What is Amazon PPC? A Beginner’s Guide to Pay-Per-Click Advertising

If you’re a new seller you’ve most likely heard about Amazon PPC advertising.

This powerful advertising platform is used to rapidly scale businesses, increase brand awareness, and even boost organic search rankings. The truth is in the modern Amazon eco-system paid advertising is a critical piece of any business’s success.

In this article, you’ll discover what Amazon PPC is, how much it costs, and the mechanics of its auction system. We’ll also explore the different ad campaign types, the many benefits of Amazon advertising, and actionable tips to improve your campaigns. By the end, you’ll have a solid foundation to confidently start advertising on Amazon.

Let’s dive in and learn how Amazon PPC can help take your Amazon business to the next level.

What is Amazon PPC?

Amazon PPC (Pay-Per-Click) is an advertising model in which sellers bid on keywords to display their products in search results or sponsored placements on Amazon and other platforms.

As the name suggests, advertisers pay only when shoppers click on their ads similar to other advertising platforms like Google search ads.

In a pay-per-click advertising model, like Amazon’s, advertisers bid on how much they are willing to spend for a customer to click on their ad. This is done on a keyword by keyword basis meaning each keyword in an advertising campaign can have a different bid. This allows advertisers to bid more for the most profitable keywords and lower their bids on lesser-performing ones.

When a customer searches for a term on Amazon, an auction is triggered among advertisers targeting that keyword. During this auction, Amazon evaluates several factors, primarily each advertiser’s bid amount and the relevance of their product to the search query. Based on these criteria, Amazon determines which ads will appear and in what order.

If a customer chooses to click on an ad that advertiser is then charged their winning bid amount for the click. This in a very basic sense is what Amazon pay per click is.

Amazon Ads are available through Seller Central by clicking on the Advertising tab.

How Much Does Amazon PPC Cost?

Since Amazon PPC operates on an auction-based system, there’s no fixed cost for advertising on the platform. The cost-per-click (CPC) can vary significantly depending on the product you’re promoting and the keywords you target.

According to Ad Badger, the average CPC for 2024 is $0.99. This means that on average when a customer clicks on an ad, that advertiser is paying $0.99 for that click. Depending on how competitive your niche is your average CPC could be higher or lower than this figure.

Additionally, Amazon does not have a minimum budget requirement for its advertising platform. This flexibility allows sellers to tailor their ad spend to match their business needs. Whether you’re working with a small daily budget or ready to scale with a larger investment, Amazon PPC provides options that fit sellers of all sizes.

How Do Amazon Ads Work?

Now that you have a basic understanding of what Amazon PPC is, it’s important to understand how everything falls together. Here is a basic rundown of how Amazon advertising works from the time you start a new ad campaign.

• Setup Your Campaign: For Sponsored Products this includes choosing the product you will be advertising, uploading or choosing which keywords to advertise for, choosing your bids for each keyword, and choosing your campaign budget. After you have fully setup your ad campaign it is ready to be launched
• Customer Enters a Search Query: For example let’s say that a customer goes onto Amazon and searches for “blue baseball hat,” as soon as this happens the next step would trigger.
• The Amazon PPC Auction is Triggered: An auction takes place among advertisers targeting the keyword “blue baseball hat.” The way this happens depends on how each campaign is set up. For example, one advertiser might specifically target the exact keyword “blue baseball hat,” while another may use a broader strategy, targeting any search term containing the word “hat.”
• Auction Results Determine Winning Ads: The winners of each auction are determined by how much each advertiser has bid on the keyword “blue baseball hat” as well as by how relevant their products are to the search term.
• Winning Ads are Displayed: The winners of the auction have their ads displayed in the customer’s search results or on product pages. The exact placement (whether it is on the top of search results or somewhere else) is determined by each bid.

If a customer chooses to click on your ad you are then charged the cost of your winning big. If a customer does not click on your ad you are not charged anything and the process continues.

Benefits of Using Amazon PPC

Besides driving more sales advertising your product or brand using Amazon PPC has many additional benefits.

• Boost Your Organic Search Rank: Every time your ad generates a sale, it signals to Amazon that your product is relevant to the shopper’s search query. Amazon’s A9 algorithm uses this data to rank products in organic search results. The more sales and clicks you drive through PPC, the more likely your product will rank higher organically. Over time, a better organic rank means less reliance on paid ads to drive traffic, which helps your bottom line.
• Increase Brand Recognition: Amazon PPC doesn’t just drive sales—it helps your brand get noticed. By appearing in relevant search results, ads introduce your product to new customers who might not have discovered it otherwise. Consistent ad visibility builds trust and recognition, making your brand a familiar choice over time. Ad campaigns like Sponsored Brand or Sponsored Display ads are especially helpful for increasing brand awareness
• Scale Your Business: The beauty of PPC is its flexibility. You can start small, test which keywords work best, and scale up once you see results. Unlike organic traffic, PPC offers almost immediate visibility, giving you the ability to rapidly scale your business.

Running an Amazon PPC campaign is like giving your product a jump start. You’re not only driving immediate sales but also setting up long-term success. With higher organic rankings and more visibility, your product becomes more competitive on Amazon.

Amazon PPC Ad Types Explained

Amazon PPC offers several ad types, each tailored to different advertising goals and strategies.

In this section, we’ll explore the main ad types, including Sponsored Products, Sponsored Brands, and Sponsored Display ads. Each type serves a unique purpose, whether it’s boosting visibility, building brand awareness, or driving direct sales. Let’s dive into what makes each ad type essential for your Amazon PPC strategy!

Amazon Sponsored Product Ads

Sponsored Products are ads that promote a single product listing and appear in Amazon’s search results and product pages.

When setting up a Sponsored Product campaign an advertiser selects a product to advertise and keywords to target for that product. For example, if you were advertising a dog bed, depending on your product, you may choose to target keywords like “calming dog bed”, “medium dog bed”, or “anti-anxiety pet bed.” When a customer searches for any of these terms an auction would take place and your ad could potentially be displayed.

Sponsored product ads appear in search results, both at the top and throughout the page, as well as on product pages. Where your ad shows up, whether it is at the top of the search results or further down the page depends on your bids as well as your competitors.

Besides the text “sponsored” which appears above the product title, Sponsored Product ads appear exactly like any other product in the Amazon search results.

When most sellers ask what Amazon PPC is, they are referring to Sponsored Product ads. It’s because these campaigns are the most popular on Amazon and provide an excellent foundation for any seller looking to drive visibility and sales.

Amazon Sponsored Brand Ads

The second type of campaign is Sponsored Brands. Although setting up Sponsored Brands takes more effort than Sponsored Product campaigns, they provide advertisers with unique benefits and opportunities to enhance brand visibility.

• Custom Creatives: Sponsored Brand campaigns allow advertisers to upload custom video and image creatives to stand out in search results
• Multiple Products: Unlike Sponsored Product campaigns, Sponsored Brands allows advertisers to display multiple products at once giving customers several options to choose from
• Unique Landing Pages: When a customer clicks on a Sponsored Brand ad the advertiser can choose to have the customer sent to a product page, their brand store, or a sub-page of their brand store

When setting up a Sponsored Brand campaign you will be asked which format to use. Currently, the three options are Product Collection, Store Spotlight, or Video.

• Product Collection: The most common format. It includes a custom image creative along with 3 product listings.
• Store Spotlight: The least common option. It does not include a custom creative. Instead, it sends customers to different sub-pages on your brand store.
• Video: If you have access to a high-quality video creative we strongly recommend this format. Video Ads can either target a specific ASIN or your entire brand. Depending on which option you choose the video formats and placements will differ. Brand video ads appear at the top of the search and can be vertical or horizontal aspect ratios. Product video ads appear within the search results and must have a 16:9 aspect ratio.

Sponsored Brand campaigns are only available to advertisers that are a part of Amazon’s Brand Registry and have a registered trademark.

Amazon Sponsored Display Ads

What separates Sponsored Display ads from our previous two entries is that they are not just displayed on the Amazon platform. These ads can be displayed on various Amazon-owned websites including IMDB, Wholefoods, and Twitch along with thousands of third-party sites.

While not as popular as Sponsored Product campaigns, Sponsored Display ads are incredibly important for re-targeting. Unlike the previous campaign types Sponsored Display does not use keywords. Instead, it uses interest and activity-based targeting. This allows advertisers to target customers who have purchased products similar to theirs in the past or customers who have viewed their product page in the last 30 days.

Since you are advertising to customers who have already shown an interest in your product or purchased a similar product previously, the conversion rates for these types of campaigns can be much higher than average.

On the creative side, this campaign type supports the use of custom image or video assets while also giving advertisers the option of using the default Amazon product listing.

In order to run Sponsored Display ads you must be a part of the Amazon Brand Registry.

Amazon Sponsored TV Ads

Amazon Sponsored TV ads are their newest product and also require you to be a part of the Brand Registry. As the name suggests these ads appear on various Amazon-operated television and streaming products like Twitch and Fire TV apps.

This campaign type also uses interest-based targeting instead of keywords. Advertisers can choose to display their ads to users who have shown an interest in documentaries, music videos, TV dramas, as well as many additional categories.

If you are a new or intermediate Amazon seller we recommend focusing on the previous three campaign types before exploring Sponsored TV.

Tips for Creating a Successful Amazon PPC Campaign

While there are a ton of in-depth resources and guides on what Amazon PPC is and how to set up your campaigns here are a few general tips to help you get the most out of your ad budget.

• Do Keyword Research: While Amazon does have an auto-campaign option and suggested keywords, we recommend doing your own keyword research. This is especially important if you’re launching a new product with no existing sales data. A good keyword research tool is essential to PPC success
• Stay Organized: A common mistake new advertisers make is neglecting clear organizational structure for their ad accounts. As your account grows, you’ll likely end up with dozens or even hundreds of campaigns. To stay on top of things, group all campaigns for the same product into a single portfolio. Additionally, establish a consistent naming system to make finding and managing your campaigns easier. A well-organized account saves time and ensures better campaign tracking and optimization.
• Optimize Your Listings: Before launching an ad campaign make sure you have fully optimized your product pages. Check that you have great images, bullets, and competitive pricing. Running ads to unoptimized product page will lead to wasted ad spend and poor results
• Monitor Your Campaigns: Amazon PPC is not something you can “set and forget.” At a minimum make sure you are checking your campaigns weekly to adjust bids, update negative keywords, add new keywords, or scale campaigns.

Your Next Steps to Master Amazon PPC

Hopefully, this article gave you a better understanding of exactly what Amazon PPC is and how it works. While this article is a great starting point it is just an outline of an incredibly deep and complex topic.

There are countless resources available to help you master Amazon PPC, from courses to videos and podcasts. If you’re just starting, consider exploring Amazon’s own e-learning platform, Amazon Ads Academy. While it may not dive as deep as some third-party tools, it offers a solid foundation for understanding the platform and its key features.

If you’re looking to launch your first campaign, we recommend starting with a Sponsored Product campaign. These campaigns are the easiest to set up and useful at any stage of your business.