If you’re selling products online, understanding how Amazon advertising works can be the difference between a product that sits unnoticed and one that consistently drives revenue. Amazon has grown into one of the most powerful advertising platforms in e-commerce, and for sellers using Amazon FBA, paid advertising is often a core part of a successful growth strategy. Whether you’re just getting started or looking to sharpen your approach, this guide walks you through the essentials.
What is Amazon advertising and how does it work?
Amazon advertising is a pay-per-click (PPC) system that allows sellers to promote their products directly within Amazon’s search results and product pages. When a shopper searches for a relevant term, your ad appears in a prominent position, and you only pay when someone actually clicks on it. This makes it a performance-based model where spend is tied directly to engagement.
At its core, Amazon advertising works by connecting your product listings to the search behavior of millions of active buyers. Because Amazon users are typically further along in the buying journey than, say, a Google searcher, conversion rates on Amazon ads tend to be strong. Ads appear in multiple placements: at the top of search results, within product listings, and even on competitor pages. The platform uses a combination of keyword relevance, bid amount, and listing quality to determine which ads show up and where.
What are the different types of Amazon ads?
Amazon offers three main ad types for sellers: Sponsored Products, Sponsored Brands, and Sponsored Display. Each serves a different purpose depending on your goal, whether that’s driving direct sales, building brand awareness, or retargeting shoppers who have already shown interest.
- Sponsored Products: The most widely used format. These ads promote individual product listings and appear within search results and on product detail pages. They are ideal for driving immediate sales and are available to all sellers.
- Sponsored Brands: These ads feature your brand logo, a custom headline, and multiple products. They appear at the top of search results and are designed to build brand recognition alongside product discovery. Available to brand-registered sellers.
- Sponsored Display: A more advanced format that allows you to retarget shoppers both on and off Amazon. These ads follow potential buyers across the web, reminding them of products they viewed but did not purchase.
For most sellers starting out, Sponsored Products is the logical first step. As your catalog and brand presence grow, layering in Sponsored Brands and Sponsored Display can significantly expand your reach.
How does Amazon’s PPC bidding system work?
Amazon’s PPC system works as an auction. When a shopper enters a search query, Amazon runs an instant auction among all advertisers targeting that keyword. The seller with the highest bid combined with the strongest ad relevance wins the placement, but only pays slightly more than the next highest bid. This is known as a second-price auction.
Bid amount is not the only factor. Amazon also considers how well your product listing matches the search term, your historical click-through rate, and your conversion performance. A highly relevant, well-optimized listing can win placements even against higher bids. This means that improving your product title, bullet points, images, and reviews directly impacts how efficiently your ad budget performs.
Amazon offers two main bidding strategies: fixed bids, where you set a specific amount per click, and dynamic bids, where Amazon automatically adjusts your bid up or down based on the likelihood of a conversion. Dynamic bidding can be a useful tool, but it requires monitoring to avoid overspending in low-performing placements.
What’s the difference between automatic and manual Amazon campaigns?
The key difference is control. Automatic campaigns let Amazon decide which search terms to show your ads for, based on your product listing. Manual campaigns give you full control over the specific keywords or product targets you want to bid on. Both have a role in a well-rounded advertising strategy.
Automatic campaigns are particularly useful when you’re new to advertising a product. Amazon’s algorithm explores a wide range of search terms and identifies which ones generate clicks and conversions. Over time, you can mine this data to discover high-performing keywords you might not have thought of yourself.
Manual campaigns, on the other hand, allow you to be precise. You choose your keywords, set individual bids, and control exactly where your budget goes. There are three keyword match types in manual campaigns:
- Broad match: Your ad shows for searches that include your keyword in any order, along with related terms.
- Phrase match: Your ad shows for searches that include your exact keyword phrase, with words before or after it.
- Exact match: Your ad shows only when a shopper types your keyword exactly as specified.
A common best practice is to run automatic campaigns first to gather data, then build manual campaigns around the best-performing search terms.
How much does it cost to advertise on Amazon?
There is no fixed cost to advertise on Amazon. You set your own daily budget and maximum cost-per-click (CPC) bid, so you have direct control over your total spend. Budgets can start as low as a few euros or dollars per day, making it accessible for smaller sellers, while larger brands can scale spend to thousands per month.
The actual cost per click varies depending on the category, competition level, and keyword demand. Highly competitive categories with many advertisers bidding on the same terms will naturally have higher CPCs. Less competitive niches often allow you to achieve solid visibility at a lower cost per click.
A useful metric to track alongside spend is your Advertising Cost of Sales (ACoS), which is your total ad spend divided by the revenue generated from those ads, expressed as a percentage. A lower ACoS means your ads are generating more revenue relative to what you’re spending. What counts as a healthy ACoS depends on your product margins and business goals.
How do you measure whether your Amazon ads are performing?
The most important metrics to evaluate Amazon ad performance are ACoS (Advertising Cost of Sales), ROAS (Return on Ad Spend), click-through rate (CTR), conversion rate, and impressions. Together, these numbers tell you whether your ads are reaching the right people and converting them into buyers at a sustainable cost.
- ACoS: Total ad spend divided by ad-attributed revenue. Lower is generally better, but the right target depends on your margins.
- ROAS: The inverse of ACoS, showing how much revenue you earn per euro or dollar spent on ads.
- CTR (Click-Through Rate): The percentage of shoppers who see your ad and click on it. A low CTR often signals that your product image or title is not compelling enough.
- Conversion rate: The percentage of clicks that result in a purchase. A low conversion rate suggests your product page needs improvement.
- Impressions: How often your ad is shown. Low impressions may indicate your bids are too low or your targeting is too narrow.
Reviewing these metrics regularly, ideally weekly, allows you to identify what is working and where budget is being wasted. Pausing underperforming keywords, increasing bids on high-converting terms, and testing new ad creatives are all part of an ongoing optimization process.
How Distrilink helps with Amazon advertising
At Distrilink, we help brands grow quickly and in a controlled way on Amazon and other major online marketplaces. Rather than building an entire in-house marketplace team, IT infrastructure, or logistics operation, brands can activate and scale through us immediately. We represent more than 25 brands and are connected to all major European marketplaces.
Our approach to Amazon advertising is data-driven and fully managed. Here is what we take off your plate:
- Campaign setup and structure, including both automatic and manual campaigns
- Keyword research and ongoing bid optimization
- Product listing optimization to improve quality scores and conversion rates
- Regular performance reporting with clear insight into ACoS, ROAS, and revenue
- Full operational execution, from activation and optimization to logistics and customer service
Brands that work with us can expand their e-commerce presence without added complexity. With our own platform and fulfilment infrastructure, we provide the speed, control, and visibility that scaling on Amazon requires. Want to find out what this could look like for your brand? Get in touch with Distrilink and let’s talk about how we can help you grow.
Frequently Asked Questions
How long does it take to see results from Amazon advertising?
Most sellers start seeing initial data — impressions, clicks, and early conversions — within the first 24 to 72 hours of launching a campaign. However, meaningful performance trends typically take 2 to 4 weeks to emerge, as Amazon's algorithm needs time to learn which placements and search terms work best for your product. Avoid making major bid or budget changes too early; let campaigns gather sufficient data before optimizing.
What should I do before launching my first Amazon ad campaign?
Before spending a single dollar or euro on ads, make sure your product listing is fully optimized — this means a clear, keyword-rich title, high-quality images, compelling bullet points, and a competitive price. Since Amazon's auction system factors in listing quality alongside bid amount, a poorly optimized listing will waste your ad budget regardless of how much you spend. Also ensure you have at least a handful of reviews, as these significantly impact conversion rates once shoppers land on your page.
What is a good ACoS target for Amazon ads?
There is no universal 'good' ACoS — it depends entirely on your product's profit margin. A common rule of thumb is to aim for an ACoS that falls below your profit margin percentage, so that your ads remain profitable after costs. For example, if your margin is 35%, an ACoS below 35% means you're still making money on ad-driven sales. Early on, some sellers intentionally accept a higher ACoS to gain visibility and reviews, then tighten it as the product matures.
Can I run Amazon ads if my product is brand new with no sales history?
Yes, and in fact advertising is often essential for new products because they lack the organic ranking and review history needed to appear naturally in search results. Starting with an automatic campaign is the recommended approach for new listings, as it lets Amazon identify relevant search terms without requiring you to guess which keywords will perform. Pair this with a competitive launch price and a review-gathering strategy to maximize the impact of your early ad spend.
What are negative keywords, and should I be using them?
Negative keywords are search terms you explicitly exclude from your campaigns, preventing your ads from showing up for irrelevant or low-converting searches. For example, if you sell premium leather wallets, you might add 'cheap' or 'kids' as negative keywords to avoid wasting budget on shoppers unlikely to convert. Using negative keywords is one of the most impactful and often overlooked optimization tactics — regularly reviewing your search term reports and adding negatives can meaningfully reduce wasted spend and improve your ACoS.
How do I avoid overspending on Amazon ads, especially as a smaller seller?
The most effective safeguard is setting a realistic daily budget cap and sticking to it while your campaigns are still in the learning phase. Start conservatively — even €10 to €20 per day per campaign — and scale up only once you can see which keywords and placements are delivering a positive return. Using exact match keywords in manual campaigns also gives you tighter control over where your budget goes, reducing the risk of paying for irrelevant clicks that drain your budget without generating sales.
Is it worth advertising on Amazon if I already rank organically for my main keywords?
Absolutely — in fact, occupying both a paid and an organic position for the same keyword increases your overall visibility and can push competitors further down the page. Research consistently shows that appearing in multiple placements on a search results page increases total clicks and brand trust. Additionally, Sponsored Brands ads at the top of the page can capture shopper attention before they ever reach the organic results, making paid and organic strategies highly complementary rather than redundant.
