The Ultimate Guide to Amazon-Sponsored Products

Anna Steeves
June 9, 2023

Investing money in Amazon-sponsored product ads is the way to go for serious Amazon sellers. It’s what separates them from the casual sellers who list the odd book or video game. Just like Google, competition for Amazon’s top spots is fierce. While Amazon continues to grow, businesses are putting more money into their Amazon advertising budgets year on year.

In fact, Statista claims that businesses spent $42.2 billion on Amazon advertising in 2022. This increased from roughly $32.5 billion worldwide in 2021. In this same year, Amazon’s net sales revenue was $469.82 billion, which increased to $513.98 billion in 2022. 

It’s clear, then, that Amazon-sponsored product ads have tremendous potential. What makes them even more impactful is a good Amazon ad optimization software like MerchJar. This software automates your keyword bids and optimizes your ads. Using such software can help you get ahead of the 2 million small and medium-sized businesses selling on Amazon

What are Sponsored Products?

Sponsored products are Amazon’s answer to PPC advertising. PPC stands for pay-per-click, and it refers to the practice of paying a fee every time a consumer clicks on an ad. In this case, the ads are for products that sellers list on Amazon. These are the most common types of ads launched by Amazon sellers. 

Sponsored products are displayed strategically in search results and on Amazon’s homepage. According to a study conducted by Profitero in 2020 and 2021, Amazon displays an average of nine sponsored products per search, but this can vary greatly depending on search terms. Amazon businesses that boost their products with PPC enjoy greater visibility and a higher CTR (click-through rate), which potentially makes more sales and revenue. 

Why Should You Consider Sponsored Products?

  • Easy to create and manage: Businesses can easily create targeted sponsored product ads that are relevant to their target audience and the terms they search for. Equally, sellers can manage their listings with ease straight from the Amazon Ad Management dashboard. 
  • Cost control: Since sponsored products on Amazon work on a CPC basis, businesses can control their costs and track their Amazon ACOS (advertising cost of sales). Sellers bid on keywords within their budget and can increase, decrease, or pause their ads at any time. 
  • Track success: Without the ability to track your campaigns’ success, you have nothing to measure performance against. Amazon’s sponsored product ads can be tracked through the platform. If you want to develop a winning Amazon bid strategy, Merch Jar also allows sellers to analyze historical data and custom metrics. 

How to Build an Effective Amazon-Sponsored Product Campaign

Now we’re going to get into the nitty gritty of building an effective Amazon-sponsored product campaign. 

1. Set Clear Goals

Your very first task when building your Amazon-sponsored product campaign is to set your goals. These should be clear and realistic. You might want to boost your sales overall or promote a new product that your company has been developing. Either way, setting goals from the outset gives you a clear purpose and sets out your path to success. Knowing your goals also gives you something to measure against to understand when you’ve met your objective. 

2. Conduct Keyword Research

Keywords are the words that are matched with what buyers type into the Amazon search bar. If your keywords are relevant to what buyers are searching for, you’re more likely to get clicks and, by extension, purchases. Of course, this also depends on how appealing your images are, as well as your ad and product copy. 

Keyword tools like Ahrefs will help you pick the right keywords for your product and target audience. Whether you decide to launch an automatic or manual campaign (more on those in a moment) will determine your method of choosing your keywords. 

3. Choose Your Campaign Type

Broadly speaking, there are two options for managing your sponsored product campaigns on Amazon; automatic targeting and manual targeting. 

Automatic Targeting

Amazon does much of the targeting legwork for you by matching your ad with relevant searches. There are plenty of upsides to this low-maintenance option, including the potential to discover new, highly targeted keywords, it's easy to set up and manage, and you might even show up on competitors' pages if you’re selling similar products. 

The downside, though, is that you have little control over your bids. While Amazon is pretty clever when it comes to displaying relevant products to buyers, their algorithm isn’t foolproof, and you might end up paying a lot to be displayed in irrelevant searches. 

Manual Targeting

And then, of course, we have manual targeting. This, as you might’ve already guessed, is more time-consuming. It involves sellers choosing keywords, bidding on keywords, and adjusting their campaigns themselves. One of the plus points of manual targeting is sellers have more control over their campaigns. They can also test out different keywords to find the ones that perform best. 

Manually targeting keywords, however, can get complex, time-consuming, and costly if you don’t understand what you’re doing or looking for. Costs can also mount up if you leave campaigns to run without monitoring them regularly. 

4. Create Your Ad Groups

Whether you’ve got ten products to sell or 1000, ad groups will help you remain organized and create sponsored product ads that have the most impact. Ad groups are essentially ads grouped together based on specific characteristics, like keywords, product type, and category. Ad groups are important for both automatic and manual campaigns. 

A few things to keep in mind when creating your ad groups:

 

  • Give them names: This is for your reference only and won’t be displayed in your sponsored product listings. It will, however, help with your organization. 
  • Product targeting expressions: These are used to express product placement intent, i.e., what kind of searches you want them to show up in. It allows sellers to go beyond the restrictions of keywords and reach more people based on their specified product attributes. You could, for example, set the product’s brand as a targeting expression or its price. 
  • Add your keywords: If you’re opting for automatic targeting, Amazon can take care of this for you. You only need to apply your negative keywords. If you’re going manual, apply your keywords to all the products in your ad group. 

5. Identify Keyword Match Types

Your next step is to identify your keyword match types. Keyword match types help Amazon sellers to refine their sponsored product’s visibility in searches. There are three keyword match types to consider for your ads:

  • Broad match: This keyword type will match ads with searches that contain synonyms, variations, or misspellings of your chosen keywords. Using broad match keywords in their sponsored product listings, Amazon sellers can help to ensure their products show up in searches related to their products. In essence, they maximize exposure. 

  • Phrase match: With phrase match keywords, your product listing will be displayed in searches that contain your exact phrase but might have additional words before or after it. For example, if your chosen phrase match keyword is ‘heavy duty gardening gloves’, then your product could also show up when someone types ‘heavy-duty gardening gloves for women’ into the Amazon search bar. This keyword type is a good middle ground. It’s more targeted than broad match keywords but generally cheaper than exact match keywords. 

  • Exact match: These are words that match exactly with the customer query, with no additional words or variations. Therefore, if your keyword is ‘heavy duty gardening gloves’, your product will show up for people who specifically search for this term. As you can imagine, exact-match keywords are used for highly targeted campaigns and can deliver fantastic results. 

6. Use Negative Keywords

Next, you need to choose your negative keywords. These are important aspects of any PPC campaign, whether through Amazon or Google. Particularly if you’re automating your campaigns without the use of negative keywords, your costs could run away from you with wasted displays and clicks. Incorporating negative keywords into your campaigns is the best way to ensure you’re not targeting irrelevant consumers. 

An example of a negative keyword would be if you’re selling snooker tables. You might decide your negative keywords are phrases like ‘coffee tables’ or ‘dining tables’. Obviously, people searching for a coffee table are unlikely to decide on a whim to buy a snooker table simply because they see your ad. Therefore, you want to stop your snooker table sponsored product listing from being shown to these people. 

Choosing negative keywords also helps Amazon sellers gather more accurate and useful data from their campaigns. You can refine your ads more quickly by cutting out some of the aspects that serve no purpose before you even begin.

7. Set Your Budget and Bids

Now it’s time to set your budget and bids. Even the largest of businesses have budgets and understanding yours will help you bid effectively. Bids can be increased, decreased, and paused. If you’re using automated software like Merch Jar, this is done for you with its Smart Bids feature. If you’re embarking on a manual campaign though, you need to keep an eye on your bids to ensure they remain profitable. 

Amazon’s bidding system works by sellers bidding on keywords. Amazon’s algorithm then determines the winning bidder based on the bid amount and the targeted keywords. In other words, the highest bids for the most relevant searches. When someone then clicks on your ad, you’ll pay the fee. 

When you’re setting your budget and bidding on your keywords, you need to keep your ACoS in mind. Generally speaking, between 15% and 20% of the product is the ideal advertising cost of sale. To work out your ACoS, simply divide how much you’ve spent on your ads by how much revenue you’ve generated through sales. You then convert this into a percentage. 

For example, let’s say you spent $10 on ads and generated $50 in sales. You’ll divide 10 by 50, which gives you a total of 0.2, or 20%. Therefore, your ACoS is 20% of the product cost. 

Begin by promoting your most popular products and best sellers. This will help you garner feedback to boost your credibility as an Amazon seller. Once you’re all established, you can move on to promoting your less popular products.   

8. Consider Professional Amazon Bid Automation Software

We’ve spoken quite a bit about Merch Jar in this article because we truly believe it’s one of the most effective tools for optimizing your Amazon-sponsored products. Our automated software eliminates many of the time-consuming and complex elements of advertising on Amazon, including running your sponsored product campaigns. 

With Merch Jar, Amazon sellers can opt for automatic bid adjustments, which means that bids will change automatically based on their impact. You can set maximum and minimum bid parameters yourself, and ‘Intelligent Constraints’ ensures there are no huge adjustments to your bids. Merch Jar allows you to fine-tune your bidding strategy so you’re always below 20% ACoS.

Are You Ready to Launch Your Sponsored Product Campaign?

Sponsored products are one of the most popular (and effective) forms of advertising on Amazon. Go into your campaign with a clear idea of your goals, budget, and target audience. Once you’ve run one campaign, you can analyze your campaign data to refine your strategies by choosing the best keywords. 

If you want access to Amazon ad automation software, Merch Jar is an excellent choice. We’ve developed our software to handle thousands of sponsored product listings simultaneously. Make your life as an Amazon seller easier, and try Merch Jar for free for 30 days.