If you’re new to Amazon PPC and feeling confused, overwhelmed, or unsure where to begin, you’re not alone.
Every seller, from small side-hustlers to seven-figure brands, has started with the exact same question:
“How does Amazon PPC actually work, and how much should I spend?”
Amazon PPC isn’t as complicated as most tutorials make it seem. Once you understand the fundamentals (how the auction system works, how ads appear in search results, and how to structure your first campaign), everything becomes significantly easier.
This beginner-friendly guide breaks everything down in simple, practical steps. You’ll learn:
- What Amazon PPC actually is and why it matters
- How the real-time bidding system works
- Realistic PPC costs for new sellers
- The difference between automatic vs manual campaigns
- The exact 5-step process to set up your first campaign correctly
- Common beginner mistakes and how to avoid them
Let’s get into it.
What Is Amazon PPC?
Amazon PPC (Pay-Per-Click) is Amazon’s internal advertising platform that allows sellers to bid for visibility on product searches and competitor listings.
When a shopper searches “yoga mat,” Amazon decides which products appear:
- At the very top of search results (Sponsored Products)
- In mid-search placements
- On competitor product detail pages
- At the bottom of search results
Amazon PPC controls all of these placements.
How the Pay-Per-Click Model Works
Here’s the important part: You only pay when someone clicks your ad, not when they see it.
For example:
- Your bid is £0.70 per click
- Your ad appears 1,000 times but receives 10 clicks
- You pay: £7.00 (10 clicks × £0.70)
- Total impressions: 1,000 (free)
If nobody clicks your ad, you pay nothing. This makes PPC one of the most cost-effective ways to:
- Get immediate visibility for new products
- Boost organic search rankings through sales velocity
- Drive early sales and reviews
- Compete against established sellers with existing rankings
- Test product-market fit before scaling inventory
PPC isn’t the only growth channel, but for most Amazon products, it’s essential during the launch phase and beyond.
How Amazon’s PPC Auction Works (The Simple Version)
When a shopper searches a keyword, Amazon runs a real-time auction between all sellers bidding for that keyword.
But here’s what most beginners misunderstand: The highest bid does NOT automatically win.
Amazon’s auction considers multiple factors:
- Relevance: How well your product matches the search query
- Product performance: Your conversion rate and sales history
- Click-through rate (CTR): How often shoppers click your ad
- Customer experience: Reviews, ratings, and return rates
- Bid amount: Your maximum cost-per-click
This is crucial because it means a highly relevant product with a £0.60 bid can outrank a poorly-optimised competitor bidding £1.20.
Your listing optimization and product quality matter just as much as your advertising budget.
Understanding Ad Rank
Amazon calculates your Ad Rank using this simplified formula:
Ad Rank = Bid Amount × Relevance Score
This means improving your product listing (title, images, bullet points, conversion rate) directly improves your ad performance, often more than simply increasing your bid.
How Much Does Amazon PPC Cost? (Realistic Beginner Numbers)
The honest answer: it depends on your niche and competition level.
However, for most beginner-friendly categories:
- Cost-Per-Click (CPC): £0.30 to £1.00
- Daily budgets: £10 to £20 to start
- Beginner ACOS (Advertising Cost of Sale): 30% to 50%
What a Healthy Early-Stage Campaign Looks Like
Here’s a realistic example for a new seller:
- Daily budget: £15
- Average CPC: £0.50 to £0.70
- Daily clicks: 20 to 40
- Daily sales: 2 to 4
- ACOS: 35% to 55%
Important context: This isn’t profit-focused yet. It’s your learning phase. The goal at this stage isn’t maximum profitability. The goal is discovering which keywords convert and building sales velocity for organic ranking.
Once you identify high-converting keywords, you can optimize bids and improve profitability.
What Is ACOS and Why Does It Matter?
ACOS (Advertising Cost of Sale) measures how much you spend on ads relative to ad-generated sales.
Formula: (Ad Spend ÷ Ad Sales) × 100
Example:
- You spend £50 on ads
- Those ads generate £150 in sales
- ACOS = (£50 ÷ £150) × 100 = 33.3%
A 33% ACOS means you spend £0.33 in advertising for every £1.00 in sales.
Automatic vs Manual Campaigns (Which Should Beginners Use?)
Understanding the difference between campaign types is crucial for beginners.
Automatic Campaigns (Good for Beginners)
How they work: Amazon automatically matches your product to relevant search terms based on your listing content.
Advantages:
- Amazon chooses all keywords for you
- Fastest way to collect initial data
- Discovers unexpected high-converting search terms
- Simple 5-minute setup
- Great for new products with no historical data
Disadvantages:
- Less control over irrelevant keyword matches
- Can waste budget without regular negative keyword additions
- Amazon sometimes matches to low-intent searches
Best for: New sellers, product launches, keyword discovery
Manual Campaigns (Best for Long-Term Profitability)
How they work: You manually select keywords, set individual bids, and choose match types.
Advantages:
- Complete control over which keywords to target
- Set custom bids based on keyword performance
- Choose specific match types (exact, phrase, broad)
- Optimize based on real conversion data
- Eliminate wasteful spending on irrelevant terms
Disadvantages:
- Requires keyword research upfront
- More time-intensive to set up
- Needs regular monitoring and optimization
Best for: Sellers with conversion data, experienced advertisers, profitability optimization
Recommended Beginner Setup
Launch both campaign types simultaneously:
- One automatic campaign for keyword discovery
- One manual campaign using your top 10 to 15 researched keywords
This approach gives you control AND discovery at the same time, maximizing your learning while maintaining strategic focus.
How to Set Up Your First Amazon PPC Campaign (5-Step Process)
If this is your first time running Amazon PPC, follow this exact checklist.
Step 1: Research and Choose Your Main Keyword Group
Identify 5 to 15 keywords that match buyer intent. These are terms people use when ready to purchase.
Example for “stainless steel water bottle”:
- stainless steel water bottle
- insulated water bottle
- metal water bottle
- water bottle with lid
- reusable insulated bottle
- leak proof water bottle
- double wall water bottle
Use Amazon’s search bar autocomplete and competitor listings to find relevant keywords.
Avoid low-intent keywords like:
- “water bottle reviews”
- “best water bottle”
- “how to clean water bottle”
These generate clicks but rarely convert for product ads.
Step 2: Create Your First Automatic Campaign
Navigate to Campaign Manager in Seller Central:
- Click Create Campaign > Sponsored Products
- Choose Automatic Targeting
- Set a daily budget of £10 to £15
- Use Amazon’s suggested default bid to start
- Enable all four targeting groups: Close match, Loose match, Substitutes, Complements
- Add 10 to 20 negative keywords if you already know low-intent searches (examples: “free,” “DIY,” “tutorial,” “cheap”)
This campaign collects early performance data across Amazon’s algorithm-selected keywords.
Step 3: Create Your First Manual Campaign
Now create a manual campaign with your curated keyword list.
Understanding match types:
- Exact Match: Highest intent, highest control (e.g., [stainless steel water bottle])
- Phrase Match: Medium intent, medium control (e.g., “insulated water bottle”)
- Broad Match: Discovery mode, lowest control (e.g., water bottle)
Beginner recommendation:
- Start with Exact Match for your 5 to 10 main keywords
- Add Phrase Match for variations
- Use Broad Match only if you’re prepared to monitor search terms daily
Set your initial bids at Amazon’s suggested bid or slightly above (5 to 10% higher) for competitive visibility.
Step 4: Monitor Your Search Term Report
After 3 to 7 days of data collection, download your Search Term Report from Campaign Manager.
Analyze:
- Which keywords generate clicks
- Which keywords drive actual sales
- Which keywords waste budget without converting
Then optimize:
- Increase bids on high-converting keywords (positive ROI)
- Add negative keywords to block irrelevant searches
- Lower bids on expensive non-converters
- Harvest keywords from auto campaigns and add to manual campaigns
This iterative optimization is the heart of profitable PPC management.
Step 5: Continuously Test and Refine
Amazon PPC requires ongoing optimization:
- Review performance weekly
- Adjust bids based on conversion data
- Test new keywords monthly
- Update negative keyword lists regularly
- Pause underperforming campaigns or ad groups
Successful PPC management is a marathon, not a sprint.
Common Beginner Mistakes (Avoid These At All Costs)
Even experienced sellers make these errors when starting out:
Using ONLY automatic campaigns – You miss profitable manual targeting opportunities
Not adding negative keywords – Wastes 20 to 40% of budget on irrelevant clicks
Blindly trusting Amazon’s suggested bids – Often inflated; start lower and increase strategically
Expecting immediate profitability – Early campaigns focus on data collection, not profit
Ignoring search term reports – The most valuable data source for optimization
Running PPC with poor listing quality – Bad images or unclear titles kill conversion rates
Thinking PPC will fix a bad product – Advertising amplifies product quality, good or bad
Remember: Amazon PPC is powerful, but only when paired with a well-optimized product listing, competitive pricing, and positive reviews.
Is Amazon PPC Worth It for Beginners?
Short answer: Yes, almost always.
Here’s why PPC is essential for most Amazon sellers:
- Organic ranking is nearly impossible without initial sales velocity – PPC generates those critical early sales
- Your competitors are running PPC – Not advertising means being invisible
- Amazon’s algorithm rewards PPC sales – They contribute to organic ranking improvements
- PPC provides irreplaceable customer data – Search terms, conversion rates, and buyer behavior insights
Even if your early ACOS looks unprofitable (40 to 50%), the long-term benefits justify the investment:
- Improved organic rankings
- Validated keyword strategies
- Increased product visibility
- Review generation through sales
Think of PPC as an investment in visibility, not just a marketing expense.
Final Thoughts: Your First Campaign Doesn’t Need to Be Perfect
Every successful Amazon seller started exactly where you are now: uncertain, slightly overwhelmed, and learning as they go.
The key to PPC success isn’t perfection on day one. It’s consistent progress through testing, learning, and optimization.
If you follow this beginner-friendly approach, you’ll:
✔ Identify which keywords actually drive sales
✔ Collect real buyer behavior data
✔ Improve your organic search rankings
✔ Build a profitable, optimized PPC system over time
Amazon PPC looks intimidating at first, but it’s actually one of the most learnable skills in the entire Amazon ecosystem.
Start small. Start simple. Start smart.
Your first campaign is just the beginning of your Amazon growth journey.