Amazon advertising rewards structure. When campaigns are organised by purpose, it becomes much easier to see what is working, move budget to it and stop paying for clicks that never convert. This guide covers the building blocks and the metrics we use to judge them.
The three main ad types
- Sponsored Products promote individual listings in search results and on product pages. For most sellers they are the core of the account.
- Sponsored Brands show your brand logo, a headline and several products, or a video, usually at the top of search results. They require Brand Registry.
- Sponsored Display reaches shoppers on and off Amazon based on products they viewed or audiences you choose.
Automatic and manual targeting
Sponsored Products campaigns can use automatic targeting, where Amazon matches your ads to searches and products based on your listing, or manual targeting, where you choose keywords or products. Automatic campaigns use four targeting groups you can bid on separately: close match, loose match, substitutes and complements.
Automatic campaigns are good at discovery. Manual campaigns give control. A common structure runs both: automatic campaigns find new search terms, and the ones that convert are moved into manual campaigns where they can be bid on precisely. We explain that process in search term harvesting and negative keywords.
Keyword match types
In manual keyword campaigns:
- Broad matches searches that include your keyword terms in any order, plus related variations. Widest reach, least control.
- Phrase matches searches containing the phrase in that order, with words before or after.
- Exact matches the exact search term and close variants such as plurals. Most control, least reach.
Many accounts separate match types into different campaigns or ad groups, so each keyword’s performance is clear and budgets can follow results.
A simple structure that scales
For each product or product group:
- An automatic campaign for discovery, with modest bids.
- A broad or phrase campaign for researched keywords, to find more converting searches.
- An exact campaign for proven search terms, where most of the budget eventually goes.
- A product targeting campaign for competitor and complementary product pages.
- A branded campaign for searches that include your brand name, kept separate so it does not flatter the rest of the account.
Clear naming (“SP | Product | Exact | Proven terms”) makes reports readable months later.
ACoS, ROAS and TACoS
- ACoS (advertising cost of sale) = ad spend ÷ sales attributed to ads × 100. If you spend $200 and ads generate $1,000 in attributed sales, ACoS is 20%.
- ROAS (return on ad spend) = attributed sales ÷ ad spend. The same example gives a ROAS of 5. ROAS and ACoS are two views of the same relationship.
- TACoS (total advertising cost of sale) = ad spend ÷ total sales (organic and advertised) × 100. It shows how much of your whole business advertising costs. You may need to calculate it yourself from Seller Central sales and Amazon Ads spend.
ACoS tells you whether campaigns are efficient. TACoS tells you whether advertising is helping the business as a whole. A rising ACoS during a launch can be acceptable if TACoS is falling because organic sales are growing.
Setting a target ACoS
The right ACoS depends on your margin. Your break-even ACoS is roughly your profit margin before advertising: if you keep 30% of the sale price after product, fees and shipping, an ACoS above 30% loses money on those sales. Targets then depend on your goal: launching, ranking, defending or maximising profit.
What we look at first in an audit
- Wasted spend on search terms with clicks and no sales.
- Converting search terms that are not yet targeted in exact match.
- Campaigns mixing too many products or match types to read.
- Budgets running out early in the day.
- Listings with weak images, titles or reviews that hold back conversion whatever the bids.
Our Amazon PPC service covers audits, setup and ongoing management for US, UK, UAE and EU marketplaces, with ACoS and TACoS reported side by side.
