Amazon PPC: The Ultimate Guide for 2026

Amazon PPC has matured rapidly since it was first launched for Amazon Sellers and Vendors.

Starting off as a straightforward Sponsored Products ecosystem, Amazon PPC now has a sophisticated, multi-format, and auction-driven environment which spans search, display, video, and programmatic ads.

With Amazon’s annual ad revenue recently passing $68 billion, including $21.3 billion in Q4 alone, competition across every product category is more fierce than ever. Most brand owners are aware that PPC advertising on Amazon is crucial for growth. Knowing exactly how to compete in such a tough market is another story.

In this guide, we’ll take a closer look at how Amazon PPC works, the costs involved in running an Amazon advertising campaign, and a practical guide to planning and launching a campaign that will maximise your chances of high returns and long-term success.

How Amazon PPC Works

At its core, Amazon PPC is an auction-based paid advertising system like many others, where you pay to display ads in real estate across Amazon search results, listing pages, and other placements.

The key thing separating it from other paid search platforms is that Amazon’s algorithm is deeply intertwined with retail performance signals.

Every time an Amazon user enters a search query or lands on a product page, Amazon will run a real-time auction, where the winner isn’t necessarily the highest bidder.

When displaying ads, Amazon will factor in:

• The PPC bid amount.
• Relevance to the shopper query.
• Expected conversion rate.
• Historical performance.
• Listing quality signals.
• Amazon buy box eligibility.
• Product stock availability.

These variables mean that well-optimised listings with healthy conversion rates can often win impressions at a lower cost-per-click compared to competitors who are bidding more aggressively, but have a poorly-optimised catalogue.

Amazon PPC Ad Formats in 2026

Amazon’s PPC ecosystem has expanded gradually over the years, and now offers four primary formats brands should work to understand when they’re looking into PPC optimisation:

Sponsored Products

• Keyword and ASIN targeted.
• Appear in search results and product pages.
• Designed for high-intent conversion.
• Typically deliver the strongest ROAS.

As the most common ad type, Sponsored Products remains a foundational driver for Amazon PPC performance across most brands.

Sponsored Brands

• Headline search placements.
• Store spotlight ads.
• Sponsored Brand Video.
• Strong for brand building and competitor defence.

As fast mobile scrolling increases, Sponsored Brand Video in particular has gained more prominence as static placements have become more competitive.

Sponsored Display

• Audience targeting (remarketing, competitor audiences).
• Product targeting.
• On and off Amazon placements.

Amazon DSP (Demand Side Platform)

• Programmatic display and video.
• Upper-funnel awareness.
• Streaming TV inventory.
• Advanced retargeting.

Amazon’s Organic + Paid Flywheel

In D2C ecommerce, organic and paid can be treated as two distinct channels you can optimise in isolation. On Amazon, however, both channels are closely intertwined, which is another key concept to understand to maximise PPC success.

When your campaigns and catalogue are well optimised:

• Amazon PPC traffic drives sales.
• Increased sales from PPC improves Amazon SEO ranking.
• Improved ranking drives organic sales.
• Cost of advertising sales declines over time.

This feedback loop, which you can see as a kind of mini-example of the Amazon Flywheel within the platform’s larger ecosystem, depends on Amazon PPC to generate initial momentum.

Because of this, paid Amazon advertising is particularly powerful during:

• Initial product launches.
• Seasonal pushes.
• Entries into competitive categories.
• Review acquisition drives supported by Amazon Vine and other tactics.

Attribution and Measurement

Vendor Central Analytics provides comprehensive advertising reports, letting you assess performance through metrics such as:

• Clicks.
• Ad spend.
• Sales.
• ACOS (Advertising Cost of Sales).
• ROAS (Return on Ad Spend).
• CVR (Conversion Rate).
• Impressions.
• New-to-Brand Metrics (Sponsored Brands & DSP only).

Bear in mind that Amazon’s attribution window can be 7 to 14 days depending on the ad format. This means you should always aim to look at your advertising data holistically in terms of its long-term impact, rather than focusing too much on small groups of metrics in isolation.

Amazon PPC Costs

With Amazon advertising’s growing revenue figures, understanding the costs of Amazon PPC is critical before you start scaling ad spend.

Average Amazon CPC

Community data from the Amazon Seller Forum places the average CPC for PPC in the UK between £0.55 and £2.20 depending on the ad format:

Sponsored Products: ~ £0.55–£1.10

Sponsored Brands: ~ £1.20–£2.50

Sponsored Display, Video: ~ £0.60–£2.20

It’s worth noting that the UK is one of the more expensive and competitive markets for international Amazon PPC, with emerging European markets’ average CPC ranging from €0.30 to €1.50 across the same ad formats.

CPC can also vary greatly from one product category to another, depending on the level of competition.

Here’s some data from the US market showing the average CPC to give you a better idea of how costs change depending on your brand’s niche.

Amazon Conversion Rates

One of the advantages of Amazon PPC is that it tends to earn higher conversion rates than brands are usually able to achieve via D2C channels.

On Amazon, average PPC conversion rates typically sit at around 9.87%, whereas across all channels it sits at around 2.35% to 3.75%.

Because intent tends to be higher on Amazon, improved conversion rates can help to offset higher CPCs and distinguish Amazon PPC as a more profitable paid marketing channel.

Hidden Costs of Amazon PPC

The budget you set aside for ad spend isn’t the only cost you’ll need to account for when you’re rolling out an Amazon advertising campaign.

Here are some of the most significant hidden costs you’ll need to account for as a Vendor to keep your margins as healthy as possible.

CoOp Funding and Trade Terms Erosion

As a Vendor, your advertising will often be funded by Amazon CoOp agreements, accruals, and additional marketing commitments that will need to be negotiated with Amazon (e.g. MDF or discretionary spend.)

If PPC funds are over-allocated out of funds that were originally available for merchandising programs, events, or price promotions, it could cause internal friction with retail buyers.

For better forecasting, try to model your PPC strategy against net margin after trade terms, not list price. It’s also a good idea to align media planning with your Amazon AVS manager so that your ad spend supports your agreed retail objectives, for example event support and new item launches.

Retail Price Control and Margin Compression

Unlike with Seller Central, you won’t have control over retail price while running your brand through a Vendor Central account, and Amazon Retail will set pricing algorithmically.

If Amazon lowers retail prices in your catalogue:

• Your perceived ACOS may rise due to lowered revenue despite CPC staying flat.
• Your retail contribution could contract despite wholesale margins being fixed.
• Price cuts and other promotions layered on top of PPC could reduce your incremental profitability.

Demand Spikes Causing Chargebacks and Operational Penalties

Amazon Vendor Central chargebacks can be a major drain on your cashflow if they’re left unmanaged, and this is often made worse following a new PPC drive.

If PPC increases demand and your supply chain can’t meet it precisely, you can risk:

• Out-of-stock penalties.
• Shortage claims.
• Operational chargebacks.

Though chargebacks aren’t visible in your Amazon ad reporting, they are tied to ad-driven velocity, and carry potential to reduce your net profitability more than the cost of running the ads themselves.

Struggling to generate consistent profits with Amazon advertising? Our Amazon ads management service provides tailored, cost-efficient strategies so you can maximise your profits.

How to Create a Winning PPC Strategy for Amazon: 10-Step Guide

Now that we’ve covered some of the fundamentals of Amazon PPC, let’s put that knowledge into practice.

Here’s how to create a complete PPC strategy for Amazon in ten steps.

1. Define Commercial Objectives

Every single decision you make regarding Amazon PPC should trace back to an overarching commercial objective. Following this principle will support effective reporting, help you and your team establish what exactly success looks like, and drive smart budget allocation.

Setting out clear objectives will also help you establish the ACOS you’ll tolerate, another crucial guide for your campaign.

Some of the most common objective types that can help give your Amazon PPC better direction include:

Launch Velocity: Driving a high volume of retail purchases in a short space of time to rank and build reviews. This means accepting a higher short-term ACOS, as you’re buying visibility and your organic ranking will compound later.

Ranking Defence: Defending your top placements and buy box eligibility. This allows for a moderate, stable ACOS provided that it prevents share of voice erosion.

Profit Maximisation: Extracting the maximum net margin possible from each unit sold. This is usually the most limiting target in terms of ACOS, and your bids shouldn’t be expected to exceed a break-even figure.

Market Share Capture: Growing your category share over time. This target gives you flexibility to accept a mid-range ACOS to acquire customers at scale, especially if you have replenishment or manufacturing advantages that can justify lower margins for a certain period of time.

Stock Clearance / Excess Inventory: Moving units as fast as possible. This goal allows for a high ACOS, as the alternative will be facing inventory carrying costs, chargebacks, and aging penalties.

2. Audit Your Unit Economics

Before you start setting bids, it’s important to calculate how advertising affects your actual profit per unit.

This is slightly different for Vendors as opposed to Sellers, as you may have a wholesale price to Amazon and additional vendor allowances. However, the overarching concept stays the same: know your contribution per retail sale.

Some of the essential line items to capture include:

• Retail price.
• Vendor invoice / wholesale price.
• Cost of goods sold (COGS) per unit (C).
• Outbound shipping to Amazon (S) along with any handling costs (include pallet costs split per unit).
• Vendor CoOp and marketing deductions (M).
• Any additional per-unit costs (e.g returns or warranty reserve) (O).

Compute contribution margin per retail sale (simple formula):

Contribution = W − C − S − M − O

Converting this figure to break-even ACoS:

Break-even ACoS (%) = (Contribution ÷ Retail Price P) × 100

Digit-by-digit worked example:

• Retail price P = £30.00
• Vendor wholesale W = £18.00
• COGS C = £8.00
• Shipping to Amazon S = £0.50
• Co-op/marketing M = £0.00 (assume none for this SKU)
• Other O = £0.00

Contribution = W − C − S − M − O = 18.00 − 8.00 − 0.50 − 0.00 − 0.00 = 9.50.

• 18.00 - 8.00 = 10.00
• 10.00 - 0.50 = 9.50

Break-even ACoS = (Contribution ÷ P) × 100 = (9.50 ÷ 30.00) × 100.

9.50 ÷ 30.00 = 0.316666

Multiply by 100 and round = 31.67%

3. Catalogue-Wide Listing Optimisation

Amazon PPC traffic can be expensive. Before you invest in it, it’s crucial to make sure your Amazon listings are thoroughly-optimised and able to turn clicks into purchases. Even small changes in conversion rate can compound and have a major long-term impact.

The key Amazon listing optimisation elements to tick off for each ASIN in your campaign include:

• High-quality Amazon product images that encourage CTR with the main image, and showcase key USPs with engaging lifestyle shots and infographics in the secondary image slots.
• Video assets focusing on USPs or product demos can lift CTR and conversion dramatically.
• Compelling titles, bullet points, and product descriptions that connect features with benefits, and allow pressed-for-time shoppers to understand your product’s selling points quickly.
• Quality A+ content to explain product differences, tell the brand’s story, build trust, and reduce return rates.
• Connecting your listings to an Amazon storefront supports upper-funnel campaigns like Sponsored Brands and DSP, while opening up another conversion path.
• Mobile-friendly formatting that provides a consistent user experience, and accommodates for the 70% of Amazon sessions made through mobile.

4. Campaign Structure

Solid campaign structures make your Amazon PPC optimisation faster and safer. As a Vendor, where CoOp constraints and catalogue management is tighter, a well-structured campaign can also help to prevent budget cannibalisation.

Recommended Structure (with one ASIN per campaign wherever possible)

Campaign naming convention “Objective+ASIN”: e.g. (Launch_SKU123_SponsoredProd_Exact). This will allow you to isolate your performance and budgets.

Separate Branded vs Generic Campaigns: Branded campaigns protect your brand terms, and typically have lower CPCs. You can keep these bids conservative for profit preservation, or defensive for increased share.

Separate Match Types: Maintain discrete campaigns and ad groups for exact, phrase, and broad matches, so you can better control their bids and scale each one independently.

Separate Product Targeting and Category Targeting: Avoid mixing product targeting with keywords in the same ad group, as product targeting can have different intent.

Avoid Mixed Intent: To prevent overbidding on testing terms or underfunding proven converters, don’t put converter exact keywords in the same ad group with discovery / testing broad keywords.

Structuring each campaign around a single ASIN will simplify your day-to-day budget pacing and SKU-level reporting, which is critical when Amazon’s retail ordering reacts to sudden increases in sales velocity.

If your scale requires it, you can always create “bundle” campaigns for groups of complementary ASINs, provided that you keep them as distinct as possible.

5. Keyword Research: Combining Amazon Signals with External Intelligence

Keyword research is a foundational part of Amazon PPC, and getting this part right will make all the difference to the long-term success of your campaign.

Some of the best keyword research sources to use include:

• Auto campaign search terms.
• Amazon Brand Analytics.
• Vendor Central’s Search Query Performance Reports.
• Reverse ASIN competitor tools that show high-intent terms your competitors are already winning.
• External search trends and category research (e.g. Google Trends and site searches on retailer sites).

Once you’ve selected your keywords, the next step is to focus them by intent.

Useful categories to use include:

High-intent: e.g. “buy [product name]”, “best [category] for [use case]”.

Long-tail: Lower volume but high conversion, with a reduced CPC ideal for exact-match placements.

Category-defining: e.g. “best [category]” and the model names for top competitors.

Emerging keywords: Monitor your auto campaigns and search term reports for newly-surfacing queries, and integrate them into the next phrase/exact if they convert.

We recommend keeping everything organised in a keyword master sheet with the columns: keyword, intent (high/medium/low), source (auto, brand analytics, reverse ASIN), match type target, and baseline CVR, then using this to prioritise the keywords you’ll move into exact match campaigns.

6. Launch Automatic Campaigns

Automatic campaigns are an essential tool for scouting data. For the first 7-14 days, aim to run an auto campaign in order to harvest search terms and ASIN discovery. This will help you discover real search term phrasing, and relevant competitor ASINs that you may not have found in your research.

Some best practices for running effective auto campaigns include:

• Setting controlled, but significant budgets, that will ensure you get enough impressions to gather statistically valid signals.
• Running campaigns for long enough to gather patterns, but short enough to prevent any wasted spend. 7-14 days is generally a good target.
• Export your search term report once every 3-4 days, and move converting terms into manual exact campaigns, while adding any irrelevant queries as negatives.
• Using the auto ASIN report to identify viable targets for product-targeting campaigns.

Remember not to treat auto campaigns as a “set and forget” solution, and more a discovery engine you can use to inform a more effective manual structure.

7. Build Your Manual Campaigns

Once you’ve validated your keywords and ASINs from auto campaigns, you can begin translating this into a layered manual structure:

Exact Match: For keywords that have proven to be high converters. These should be the highest priority, and get the highest bids within your margin tolerance.

Phrase Match: For scaled variations and better discoverability, with slightly lower bids than exact-match.

Broad: For use only when you have reliable controls (strict negative lists, low budgets and bid caps). Best used for discovery and gradual category expansion, rather than your primary acquisition channel.

Product Targeting: Best for targeting competitor ASINs, complementary ASINs, and category nodes. Where available, try to use negative ASINs and adjust your bids by placement type, e.g. top vs rest of search results.

Aside from mapping out this structure, it’s also a good idea to create margin bands for each ASIN you’re advertising, for example High margin > 35% contribution, Medium 15-35%, Low < 15%.

Setting maximum CPCs and ACOS limits by band will also help you organise your campaign, as high-margin SKUs can support more aggressive bids and share-of-voice capture, while lower-margin products may require lower bids and tighter targeting.

To ensure you’re getting the most out of your budget, consider allocating a small percentage to phrase/broad experiments, while keeping the bulk of your funds focused on exact and ASIN targets that you’ve already established are high converters.

8. Layer Sponsored Brands / Video

Sponsored Brands and Sponsored Brands Video are one of the more effective ad classes for businesses who want to ensure brand protection, defence from competitors, and general category visibility. Video ads in particular can be highly effective at pulling shoppers’ attention, and according to Amazon’s own studies, can supercharge click-through rate and sales growth.

Here’s how to execute some of these key tactics using sponsored brands:

Brand Protection: Running Sponsored Brands on your branded terms to prevent the competition stealing the top spots. There’s generally no need to let your bids climb too high here, as branded terms generally convert well.

Competitor Defence: Target competitor brand terms and ASINs (wherever Amazon PPC policy allows) to capture compare-and-convert shoppers.

Category Visibility and Storytelling: Leverage your storefront and video content to further explain your product’s features or justify a premium price point.

9. Introduce Amazon DSP Once Your Campaigns Have Matured

Once your main Sponsored Products and Sponsored Brand campaigns are profitable, and you’ve earned enough conversions to see an incremental lift, you can look at layering in Amazon DSP.

DSP is a programmatic advertising platform for display and video ads both on and off Amazon, and gives you an opportunity for both retargeting and advanced audience prospecting.

Some of the most effective deployments for Amazon DSP as a Vendor can include:

• Retargeting viewers and abandoned carts, with the aim of converting high-intent audiences who didn’t purchase on their first visit.
• Prospecting competitor audiences and building brand exposure amongst shoppers who viewed competitor ASINs or browsed relevant categories.
• Building top-of-funnel awareness for new product lines using video content and streaming.
• Using DSP and Sponsored Products in tandem to build cross-touch attribution and evaluate impact with a full-funnel view.

For the best results, start your DSP with small audience segments and frequency caps, measure your cost-per-acquisition and incremental lift, then scale up. Follow off-Amazon creative best practices with clear, pithy copy and strong CTAs.

10. Ongoing Analysis, Checks, and Improvements

The previous steps will give your strategy for Amazon PPC strong foundations, but you’ll only start to maximise your ROI with a set cadence and incremental, long-term improvements.

Here are some recommended regular checks and optimisations you can carry out to fully optimise your campaigns, running from routine daily checks to more top-level quarterly optimisations.

Daily

• Carry out budget-pacing and delivery checks to ensure your campaigns are pacing well for your daily/weekly goals, and not on track to overspend at the end of the month.
• Audit for spend anomalies and flag any spikes in CPC or general spend. Consider pausing if these campaigns are at risk of exceeding ACOS limits.
• Review products’ stock and PO status and coordinate with supply planning. If distribution centres are showing low levels, then scale up. If Amazon is oversupplied, then pump the brakes.

Weekly

• Audit search terms in both auto and manual campaigns, pull any non-converting terms, and add these as negatives.
• Carry out bid audits and adjustments depending on performance bands, increasing for low ACOS and high-return keywords while lowering bids on your weakest performers.
• Run a placement analysis. If you’re overpaying on top-of-search, move bids down to “rest of search”, or adjust using a placement multiplier.

Monthly

• Refine your campaigns’ structure by shifting stable discovery keywords into separate exact-match campaigns with fresh budgets.
• Rotate and test images, listing page A+ content modules, and the ad creative for Sponsored Brands and DSP ads themselves.
• Carry out a margin review, recomputing your break-even figure and adjusting maximum CPCs if any costs or wholesale pricing has changed.

Quarterly

• Test-run new formats, e.g. Sponsored Brands Video, storefront modules, or DSP streaming buys.
• Increase your DSP budget for audiences that are showing healthy returns and align with your brand’s retail availability.
• Plan tests for your brand health and storefront.

Amazon PPC FAQs

Success in Amazon PPC requires tight alignment with commercial objectives, a well-thought-out campaign structure, and a mutually beneficial feedback loop between quality listing optimisation and paid traffic.

By building a strong understanding of Amazon fundamentals, planning your campaign with respect to best practices, and prioritising long-term testing and improvement, you’ll be able to give your PPC strategy for Amazon a strong start and learn valuable lessons you can apply to all your paid marketing drives in the future.

We’ll wrap up with some frequently asked questions about Amazon PPC we often receive from our clients when we’re supporting them with Amazon advertising.

For more support with your next PPC campaign, be sure to check out our other blog posts, or find out how our bespoke Ads and DSP service can help you improve your ROAS and ensure your budget’s being put to good use.

Is Amazon PPC still worth it in 2026 given rising competition?

Yes! But only if it’s approached strategically. As competition intensifies across product categories, poorly structured campaigns will quickly erode margin. However, brands with strong unit economics, well-optimised listings, and disciplined bid control can still generate highly profitable growth. In many categories, Amazon PPC remains one of the highest-converting paid channels available.

What is a “good” ACOS on Amazon?

There’s no universal benchmark, and what a good ACOS looks like depends on your contribution margin and commercial objectives. If your break-even ACOS is 32%, then a 28% ACOS is profitable, whereas 40% would be loss-making. During product launches or market share pushes, you may intentionally accept a higher ACOS to drive ranking momentum.

How long does it take for Amazon PPC to show results?

Initial signals typically emerge within 7-14 days, particularly when running automatic campaigns for discovery. However, truly effective optimisation requires long-term data. Because Amazon’s attribution window can extend up to two weeks (depending on ad format), campaigns should ideally be assessed over 30-60 day periods for a reliable and usable trend analysis.

Should I start with automatic or manual campaigns?

Automatic campaigns can be a great first step to discovering your market and getting some initial direction for manual. Automatic campaigns are valuable for harvesting real shopper search terms and competitor ASINs. Manual campaigns - particularly exact match and product targeting - are where profitability is built and scaled. Treat automatic campaigns as a research engine, instead of a long-term structure.

What budget should I allocate to Amazon PPC?

Budgeting for Amazon PPC should be driven by objectives and margin, not guesswork. A common starting point for launches is 10-20% of projected retail revenue, though competitive categories may require a more aggressive investment. Always model spend against contribution margin after trade terms if you operate via Vendor Central.

How important is listing optimisation before launching ads?

Absolutely critical. Sending paid traffic to a poorly optimised listing will inflate CPC and depress conversion rate, making campaigns unprofitable regardless of bid strategy. High-quality imagery, compelling copy, strong A+ content, and competitive pricing materially improve your ability to win auctions at lower effective costs.

Does PPC improve organic ranking on Amazon?

Yes, but not directly. Increased sales velocity generated by PPC can improve organic keyword ranking over time. As organic visibility strengthens, reliance on paid traffic may reduce, lowering blended ACOS. This is the foundation of Amazon’s organic + paid flywheel.

When should I introduce Sponsored Brands or DSP?

Sponsored Brands are effective once you have stable Sponsored Products performance and want to defend brand terms or expand category visibility. Amazon DSP is typically introduced once core campaigns are profitable and you have sufficient conversion data to support retargeting and prospecting audiences.

Why has my ACOS increased even though CPC hasn’t changed?

A lot of factors could be responsible for inverse trends with ACOS and CPC. A drop in retail price, reduced conversion rate, seasonal shifts in shopper behaviour, stock issues, or increased competition can all increase ACOS without any bid changes. Always investigate retail pricing and listing performance before you adjust bids.

Is it better to prioritise ROAS or growth?

This depends entirely on your commercial objective. Profit-maximisation strategies prioritise ROAS and tight ACOS control. Market share or launch strategies prioritise visibility and ranking, often accepting lower short-term efficiency for long-term gain. The key here is alignment - your bidding strategy must reflect your overarching commercial goals.

Can Amazon PPC scale indefinitely?

No paid channel scales infinitely without diminishing returns. As you expand into broader match types, new placements, and upper-funnel formats, efficiency will start to decline. Sustainable scaling depends on continual listing optimisation, margin management, creative testing, and disciplined budget reallocation towards the highest-return segments.