How Amazon Ads Work

Ever wonder how Amazon ads work, and if they might be a good bet for your business? Here’s some info to help you decide.

When it comes to online retail, Amazon remains the most popular marketplace for online shopping in the Western World, and especially in the United States. While AliExpress and other marketplace competitors like Google Shopping Actions and are certainly making inroads to this space, it remains a fact that 44% of shoppers start their online shopping sessions on Amazon. By contrast, only 33% begin a product search with Google. A staggering 40% of Americans buy products on Amazon at least once a month.

The breakdown of how Amazon ads work

There are three major types of Amazon ads, each with its own set of sub-strategies for targeting product searches on Amazon’s main site: Sponsored Product Ads, Sponsored Brands, and Product Display ads.

Amazon Sponsored Product Ads

Image credit: Amazon Advertising

Amazon Sponsored Product Ads are pay-per-click, keyword-targeted display ads for individual products that appear on search results pages. How Amazon ads work is similar to your average pay-per-click (PPC) ads. They operate on a cost-per-click pricing model, and you only pay when a customer clicks on your ad. Similar to Google Ads, Amazon uses keyword-based targeting which advertisers bid on. The more popular the keyword, the higher the bidding level for the ad.

If you decide to go with Sponsored Product Ads, you will be doing manual targeting. There are three types of keywords you can bid on: Broad, Phrase, and Exact.

Sponsored product ads also offer an option for automatic keyword targeting through an algorithm that applies the most relevant keywords for your product listings.

Amazon makes it easy to monitor your ads’ performance. Sponsored Product Ads offers a reporting tool that displays your ads’ clicks, spend, sales, and advertising cost of sales.

Maximizing results and minimizing costs for Sponsored Product Ads

Negative Keyword Targeting

Find keywords that have low conversion rates and flag them as negative. This will cause Amazon to stop showing your ad to shoppers. This can be critical to your bottom line: even if these keywords have a high click-through-rate, their low conversion rate means they’re probably not reaching the right type of shoppers, and you’re still paying per click.

Adjust Bids By Placement

‘Adjust bids by placement’ is the new version of what used to be Bid+. With Bid+, you could only set a 50% boost for the top of search (first page) placement. With ‘adjust bids by placement’, you can set up to a 900% increase for top of search (first page) as well as for product detail placements.

Amazon Sponsored Brands

Image Credit: Amazon Advertising

Sponsored Brands lets you pair a collection of your products with your logo and a creative headline. You also have the chance to promote your brand’s Store, because you can link directly to it. The main difference between Sponsored Ads and Sponsored Brands is that the latter allows you to promote keyword-targeted ads of multiple products above, below, and alongside search results.

With Sponsored Brands, you can target three types of keywords: Branded product keywords, Complementary product keywords, and Sponsored products automatic targeting keywords.

Sponsored Brand Campaigns also let you feature up to three unique products in your ads, customize your ads’ image, headline, and landing page, as well as test the performance of all these elements.

To determine how much you pay for Sponsored Brand Campaigns, Amazon uses a pay-per-click, auction-based pricing model, so you’ll never pay more than you bid per click. In addition to manual bidding, you can choose automated bidding, which will optimize your ads for conversion.

As with Sponsored Product Ads, you can also monitor their performance. Sponsored Brand Campaigns reporting features include

  • number and rate of clicks,
  • your ad spend,
  • total sales,
  • the estimated win rate for keywords, and
  • ACoS (Advertising Cost of Sales).

Getting the best results on Sponsored Brands

Ad Creative Guidelines

Amazon recommends including your product’s top benefit in your ad’s headline–mobile shoppers can only see the ad’s main image and headline.

Avoid exaggerated claims: if you say your product is “#1” or a “Best Seller,” your ad won’t get approved.


Best practices for testing your ads is to change just one variable at a time, run them for at least two weeks, and measure regularly against your sales goals.

Amazon Product Display Ads


Image Credit: CrazyLister

Product display ads are pay-per-click ads that appear on product detail pages, customer review pages, on top of the offer listing page, and below search results. They can also be placed on abandoned cart emails, follow-up emails, and Recommendations emails. Their main objective is to cross-sell or upsell your customers.

Using product display ads, there are two types of campaign targeting:

Product targeting is a contextual form of targeting, so you can target specific products and related categories.

Interest targeting is a behavioral form of targeting, so you can target shopper interest and reach a larger audience.

Product display ads also let you choose the in-category detail pages where you want to advertise, customize your ad creative, and it offers a reporting tool for all the details on your campaigns.

Taking advantage of Product Display Ads features


The advantage of these ads is that you can use product targeting on competitor pages, complimentary product detail pages, and your own product detail pages to cross-sell and upsell similar products. Using product targeting on related categories also extends your reach to sections of Amazon’s catalog that are related to your products.

Ad Creative

When crafting your headlines, Amazon allows you to include phrases like “Exclusive”, “New”, “Buy Now”, and “Save Now”, but making claims like “#1” or “Best Seller” will get your ad rejected.

Plenty of opportunities – just be smart about it.

These are the basics on how Amazon ads work. There are plenty of opportunities to spend your advertising dollars with Amazon. In addition to the programs described above, there are also Amazon Native Ads (those you place on your own website), as well as AmazonVideo Ads. Those will be covered in a future article.

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