Amazon Sponsored Products – Meaning, Cost, Tips & Reviews

Amazon can be a tough marketplace to sell on, with countless sellers vying for attention. However, with the right tools, marketing strategies, and advertising solutions, standing out becomes much more achievable. This guide focuses on one such powerful advertising solution: Amazon Sponsored Product Ads.

By leveraging these ads, you can enhance the visibility of your products and connect directly with eager buyers. We’ll walk you through setting up your campaigns, choosing effective keywords, fine-tuning your bidding strategy, and much more, including how to utilize Amazon statistics to inform your decisions and optimize your results.

This article will provide practical amazon sponsored products meaning, amazon sponsored products tips and detailed instructions for using Sponsored Product ads on Amazon, helping both new and experienced sellers optimize their presence, increase sales on amazon and understand the amazon sponsored products meaning.

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Let’s get started.

What are Amazon Sponsored Products

Amazon Sponsored Products are cost-per-click ads designed to promote individual product listings, driving traffic to listings and generating higher sales. To get started with Sponsored Products, sellers must have an Amazon Sponsored Products account, enabling them to create and manage campaigns directly within Amazon’s advertising platform.

The best part about these ads is that sellers only pay when a shopper clicks on their ad on the platform, i.e., these are Amazon PPC ads. When a shopper clicks on one of Amazon’s Sponsored ads while browsing the platform, they are directed to the product’s detail page.

In addition to Sponsored Products, Amazon offers several other types of sponsored ads. Let’s look at all ad types, including Sponsored Product ads, below.

Types of Sponsored Ads

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1. Sponsored Products

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As we discussed above, Sponsored Products are cost-per-click ads that promote your items on Amazon and other apps and websites, including BuzzFeed, Pinterest, Raptive, and more. These ads target specific keywords, and sellers can choose which products to advertise.

Sponsored Products ads appear on desktop and mobile browsers and the Amazon mobile app. Their widespread reach makes them an ideal choice for an Amazon product launch. When customers click your ad, they are directed to the product’s detail page.

Note: Sponsored Products are accessible to Kindle Direct Publishing authors, professional sellers, vendors, and agencies. To be eligible for advertising, products must belong to one or more approved categories and qualify for the Featured Offer (Buy Box).

(We’ll discuss Sponsored Products ads in further sections of this guide.)

2. Sponsored Brands

Sponsored Brands is an advertising solution designed to increase brand visibility on Amazon. Sellers can create display and video ads showcasing their brands that appear at the top, alongside, or within shopping results and reach customers on desktop and mobile devices.

These ads showcase the brand and product portfolio at the top of the product detail pages and search results.

3. Sponsored Display

Sponsored Display is an advertising solution that works for any business, regardless of whether they sell on Amazon. It uses machine learning and various ad formats to help businesses reach customers across the Amazon store and thousands of other apps and websites.

Sponsored Display ads are special as they target shoppers based on their behavior and interests both on and off Amazon. They are used to re-engage potential customers.

4. Sponsored TV

Sponsored TV is a self-service advertising solution that lets brands of any size reach and engage with audiences on their home televisions.

Using billions of shopping and streaming signals, these Streaming TV ads help your brand reach the right viewers at the right time on platforms like Twitch and Freevee.

5. Stores

Stores is a free, self-service tool that lets brand owners design and build multipage Amazon stores to showcase their products and USPs.

They offer brands a free way to showcase their products, share their story, and build lasting relationships with customers. Sellers can easily create a Store using predesigned templates and drag-and-drop tiles option.

Bonus: Learn how to create an Amazon Storefront from our detailed blog.

Amazon Sponsored Products Cost

Amazon Sponsored Products use a cost-per-click (CPC) model, so you only pay when someone clicks on your ad. The cost of Amazon Sponsored Products can vary depending on factors like the competitiveness of keywords and the category you’re advertising in. There’s no upfront fee, letting you manage your budget based on how well your ads perform.

Cost Structure

• CPC Rates: On average, you might pay around $0.81 to $0.89 per click, though this can vary depending on competition and keywords. Some advertisers report spending between $0.71 and $0.89 per click, with costs influenced by bidding strategies and market demand.
• Daily Budget: You can start with a small daily budget, like $5 to $10, but many successful campaigns work with $50 to $100 per day.
• Bidding Strategy: Costs can go up if more sellers are bidding on the same keywords, so it’s important to fine-tune your bidding to stay within your budget.

Bonus: Read our blog on Amazon advertising costs, which discusses how much different types of Amazon ads cost.

Setting Up Sponsored Products Ads on Amazon

Step 1: Login and Access Advertising Dashboard

1. Go to sellercentral.amazon.com and enter your login credentials.
2. Access the main dashboard.
3. Click on “Advertising”.
4. Select “Campaign Manager”.

Step 2: Set Up Your Amazon Sponsored Products Ad Campaign

Once inside your Amazon seller central account, follow these steps to set up a Sponsored product ads campaign, follow these steps:

1. Click on “Create Campaign” to start.

2. Confirm the country you want to run your campaign in > Choose the campaign type as “Sponsored Products” to proceed.

3. Input the following details in the ‘Settings’ section.

• Give your campaign a unique and descriptive name to identify and track the campaign later. 

Note: The campaign name is not visible to the audience.

• Create a Portfolio to better manage your advertising campaigns by brand, season, or product category.
• Set up the daily budget. 

4. Choose the Sponsored Products ad campaign’s start and end dates. You can even choose to run the campaign indefinitely.

Note: Campaign start and end times are relative to the country where the ad is running.

5. Select automatic targeting or manual targeting. If you choose manual targeting, select keywords for your ads. Amazon provides keyword suggestions based on your product, or you can input your own.

Pro Tip: To capture different search queries, you must choose a mix of broad, phrase, and exact-match keywords.

6. Let’s suppose you have selected the manual targeting option; next, you have to choose a bidding strategy. You can select either dynamic bid-down, dynamic bid-up and down, or fixed bid. 

Pro Tip: If you’re working within a strict budget, it’s recommended that you choose the ‘Dynamic bids—down only option.’

7. To set up an ad group, enter a title in the “Create an ad group” section. Sellers can enable the ”Launch to additional campaigns in other countries” option to expand their campaigns to other countries. To manage and view these campaigns, simply use the country selector.

8. Next, choose the products you want to advertise. You can select individual products or entire product groups. Make sure to choose products that are eligible for the Featured Offer.

9. For manual targeting, you must set bids for your selected keywords or product targets.

Note: Amazon suggests bid amounts based on competition and estimated traffic, but you can adjust them to fit your budget and goals. Besides, Sponsored Products ads don’t require custom ad copy since they use your product title and image. Thus, your product listings need to be clear with compelling titles, bullet points, and descriptions. 

10. Before launching your campaign, review all your settings carefully. Check the campaign name, budget, targeting, keywords, and selected products to ensure everything is set up according to your plan. Once satisfied, click “Launch Campaign” to go live.

Keyword Research and Targeting

Keywords are the terms you choose in Sponsored Products PPC campaigns. You bid on these keywords to have your ads shown to customers.

Selecting and targeting the right keywords for the Sponsored Products campaign increases the likelihood of clicks and conversions.

Different Types of Keyword Targeting 

Here are the different types of keywords that allow you to fine-tune your Sponsored Products ads’ reach:

1. Broad Match Keywords

The most flexible kind of keyword targeting is broad match. When using broad match targeting, your Sponsored Products can appear in any position for searches containing any words you used in your keyword phrase.

In addition, it can also incorporate possible modifications, including plural forms and other possible words of similar meaning or scope of use.

Note: Broad-match targeting can also lead to irrelevant clicks. Therefore, you must constantly monitor and refine the broad match keywords.

2. Phrase Match

Phrase-match keywords narrow down the search results a bit more than broad-match keywords. They target searches that include the exact keyword phrase or close variations. The catch is that they include additional words before or after the phrase.

So, let’s say your keyword is “wireless headphones”. Your Sponsored Products ad could appear for searches like “best wireless headphones for online classes ” or “wireless headphones in black,” but not for “Headphones for office calls.”

While Phrase Match keywords offer more specificity, they can miss out on variations in how shoppers phrase their searches.

3. Exact Match

Exact match targeting is the most accurate way to target keywords in CPC advertising models. Your Sponsored Products ad will only appear for a keyword or phrase that the person typed in the search bar or its very close variations, such as misspellings or plurals.

Nevertheless, this precision can also limit your ad’s reach and potentially reduce the overall number of impressions.

Keyword Targeting Type	Example Keyword	Potential Search Results
Broad Match	Wireless Headphones	– Best wireless headphones – Bluetooth headphones – Wireless earbuds – Headphones for running wireless
Phrase Match	Wireless Headphones	– Best wireless headphones – Wireless headphones for TV – Cheap wireless headphones
Exact Match	Wireless Headphones	– Wireless headphones

Negative Keywords

Negative keywords are terms you add to your PPC campaigns to prevent your ads from showing up for irrelevant searches. These keywords refine your keyword targeting efforts and reduce wasted ad spend. You can optionally add negative keywords to your Sponsored Products ad campaign. 

If you are a high-end luxury item seller on Amazon, then you might add “cheap” as a negative keyword to avoid clicks from shoppers looking for budget options.

Tools and Techniques for Effective Keyword Research

Here are all the tools and resources you can use to ensure that you select and target the right keywords every time you run a Sponsored Products ad campaign.

• When setting up a manual targeting campaign, Amazon provides keyword suggestions based on your product listing and its relevance to shoppers’ search terms. To reach a wider audience, it is suggested that you use these Amazon Suggested Keywords in your campaign.
• Use external tools like Helium 10 and Jungle Scout. They provide more detailed keyword metrics, such as search volume, competition, and keyword trends over time.
• Check out the keywords that your competitors are targeting by looking through their listings. You can again use tools that allow you to see which keywords are driving traffic to their products.
• Once your campaign is live, regularly review the Search Term Report in Amazon’s Campaign Manager. This is suggested so that you can see which keywords are generating clicks and sales and adjust your strategy accordingly.

Bidding Strategies

Sponsored Product ads involve keyword bidding. The bid represents the maximum amount you’ll pay for a click on your ad. The actual cost you incur depends on multiple factors, as mentioned in previous sections.

Sellers must choose the right bidding strategy as it influences the positioning of the ads in search results and product pages.

Manual Bidding vs. Automatic Bidding

Manual Bidding	Automatic Bidding
Provides full control over bids for each keyword or product Can decide how much to bid based on specific goals and data	Limited control, with Amazon’s algorithm automatically adjusting bids based on the likelihood of conversion
Requires regular monitoring and adjustments to ensure optimal performance	Requires less monitoring, as the system handles bid adjustments
Potential risk of overspending or underspending if bids are not managed properly; thus, requires careful analysis to avoid wasteful ad spend	Lower risk of overspending on low-converting clicks, but there’s a potential risk of missed opportunities if the algorithm underbids for valuable placements
Budget efficiency depends on the advertiser’s ability to manage bids effectively Manual adjustments can lead to better cost management	Automatic adjustments help ensure budget efficiency by focusing on conversions May not always align with an advertiser’s preferred CPC
Requires a significant time investment for ongoing bid management, performance analysis, and strategic adjustments	Reduces time investment needed for campaign management, as the system automates bidding decisions, freeing up time for other tasks

Dynamic Bids and Bid Adjustments

On the basis of the likelihood of conversion, dynamic bids automatically adjust bids in actual time. There are three types of dynamic bids, and these are as follows:

1. Dynamic Bids – Down Only
   • This option automatically lowers your bid in real time if Amazon predicts a lower chance of a conversion. It’s designed to prevent overspending on clicks that are less likely to convert.
   • The down-only bidding strategy for Amazon Sponsored Products lets you lower bids on less relevant search queries or underperforming placements. This helps manage your ad spend by focusing your budget on more effective areas, making it a crucial component of a well-rounded Amazon Sponsored Products strategy.
   • It is the ideal choice when you have a conservative budget but still want to participate in auctions for high-quality traffic.
2. Dynamic Bids – Up and Down
   • With this option, Amazon increases your bid by a maximum of 100% when it predicts a higher chance of conversion and decreases it when the likelihood is lower. This type of dynamic bid aims to maximize visibility when it matters most.
   • In the United States, this bidding campaign generated 119% more ad-related sales per campaign and achieved a 5% lower Amazon RoAS compared to down-only bidding campaigns.
   • This option is useful for sellers willing to pay a premium for better placement to capture high-converting traffic.
3. Fixed Bids
   • Fixed bids keep your bid amount the same, no matter how likely it is to convert. Amazon does not adjust your bids dynamically, giving you total control over your willingness to pay per click.
   • Unlike the strategies for dynamic bidding, this approach can get more impressions. However, it will result in fewer conversions for your ad spend.
   • Fixed bids are best for advertisers who prefer consistent bid amounts and understand their target CPC.
4. Rule Based Bidding

• Sellers can apply a rule to any campaign running for at least 10 days with a ROAS guardrail.
• Amazon Ads will adjust your base bids up and down to increase conversions while staying within the ROAS guardrail. However, the ROAS guardrail is not guaranteed to be met.
• If the campaign’s ROAS drops below 30% of the 20-to-40-day average over the last 20 days, Amazon Ads will automatically disable the rule and revert to your previous bidding strategy.

Note: Additionally, Amazon allows for bid adjustments based on placement. You can set higher bids for top-of-search placements or product page placements. This would help you strategically position your ads in locations with higher conversion potential.

Tips for Optimizing Your Bidding Strategy

Tip 1: If you’re new to Amazon Sponsored ads, begin with lower bids to test the waters and gather data. Gradually increase your bids based on performance insights.

Tip 2: Review your Sponsored product ad campaign performance to identify high and low-performing keywords. Adjust your bids accordingly to focus on profitable targets.

Tip 3: As a seller, you can use schedule-based budget rules to adjust your budget according to specific times or dates. Furthermore, use performance-based rules to modify your budget based on how well your ads are performing.

Tip 4: Use dynamic bids for campaigns where the chances of conversion vary significantly, such as seasonal promotions or time-sensitive offers.

You might also like to read: How to Buy UPC Codes for Amazon: A Complete Guide with Tips 35+ Amazon Analytics Tools Every Seller Should Try What to Do When Your Amazon Seller Account is Suspended or Deactivated? What Is Amazon A+ Content and How Can Sellers Create It? All You Need To Know About Amazon Marketing Cloud Ultimate Guide to Master Amazon PPC Optimization in 2025

Ad Placement and Visibility

If you’re not monitoring where your Amazon Sponsored Product ad is placed, you could face losses. Several factors influence ad placement, including:

• Bid Amount (higher bid amount increases the chances of securing top ad placements)
• Ad relevance
• Overall competition for a particular keyword or ad placement
• Devices where the ad has to be displayed (mobiles, desktops, etc.)

Amazon Sponsored Product ads can be placed in three ways. Each of these options impacts how and where your ads are displayed.

1. Top of Search: Ads appearing at the top of search results are highly visible and typically receive significant attention from shoppers.
2. Product Pages: Ads placed on product detail pages are shown alongside relevant products. They capture interest from shoppers browsing similar items.
3. Rest of Search: Ads appearing in the lower parts of search results or on subsequent pages. They still have visibility but may receive less traffic compared to top placements.

Placement	CTR	Conversion rate
Top of Search	4.41%	13.8%
Product Pages	0.13%	6.7%
Rest of Search	0.79%	8.7%

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How to Improve Ad Visibility and Ranking?

While there are no strict rules, some proven strategies can improve Sponsored Product ads’ visibility and ranking.

However, you can factor in the following tips for optimum results:

• Use dynamic bids (down only) to let Amazon automatically lower your bids in auctions where conversions are less likely.
• Product listings must be well-optimized with high-quality images, descriptions, and competitive pricing for better performance of ads.
• Use automatic targeting and choose from the four match types (close match, loose match, complements, and substitutes) that align with your campaign goals. You can make this selection during or after setting up your campaign.
• Leverage negative ASINs to prevent your ad from appearing next to irrelevant or non-complementary products.
• Increase your bids to compete for higher placements, especially for high-converting keywords.

Monitoring and Analyzing Sponsored Products Ads Performance

Running Amazon Sponsored Product ads alone will not make you an overnight success. Sellers must monitor key metrics to ensure their campaign is effective and attracting new leads. 

Key Performance Metrics to Observe

1. Click-through Rate:  It yields the percentage of users clicking on the ad once the ad has been displayed. Sponsored Products ad with a higher CTR implies that the ad is interesting and relevant and people are encouraged to take prompt action.
2. Conversion Rate: The conversion rate measures how many conversions (like clicks, purchases, or sign-ups) you get as compared to your total audience. It is calculated as (conversions ÷ total audience) x 100
3. Advertising Cost of Sales: ACoS considers the ratio of ad spend to revenue generated. Sellers must aim for a lower ACoS since it means you have a more cost-efficient campaign.
4. Return on Advertising Spend: Measures the revenue generated for every dollar spent on advertising. A higher RoAS shows that you gained good returns on your ad investment.

Tools and Techniques For Monitoring Performance

1. Amazon advertising console gives you comprehensive information about your campaigns and other important stats for online advertising, such as CTR, conversion rate, ACoS, and RoAS. It will help you analyze your ad campaign’s performance, generate reports, and conduct trend analysis on the platform for your product category.
2. Amazon’s analytics tool helps you gain in-depth information about the campaign’s key metrics. This tool enables sellers to assess, analyze, and compare customers’ demographic information, keyword search results, and competitive indicators, among other things. Based on this information, sellers can always refine their targeting and bidding.

If you have the financial bandwidth you can use third-party tools like Jungle Scout for more in-depth keyword research.

Note: Sellers on Amazon need to carefully consider the take rate, as it directly affects their profit margins. Take rate refers to the percentage of each sale that Amazon collects as a fee from sellers using its platform. The take rate varies based on different product categories.

Tips and Best Practices for Sponsored Product Ads Optimization 

Tip 1: Update and Refine Keywords

Continuously review and adjust your keyword list based on how they are performing. Remove underperforming keywords and incorporate new, relevant terms to align your ads with current search trends.

Use long-tail keywords, as they help you target more specific searches. By targeting precise (long-tail) keywords, you can more effectively reach buyers looking for niche products typical in dropshipping and Amazon retail arbitrage scenarios.

Tip 2: Conduct an A/B Test for Ads

Experiment with different types of images and ad copies for your Sponsored product campaigns to determine which combinations improve audience engagement and conversions.

Tip 3: Adjust Bids Based on Performance Data

Assess campaign performance and modify your bids according to the results. Increase bids for high-performing keywords to gain better placement and lower the bids for less effective keywords for cost control.

Tip 4: Utilize Customer Reviews and Ratings

Remember to incorporate positive customer reviews and high ratings into your ad strategy. Sponsored Product ads featuring strong reviews and ratings often perform better, building trust and appealing to potential buyers.

Common Challenges and Solutions

Amazon’s marketplace has over 1.1 million sellers from the US. Even after running Sponsored Products ad campaigns, sellers might face some challenges that would lead to little to no sales. These challenges are outlined below, along with their solutions:

1. Problem: Low Click-Through Rates

Explanation: Your Sponsored Products ads may not be attracting enough clicks because your product detail pages are not fully optimized or your keywords are too broad.

Solution: Make sure your product detail pages are fully optimized with strong descriptions, bullet points, and professional images. Use negative keywords to avoid irrelevant traffic. Check out what keywords your competitors are using and bid on them to target the right audience more effectively.

2. Problem: High Advertising Costs

Explanation: High ad costs for Sponsored product ads can result from bidding on highly competitive keywords or not regularly adjusting bids. This leads to inefficient budget use.

Solution: Monitor your Sponsored Products ad campaign performance regularly and adjust your bids based on results. Focus on high-performing keywords and consider using long-tail keywords to reduce competition. Also, try implementing negative keywords.

3. Problem: Poor Conversion Rates

Explanation: Low conversions might occur if your product pages are not engaging or user-friendly. This causes potential customers to leave without purchasing.

Solution: Provide clear, detailed descriptions, top-quality images, and competitive pricing to improve your Sponsored Product ads and make them more user-friendly. Make sure your product pages offer a smooth customer experience. You can further consider enhancing brand content (A+ content) to make your listings more compelling.

Did you know that basic A+ Content can encourage repeat purchases and increase sales by up to 8%?

4. Problem: Compliance with Amazon’s Policies

Explanation: Non-compliance with Amazon’s advertising policies for amazon sponsored products ads can lead to ad rejections or penalties, which can disrupt your campaigns.

Solution: You may overcome this challenge by regularly reviewing Amazon’s advertising policies to stay updated on guidelines. Besides, you must implement best practices for ad content and targeting to avoid policy violations and potential penalties.

The Final Takeaway

To sum up, Amazon Sponsored Products can help you improve your position and sales on Amazon for any type of business model, be it Merch on Demand or Amazon Dropshipping. Nevertheless, for successful results, you must know how to set up your campaigns the right way. The key is to pick the right keywords and adjust your bids based on how they perform. 

The point is that if, as a seller, your growth and mobility on the platform seem stunted, then Amazon Sponsored Products ads are a good place to start. So, why wait? Start exploring Amazon Sponsored Products today and watch your business grow!

FAQs

1. What are Amazon Sponsored Products? 

Sponsored Products are ads you pay for when someone clicks on them. They promote individual products on Amazon and other select premium apps and websites. Sponsored product ads work on a keyword bidding model, and sellers pay based on the number of clicks they get on their ads.

2. How much does Amazon Sponsored Products cost?

Costs for Amazon Sponsored Products vary based on your bid amount and keyword competition. You set a bid amount for each keyword. In 2022, the average CPC in the United States was 0.90 USD.

3. How do Sponsored Products ads work?

Sponsored Products work by placing ads for your products on Amazon’s search results and product pages. You choose relevant keywords, set a budget, and bid for placement. Also, these ads are visible on both mobile and desktop. When shoppers search for those keywords, your ad has the potential to appear.

4. What is the take rate for Amazon ads?

The take rate is the percentage of each sale that Amazon charges as fees to sellers. The take rate differs for each category. For example, the take rate or referral fee for footwear, home, and kitchen is 15%, and for full-size appliances, it is 8%.

5. What is the conversion rate for Amazon Sponsored ads?

The Sponsored Products ads have an average conversion rate (CVR) of 10%.

6. How do I determine the right budget for my Amazon Sponsored Products campaign?

To determine the right budget, analyze your sales goals, historical data, and competition. Start with a budget that aligns with your goals and adjust based on performance and results.

7. What is the difference between automatic and manual targeting, and when should I use each?

Automatic targeting allows Amazon to match your ads with relevant search terms based on your product details. Manual targeting lets you choose specific keywords yourself. You can use automatic targeting for initial research and manual targeting for precise control over your keyword strategy.

8. How can I improve my Amazon Sponsored Product ad’s CTR?

To improve Amazon Sponsored Product ad’s CTR, make sure your ad copy is captivating and relevant. Use high-quality images and adjust your keywords. Lastly, regularly test different ad variations to identify what resonates best with your audience.

9. What are negative keywords, and why are they important in Amazon Sponsored Products campaigns?

Negative keywords prevent your ads from showing up for irrelevant searches. This helps to avoid wasting ad spending on clicks that are unlikely to convert.

10. How do I measure the success of my Amazon Sponsored Products campaign?

To measure success, you have to track key metrics like CTR, conversion rate (CVR), advertising cost of sales, and return on advertising spend.