Amazon Sponsored Products Ads 2024 Guide

Sponsored products

Whether you’re just starting out with your first product or a seasoned Amazon seller, Sponsored Products Ads are an incredibly effective way to introduce a new product to potential customers.

These ads seamlessly blend into Amazon’s search results, making them highly effective in catching customers’ attention. In fact, they’re the most preferred type of ad among Amazon users, as shown in our 2023 Amazon Advertising Report.
For new products, getting those initial sales can be tough to boost your visibility in organic search results. Sponsored Products Ads help by targeting relevant keywords, putting your products at the top of the first page right from the start.
Setting up these ads is simple and straightforward, even if you’re new to advertising. Let’s take a closer look at what Sponsored Products Ads are, how they function, and how to launch your first campaign.

What is a Sponsored Products ad?

Sponsored Products ads are a type of advertising on Amazon where you pay a small fee each time someone clicks on your ad. These ads help your products get noticed in Amazon search results when people search for specific keywords. They look similar to regular product listings, which makes them stand out to shoppers.

The best part? You don’t need to be brand registered to use Sponsored Products ads, unlike some other types of Amazon ads. That’s why they’re the most popular choice among sellers, with 75% of them using Sponsored Products ads to boost their sales.

While more sellers are increasingly branching out to other forms of Amazon PPC, Sponsored Products ads still constitute 78% of overall Amazon ad spend among sellers.

How do Sponsored Products ads work?

Sponsored Products ads work like this: You pick keywords or products you want your ad to show up for when people search on Amazon. Then, you decide how much you’re willing to pay for each click on your ad. This is called bidding.

When someone searches for something related to your keywords or products, your ad might show up at the top of the search results, mixed in with the regular listings, or even on your competitors’ product pages. The goal is for people to click on your ad and check out your product.

It’s like a little auction where you compete with other sellers to get your ad seen by potential customers. But don’t worry, you have control over how much you spend each day, so you won’t go over your budget.

If you bid high enough, you’ll receive a top spot in search results — your ultimate goal, as this placement gives you the best chance to reach the most customers. Bid too low, and your ads may not appear anywhere.

Once a customer clicks your ad, you will be charged the amount of your keyword bid, whether the customer purchases your product or not.

2023 update: On August 16, 2023, Amazon announced that Sponsored Products ads will now start to appear on premium apps and websites such as Pinterest, BuzzFeed, Hearst Newspapers, Raptive, Ziff Davis, Lifehacker, and Mashable. Ads shown on other apps or websites will link to your Amazon product detail page.

Ad placements on other websites will be turned on automaticaly. Amazon states, “Advertisers using Sponsored Products do not need to take any action to appear on these sites or apps. Your Sponsored Products ads will automatically show up when we think a customer is likely to be interested in your product, based on relevant page context, the campaign, and cost-per-click parameters that you have already established.”

Sellers can view the performance of these campaigns by viewing the Sponsored Products placement report.

Targeting options:

With Sponsored Products, you have two targeting options to choose from: automatic targeting and manual targeting.

1.Automatic Targeting :

With automatic targeting, Amazon chooses the keywords or products your ad will show up for based on your product listing. Before using this option, make sure your listing has good keywords. This helps Amazon pick the right targets.

When you use automatic targeting, you can pick from four different types of keyword matches:

1.Close match: These ads appear when shoppers use search terms that are closely related to the product you’re advertising
2.Loose match: These ads appear when shoppers search loosely related keywords
3.Substitutes: They target shoppers who are considering products that are similar to your product, but sold by a different brand
4.Complements: They target shoppers viewing detail pages of products that complement yours

Setting up an automatic campaign is quick and easy, especially for new sellers. As your campaign runs, you’ll collect data that can help you make it even better.

These campaigns are also a handy way to discover new keywords. Amazon might show your ad for words you hadn’t thought of. In your campaign, you’ll see all the keywords Amazon picked, how much you spent on each, and how many sales you got from them.

If you sell in different Amazon marketplaces, you can use the same campaign there too. Amazon will adjust your budget to the local currency, match your products, and suggest bids for each marketplace.AddMatrix, a leading Amazon marketing agency, specializes in optimizing Sponsored Ads to drive results. From strategic planning to data-driven optimization, AddMatrix maximizes ad spend for tangible ROI. With their guidance, businesses can thrive in the competitive Amazon marketplace, achieving growth and success like never before.

2.Manual Targeting :

When you choose the manual option, you get to decide which keywords or products your ad will show up for. You can choose from a list of suggested keywords Amazon gives you, or you can make your own choices. You can also set how much you want to bid for each keyword.

Use keyword targeting when you know the exact words customers use when searching for your product. You can find these words using a tool like Keyword Scout.

With product targeting, you can choose to show your ad on specific competitor products, categories, brands, or other features.

If you want to target both keywords and products, you can! Simply create two different manual campaigns — one for each targeting option.

Manual campaigns are further broken down into match types: broad, phrase, or exact match.

Bidding Strategy

For both automatic and manual campaigns, you need to choose your campaign bidding strategy — how you want to pay for clicks on your ads.
But first, what is a bid exactly?

The bid is how much you’re willing to pay each time someone clicks on your ad. But you won’t always pay your full bid amount. Instead, you’ll pay just enough to beat your competitors’ bids.

For example, if you set your bid at $0.50 for the keyword “marshmallow sticks for a campfire,” you might not actually pay the full $0.50. If your bid is the highest, you’ll pay a bit less than that—maybe $0.45 or so.

You have three bidding strategies to choose from, depending on your budget and whether you want Amazon’s help in setting your bids.

1.Dynamic bid-down only: Amazon will lower your bid when they think your ad might not lead to a sale. This saves you some money per click.

2.Dynamic bid-up and down: Amazon will raise your bid by up to 100% if they think your ad will likely lead to a sale. But if they think it won’t, they’ll lower your bid. This might not be best if you have a tight budget.

3.Fixed bids: Amazon won’t change your bids for you. They’ll stay the same until you decide to change them. If you know exactly how much you want to spend per click, this option is for you.

How to set up a Sponsored Products ad

Setting up both automatic and manual campaigns is fairly simple. In Seller Central, go to the “Advertising” tab, then click “Campaign Manager,” and then “Create Campaign.”

Under “Choose your campaign type,” click on “Sponsored Products”

Fill out all necessary information, such as your campaign name, date range you’d like the ad to run, portfolio (optional), your daily budget, bidding strategy, keywords, and targeting type.

For this example, we’re going to set up a manual targeting campaign.

The next section is where you define your bidding strategy. For manual campaigns, we recommend choosing “Dynamic Bids, down only” as you’ll have more control over the data and bidding for each keyword. If you choose ‘up and down,’ your daily budget may run out quickly.

Create an ad group with a custom name. This will help you stay organized as you launch more campaigns.

For example, if you’re going to run a broad match, phrase match, and exact match campaign for your product, name the ad group based on the match type

Then choose the product(s) you want to advertise.

Choose your targeting type: product or keyword. When first starting out, we suggest targeting keywords.

Under keyword targeting, Amazon will display a list of suggested keywords to target, as well as the option to choose the match type. In this case, we’re only going to add a broad match type.

Next to the suggested tab, you can enter your own keywords from your keyword research.

After you add in your keywords, Amazon will show the suggested bid amount per keyword.

These may be a little conservative, so we recommend increasing your bid to 25% over the suggested bid to get as many impressions as possible — if it’s within your budget, of course.

Next, you’ll have the option to add negative keywords. Negative keywords are keywords for which you don’t want your ad to appear, either because they’re not converting or they’re not relevant. For instance, if one keyword is gaining lots of clicks but zero sales, you can add it to the negative keyword list so your product no longer appears for related searches, and you don’t have to pay for clicks that don’t perform.

The last step is to click “Launch Campaign,” and you’re ready to go!

Optimizing your campaigns

In your campaign manager, click on your automatic targeting campaign. At the top of the page, you can see a summary of your campaign, including how much you’ve spent, how much you’ve made in sales, the ACoS, and total impressions. Further down, you can see how many clicks your campaign has gotten and how many orders you’ve received from the ad campaign.

Once you click on your automatic ad group, you will see the search terms tab. This will show you all the search terms Amazon has been targeting for your product.

You can see a breakdown of how many clicks, spend, sales, and ACoS for each individual search term.

As you scroll through the list, you’ll also see the ASINs Amazon is targeting, as Amazon may choose to display your ad on competitors’ product listings.

There are two main things we want to find now: our worst-performing keywords and our top-performing keywords.

1.Worst-performing keywords:

these are keywords that you’re spending a lot of money bidding on, but that are not generating purchases.

To discover them, sort by clicks or spend (descending). If you see terms with lots of clicks but no sales, these are the ones you want to stop targeting. The general rule of thumb is any keyword that has 10 clicks but no sales is one you want to remove.

Make a list of these keywords, click on negative targeting, and add these keywords to the list. Amazon will no longer target these keywords.

Over the next week or so, you will begin to see your ACoS go down for your automatic campaign, since you removed low-conversion keywords.

2.Best-performing keywords:

these are keywords that have a low ACoS (and are therefore valuable). We want to remove them from the automatic targeting campaign and instead put them in a manual targeting campaign, so we can have more control over what we spend on them.

Sort your list by ACoS and find the search terms with a high number of sales but a low ACoS.

Then, you’ll want to add those same keywords to your manual targeting campaign, where you can adjust the bids for each individual keyword.

Optimizing a manual targeting campaign

The way you optimize manual campaigns will be a little different than automatic ones.

Once you pull the high-performing keywords from your automatic campaign, you should immediately add them to a manual campaign. We suggest using exact matching, since you know those exact keywords already perform well.

First, click into the manual campaign you’d like to optimize and sort by spend. The goal is to decrease spend on keywords that aren’t performing well and increase spend on keywords that are performing well.

Earlier, you determined your ACoS (what you are willing to spend for each keyword). If your target ACoS is 30%, then you want to be sure you’re spending no more than that amount. Go through each keyword in your campaign and adjust bids accordingly

1.Lower your bids for any keyword with over 30% ACoS, or remove it completely
2.Lower your bids for keywords with high impressions and clicks but low sales
3.Increase your bid on keywords with low impressions and low ACoS
4.Increase your bid on keywords with few to no impressions but that are highly relevant to your product. Then, check back in a couple weeks to see if anything has improved
5.Pause bids on keywords with high clicks and high ACoS

Repeat this process every week or so to ensure your campaigns are performing at the highest level. You’ll have more to do when you first launch your campaign, but you’ll see that over time, this process becomes easier. After a few months, there won’t be many changes to make because your campaigns are more optimized each time.

Are Sponsored Products ads worth it?

In short, yes! Though you need to keep in mind that no kind of advertising on Amazon is not a “set it and forget it” system. You need to stay on top of your campaigns to ensure they’re performing profitably. If you forget about them or don’t check them frequently enough, you may be spending too much on clicks that are not converting into sales.

If you are not Brand Registered, Sponsored Products are an incredibly effective way to advertise your products on Amazon. AddMatrix, a leading Amazon marketing agency, specializes in optimizing Sponsored Ads to drive results. From strategic planning to data-driven optimization, AddMatrix maximizes ad spend for tangible ROI. With their guidance, businesses can thrive in the competitive Amazon marketplace, achieving growth and success like never before

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