Module 11
Amazon Sponsored Products

11.3 Six Steps for Highly Converting Sponsored Products Campaigns

When your product is still new, Amazon Sponsored Products can offer a great boost to getting off the ground and can also help improve organic rankings. And, it pays to dedicate a higher budget to paid-traffic sources when you are first starting with Sponsored Products.

As your campaign builds up steam with increasing sales and more reviews, you can gradually decrease the bids. If you closely follow your campaign, make adjustments accordingly, and have a little patience, you will notice in your AMZ Tracker keyword ranking dashboard that your products will start rising in the organic search results as well.

But while Amazon Sponsored Products is an extremely powerful advertising tool, it’s important to understand that it’s still an investment and you’ll need to make the appropriate calculations to make sure that the numbers make sense. The costs can still outweigh the sales if the keywords are not properly selected.

That’s why we recommend you follow these 6 golden steps below for creating highly converting Amazon Sponsored Products campaigns, to make sure you will do things right:

  1. Make Sure Your Listing is Fully Optimized
  2. Know How Much You Can Spend on Advertising and Still Make a Profit
  3. Run An Automatic Targeting Campaign For a Couple of Weeks
  4. Stop the Automatic Targeting Campaign and Run a Manual Targeting Campaign
  5. Optimize Your Manual Targeting Campaign
  6. Patience = Profit

Step 1. Make Sure Your Listing is Fully Optimized

Before you start your first Amazon Sponsored Products campaign, the most important thing you should do is to make sure you followed all of our instructions in Module 8 – Create Your Optimized Product Listing.

You don’t want to be sending a bunch of paid traffic to a page that won’t convert customers. It will not only affect your competitiveness for future Amazon keyword bids but it will also damage your organic keyword rankings. Remember a high conversion rate will increase your keyword relevancy.

Pro Tip: Make sure your listing looks awesome and you have at least 10-15 good reviews with 4+ stars on a product before you turn on your Amazon Sponsored Products campaign. The Amazon ecosystem has become so dependent on these “trust factors” that your conversion rate will greatly decrease without them. Amazon customers will be hesitant to buy a product without quality reviews.

Step 2. Know How Much You Can Spend on Advertising and Still Make a Profit

You can only run a successful Amazon Sponsored Products campaign if you know how much you can spend and still make a profit. If the advertising cost is $10 to make a $5 profit sale, you are losing money. And we’re in the game to make money!

The metric that Amazon uses to give you insight in this is ACoS, which stands for Advertising Cost of Sale. ACoS is the percent of attributed sales you spent on advertising.

How is ACoS calculated?

  • Let’s you spent $10 in advertising
  • This resulted in attributed sales of $20
  • Your ACoS will then be 10/20 = 50%

You will want to calculate what your ACoS threshold is before you start your campaigns. This is a very important step and will ultimately help you decide on which campaigns you’ll want to pause and increase.

Your ACoS should not exceed your profit margin, or you will lose money on your campaign. If your ACoS is 50%, but your profit margin is only 30%, you are not running a profitable campaign. This is why you should know your ACoS threshold.

Your ACoS threshold is the same as your profit margin. How do you calculate your profit margin?

Let’s use a glass tea pitcher as an example, with a retail price of $30. To calculate the profit margin, we need to subtract the following costs from the retail price:

  • Cost of Goods (COGS): $7
  • All FBA Fees: $4
  • Shipping: $1

This leads to a profit margin of (30-7-4-1=) $18 So we can spend up to $18 to get a sale and still be profitable, or at least break even. To calculate our ACoS threshold, we simply divide the net income from the retail price: $18/$30 = 0.60.

Meaning, we have a 60% ACoS threshold. Which in turn means we make a profit on any keyword that has an ACoS of 60% or less.

The key takeaway here is: know your profit margin and keep track of your ACoS as your campaign runs.

You can find your ACoS in the Campaign Manager tab of the Advertising tab. You can access it through the reports tab here:

You can find your ACoS in the Campaign Manager tab of the Advertising tab. - From Zero To Liftoff Amazon FBA course

Step 3. Run An Automatic Targeting Campaign To Find High Converting Keywords

Now that you have made sure your listing is fully optimized and you know your ACoS threshold, it is time to create your first campaign.

When you start your first Amazon Sponsored Products campaign, you should only create an automatic targeting campaign.

Automatic targeting campaigns are simple, all you have to do is set the maximum bid, the start date and expiry date, and then Amazon runs your campaign for you.

We recommend starting off with a budget of $20 a day, at a $1.50 bid and run this for at least 2 weeks. If your ACOS is high at the start, it’s normal. Remember you are collecting data.

When you create an automatic targeting campaign, you basically give Amazon a ‘carte blanche’ to select all relevant customer search keywords for displaying your ad.

In the long run, you will probably make more profit with a manual targeting campaign than with an automatic targeting campaign. A manual targeting campaign is much more customizable. So why should you start with running an automatic targeting campaign? Because an automatic targeting campaign is an excellent way to learn about high converting keywords that you may have missed otherwise!

That’s the main reason you should use it for. Run the automatic targeting campaign for a couple of weeks. This should be enough to figure out a number of high converting keywords for your product. Once you have found these in your Search Term Report, end the campaign and instead create a manual targeting campaign.

Secondly, it’s a good way to see if Amazon is aware of what your product is and/or does. Take a look at your top 10-12 Search Terms with the most impressions. If your search term report is full of irrelevant terms, then it’s likely Amazon is confused about what your product is or does. This isn’t a good thing. You need to go back and re-optimize, figuring out why Amazon thought those terms were relevant in the first place. Maybe you need to remove those irrelevant keywords or re-phrase some sentences in your copy.

It doesn’t matter if you made a profit in these two weeks. Even if you didn’t, you now know some high converting keywords that you can add to your manual targeting campaign, you know if Amazon understands your listing or not and that alone already makes the investment worthwhile.

Step 4. Stop the Automatic Targeting Campaign and Run A Manual Targeting Campaign

Once you have found the high converting keywords for your product, you should stop the automatic targeting campaign and instead create a manual targeting campaign.

The majority of the time you will want to run a manual targeting campaign. This campaign gives you much more control because it is much more customizable than an automatic targeting campaign.

A manual targeting campaign allows you to:

  • select the keywords that you want to target
  • set different bids for different keywords

Select Your Keywords

When you create your manual targeting campaign, first add the high converting keywords that you have found when you ran the automatic targeting campaign.

Next, go over the keywords that Amazon will show you. But don’t just blindly trust these! These are there to make Amazon money, not you. So be picky: make sure the keywords you choose perfectly fit your product offer or ignore them.

Finally, add any other keyword you want to target.

Set Your Bid

What is a good default bid? When deciding on your default bid keep in mind that – like Facebook and Adwords – Amazon’s pay-per-click ads are set up as an auction for ad space. This means that the default bid is the maximum you’re willing to pay each time someone clicks on your ad. Initially, we recommend setting this number as $2 or as high as $5 per click. Don’t worry – Amazon’s never going to actually charge you that much in our experience thus far, but you’ll be monitoring the campaign just in case.

Why such a high number? Because at this stage of the game, you’re trying to collect as much data about the advertising market in your marketplace as possible. If your default bid is too low, your ads will only get shown sporadically and it’ll be difficult to trust the data you’ve collected. So you will want to outbid the competition with a bold default bid when you are starting out.

Later on, once you have collected this data, you can lower your default bid and/or customize your bids for specific keywords

Step 5. Optimize Your Manual Targeting Campaign

You may choose to start your manual targeting campaign with just a default bid $2, but as you accumulate more data on which keywords convert well and which don’t, you will want to optimize your campaign accordingly.

This is how you can optimize your manual targeting campaign:

  • Take advantage of the different match types. There are 3 match types: broad, phrase and exact. By default, any keyword you add to your campaign is added as a broad match type. However, you can refine this by using phrase match or exact match.
  • Exclude keywords by adding them as negative keywords. If Amazon keeps associating a keyword with your ads but it’s not converting, you can add it as a negative keyword which then tells Amazon not to show your ads for this term.
  • Review the search reports. As you accumulate more and more data, you should regularly review the search term reports that are available in your Seller Central account to see where you can further optimize your campaign and your listing. New keywords will pop up from time to time as new buzz terms become popular.
  • Customize your keyword bids. Don’t let your ads get out of control. At least once per week, review your advertising costs and advise your bids as necessary up or down.

Take advantage of the different match types

Broad match keywords give the most traffic exposure, while phrase and exact match types provide restrictive traffic for specific target audience only. What’s the difference between these matches?

  • Broad Match: This offers your ads broad traffic exposure. When a customer enters a search term, you have a better chance of getting traffic if the term contains all the keywords or synonyms. The search term can contain keywords or synonym in any order. For example, if you target the keyword ‘blue dress’ your ad could also show up when customers search for ‘blue skirts’, ‘sapphire dress’ or ‘dresses that are blue’. Skirts are closely related to dresses and sapphire is a shade of blue.

  • Phrase Match: This is when the search term must contain the exact phrase or sequence of words. Compared to broad match, this is more restrictive but it generally results in more relevant placement of ads. For example, if you target ‘blue dress’ your ad can appear when someone searches for ‘dark blue dress’.
  • Exact Match: This search term must contain the exact keyword in the exact order for your ads to show. It actually allows for close variations of the exact term. It is the most restrictive match type, but it is more relevant to customers’ search terms. For example, if you target ‘blue dress’ your ad can appear when someone searches for ‘blue dress’ or ’blue dresses’.

Exclude keywords by adding them as negative keywords

Negative keywords are keywords that prevent your ad from being triggered when a customer searches for that keyword.

For example, if you are targeting the keyword green shoes and have selected broad match, you may want to make sure your ad does not show up for green flip flops. You can do so by adding this as a negative keyword for your campaign.

You should be focusing on excluding weak search terms and refining the targeting to exclude less relevant terms or any term that you do not want to associate with your brands or products. Additionally, any keyword that was way over your ACoS threshold is not worth chasing. Either it’s too competitive and therefore too costly at this time, or it’s not relevant enough to warrant the spend as it doesn’t convert well.

Review the search reports

Now you should stand back and watch the beauty of the FBA business model at work. Meaning, run your advertising campaign for a week without making any adjustments.

Pro Tip: If you check your campaign results a few days after you start the campaign, you may not see any sales. Amazon’s advertising reports have a several day latency, which means that it takes 48-72 hours sometimes for conversions to be reported.

Then open the Search Term Report. Here’s how you can find it:

  • Open your Seller Central account. Go to the Reports tab, and click on the Advertising Reports option in the drop-down menu.
You can find your ACoS in the Campaign Manager tab of the Advertising tab. - From Zero To Liftoff Amazon FBA course
  • On the Advertising Reports page, click on Search Term Report to open it.
Select Search Term Report. - From Zero To Liftoff Amazon FBA course
With this data, you can see what’s working, what’s not, and sharpen your money-making method. You should be able to identify:

  • which keywords convert to sales
  • and at what ACoS

Regularly review your Search Term report to spot profit opportunities.

Customize your keyword bids

Manual targeting campaigns allow you to customize your bid for each keyword.

Now that you have the data from your Search Term reports, you should raise the bid on high converting keywords. Also, consider changing the match type to phrase match or even exact match.

Lower your bids on keywords that do not convert well. And pause the bids for keywords that exceed your ACoS threshold, or even add them to your negative keywords list.

Remember, an optimized paid search campaign is all about ensuring that you bring the most qualified customer to your listing at an efficient and profitable cost.

Step 6. Patience = Profit

Now for a bit of a reality check. Very few campaigns are going to be instantly profitable in their first few days, or even their first month. But because Amazon Sponsored Products seems to influence organic rankings, it lowers the cost per click over time, and because conversion rates tend to increase over time, you can’t give a campaign the thumbs-down on their platform as quickly as you might on Adwords or Facebook.

While some campaigns might be instant big winners, many more start out as losers, then pick up after the first few weeks to make month two or three pleasantly profitable.

We haven’t found a reliable metric yet that can predict which campaigns will take off, but the point is this: Amazon Sponsored Products reward patience. So don’t rush to turn off a campaign before you’ve given it ample time to prove whether it’s going to be a winner for you or not.

Another reason to be patient is that there’s some evidence to suggest that your products will actually rank better organically while you’re running ads. It seems like the increase in visitors and sales can bump your organic rankings in Amazon search up a few spots, which is worth a lot more than what the ads will cost you. Test after test from our team as well as from others seems to show this being true.

So it’s a double bonus with Amazon Sponsored Products ads!


To summarize, these are the 6 golden steps to increasing your sales with Amazon Sponsored Products:

  1. Make Sure Your Listing is Fully Optimized
  2. Know How Much You Can Spend on Advertising and Still Make a Profit
  3. Run an Automatic Targeting Campaign To Find High Converting Keywords
  4. Stop the Automatic Targeting Campaign and Run a Manual Targeting Campaign
  5. Optimize Your Manual Targeting Campaign
  6. Patience = Profit

If you want to dive in even deeper, we recommend you check out the book PPC Strategies for Amazon Sellers: How to use Sponsored Ads to increase sales and improve search rank for your Amazon FBA Products.

Let's Set Up Your Amazon Sponsored Products Campaign!

Now that you’ve learned the basics of Amazon Sponsored Products, let’s set up your first campaign! We’ll guide you through the process step-by-step.