What is Amazon Advertising, and How Does It Work? 

Amazon Ads are paid advertisements that help promote your brand and products directly on the Amazon platform. These ads appear in high-visibility areas, such as search results, product detail pages, and even third-party sites. Amazon Ads streamline the buyer journey and increase the chances of product discovery, leading to higher sales. 

Why Should You Advertise on Amazon? 

Ads generate more traffic to your product listings and increase their visibility, resulting in increased sales. Higher sales, in turn, lead to more customer reviews, which can help improve your product’s organic ranking, generating even more exposure and boosting overall success. 

• Increase Visibility for Your Brand and Products:

  With over 180 million Prime members actively shopping on the site, Amazon is the perfect platform to get your products in front of the right audience. Ads help increase your visibility, ensuring potential buyers discover your brand. 

• Reach a Relevant, Engaged Audience:

  Unlike other platforms where users are information gathering or casually browsing, Amazon users are already in a buying mindset, making them more likely to convert after clicking on an ad. Conversion rates on most D2C sites hover around 2.5%-3%, on Amazon we routinely see conversion rates between 10%-15%.  

• Boost Sales and ROI:

  With the higher conversion rates from ads placed on Amazon’s site, advertisers will see better return on ad spend (ROAS) and increased sales compared to other ad platforms. 

• Gain Insights About Your Customers:

  Amazon provides valuable first party data on consumer behavior, enabling you to refine your ad strategy and better understand your audience’s shopping habits. 

How Much Does Advertising on Amazon Cost? 

The majority of Amazon Sponsored Ads use a pay-per-click (PPC) model, meaning you only pay when someone clicks on your ad. There are some ad types that will do a CPM model (cost per thousand impressions). These ads appear throughout search results (SERPs), product detail pages and other locations with a “sponsored” label, allowing for multiple placements as Amazon shoppers browse the platform. Costs can vary based on keyword competition, with the average cost per click hovering around $0.81. You can set daily budgets and allocate funds to ensure you stay within your advertising limits while maintaining flexibility over campaign spending. 

How Can Brands Get Started with Amazon Ads? 

To get started with Amazon Ads first sellers need an active Professional Seller account, which allows them to list products and launch campaigns through the self-service platform. This platform gives advertisers control over ad budgets, targeting, and performance monitoring, making tracking progress in real-time easy.  Payments are typically deducted from sales through Seller Central or charged via a credit card. If you’re a beginner at utilizing Amazon Ads, starting with PPC campaigns targeting branded terms ensures your products appear in front of customers already searching for your brand. As you gain confidence, you can expand to more general category terms, competitor and audience targeting to attract new customers and increase your reach. 

Types of Sponsored Ads on Amazon 

Amazon offers several ad formats tailored to different goals: 

• Sponsored Products: These primarily keyword-targeted ads appear in search results and product detail pages. They’re great for increasing product visibility and driving immediate sales. 

• Sponsored Brands: These ads promote your brand as a whole, displaying your logo and a selection of products at the top of search results. They are ideal for building brand recognition and can even drive traffic to your own branded storefront within the Amazon marketplace. 

• Sponsored Brand Video: Attract customer attention with compelling product videos that show within the search engine results page. These have great click through rates and are good for increasing awareness and traffic Sponsored Display: These ads appear both on Amazon and third-party sites, targeting customers who have previously viewed your products or similar items. They work well for retargeting and boosting product awareness. 

• Sponsored TV: The newest addition to the Sponsored Ads products, Sponsored TV is a self serve platform allowing advertisers to run video ads on Freevee, Twitch and 3P sites like Bloomberg and Crackle through Amazon Publisher Direct. With no minimum spend, fees or upfront commitments, it’s a good way to test streaming TV advertising. 

Sponsored Advertising vs. DSP Advertising 

Sponsored or search advertising on Amazon uses PPC campaigns to drive product discovery. Brands bid on specific search terms and audiences to get their products in front of potential buyers. Sponsored product ads and sponsored brand ads are the most visible placements within the search engine results page. 

On the other hand, Demand-Side Platform (DSP) advertising enables advertisers to buy programmatic ad space both on Amazon and across Amazon-owned sites including streaming TV. DSP ads are excellent for increasing brand awareness, and they offer advanced targeting for audiences with high purchase intent, both for products sold on and off Amazon. While DSP requires a higher minimum spend, it provides a broader reach and the ability to drive traffic to both Amazon listings and direct-to-consumer websites. Sponsored Display and Sponsored TV ads are a simpler version of DSP, with no minimums, allowing advertisers to experiment with this format, although targeting controls are more limited than DSP.  

Common Amazon Advertising Mistakes 

New advertisers often fall into the trap of assuming strategies from other platforms (like Google Ads) will work seamlessly on Amazon. However, Amazon requires unique approaches and continual optimization over time.  

Relying too heavily on auto-campaigns, improper campaign organization and not dedicating enough time to managing ad spend will lead to misspent budgets. Strategies, campaign set up, targeting, etc. all need to be designed within the context of Amazon’s marketplace and algorithms to achieve a high ROAS that does not cannibalize organic sales.  

Tracking and Measuring Amazon Sponsored Ads 

To help analyze and optimize, Amazon offers a wealth of metrics to monitor ad success, including impressions, clicks, and ROAS. Metrics like ACOS (Advertising Cost of Sales) and new-to-brand orders help track campaign profitability, ad performance, and their overall contribution to business goals. Third party ad tech platforms like Pacvue and AdBrew, offer even more insights as they pull data from the Amazon Ad API and combine it into additional insights.  

How to Optimize Amazon Sponsored Ads 

Optimizing your Amazon ads is key to maximizing performance. Start by refining targeting and adjusting bids to focus on high-performing search terms. Experiment with both top and middle of the funnel (Sponsored Brand, Video, Display and TV) alongside your bottom of funnel (Sponsored Product) ads. Keep in mind the top of funnel ads will not have a great ROAS, but will drive awareness and increase brand searches that will be captured by your Sponsored Product ads.  

A well-designed product detail page, storefront and solid customer reviews are also critical; Amazon Ads can send plenty of traffic to your pages, but if they are not well optimized customers will not convert and ad spend dollars are wasted.  

Amazon advertising has grown exponentially over the last ten years. What was once a fairly simple and straight forward platform, is now highly complex one that can be use to deploy advanced advertising strategies to grow your brand. To put some real muscle behind their advertising efforts, many brands hire an e-commerce agency, like Nile, to optimize their Amazon Ads. Agencies like Nile have a team of experienced professionals with the tools and expertise needed to craft Amazon Ads that can accelerate your brand’s sales. Contact Nile for a no-risk, no-cost consultation today.