Amazon Sponsored Products is the most widely used and highest-ROI advertising format on Amazon. Yet many sellers lose money not because the ads don’t work – but because their campaign setup is flawed from day one.
This guide goes beyond basic definitions. It walks you through how to set up Sponsored Products campaigns correctly, why each decision matters, and how experienced sellers structure campaigns to improve visibility, click-through rate (CTR), conversion rate (CVR), and Advertising Cost of Sales (ACoS).
Whether you’re launching your first product or scaling an established catalog, this article is designed to serve as a practical reference you can return to again and again.
What Are Amazon Sponsored Products?
Amazon Sponsored Products are pay-per-click (PPC) ads that promote individual product listings (ASINs). These ads appear:
- At the top of search results
- Within search results
- On competitor product detail pages
- Below the Buy Box
You only pay when a shopper clicks your ad.
Why Sponsored Products matter:
- They directly influence sales velocity
- They help new listings gain visibility
- They support keyword discovery and ranking
- They are eligible for both Amazon FBA and FBM sellers
For most brands, Sponsored Products account for 70 – 90% of total Amazon ad spend, making campaign setup a high-impact decision.
Before You Set Up a Sponsored Products Campaign
Experienced advertisers know that campaign setup starts before clicking “Create campaign.”
1. Ensure Your Listing Is Retail-Ready
Ads amplify what already exists. If your listing is weak, ads will only accelerate wasted spend.
Before advertising, confirm:
- Clear main image that meets Amazon image guidelines
- Keyword-optimized title and bullet points
- Competitive pricing
- At least a few reviews (or a clear launch strategy)
- Stock availability (ads stop when inventory runs out)
Insight: A high ACoS is often a listing problem, not an ad problem.
2. Define the Campaign’s Objective
Every Sponsored Products campaign should have one primary goal, such as:
- Keyword discovery
- Ranking for specific keywords
- Defending branded terms
- Scaling profitable traffic
Trying to do everything in one campaign leads to poor data and weak optimization.
Step-by-Step Amazon Sponsored Products Campaign Setup
Step 1: Choose the Right Campaign Type
Amazon offers two targeting types for Sponsored Products:
Automatic Targeting
Amazon decides when and where your ads appear.
Best for:
- New product launches
- Keyword discovery
- Sellers with limited data
Manual Targeting
You choose keywords or product targets.
Best for:
- Controlling spend
- Optimizing ACoS
- Scaling profitable terms
Expert recommendation:
Most advanced sellers run both automatic and manual campaigns simultaneously, each with a specific role.
Step 2: Campaign Naming Structure (Often Overlooked)
A clear naming system saves time and prevents costly mistakes as you scale.
Example naming format:
SP | Auto | Main ASIN | Research
SP | Manual | Exact | Top Keywords
SP | Product Targeting | Competitors
This allows you to quickly:
- Identify intent
- Compare performance
- Pause or scale campaigns confidently
Step 3: Set Your Daily Budget Strategically
Amazon recommends a minimum budget, but smart budgeting is strategic, not arbitrary.
Guidelines:
- Auto campaigns: slightly higher budget for data collection
- Manual exact campaigns: budget aligned with proven ROAS
- Launch phase: expect higher ACoS temporarily
Key insight:
A low daily budget can throttle impressions and distort performance data, leading to bad decisions.
Step 4: Bidding Strategy Selection
Amazon offers three bidding strategies:
- Dynamic bids – down only
Amazon lowers bids when conversion likelihood is low (safest option). - Dynamic bids – up and down
Amazon increases bids for high-conversion placements. - Fixed bids
Your bid stays constant.
Best practice:
Start with Dynamic bids – down only for new campaigns. Switch selectively once you have conversion data.
Setting Up Automatic Sponsored Products Campaigns
Automatic campaigns use four internal match types:
- Close match
- Loose match
- Substitutes
- Complements
How to Structure Auto Campaigns Like a Pro
Instead of one generic auto campaign, advanced sellers often:
- Separate auto campaigns by ASIN or product group
- Monitor search term reports weekly
- Harvest converting search terms into manual campaigns
Original insight:
Auto campaigns are not meant to be “set and forget.” They are data mining tools, not scaling engines.
Setting Up Manual Sponsored Products Campaigns
Manual campaigns give you precision – and responsibility.
Keyword Match Types Explained
- Exact match – highest control, best for scaling
- Phrase match – balances reach and relevance
- Broad match – discovery and long-tail traffic
Strategic structure:
- Separate campaigns by match type
- Isolate top-performing keywords in exact-only campaigns
- Use negatives aggressively to reduce waste
Product Targeting Campaigns (Underused, High Potential)
Product targeting lets you show ads on:
- Competitor ASINs
- Category pages
- Brand pages
Best uses:
- Defensive ads on your own listings
- Conquesting weaker competitors
- Upselling complementary products
Advanced tip:
Target competitor ASINs with worse reviews or higher prices for stronger conversion rates.
Negative Keywords: The Profit Protector
One of the most common Sponsored Products mistakes is ignoring negative keywords.
Add negatives to:
- Block irrelevant traffic
- Prevent overlap between campaigns
- Improve ACoS and conversion rate
Types:
- Negative exact
- Negative phrase
Rule of thumb:
If a search term has spent money with no sales after sufficient clicks, it belongs on your negative list.
Measuring Success: Metrics That Actually Matter
Avoid optimizing for vanity metrics.
Focus on:
- ACoS and TACoS
- Conversion rate
- Click-through rate
- Cost per conversion
- Keyword-level profitability
Context matters:
A higher ACoS may be acceptable for ranking or launch campaigns, but not for long-term scaling.
Common Sponsored Products Setup Mistakes
- Mixing auto and manual targeting in one campaign
- Using one campaign for multiple objectives
- Ignoring search term reports
- Scaling bids before fixing listings
- Setting bids without understanding margins
These mistakes don’t just reduce performance – they hide the real problem, making optimization harder over time.
Why This Setup Approach Works
This framework reflects how experienced Amazon sellers and agencies actually operate:
- Data-driven, not guess-based
- Structured for scale
- Built around profitability, not impressions
It’s also aligned with how Amazon’s advertising algorithm learns and rewards relevance over time.
Final Thoughts: Sponsored Products Are a System, Not a Switch
Amazon Sponsored Products campaigns don’t succeed because of one setting – they succeed because of intentional structure, clean data, and continuous refinement.
When set up correctly, Sponsored Products become:
- A growth engine
- A ranking accelerator
- A predictable, scalable traffic source
If you treat setup as a strategic foundation – not a checkbox – you gain a long-term competitive advantage.
About SwanseaAirport
SwanseaAirport provides independent tools, in-depth guides, and expert insights to help Amazon and Walmart sellers make smarter decisions, reduce wasted ad spend, and build sustainable marketplace businesses.
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