Last Updated: October 16, 2024 *Part 2 of our Complete Amazon Advertising Guide Series | [View Part 1: Core Advertising Fundamentals here](insert internal link)* These are the core actionable takeaways you can implement today: 1. Sponsored Products (SP) ads include two core formats: **Automatic (system-managed)** and **Manual (seller-controlled)** 2. For new automatic campaigns, run only *Close Match* and *Substitutes Match* groups first to minimize wasted spend 3. Pre-emptive negative targeting cuts irrelevant ad spend by **20-40%** (*based on 200+ US/EU seller account performance data, 2023-2024*) 4. Structure manual keyword campaigns to separate Broad Match (for new keyword discovery) and Exact Match (for high-intent position locking) 5. Use fixed bidding + 20% Top of Search (TOS) placement adjustments to test and lock in first-page positions for high-conversion keywords ## Introduction Many new and mid-tier sellers struggle with SP ad performance: they overspend on irrelevant traffic, misconfigure match types, or waste budget on positions that never convert. This guide skips vague theory and focuses 100% on actionable, tested tactics you can use to launch and optimize SP ads for new and growing products. All tactics are compatible with all Amazon North American and European marketplaces. *Note: All bid values provided are examples only. Adjust all bids based on your specific category, site, and current competitive benchmark data.* ## 1. Core Sponsored Products (SP) Ad Structure SP ads are the longest-running and highest-converting ad format for most Amazon sellers. The full structure splits into two core campaign types: - **Automatic Campaigns**: Amazon’s algorithm targets keywords and ASINs based on your Listing content - **Manual Campaigns**: You control exactly which keywords, ASINs, or category nodes to target ## 2. Automatic Campaign Setup ### 2.1 Close Match & Substitutes Match Groups We recommend launching only two automatic ad groups first, and ignoring the remaining two match types for initial testing: 1. **Close Match Group**: Targets search terms that closely match keywords pulled directly from your Listing (title, bullet points, description, and backend keywords) 2. **Substitutes Match Group**: Places your ad on product detail pages of similar (substitute) products to yours #### How to Launch These Groups: 1. Set initial bids equal to Amazon’s suggested bid for your category 2. Monitor impressions over the first 3-5 days 3. If impressions are too low (fewer than 1,000 per group per week), increase bids incrementally by 10-15% until you hit consistent impression and click volume 4. If you need guidance on basic campaign creation steps, refer to the official Amazon Seller University tutorials. *Why skip Loose Match and Complements Match initially? These groups deliver far less relevant traffic for most categories, and you can add them later once you have optimized your core ad groups and have extra budget for traffic discovery.* ### 2.2 Pre-emptive Negative Targeting Pre-emptive negative targeting is the single most effective way to cut wasted ad spend before you even launch a campaign. Negative targets prevent your ad from showing for irrelevant search terms or ASINs, so you do not pay for clicks that will never convert. #### Common Negative Targets to Add Pre-Launch: - **Irrelevant brand terms**: Negate the brand names of top competitors if you do not sell their products - **Irrelevant attribute terms**: For example, if you sell only white wireless earbuds, negate terms like “black”, “red”, or “wired” - **Non-relevant use case terms**: For example, if you sell a residential air fryer, negate “commercial” or “industrial” #### Where to Source Negative Keywords: 1. Amazon’s search bar autocomplete results 2. Competitor keyword reverse searches (use free tools like the Amazon Search Term Report, or paid tools like Helium 10 or Jungle Scout) 3. Your pre-built keyword list’s irrelevant root terms #### Cost Savings Impact: **A single irrelevant click costs an average of $2.00. Blocking 10-20 irrelevant clicks per day saves $20-$40 in wasted budget that can be reallocated to high-performing targets.** *Warning: Do not negate terms that include your own brand name, and ensure all targeting and negative targeting practices comply with Amazon’s Advertising Policies and applicable trademark laws in your selling region.* ### 2.3 Loose Match & Complements Match Groups (Optional) If you have extra budget for traffic discovery, you can launch these two groups as a single combined campaign: - **Loose Match**: Targets broader, less specific search terms related to your product (similar to Broad Match in manual campaigns) - **Complements Match**: Places your ad on detail pages of products that are commonly purchased with yours (e.g., phone cases for a smartphone) The optimization logic for these groups is identical to core automatic groups: negate underperforming terms and ASINs after 7-10 days of data collection. ## 3. Manual SP Ad Campaign Setup Manual campaigns split into two core targeting types: *Keyword Targeting* and *Product Targeting*. We will cover keyword targeting first. ### 3.1 Keyword Match Types Explained Manual keyword targeting uses three match types, each with different targeting rules. We have summarized their use cases in the table below: | Match Type | How It Works | Best For | | | --| -| | **Broad Match** | Your ad shows for search terms that contain the root words of your target keyword, in any order, with additional terms allowed. For example, targeting "Bluetooth earphone" will match "white Bluetooth earphone for running" or "earphone Bluetooth wireless". | Discovering new long-tail and niche search terms you did not include in your initial keyword list | | **Phrase Match** | Your ad shows for search terms that contain your exact target keyword phrase as a consecutive string, with additional terms allowed only before or after the phrase. For example, targeting "Bluetooth earphone" will match "wireless Bluetooth earphone" but not "Bluetooth wireless earphone". | Niche categories with highly standardized search order (test this for your use case only) | | **Exact Match** | Your ad shows only when a user’s search term is almost identical to your target keyword (minor differences like pluralization or capitalization are ignored). For example, targeting "Bluetooth earphone" will match "Bluetooth earphones" but not "wireless Bluetooth earphone". | Locking in top positions for proven high-conversion keywords | *Note: Based on cross-category testing, we recommend prioritizing Broad and Exact match for most use cases, as Phrase match delivers minimal incremental value when paired with the other two formats. Test Phrase match only if your niche has highly structured search queries.* ### 3.2 How to Structure Keyword Targeting Campaigns After you finalize your positive keyword list (use system-suggested keywords to supplement your pre-researched list if needed), structure your campaigns to separate Broad and Exact match for the same keyword: 1. Create a separate Broad Match campaign for core high-volume keywords 2. Create a separate Exact Match campaign for the *same core keywords* #### Why Separate Match Types? This structure lets you control budget and performance separately for each match type: - **Exact Match groups** deliver higher-intent traffic, as users are searching for your exact target term, so you can allocate more budget to these high-performing terms - **Broad Match groups** deliver a wider range of traffic, so you can use them to discover new long-tail keywords you missed during initial research #### Advanced Optimization Tip: Add the core keyword as an **Exact Negative Target** in your Broad Match campaign. This ensures all exact-match traffic for that keyword flows to your dedicated Exact Match campaign, while the Broad Match group only captures long-tail variations of the term. For example: - You target "smart watch for women" in both Broad and Exact campaigns - Add "smart watch for women" as an Exact Negative in the Broad campaign - The Broad campaign will now only capture long-tail variations like "smart watch for women iPhone compatible" - All exact searches for "smart watch for women" go to the Exact campaign, where you can bid more aggressively for top positions ### 3.3 How to Secure Top of Search (TOS) Positions for High-Intent Keywords The top four positions on the first page of search results (Top of Search, TOS) deliver the highest click-through rate (CTR) and conversion rate (CVR) for most keywords. You do not need expensive third-party bid management tools to lock in these positions – all steps can be done directly in Seller Central. #### Step-by-Step TOS Bidding Method: We recommend using **Fixed Bidding** or **Dynamic Bidding (Down Only)** for new products, as Dynamic Bidding (Up and Down) is too costly for listings with limited conversion history. 1. Start with Amazon’s suggested bid for your target keyword (e.g., $2.20 for a sample long-tail keyword) 2. Set a 20% TOS placement adjustment 3. Test an initial bid 10-20% above the suggested bid (e.g., $2.60 for the sample keyword) 4. Search for the keyword in an incognito Amazon browser window to check your ad position 5. If your ad does not appear on the first page, increase the bid by 10% and re-test 6. Stop increasing bids once your ad appears on the first page (e.g., you hit a $3.00 bid and your ad appears in position 2-3) 7. Test lowering the bid incrementally to find the minimum threshold to hold the first-page position (e.g., you may find $2.90 holds the position, but $2.80 does not) 8. Run this bid for 2-3 days to monitor conversion performance before making further adjustments #### Cost Calculation Example: If you use a $2.90 base bid + 20% TOS adjustment + Dynamic Bidding (Down Only): **Maximum possible CPC = $2.90 × 1.2 = $3.48** *Key Context: Ad rank is determined by the formula `Effective Bid × Listing Quality Score = Ad Rank`. For new listings with lower quality scores (due to limited reviews and conversion history), you can offset lower quality scores with a slightly higher bid to secure top positions until your listing gains social proof.* ### 3.4 Advanced Broad Match Tactics When setting up Broad Match campaigns, add all root terms from your negative keyword list as **Phrase Negative Targets** to block irrelevant traffic. - Do not skip pre-emptive negative targeting for Broad Match groups to "get more traffic": wasted spend on irrelevant clicks lowers your overall campaign performance and wastes budget that could be allocated to high-performing targets - If you need more traffic, increase bids on your core relevant keywords instead of allowing irrelevant traffic ## 4. Bidding Strategies Explained Amazon offers three core bidding models for SP ads. The table below summarizes how they work, their maximum cost, and ideal use cases: | Bidding Strategy | How It Works | Maximum Possible Cost | Best For | | | --| --| -| | **Dynamic Bidding (Up and Down)** | Amazon increases your bid by up to 100% when it predicts a high chance of conversion, and lowers your bid when it predicts a low chance of conversion. | `Base Bid × (1 + Placement Adjustment) × 2`
Example: $2.00 bid + 20% TOS adjustment = **$4.80 maximum CPC** | Mature campaigns with 30+ days of conversion history, aggressive rank growth goals | | **Dynamic Bidding (Down Only)** | Amazon only lowers your bid when it predicts a low chance of conversion, never increases it. | `Base Bid × (1 + Placement Adjustment)`
Example: $2.00 bid + 20% TOS adjustment = **$2.40 maximum CPC** | New launches, campaigns with limited conversion data, sellers who want to control spend | | **Fixed Bidding** | Your bid stays exactly at the level you set, with no adjustments from Amazon (placement adjustments still apply). | `Base Bid × (1 + Placement Adjustment)`
Example: $2.00 bid + 20% TOS adjustment = **$2.40 maximum CPC** | Precise TOS position testing, new campaigns, sellers who want full control over bidding | ### 4.1 Placement Adjustments You can set percentage-based bid adjustments for three ad placement types: 1. **Top of Search (first page)**: The highest-intent placement, for which we recommend a 15-30% adjustment for high-conversion keywords 2. **Rest of Search**: Other positions on search results pages, which usually require 0-10% adjustments 3. **Product Pages**: Ad placements on ASIN detail pages, which you can adjust based on your product targeting performance ## 5. Product Targeting Tactics Manual Product Targeting lets you target or exclude specific Amazon Standard Identification Numbers (ASINs) or category nodes. It works nearly identically to Automatic Substitutes Match, except you control exactly which targets to include or exclude. ### Core Use Cases: 1. **Target competitor ASINs**: Place your ad on the detail pages of weaker competitors, where your product has a clear price, review, or feature advantage 2. **Exclude underperforming ASINs**: Negate ASINs that receive 10+ clicks with zero conversions, as these are wasting your budget 3. **Target category nodes**: Target entire product categories with bid adjustments for different price points, review counts, or star ratings The bidding and placement adjustment rules for Product Targeting are identical to those for Keyword Targeting. ## 6. Campaign Optimization by Product Lifecycle Adjust your bidding and targeting strategy based on your product’s lifecycle stage: 1. **New Launch Phase (0-30 days, <15 reviews)**: - Use conservative Fixed or Dynamic (Down Only) bidding - Prioritize Broad Match and automatic campaigns for keyword discovery - Avoid aggressive TOS adjustments to prevent overspending on low-conversion traffic - We recommend waiting for 5-10 verified reviews (e.g., from the Vine Program) before scaling ad spend 2. **Growth Phase (30-90 days, 15-50 reviews, stable CVR)**: - Increase bids for high-performing Exact Match keywords - Use Exact Match + TOS adjustments to lock in top search positions - Scale budget for campaigns with Advertising Cost of Sale (ACOS) below your target threshold - Launch Product Targeting campaigns on top competitor ASINs 3. **Mature Phase (90+ days, >50 reviews, stable organic rank)**: - Shift to defensive bidding to maximize profit - Optimize negative targeting to cut all remaining wasted spend - Focus on lowering ACOS by adjusting bids for underperforming keywords - Test Loose and Complements Match automatic groups to capture untapped traffic ## Frequently Asked Questions (FAQ) ### Q: Should I run all four automatic ad match types? A: For most products, start with only Close Match and Substitutes Match. Only add Loose and Complements Match if you have extra budget and want to discover untapped traffic sources, after you have optimized your core ad groups. ### Q: How often should I adjust my bids? A: For new campaigns, check performance every 2-3 days, but only make adjustments after you have at least 7 days of consistent data to avoid overreacting to short-term fluctuations. For mature campaigns, adjust bids once every 7-14 days. ### Q: Can I use Dynamic Bidding (Up and Down) for new products? A: We do not recommend it for new launches, as the system does not have enough conversion data to make accurate bidding decisions, leading to potential overspending. Use Fixed Bidding or Dynamic (Down Only) for the first 30 days. ## Next Step Go to your **Seller Central > Advertising > Campaign Manager** today, and audit your existing SP campaigns to ensure you have pre-emptive negative keywords added to your automatic and Broad Match campaigns. ## What Do You Think? What’s your biggest pain point with SP ad campaigns? Have you tested the TOS bidding method shared here? Share your experience or questions in the comments below!