What Is a Sponsored Product on Amazon?

Amazon’s search advertising solution, Amazon Advertising, is increasingly becoming integral to vendors’ business growth. This platform is similar to Google’s pay-per-click (PPC) ads, which means you only pay when someone clicks on your ad.

At Click Fluency, our Amazon PPC management services cover

  • Amazon Headline Search ads
  • Product Display ads
  • native ads
  • video ads

Of these advertising types, Amazon Sponsored Product ads (SPAs) have the most significant impact on ad revenue.

What is a Sponsored Product on Amazon? In this guide, our team discusses Sponsored Products on Amazon to help you launch and manage profitable campaigns.

Sponsored Product on Amazon: Pay-per-Click Model

What is a Sponsored Product on Amazon? Amazon Sponsored Product Ads are keyword-targeted display ads to generate traffic to a specific product listing. The billing of these ads follows a pay-per-click (PPC) model, and you can pay anything from a few cents to a few dollars when someone clicks on your ad.

A real-time auction determines your cost per click. Each seller submits a bid, which determines their ad position. The cost per click (CPC) is one cent higher than the next highest bid and might differ from your bid amount.

For example, suppose three sellers submit the following bids:

  • Seller 1: $3.40
  • Seller 2: $3.00
  • Seller 3: $3.60

In this case, seller 3 wins the auction with a bid of $3.60. However, Seller 3’s CPC will be $3.41, one cent higher than the next highest bid. Seller 1’s CPC will be $3.01.

Where Do Sponsored Products Appear?

Your Sponsored Product ads appear in various strategic locations on Amazon, ensuring optimal visibility. This image ad looks like an organic product listing but has a gray Sponsored tag above the product’s title.

Eligibility Criteria and Product Requirements

You must meet various eligibility criteria to take advantage of the Sponsored Product platform on Amazon. Before you can launch a campaign, you will need:

  • An active seller’s account that has been selling for at least 90 days
  • Good standing with Amazon
  • The ability to ship to the country where you are running the campaign
  • A professional seller, vendor, or Kindle Direct Publishing author seller account

Your products also need to meet specific requirements. The Sponsored Product ad platform is unavailable for adult, refurbished, or used products. The product should also be in stock and available in the Buy Box.

Setting up a Sponsored Product Ad Campaign

Creating and configuring a Sponsored Product Ad campaign is a relatively straightforward process. Follow the steps below to set up these image ads.

Step 1: Create Your Campaign

Log into your Amazon Seller Center, then click on the hamburger icon in the top left corner of your screen. Hover over the Advertising drop-down menu, then select Campaign Manager. Click on Create Campaign.

If you are a brand registry program enrollee, Sponsored Products is the only campaign type available. Otherwise, your other campaign options also include Sponsored Brands and Display Campaigns. Choose Sponsored Products, then click Continue.

Step 2: Enter Your Campaign Settings

The Settings menu will appear, where you can enter your campaign name, duration, and daily budget. You can also add the campaign to a portfolio, which is helpful if you sell multiple product variations.

Step 3: Select the Campaign Types

Two campaign types exist: manual and automatic.

Manual Campaigns

With a manual campaign, you set the keywords you want to target as well as the match type and bid for each keyword. The match type instructs Amazon when to display the ad and involves the relationship between potential customers’ search terms and the keyword.

Three match types are available. Below, we discuss each match type using the keyword “baby banana toothbrush” as an example.

  • Exact match type: When you set an exact match type, your ad only appears if someone searches “baby banana toothbrush.” Targeting these keywords is more expensive and restrictive, but they typically relate to specific search intent, resulting in higher conversion rates.
  • Broad match type: With a broad match type, you reach a wider audience, and your bid costs are lower. However, matching buyers’ search intent becomes more challenging. For example, your baby banana toothbrush ad might appear when someone searches “toddler training toothbrush set.”
  • Phrase match type: This match type relevance is somewhere between the exact match and the broad match. Examples of broad match searches you can target include “baby bamboo toothbrush” or “baby finger toothbrush.”

A manual campaign is ideal if you need complete control over your keyword targeting and have an in-depth understanding of your target audience and their buying behaviors.

Automatic Campaigns

If you run an automatic campaign, Amazon’s algorithm chooses relevant searches according to the product category and information. With this option, you don’t have control over the keywords your campaign targets.

However, if you are advertising a new product, running an automatic campaign can help you harvest customer search term data, and you can use this information in future manual campaigns.

Key Metrics to Gauge the Success of Your Campaigns

You need to keep your finger on the pulse of your Sponsored Product campaign to ensure that it generates sufficient returns. Key performance indicators (KPIs) to track include:

  • Advertising cost of sales: ACOS is a metric that lets you compare the amount you spent on your campaign and the amount you earned in sales to track your campaign’s cost-efficiency. ACOS = (ad spend / ad revenue) x 100
  • Search impressions, clicks, and conversions: If a search term receives many clicks but no conversions, add this keyword to your negative keyword list.
  • Conversion rate: Your conversions as a percentage of clicks is significant in determining the effectiveness of your product listing elements.

Launch an Amazon Sponsored Products Ad Campaign Today

What is a Sponsored Product on Amazon? Get in touch with our team at Click Fluency to learn more.

As an Amazon seller, you might ask, are Amazon ads still worth it? At Click Fluency, our marketing professionals can provide you with a complete Amazon PPC campaign solution and maximize your return on investment. Contact us to schedule a call.

Imagine looking at your Amazon account and:

• Seeing a higher return on ad spend
• Not worrying about issues with your seller account because it’s handled by experts
• Feeling in control of your Amazon success
• Spending less time on the complexities

All of this, and so much more, happens when you work with Click Fluency. Schedule a call today to get started.