsored Display ads showcase your brand consistently across Amazon and beyond. This repeated exposure builds customer trust and recognition, making shoppers more likely to choose your products over competitors.

What Ads Can You Use for Amazon PPC?

There are three types of Amazon PPC ads, each serving distinct purposes and having different characteristics. 

TLDR Read:

Sponsored Product Ads

They are the most popular ad format on Amazon, displaying individual products directly in search results with a "Sponsored" label. These ads effectively divert traffic away from competitors while giving your products premium positioning. These ads are typically available only for products that hold the Buy Box. 

After all, Buy Box is the main area on a product detail page where customers start their purchase, making it a crucial part of winning ad placements. Items such as adult products and used or refurbished products are not eligible for this type of ad. 

Here are their key characteristics:

• Where do they appear - Above, within, or below search results

• Used for - Targeting specific keywords or product categories

• Landing options - One click takes shoppers to your detail page

• USP - Very simple setup process. Just select keywords, set bids, and launch

  
  

Sponsored Brand Ads

Sponsored Brand Ads were previously known as Headline Search Ads. They are designed to showcase your brand and multiple products with a customizable banner. However, there are two major downsides to these ads. One, competition is intense, often requiring higher bids. Two, they are only available to sellers enrolled in the Amazon Brand Registry. Here are their key characteristics:

• Where do they appear- Appears at the top of search results, offering maximum exposure

• Used for - Highlighting three or more products and boosting brand visibility

• Landing Options - Drives traffic to your Amazon Store, a custom landing page, or a product-focused brand page.

• USP - Total flexibility in presentation of ads. You can combine logos, headlines, and product images to create a strong brand message

  
  

Sponsored Display Ads

These ads are ideal for reaching audiences both on and off Amazon. Using these ads, you can target shoppers based on their behavior, interests, and browsing history. This means you can reach audiences who have viewed similar products, explored related categories, or even visited your own product pages. 

They are an excellent way to re-engage potential buyers. They offer flexible pricing models, including cost-per-click (CPC) and cost-per-thousand impressions (CPM) options. Here are their key characteristics:

• Where do they appear - Amazon product detail pages, homepages, third-party websites, and apps

• Used for - Increasing product awareness, driving repeat purchases, and reaching new audiences beyond the Amazon marketplace.

• Landing Options - Takes shoppers to your detail page

• USP - Offers complete creative freedom. It supports static images, responsive designs, and short video formats for engaging storytelling

  
  

How Much Does It Typically Cost to Run an Amazon PPC Campaign?

First of all, Amazon Ads are incredibly budget-friendly. You can get started even with as little as $10. In fact, there’s no minimum spend required, and you can begin testing your campaigns with such a minimal amount. Another great part about these ads is their CPC pricing model. This means you only pay when someone actually clicks on your ad. 

Currently, the average CPC on Amazon is about $0.98, meaning you’ll pay around 98 cents for each click, which is quite reasonable in the PPC advertising space. 

Amazon also offers great flexibility in budgets. There are multiple options for you to select from based on your ad type. For instance, Sponsored Products and Sponsored Display campaigns offer a daily budget model, which you can adjust up or down at any time. Sponsored Brands, however, offer both daily and campaign-level budgets. Daily budgets provide maximum flexibility, while campaign-level budgets are fixed, allowing only upward adjustments. 

To find out if your ad spend is delivering optimal returns, try our free Amazon PPC Spend Audit Calculator today.

How Do You Get Started with Amazon PPC?

Finding success with Amazon PPC is not easy unless you approach it strategically. Here are the different steps you need to follow to create and launch a successful Amazon advertising campaign:

Step 1: Choose the Right Products to Advertise

The right products can be the catalyst for your PPC campaign to succeed. The formula for picking products for your PPC campaign is quite simple. Start with products that already perform well organically. Look for items with:

• 4+ star ratings with substantial reviews

• Healthy profit margins (at least 30-40%)

• Strong conversion rates from organic traffic

For example, promoting a product with a 4.5-star rating and hundreds of positive reviews can significantly increase your chances of conversion when compared to a product with a 2.5-star rating and hundreds of negative reviews. Take a look at this ad, which showcases a really popular product that has very high ratings:

Pro Tip: You can also pick products with unique selling points or strong differentiators. They tend to stand out in search results and grab the eyeballs of users.

Step 2: Research Your Keywords

For every product you chose in the previous step, perform a thorough keyword research. In this step, you are essentially identifying the terms your potential customers could be using to find products like yours. Here are some basic tips to master your keyword research:

• Use long-tail keywords: They are longer, more specific phrases that attract highly targeted traffic. They typically have lower competition, reduced CPC, and higher conversion rates. For example, instead of just targeting “water bottle,” consider “insulated stainless steel water bottle”. This will capture a more precise target audience. 

• Analyze customer reviews: This is applicable both for your products and those of your competitors. These reviews provide valuable insights into how customers naturally describe the product. They often contain words that emphasize key features and common pain points.

• Find negative keywords: These terms prevent your ads from appearing for irrelevant or low-converting searches. For instance, if you sell premium leather wallets, adding terms like "cheap" or "faux leather" as negative keywords can help you avoid wasting ad spend on customers seeking low-cost alternatives. 

• Keep optimizing the keywords list: By frequently reviewing your ad reports, you can identify high-converting keywords that drive sales and allocate more budget to them. At the same time, removing underperforming or irrelevant keywords helps reduce wasted ad spend. This ongoing optimization keeps your ads aligned with changing customer behavior.

Pro Tip: Leverage atom11's Search Harvester to gain better control over your keyword optimization process. With atom11’s customizable rules, you can automate tasks like identifying high-performing keywords and eliminating low-converting ones with minimal effort.

Step 3: Optimize Product Listing 

A well-optimized listing improves the conversion rates for your ads as the customers who are on edge are easily converted by it. It has several other advantages too: it maximizes your ad's relevance, improves Quality Score, reduces your CPC, and so on. 

The list doesn’t end there. Even if you are not running a campaign, a well-optimized list is important because it helps your product rank higher on search results and builds customer trust by clearly conveying the value of your product.

Here are some basic practices you need to follow if you are looking to optimize your product listing: 

• Use clear, high-resolution images. If applicable, include lifestyle and infographic shots to highlight features and benefits. Here is an example:

• Utilize A+ content to your advantage. This is prime real estate on the product details page that you can use to tell your brand story and showcase unique selling points that can convince users who just clicked your ads. Here is a brand using A+ content to communicate different selling points - 

• Add compelling product titles that will grab the attention of the users from the get go. It should be concise, keyword-rich, and clearly communicate the product’s key features.

• Use the provision of bullet points to convey the benefits of your product (rather than features). Even within these bullet points, try including relevant keywords. Here is a brand that has effectively utilized bullets to convey features and the benefits the user will enjoy.

• Ensure that the product description is persuasive. Use a mix of storytelling and technical details to engage potential buyers and improve conversions.

• Don’t ignore backend keywords. These hidden search terms are the key to better visibility without cluttering your main listing.

  
  

Step 4: Create the Campaign

To set up your first PPC campaign, log in to your Amazon Seller Central account, then navigate to the Advertising tab > Campaign Manager.  Here are the different steps you need to follow:

1. Click ‘Create a portfolio’ to group related campaigns under a single name. Portfolios can be organized by product categories, brands, strategies, or any custom naming convention that aligns with your goals. You also have the option to add a budget cap to control spending for each portfolio, helping you stay within your marketing budget.

2. Click Create Campaign. You’ll be directed to the ‘Choose your campaign type’ page. For this example, we will select Sponsored Product. Click Continue.

3. Choose a clear, descriptive campaign name to easily identify your strategy. A good naming convention includes the campaign type, targeting type, product name, and attributes, such as: SP_Auto_Halfsleeve_Shirt_CM_LM (Sponsored Product, Auto, Product Name, Custom Metrics)

4. Choose the start date for your campaign. You can leave the end date blank if you want your campaign to run indefinitely.

5. Set a daily budget for your campaign. For new campaigns, a daily budget of $50 or more is recommended for most categories to ensure you gather enough data. Smaller budgets, like $10 per day may limit visibility and data collection.

6. Choose the specific product you want to advertise. You might have already selected the products from step one.  If you’re just getting started, consider adding only one product per ad group to keep targeting and performance tracking straightforward.

Pro Tip: Create an Ad Group to organize your ads and manage bids effectively. All ads within an ad group share the same bids and targeting settings.

Step 5: Choose the Targeting

After completing the initial campaign setup, you’ll need to choose between automatic and manual targeting. With automatic targeting, Amazon uses your product information to match ads to relevant customer searches. 

This makes it a great option for new campaigns as it provides valuable keyword data over time. In contrast, manual targeting relies on the keywords and bids you provide, allowing for more precise control.

Regardless of the targeting type you choose, you’ll still need to add ad groups, select the products you want to advertise, and set a default bid for each product. If you opt for automatic targeting, Amazon will review and launch your campaign immediately, while manual targeting requires a few additional steps.

Step 6: Add Keywords to Target

With manual targeting for Amazon PPC, you can add up to 1,000 keywords per ad group, though starting with at least 30 is recommended for a well-optimized campaign. You can either add keywords manually, allowing Amazon to suggest additional options, or upload a complete keyword list via a .csv file. This flexibility helps you fine-tune your targeting based on your research and campaign goals.

Amazon offers several keyword match types to refine your targeting:

• Broad: Matches variations and related searches (e.g., "running shoes" may trigger "black running shoes," "comfortable shoes for running," or "jogging footwear").

• Phrase: Matches exact phrases and sequences (e.g., "wireless earbuds" matches "best wireless earbuds" but not "earbuds wireless").

• Exact: Matches only the exact keyword or close variations (e.g., "coffee maker" only triggers "coffee maker" or "coffee makers").

• Negative Phrase: Blocks searches containing the full phrase (e.g., "kids backpack" blocks "pink kids backpack" but not "backpack for kids").

• Negative Exact Match: Blocks searches containing the exact phrase (e.g., "water bottle" blocks "water bottle" but not "stainless steel water bottle").

Regularly updating your keywords based on campaign data can help you discover high-converting terms and reduce wasted ad spend.

Step 7: Set Keyword Bids 

Now that you have added the keywords to target, the next step is to set bids. You can always use your earlier keyword research to determine the most cost-effective bids for each keyword. For a high-converting keyword, you can increase the bid, and vice versa. But the key is to always base your bid decisions and bid strategy on data. This will help you avoid overspending. 

Use atom11’s bid calculator to determine the right bid for a keyword by factoring in placement modifiers. To the uninitiated, a placement modifier allows you to adjust your bids for specific ad placements on Amazon. For instance, increase or decrease your bid for placements like "top of search" or "product pages”.

atom11 also automates your bidding process by facilitating custom rules that revolve around parameters like clicks, ACoS, conversions, and spend. For example, you can reduce bids if the spend is high but ACoS is still below your target. This eliminates the need for manual bid adjustments.

Additionally, the atom11 Inventory Optimiser allows you to automate budget changes based on stock levels, ensuring efficient ad spend even during inventory fluctuations. 

Step 8: Launch Ads

You’re all set!. Just launch the ads. Amazon typically takes a few hours to review your campaign and ads. Once approved, your ads will go live, and you can immediately start tracking their performance.

If there are any issues with your ads, Amazon will notify you and provide guidance on how to resolve them. However, do not be reactive, especially in the early stages of your campaign. Keep monitoring ad performance to make quick adjustments to your keyword targeting, bidding, or daily budget as needed. As your campaign matures and stabilizes, you can reduce the frequency of these checks.

Step 9: Monitor and Optimize Campaigns

Unfortunately, your job doesn’t end with launching the ads. You need to closely monitor them and use the collected data to fine-tune the campaign to ensure it delivers maximum results. Here are some key Amazon metrics you need to track when it comes to Amazon PPC ads:

While you can always use Amazon’s built-in Advertising Console to track these metrics, for more effective tracking and deeper insights, you can use atom11’s advanced analytics tool. It offers the following key features:

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

• Sales Trend Dashboard: Track ASIN-level trends over daily, weekly, or monthly periods without juggling multiple reports.

• Root Cause Analytics: Quickly identify what’s driving sales changes, from shifts in ad spend to variations in average order value (AOV) and page views.

• Digital Shelf Insights: Keep an eye on both organic and sponsored keyword rankings to refine your ad strategies in real-time.

How can atom11 help?

atom11, an Amazon Ad Optimization Platform, can simplify and streamline the entire lifecycle of your Amazon PPC management, while giving you complete control over your campaigns. Our platform makes it easy to set up, track, and optimize your PPC ads with AI-powered insights, custom reporting, easy-to-use tools, and intuitive dashboards. atom11 can make smarter, data-driven decisions for you, ensuring that you enjoy improved ad visibility, reduced ad spends, and maximum returns. So ready to shape your Amazon PPC strategy with atom11? Book a free demo today.

Frequently Asked Questions on Amazon PPC

Can you run Amazon PPC on an Individual Seller Account?

No. Amazon PPC advertising is restricted to those with Professional Accounts. Those with an Individual Seller Account have to register for the Professional Account to launch their first PPC campaign. 

How long should I run my Amazon PPC campaign for?

A typical Amazon PPC campaign takes anywhere between a few days to several weeks to give you results and a realistic view of your ad campaign performance. In other words, it is advisable to run your PPC campaign for at least 2-3 weeks to see some visible results. 

How much should I spend on Amazon PPC?

If you are looking to grow your brand and product’s visibility using Amazon PPC, you need to spend around 10-15% of your revenue. There are some aggressive sellers who will spend more, while new sellers allocate only a fraction of this amount at first and then slowly increase their spend. 

What is a good conversion rate for Amazon PPC?

It depends on the type of products you are selling. However, a good conversion rate for Amazon PPC usually hovers around 10%-15%. 

Do you have to sell on Amazon to use Amazon PPC?

Under most circumstances, yes. But if you are using sponsored display ads, you can use them to grow your business, even if you are not selling on Amazon.