Amazon PPC Ads: The Complete Guide to Amazon PPC Advertising (2026)

Amazon PPC ads are the single fastest way to grow revenue on Amazon — and the single fastest way to burn cash if you don't know what you're doing. I've watched brands spend six figures on Amazon PPC advertising with nothing to show for it, and I've watched brands turn $10K/month in ad spend into $200K/month in revenue. The difference isn't budget. It's strategy.

After managing Amazon PPC advertising across 50+ brands with $205M+ in total sales, this is the comprehensive guide I wish existed when I started. Every tactic here comes from real campaigns, real data, and real results.

What Are Amazon PPC Ads?

Amazon PPC (Pay-Per-Click) ads are sponsored placements where you bid on keywords or product targets, and you only pay when a shopper clicks your ad. They appear in search results, on product detail pages, and across Amazon's ecosystem.

There are three core Amazon PPC ad types:

• Sponsored Products — Ads for individual product listings that appear in search results and on product pages. This is where 70-80% of your ad budget should live. They drive direct sales and boost organic rank.

• Sponsored Brands — Banner ads that appear at the top of search results featuring your brand logo, a headline, and up to three products. Great for brand awareness and capturing top-of-funnel traffic.

• Sponsored Display — Audience-based ads that appear on and off Amazon. These target shoppers based on browsing behavior, interests, and purchase history. Powerful for retargeting and conquest campaigns.

Each ad type serves a different purpose in your advertising funnel. The mistake most sellers make is treating them all the same — same strategy, same expectations, same metrics. They're fundamentally different tools.

How Do Amazon PPC Ads Actually Work?

Amazon PPC advertising runs on a second-price auction system. You set a maximum bid for a keyword, but you only pay $0.01 more than the next highest bidder. So if you bid $2.00 and the next highest bid is $1.20, you pay $1.21.

But here's what most sellers miss: Amazon doesn't just look at your bid. It looks at your expected conversion rate. A product with a 15% conversion rate and a $1.50 bid can win the auction over a product with a 5% conversion rate and a $2.00 bid. Amazon wants to show the ad most likely to generate a sale because Amazon takes a percentage of every sale.

This means your listing quality directly impacts your PPC performance. Bad listing? You'll pay more per click, get fewer impressions, and convert worse. It's a triple penalty.

The ranking factors that matter for Amazon PPC ads:

• Bid amount — Higher bids get more visibility, but it's not the only factor

• Expected conversion rate — Based on your historical performance and listing quality

• Relevance — How closely your product matches the search query

• Account history — Accounts with strong track records get preferential treatment

How Should You Structure Your Amazon PPC Campaigns?

Campaign structure is where most accounts go wrong. They end up with a mess of overlapping campaigns competing against themselves, making optimization impossible.

Here's the structure we use across our portfolio:

Discovery Layer (Auto + Broad)

• Auto campaigns — Low bids, controlled budgets. Their job is keyword discovery, nothing else. Run them, mine the search term reports weekly, and graduate winners.

• Broad match campaigns — Moderate bids. Catch variations and long-tail queries you wouldn't find with exact targeting. Same harvest-and-graduate process.

Performance Layer (Exact Match)

• Exact match campaigns — Your proven winners. These keywords have conversion data behind them. Bid aggressively here because you know the math works.

• Single keyword ad groups (SKAGs) — For your top 10-20 keywords, isolate them in their own ad groups. This gives you granular bid control and clean data.

Strategic Campaigns

• Brand defense — Target your own brand terms. Should have the lowest ACoS in your account. Prevents competitors from stealing your branded traffic.

• Competitor conquest — Target competitor brand terms. Expect higher ACoS. Measure on incrementality, not efficiency.

• Product targeting — Target specific competitor ASINs. Place your ad on their product page. Conversion rates here depend entirely on how your product compares.

Negate Everything

Every time you graduate a keyword from discovery to performance, negate it in the discovery campaign. Every time you find an irrelevant term, negate it everywhere. Without negative keywords, your campaigns will cannibalize each other.

What's the Right Budget for Amazon PPC Advertising?

There's no universal answer, but there's a framework.

Start with your margins. If your product has a 40% gross margin (after COGS, FBA fees, and Amazon's referral fee), you can afford up to a 40% ACoS before you're losing money on every ad-driven sale. Your target ACoS should be meaningfully below that break-even point. Then back into daily budget:

• New product launch: 15-25% of expected revenue allocated to PPC

• Established product, growth phase: 10-15% of revenue

• Established product, profitability phase: 5-10% of revenue

For a product doing $100K/month, that's $5K-$15K/month in ad spend depending on your phase.

Critical rule: don't set budgets so low that campaigns run out of budget by mid-afternoon. If your daily budget is exhausted by 2 PM, you're missing the entire evening shopping window — which for many categories is the highest-converting period. Either increase the budget or reduce bids to spread spend across the full day.

How Do You Optimize Amazon PPC Ads for Lower ACoS?

ACoS (Advertising Cost of Sale) is your ad spend divided by ad revenue. Lower is generally better, but context matters.

The optimization hierarchy:

1. Fix Your Listing First

This isn't a PPC tactic — it's a PPC prerequisite. If your listing converts at 5% instead of 10%, your ACoS doubles. Full stop. No amount of bid optimization fixes a bad listing.

We've run 10,000+ A/B tests. Main image is the highest-leverage element. Test it first. Then title, then A+ Content.

2. Negate the Waste

Pull search term reports. Find terms with spend and zero conversions. Negate them. This is the fastest path to lower ACoS and we regularly see 15-25% improvement in the first two weeks.

3. Bid by Keyword, Not by Campaign

A keyword at 8% ACoS and a keyword at 45% ACoS shouldn't have the same bid. Pull keyword-level data, calculate target bids based on each keyword's conversion rate, and adjust individually.

4. Use Placement Adjustments

Top of search often has 2-3x the conversion rate of other placements. If the data supports it, increase your top-of-search modifier. You'll pay more per click but convert so much better that ACoS drops.

5. Harvest and Graduate

Move proven keywords from auto/broad to exact match with optimized bids. This simple process, done weekly, compounds into massive efficiency gains over months.

What Metrics Should You Track Beyond ACoS?

ACoS is important but it's not the full picture. Here's what actually matters:

• TACoS (Total Advertising Cost of Sale) — Ad spend divided by total revenue (including organic). This tells you whether PPC is building organic momentum or creating ad dependency. If TACoS is declining while revenue grows, you're winning.

• Click-Through Rate (CTR) — Low CTR means your main image or title isn't compelling. This isn't a bidding problem — it's a creative problem.

• Conversion Rate (CVR) — Low CVR with decent CTR means your listing is attracting clicks but not closing. Check your price, reviews, images, and bullet points.

• Impression Share — What percentage of available impressions you're capturing. Low impression share on high-converting keywords means there's room to scale.

• New-to-Brand Metrics — For Sponsored Brands, Amazon shows what percentage of purchases come from customers new to your brand. This measures actual customer acquisition.

Track these weekly. Build a dashboard. The brands that scale fastest are the ones with the clearest view of their data.

How Do Amazon PPC Ads Affect Organic Ranking?

This is the part that makes Amazon PPC advertising fundamentally different from Google Ads. Every sale you drive through PPC contributes to your organic ranking for that keyword.

Amazon's algorithm tracks sales velocity by keyword. When your product sells 50 units this week on the keyword "organic protein powder" — whether those sales come from PPC or organic — your product ranks higher for that term organically.

This creates a flywheel:

• PPC drives sales on target keywords

• Sales velocity improves organic rank

• Better organic rank drives free organic sales

• Total revenue grows while TACoS shrinks

The brands in our portfolio that understand this flywheel outperform those that treat PPC as a standalone channel. They accept higher ACoS in the short term on strategic keywords because they're investing in organic rank that will pay dividends for months.

Common Amazon PPC Advertising Mistakes

After auditing hundreds of Amazon PPC accounts, these are the patterns I see repeatedly:

Running auto campaigns without harvesting. Auto campaigns are discovery tools, not set-and-forget revenue drivers. If you're not reviewing search terms weekly, you're paying discovery prices for keywords that should be in exact match campaigns. Bidding the same amount on every keyword. A branded keyword and a generic category keyword have completely different conversion rates. Bidding them the same wastes money on one and under-invests in the other. Optimizing on 3 days of data. PPC data needs volume to be statistically meaningful. Making bid changes on a keyword with 10 clicks and 1 conversion is reacting to noise. Wait for 30+ clicks minimum before making decisions. Ignoring the listing. I've said it three times in this guide and I'll say it again: your listing is the biggest lever in your PPC performance. A 2% conversion rate improvement can do more for your ACoS than weeks of bid optimization. Cutting spend to lower ACoS. Reducing bids or budgets will lower ACoS, but it will also lower sales and hurt organic rank. You're not optimizing — you're retreating. Lower ACoS by improving efficiency, not by reducing volume.

What To Do Next

Amazon PPC advertising isn't complicated in theory. Bid on keywords, pay for clicks, optimize based on data. But executing it well across hundreds of keywords, multiple campaign types, and constantly shifting competitive dynamics — that's where most brands fall behind.

If you're spending $5K+/month on Amazon PPC ads and your ACoS is higher than your margins can support, or you know there's room to scale but aren't sure where, the diagnosis is usually straightforward once you have the right eyes on the data.

Book a free strategy call — We'll audit your campaign structure, search term data, and listing conversion rates. You'll leave with a clear picture of where the money is leaking and how to fix it.

Hunter Harris is the founder of GigaBrands, an AI-assisted Amazon growth agency managing 50+ brands with over $205M in total Amazon sales.