TL;DR

Sponsored Products ads are a popular choice due to precise targeting and increased visibility.
Start with a descriptive campaign name and choose your products strategically.
Use automatic targeting for initial keyword research and switch to manual for more control.
Regularly review performance and adjust bids based on ACoS for optimal results.
Use negative keywords to filter out non-performing terms and save on ad spend.
Consistent monitoring and adjustments are key to maximising your campaign’s success.

Among the three major ad types on Amazon, Sponsored Products are undeniably the most popular. The reason? These ads blend seamlessly with organic search results and require minimal setup to get started.

In the past decade of working with Amazon sellers, our Amazon selling consultants have rarely come across anyone who doesn’t use Sponsored Products ads. It’s no wonder they’re the preferred choice for sellers and shoppers alike, as confirmed by Jungle Scout’s 2023 Amazon Advertising Report.

Whether you’re a new seller launching your first product or a seasoned pro managing your 50th, setting up Sponsored Products ads the right way is crucial. And in this blog post, we’re diving deep into how to do exactly that.

Quick guide

What are Sponsored Products ads?
Where do Sponsored Products appear?
What products are eligible for Sponsored Products?
Benefits and limitations of Sponsored Products
How to create a Sponsored Products campaign on Amazon
How to optimise your Sponsored Products campaign?
- Allow campaigns to run before making changes
- Calculate your break-even ACoS
- Optimise automatic targeting campaigns
- Optimise manual targeting campaigns
- Monitor and adjust regularly

What are Sponsored Products ads?

Amazon Sponsored Products are pay-per-click (PPC) ads that seamlessly blend into organic search results.

These ads are keyword-based, meaning they appear when a shopper’s search terms match the keywords you’ve chosen for your product. When someone clicks on a Sponsored Products ad, they’re taken directly to the product detail page on Amazon, where they can learn more about the product and make a purchase.

Where do Sponsored Products appear?

Sponsored Products can appear at the top of, alongside, or within shopping results and on product pages, both on desktop and mobile.

In 2023, Amazon expanded the reach of these ads to premium apps and websites such as Pinterest, BuzzFeed, Hearst Newspapers, Raptive, Ziff Davis, Lifehacker, and Mashable, giving sellers even more visibility beyond the Amazon platform.

Amazon states, “Advertisers using Sponsored Products do not need to take any action to appear on these sites or apps. Your Sponsored Products ads will automatically show up when we think a customer is likely to be interested in your product, based on relevant page context, the campaign, and cost-per-click parameters that you have already established.”

What products are eligible for Sponsored Products?

Not all products are eligible for Sponsored Products ads. At this time, adult products, used items, refurbished goods, and products in restricted categories cannot be advertised. It’s important to review Amazon’s creative acceptance policies for Sponsored Brands and Sponsored Products to ensure your products fall within the permitted categories.

Benefits and limitations of Sponsored Products

Pros	Cons
Increased product visibility: Ads appear in prime positions, boosting visibility over organic listings.	High costs: Cost-per-click can be expensive in competitive categories.
Higher click-through rates: Ads target shoppers actively searching for related products, increasing the likelihood of clicks and sales.	Intense competition: Many sellers use Sponsored Ads, making it difficult to stand out.
Enhanced brand awareness: Directs shoppers to your product detail page, helping them learn more about your brand and offerings.	Time-consuming: Requires regular monitoring and optimization to stay effective.
Cost-effective advertising: Pay only when someone clicks on your ad, and control your budget with daily or lifetime limits.	Risk of overspending: Poorly managed campaigns can quickly drain your budget.
Boosted conversion rates: Sellers often see a significant increase in units ordered after launching a Sponsored Products campaign.
Flexible budgeting: This allows you to set and adjust budgets according to performance and seasonal needs.
Broad reach: Ads appear on Amazon search results, product pages, and even external websites, maximising your product’s exposure.

How to create a Sponsored Products campaign on Amazon

Step 1:

Go to the “Campaign Manager” section under the “Advertising” tab. Click the “Create Campaign” button to start the setup process.

Select “Sponsored Products” as your campaign type. This is ideal for promoting individual products and increasing their visibility on Amazon’s search results and product detail pages.

Step 2:

Write a descriptive campaign name. A well-structured campaign name helps you identify the purpose of each campaign at a glance.

Use a format like:

[ProductName] – [AdType] – [Targeting] – [Date].

Example: “MarshmallowSticks – SP – Manual – Sep2024”. This structure ensures you can easily track and manage multiple campaigns.

Best practices:

Include the product name or ASIN for clarity.
Specify the targeting type (e.g., Manual or Automatic).
Add the campaign start date for reference.

Step 3:

Choose products to promote. You can choose to promote individual products or a group of related products. For new campaigns, start with a single product to focus on optimising performance.

Tip: Promote multiple variations of a product (e.g., different colours or sizes) within a single campaign if they share the same keywords.

Product selection tips from our Amazon advertising specialists

Single product campaign: Focuses on individual performance, making it easier to manage.
Multiple products campaign: Useful for cross-promotions but requires careful tracking to avoid budget spread too thinly.
Recommended limit: Add no more than 10-15 products per campaign to maintain control and avoid data clutter.

Step 4:

Select targeting type. You have two options: Automatic Targeting and Manual Targeting. Choose based on your experience level and campaign goals.

Automatic targeting:

How it works: Amazon uses your product listing details to automatically match your ads with relevant keywords and products.
Match types explained:

- Close match: Targets search terms closely related to your product.
- Loose match: Expands to less specific terms.
- Substitutes: Shows ads to customers looking at similar products.
- Complements: Target shoppers viewing products that complement yours.
Best for: New sellers and initial keyword research. It’s quick to set up and can provide insights into which keywords work best.

Manual targeting:

How it works: You choose the specific keywords or products to target. You can set custom bids for each keyword.
Targeting options:

- - Keyword targeting: Choose keywords you believe customers will use to find your product. Use a tool like Helium 10 or Keyword Scout to find high-volume, relevant keywords.
  - Product targeting: Target specific ASINs, categories, or brands.

Match types:

- Broad match: Keywords can appear in any order with additional terms. Good for reaching a wider audience.
- Phrase match: The keyword phrase must appear in the same order. Balances reach and relevance.
- Exact match: Shows ads only for the exact keyword. Highly targeted but limited in reach.
Best for: Experienced sellers who have identified effective keywords through research.

Step 5:

Understanding bids:

A bid is the maximum amount you’re willing to pay for a click on your ad. You only pay when someone clicks on your ad, and you’ll never pay more than your maximum bid.

Example: If you bid $0.50 and the second-highest bid is $0.40, you’ll only pay $0.41.

Choose a bidding strategy:

Dynamic bids – Down Only: Amazon lowers your bid if the ad is less likely to convert.
Dynamic bids – Up and Down: Amazon adjusts your bid up to 100% higher if your ad is likely to convert, or lowers it if not.
Fixed Bids: Your bid remains the same, regardless of the likelihood of conversion.

Recommendation: Start with “Dynamic Bids – Down Only” to manage costs effectively while gathering initial data.

Adjust bids by placement:

Choose whether to increase bids for placements at the top of search results or product pages. This can help boost visibility in high-traffic areas.

Step 6:

Add negative keywords to prevent your ads from showing up for irrelevant search terms. Add keywords that aren’t converting or don’t relate to your product.

Example: If you’re selling “marshmallow sticks” and notice clicks on the term “marshmallow toys” but no sales, add it as a negative keyword.

Best practices:

Regularly review search term reports to identify underperforming keywords.
Add irrelevant or non-converting keywords to the negative list to optimise ad spend.

Step 7:

Click “Launch Campaign” to push your ads live. Monitor the campaign closely, especially in the initial weeks, to make necessary adjustments.

How to optimise your Sponsored Products campaign?

#1: Allow campaigns to run before making changes

Let your campaigns run without any modifications for at least two weeks. This allows Amazon to collect enough data on performance, which will help you make informed optimization decisions later.

During this period, focus on gathering data such as impressions, clicks, sales, and ACoS. Avoid making early adjustments based on limited data, as it may lead to inaccurate conclusions.

#2: Calculate your break-even ACoS

Understand ACoS (Advertising Cost of Sales):

ACoS represents the percentage of your ad spend relative to the sales generated from that spend. It’s calculated as:

ACoS = (Total Ad Spend / Total Attributed Sales) x 100.

Example: If you spend $5 on ads and generate $25 in sales, your ACoS is 20% ($5 / $25 = 0.20).

Determine your break-even ACoS:

Calculate this by dividing your profit margin by the selling price. This helps you understand the maximum ACoS you can afford without losing money.

Example: If your profit is $10 on a $50 product, your break-even ACoS is 20% ($10 / $50).

#3: Optimise automatic targeting campaigns

Go to your campaign manager and open the search terms report for your automatic targeting campaign. This report shows which search terms triggered your ads, how much was spent, and how much revenue was generated.

Identify worst-performing keywords: Sort the report by clicks or spend. Remove keywords with high clicks but no sales. As a general rule, any keyword with over 10 clicks and no conversions should be added to the negative keyword list. Example: If “marshmallow stick holders” has 15 clicks and zero sales, add it as a negative keyword to stop wasting money on it.
Identify top-performing keywords: Find keywords with low ACoS and good sales. Move these keywords to a manual targeting campaign where you can set specific bids and better control their performance.

#4: Optimise manual targeting campaigns

Transfer high-converting keywords from your automatic campaign to a new manual campaign. Use exact match targeting for better control and precision. Example: If “campfire marshmallow sticks” performs well, add it as an exact match keyword in your manual campaign.

Adjust bids based on ACoS:

Lower bids: Reduce bids for keywords with high ACoS (above your target ACoS). For example, if your target ACoS is 30% and a keyword has a 45% ACoS, lower the bid by 10-15%.
Increase bids: Raise bids for keywords with low ACoS and high conversion rates to maximise impressions and clicks.

Refine keyword match types:

Use broad match for exploring new keyword opportunities, phrase match for targeting specific phrases, and exact match for precise targeting. Adjust match types based on performance and budget.

Use negative keywords effectively:

Add irrelevant keywords or those with high clicks but no sales to your negative keyword list. This will prevent your ads from showing for unprofitable searches.

#5: Monitor and adjust regularly

Review your campaign performance on a weekly basis. Adjust bids, keywords, and targeting options based on the data collected.

Use Amazon’s reporting tools: Generate reports like the Placement Report and Search Term Report to gain deeper insights into campaign performance. Use these insights to fine-tune your strategy.
Focus on high-traffic keywords: Use keyword research tools like Amazon’s Search Term Report or third-party tools to identify high-traffic keywords relevant to your products.
Set realistic budgets: Start with a daily budget that you’re comfortable with. Adjust based on campaign performance to avoid overspending.
Monitor campaign placements: Analyse where your ads are performing best, such as top-of-search results or product pages. Adjust your bids by placement to optimise performance.

See you next week

There’s no doubt that Amazon Sponsored Products is one of the most effective advertising tools available on the platform. These campaigns offer numerous benefits, such as precise targeting, increased visibility, and the ability to customise ads according to your business goals, all of which can significantly boost your bottom line.

Want to explore more about how Amazon’s advertising can work for you? Hire our Amazon advertising services —we’d love to help you unlock the full potential of your Amazon business.

How to create and manage Sponsored Products campaigns in 2024?