2026-06-09 · 6 min
Amazon PPC Basics: How Sponsored Products Work in 2026
Sponsored Products are Amazon's most used ad type. This guide explains how they work, how to set up your first campaign, and what metrics to watch.
What Sponsored Products Actually Are
Sponsored Products are pay-per-click ads that appear in search results and on product detail pages. You set a bid for a keyword or product target. When a shopper searches for that keyword and clicks your ad, you pay the bid amount. If they do not click, you pay nothing. The ad looks like a normal search result with a small "Sponsored" label.
Automatic vs. Manual Campaigns
Automatic campaigns let Amazon decide which search terms to show your ad for, based on your listing content. They are useful for finding new keywords you had not considered. Manual campaigns let you choose exact keywords or product targets. Most sellers run both: automatic campaigns to discover terms, manual campaigns to bid precisely on the best performers. Move good terms from automatic to manual as you identify them.
Match Types
Broad match shows your ad for searches containing your keyword in any order, plus related variations. Phrase match requires the keywords to appear in the correct order. Exact match shows your ad only for searches that match precisely. Start with broad and phrase match to gather data, then shift budget toward exact match for your best keywords once you know which terms convert.
Key Metrics to Watch
ACoS (Advertising Cost of Sales) is your ad spend divided by ad-attributed sales. A 25% ACoS means you spent $25 to generate $100 in sales from ads. Your target ACoS depends on your margin. TACoS (Total ACoS) divides ad spend by total sales including organic. As organic rank improves from ad-driven sales, TACoS drops. This is the real measure of whether ads are building your business or just renting sales.
Negative Keywords
Add irrelevant search terms as negative keywords to stop wasting budget. If you sell premium coffee equipment and your ad shows for "cheap coffee maker," add "cheap" as a negative exact keyword. Review the Search Term Report weekly and move non-converting terms to negatives. This is the single highest-impact optimization for most new PPC accounts.