Amazon PPC (Pay-Per-Click) advertising is a cornerstone of success for sellers looking to boost product visibility and increase sales. However, running Amazon ads without a solid strategy can lead to high advertising costs without a significant return. To truly master Amazon PPC, sellers need to focus on lowering their Advertising Cost of Sale (ACOS) while maximizing their Return on Investment (ROI).
In this in-depth guide, we will explore key strategies to optimize your Amazon PPC campaigns, reduce unnecessary ad spend, and drive profitable sales. Whether you’re new to PPC or looking to refine your approach, these expert tips will help you stay ahead of the competition.
Understanding Amazon PPC and ACOS
What is Amazon PPC?
Amazon PPC is an advertising model where sellers bid on keywords to display their products in search results and product detail pages. The three primary types of Amazon PPC ads include:
Sponsored Products – Appear in search results and product detail pages, promoting individual product listings.
Sponsored Brands – Feature a brand logo, headline, and multiple products, ideal for brand awareness.
Sponsored Display – Targets shoppers both on and off Amazon, using display ads for retargeting and brand expansion.
Each ad type serves a different purpose, and using them strategically can help maximize results.
What is ACOS and Why Does it Matter?
ACOS is a critical metric that determines how much you’re spending on ads in relation to your sales revenue. It is calculated as:
ACOS=(AdSpendAdRevenue)×100ACOS = \left(\frac{Ad Spend}{Ad Revenue}\right) \times 100ACOS=(AdRevenueAdSpend
A lower ACOS means greater efficiency—you’re spending less on ads to generate sales. While ACOS goals vary by category and business model, many sellers aim for an ACOS below 30%. However, the ideal ACOS depends on factors like product margins, competition, and overall business goals.
Strategies for Lowering ACOS and
Maximizing ROI
1. Optimize Keyword Targeting
Your keyword strategy plays a significant role in your PPC campaign’s success. Poor keyword selection can lead to wasted ad spend, while the right keywords help improve conversions. Here’s how to refine your approach:
Use High-Intent Keywords
Not all keywords drive conversions. Some attract window shoppers, while others indicate strong purchase intent. For example:
Low-intent keyword: “Best wireless headphones” (Informational search)
High-intent keyword: “Buy Sony WH-1000XM5 noise-canceling headphones” (Ready to purchase)
Focusing on high-intent keywords helps increase conversion rates and lower ACOS.
Utilize Long-Tail Keywords
Long-tail keywords (phrases with three or more words) are often less competitive and convert better. For example:
Instead of “Running shoes”, target “Men’s lightweight running shoes size 10”
Long-tail keywords attract shoppers who are closer to making a purchase.
Leverage Negative Keywords
Negative keywords prevent your ads from showing for irrelevant searches, reducing wasted ad spend. Regularly update your negative keyword list to exclude searches that don’t convert.
Perform Regular Keyword Research
Amazon’s Search Term Report helps identify profitable keywords and eliminate underperformers. Additionally, third-party tools like Helium 10, Jungle Scout, and ZonGuru can uncover valuable keyword opportunities.
2. Structure Your Campaigns
Effectively
A well-organized campaign structure improves performance and makes optimization easier. Consider these best practices:
Separate Campaigns by Match Type
Exact match: Targets highly specific searches (best for high conversion rates).
Phrase match: Captures variations while maintaining relevance.
Broad match: Expands reach but requires close monitoring.
By segmenting campaigns based on match type, you gain better control over bidding and performance.
Organize by Product Category
Avoid lumping unrelated products into the same campaign. If you’re selling running shoes and hiking boots, create separate campaigns to fine-tune keyword and bid strategies for each.
Use Auto and Manual Campaigns
Together
Auto campaigns help discover new keywords.
Manual campaigns allow precise targeting and bid control.
Start with auto campaigns to gather data, then transition high-performing keywords to manual campaigns.
Bid Strategically
Your bidding strategy directly influences ACOS and profitability. Use these techniques to manage bids effectively:
Start with Conservative Bids
Avoid overspending by setting initial bids at a moderate level. Monitor performance and adjust gradually.
Use Dynamic Bidding
Amazon offers “Dynamic Bids – Down Only” and “Dynamic Bids – Up and Down” options:
Down Only: Reduces bids when conversions are less likely (saves money).
Up and Down: Increases bids when a conversion is highly likely (riskier but can increase sales).
Adjust Bids Based on Performance
Regularly analyze keyword performance and lower bids on underperforming keywords while increasing bids on profitable ones.
Improve Click-Through Rate (CTR)
and Conversion Rate (CVR)
A higher CTR and CVR mean your ads are more engaging and converting efficiently.
Optimize Product Listings
Use high-quality images from multiple angles.
Write compelling product titles with relevant keywords.
Include detailed bullet points and descriptions highlighting key features.
Use Competitive Pricing
If your product is significantly more expensive than competitors, shoppers may click but not buy—hurting your ACOS. Consider running promotions or offering coupons.
Leverage Reviews and Ratings
Products with higher ratings (4+ stars) and more reviews tend to convert better. Encourage customer feedback through Amazon’s Vine Program or post-purchase emails.
Monitor and Adjust Your Budget
Managing your Amazon PPC budget effectively is crucial to maintaining profitability while maximizing exposure. Without proper monitoring, ad spend can quickly spiral out of control, leading to high ACOS and reduced profit margins.
Optimize Your Budget Allocation
One of the most effective ways to optimize your budget is to allocate more funds to high-performing campaigns. By analyzing your advertising reports, you can identify which keywords and ad groups generate the most conversions at a low cost. Increasing bids on these profitable keywords ensures your ads remain competitive while maximizing returns.
Pause or Lower Bids on
Underperforming Keywords
At the same time, it’s essential to pause or lower bids on underperforming keywords. If a keyword is consuming a significant portion of your budget but failing to drive conversions, it’s a sign that either the targeting needs refinement or the keyword is not aligned with buyer intent. Adjusting bids downward or completely pausing certain keywords can prevent wasted ad spend and improve overall efficiency.
Set Daily and Lifetime Spend Limits
Setting daily and lifetime spend limits is another crucial strategy to prevent overspending. Amazon allows you to define daily caps on your campaigns, ensuring that once your budget is exhausted, ads automatically pause instead of continuing to accrue costs. This helps in managing cash flow, especially for sellers with limited ad budgets.
Regular Budget Reviews
Regular budget reviews and adjustments ensure that your PPC campaigns remain cost-effective while delivering optimal results. By continuously reallocating funds to the most profitable campaigns, you can maintain a sustainable advertising strategy that maximizes sales without excessive spending.
Utilize A/B Testing
A/B testing, also known as split testing, is an essential strategy for optimizing Amazon PPC performance. By testing different elements of your ads, you can identify which variations drive the best results and refine your campaigns accordingly.
Test Your Ad Creatives
One of the most impactful aspects to test is your ad creatives. Experimenting with different product images, titles, and bullet points in Sponsored Brands or Sponsored Display ads can help determine which version resonates most with customers. A more engaging image or compelling headline can significantly improve click-through rates (CTR) and conversions.
Compare Bidding Strategies
Bidding strategies are another critical area to test. Many sellers debate between manual and automated bidding. While automated bidding can save time by adjusting bids dynamically based on competition and conversion likelihood, manual bidding allows for more control. Testing both methods and analyzing which provides better ACOS can help refine your approach.
Analyze Ad Placements
Placements also play a significant role in ad performance. By running campaigns with different placement settings—such as Top of Search vs. Product Pages—you can evaluate which positions generate the highest ROI. Amazon’s Placement Reports provide insights into how each placement performs, enabling you to make data-driven adjustments.
Continuous Testing and Refinement
A/B testing should be an ongoing process. What works today may not be effective in the future due to changes in competition, consumer behavior, and Amazon’s algorithm. By continuously testing and refining your ads, you can ensure that your PPC campaigns remain optimized and profitable.
Retarget and Upsell with Sponsored Display Ads
Sponsored Display Ads offer a powerful way to re-engage shoppers who have already interacted with your product and to upsell additional items to existing customers. Unlike traditional search-based ads, Sponsored Display Ads allow you to target audiences based on their shopping behavior, both on and off Amazon.
Retarget Potential Customers
One of the key benefits of Sponsored Display Ads is retargeting shoppers who viewed your product but didn’t purchase. Many consumers browse multiple listings before making a final decision. By serving ads to these potential buyers after they leave your product page, you increase the chances of converting them later. Amazon’s data shows that retargeted ads often have higher conversion rates because they reach shoppers who are already interested in the product.
Upsell Complementary Products
Another effective strategy is upselling complementary products. If a customer has already purchased one of your items, you can use Sponsored Display Ads to promote related products. For example, if someone buys a coffee maker from your store, you can target them with ads for coffee filters, accessories, or premium coffee beans. This not only increases your average order value but also helps build brand loyalty.
Expand Your Reach Beyond Amazon
Additionally, Sponsored Display Ads extend your reach beyond Amazon. These ads can appear on external websites, apps, and Amazon’s partner networks, allowing you to attract new customers who might not have initially searched for your product on Amazon. By strategically using this ad format, you can expand brand awareness and drive additional sales while keeping ACOS in check.
Leverage Automation and AI Tools
Amazon PPC campaigns require constant optimization, but manually adjusting bids, monitoring keywords, and analyzing performance can be time-consuming. Leveraging automation and AI-powered tools can help streamline the process, ensuring that your campaigns remain efficient and profitable.
Use AI for Bid Optimization
AI-based platforms like Perpetua, Sellics, and Quartile use machine learning to optimize bids in real time. These tools analyze vast amounts of data, automatically adjusting bids based on performance metrics such as conversion rates, CTR, and competitor activity. This level of automation ensures that your ads are always competitive without requiring manual intervention.
Automate Keyword Management
Automated tools also assist with keyword management. They can identify new high-performing keywords based on customer search behavior and automatically add them to your campaigns. Similarly, they can detect underperforming keywords and suggest pausing or lowering bids to reduce wasted ad spend.
Leverage Predictive Analytics
Another advantage of AI tools is predictive analytics. By analyzing historical data, these platforms can forecast trends, helping sellers make informed decisions about budgeting, keyword targeting, and seasonal adjustments. For example, if a tool detects a spike in demand for a specific product category, it can recommend increasing ad spend to capitalize on the trend before competitors do.
Maintain Human Oversight
While automation can significantly improve efficiency, it’s essential to monitor performance regularly. Even the best AI-driven tools need human oversight to ensure that the recommendations align with your business goals. By integrating automation with strategic decision-making, sellers can scale their PPC campaigns effectively while maintaining a strong return on investment.
Seasonal and Trend-Based PPC Strategies
Amazon shopping trends fluctuate throughout the year, especially during peak seasons like Black Friday, Prime Day, and the holiday season. To optimize your PPC campaigns:
Increase bids on high-performing keywords before and during seasonal events to capitalize on increased traffic.
Use historical data from previous seasons to identify trends and predict demand.
Leverage promotional ad types, such as Sponsored Brands and Coupons, to attract more conversions.
Reduce ad spend post-season to prevent high ACOS on declining searches.
By aligning your PPC strategy with seasonal trends, you can maximize ROI when demand is highest.
Competitor Analysis and
Defensive Bidding
Understanding how your competitors run their Amazon PPC campaigns can give you a competitive edge.
Identify competitor keywords using tools like Helium 10 or Jungle Scout and bid on those terms to appear alongside their listings.
Use defensive bidding by targeting your own brand keywords to prevent competitors from stealing traffic.
Analyze competitor ads to see which angles they emphasize (pricing, benefits, discounts) and craft a stronger value proposition in your own ads.
Leverage Amazon’s Product Targeting ads to place your product ads on competitor product pages, increasing visibility among relevant audiences.
This strategy helps protect your market share while taking advantage of competitor traffic.
Elevate Your Amazon Game
Mastering Amazon PPC involves a strategic approach to keyword targeting, bid management, and ongoing optimization. By implementing these expert tips, sellers can effectively lower their Advertising Cost of Sales (ACOS), enhance their return on investment (ROI), and maximize overall profitability.
Remember, achieving success in Amazon PPC isn’t solely about increasing your ad spend; it’s about making smarter, more informed spending decisions that drive better results. Focus on refining your strategies and continuously monitoring performance to stay ahead in the competitive Amazon marketplace.
