How Does Advertising Work On Amazon

Advertising on Amazon is a continually evolving process. You may have tried advertising for a few different items, but you’re not seeing the results you want. Now you’re looking for more information on how the system runs so you can use it to its fullest potential for your products.



Amazon is not the only platform to use Pay-Per-Click (PPC). However, it is the one which will have the most immediate benefits. Other PPC sites are useful, but they don’t help you quite as much in the beginning.

PPC is based on the idea of paying every time someone clicks your ad. This is different than impression-based advertising, where you pay for people to view the ad.

With Amazon advertising, you tell the algorithm how much you want to spend to show up for a keyword. The system then compares it to what everyone else is willing to pay and selects the highest bids.


Keywords are what your customers type into the search bar when they decide to buy something. What your customers search for matches to the words in your ad or on your product page. From there it’s up to the customer whether they buy or not.

You have options for finding usable keywords. One of the best ways to get new keywords is to partially fill your own Amazon search box. The suggestion list that pops up are keywords people have searched before. While this takes a little time, it provides real insight into Amazon customers.

Another possibility for Amazon keywords is Amazon specific keyword tools. There are free and paid tools available. Fortunately, these tools typically offer relevant category searches. This refines the keywords you get to make sure they’re suitable for your product categories.

A third option involves using generic keyword websites. These generic keyword sites yield long lists. Not all the words will be relevant, but there will be a couple that you wouldn’t have had otherwise.

While you’re looking up keywords, keep lists. These should appear in your product pages for organic reach. The words will also be necessary while you set up your advertising.

Campaign Numbers

Every Amazon advertising campaign you set up will ask you for two critical numbers. These are your daily budget and default bid. These control how much money is spent on a given day. You’ll also need to know about the advertising cost of sale (ACoS), which turns up once you start campaigns.

The daily budget is the maximum you pay Amazon per day. Once your campaign hits this limit, your bids stop until the midnight reset. How far into the day your budget lasts depends on where you set your bid rate. Each keyword can have its own bid rate.

Advertising cost of sale is a figure you can use to determine your bid numbers. Roughly 1 in 10 people who click an ad actually buy something. Your bid price must reflect this, as well as your pricing. To find the ACoS, divide the amount of money spent on advertising by the number of product sales. You can then apply this number with your other costs to ensure you’re making a profit.

Automatic Targeting

Amazon advertising offers a solution if you do not want to spend a ton of time researching. With automatic targeting, the advertising algorithm looks at your product page. It then determines what keywords your product works for and will bid on those. The price for this ease is control though since the only numbers these campaigns take are default bid and daily budget.

Manual Targeting

Manual targeting allows you significantly more control. You’ll start with a daily budget and average bid figure, and then fine tune exactly what you would like to bid on. To start, you’ll need your lists of keywords and numbers.

Once you get through the initial setup of default bids and picking the product to advertise, you’ll be able to add your keywords. You can add them in groups, each with its own specific level. Broad will bid on anything containing the words. A phrase will bid on anything with the words in it in the same order. Exact means that word or phrase alone will be bid on.

The next consideration is the bid number for each individual keyword. The general advice is to bid lower on broad searches since more of those will be irrelevant. On the other hand, the bid on exact keywords may be a little higher, because you want to be in the top space for those keywords.

Once you have all your items set up, it’s time to let the campaign run. For manual campaigns, you’ll need to come back in at least once a week to tweak your bid numbers and keywords. This process is called optimization.


Advertising on Amazon needs research to succeed. You’ll need to put in the work up front to ensure you’re using the right keywords and budgets to make a profit. While the options may seem overwhelming, the system gives you precise feedback. Over time, you’ll master the ins and outs of Amazon advertising.

Lastly, if you want a tool that automates Amazon Sponsored Products best practices and allows you to manage your Campaigns in an unprecedented way, you can check

Their Smart Engines are extremely flexible and can adapt to any Amazon Advertising strategy or goal.

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