Amazon PPC Management: Strategy, Costs & What to Expect in 2026

Amazon advertising has become a non-negotiable cost of doing business on the platform. The days when you could launch a product, optimise your listing, and watch organic sales roll in are long gone. In 2026, Amazon's marketplace is a pay-to-play environment and the brands that win aren't necessarily the ones spending the most. They're the ones spending most intelligently. But here's the frustration most brand managers share: Amazon PPC feels like a black box. You're pouring money into Sponsored Products, Sponsored Brands, and Sponsored Display campaigns, and you're getting reports full of metrics — ACOS, ROAS, TACoS, impressions, clicks — but you're not sure whether the returns justify the spend. Is a 25% ACOS good or bad? Should you be using Amazon DSP? What's actually changed with the new AI-powered bidding options? This guide answers those questions with specifics, not generalities. We'll walk through how Amazon PPC works in 2026, what a well-structured campaign looks like, how to set realistic benchmarks, and when it makes sense to manage in-house versus bringing in specialist support. **How Amazon PPC Works: The Fundamentals** Amazon's advertising platform operates on a cost-per-click (CPC) auction model. You bid on keywords or product placements, and when a shopper's search matches your targeting, your ad enters an auction. The winner gets the placement; you pay when someone clicks. The price you pay is one penny more than the second-highest bid (second-price auction), though Amazon's actual auction mechanics are more complex than this simplified explanation. **The three core ad types you need to understand:** **Sponsored Products** are the workhorse of Amazon advertising. These ads appear within search results and on product detail pages, and they look nearly identical to organic listings. They're keyword-targeted or product-targeted, and they drive the majority of advertising revenue for most brands. If you're only going to run one ad type, this is it. **Sponsored Brands** (formerly Headline Search Ads) appear at the top of search results and feature your brand logo, a custom headline, and up to three products. They're powerful for brand awareness and category ownership, but they require Brand Registry. Sponsored Brands Video — a variant that shows a looping video in search results — has become one of the highest-converting ad formats on the platform. **Sponsored Display** ads appear on and off Amazon — on product detail pages, customer review pages, and across Amazon's network of partner sites and apps. They offer audience-based targeting (retargeting shoppers who viewed your products, targeting competitor audiences, lifestyle audiences, etc.) rather than keyword targeting. They're lower-funnel awareness plays that complement your Sponsored Products strategy. Beyond these three, **Amazon DSP** (Demand-Side Platform) is Amazon's programmatic advertising platform. It allows you to buy display, video, and audio ads across Amazon-owned properties and third-party sites, using Amazon's shopper data for targeting. DSP is typically used by larger brands with bigger budgets (minimum spends apply) and is particularly effective for upper-funnel awareness and retargeting strategies. **Campaign Structure: Getting the Architecture Right** Campaign structure is where most Amazon advertising strategies succeed or fail. A well-structured account gives you control, visibility, and the ability to optimise effectively. A poorly structured account — usually one that's grown organically without a plan — bleeds money through wasted spend and missed opportunities. **The framework that works for most brands:** **Separate campaigns by match type.** Run distinct campaigns for exact match, phrase match, and broad match keywords. This gives you precise control over bids at each match type level and prevents broad match terms from consuming budget that should be allocated to your highest-converting exact match terms. **Use auto campaigns for discovery, manual campaigns for control.** Auto campaigns (where Amazon selects the targeting) are excellent for discovering new keywords and placements you hadn't considered. But they should feed into manual campaigns, not replace them. Set up a regular cadence — weekly or fortnightly — to harvest converting search terms from your auto campaigns and add them as exact match keywords in your manual campaigns. **Create product-level campaigns for your top ASINs.** Your best-selling products deserve dedicated campaigns with their own budgets and bid strategies. Grouping multiple products into a single campaign means your top performer can starve your other products of budget, or a poor performer can drag down your average metrics. **Separate brand and non-brand campaigns.** Brand keyword campaigns (targeting your own brand name) typically have very low ACOS and high conversion rates. Mixing them with non-brand campaigns artificially inflates your performance metrics and obscures how your non-brand acquisition campaigns are actually performing. **Implement a negative keyword strategy from day one.** Every irrelevant click is wasted spend. Review your search term reports weekly and add irrelevant terms as negative keywords. This is tedious but essential — most brands waste 15-25% of their ad spend on irrelevant clicks that could be eliminated with disciplined negative keyword management. **Bidding Strategy: Beyond the Basics** Amazon offers several bidding strategies, and choosing the right one for each campaign can significantly impact your results. **Fixed bids** keep your bid constant regardless of context. They give you maximum control but don't adapt to varying conversion probabilities. Use them for campaigns where you want predictable spend and have enough data to set bids accurately. **Dynamic bids — down only** reduces your bid when Amazon predicts a click is less likely to convert. This is the default and the safest option for most campaigns. It protects you from wasted spend on low-probability clicks without adding any upside risk. **Dynamic bids — up and down** allows Amazon to increase your bid (by up to 100% for top-of-search placements) when a conversion is more likely, and decrease it when it's less likely. This can be powerful for high-converting products where you want to maximise visibility, but it can also escalate costs quickly if not monitored carefully. **Portfolio bidding and budget rules** let you set performance targets at the portfolio level and automatically adjust budgets based on time-based rules or performance thresholds. These are useful for larger accounts where manual daily budget management isn't practical. **The AI bidding developments worth watching:** Amazon has been rolling out increasingly sophisticated algorithmic bidding tools that use machine learning to optimise bids in real time. These tools can factor in hundreds of signals that human bid managers can't process — time of day, device type, shopper history, competitive landscape, and more. Early results suggest they can outperform manual bidding for some campaign types, particularly Sponsored Products campaigns with substantial historical data. However, they require enough conversion data to learn effectively, so they're not always suitable for new products or low-volume campaigns. **Placement adjustments matter more than most brands realise.** Amazon lets you increase bids by up to 900% for top-of-search and product page placements. Top-of-search placements typically have the highest conversion rates (often 2-3x higher than rest-of-search), so paying a premium for these placements can be highly profitable even though the CPC is higher. Review your placement reports regularly to understand where your ads perform best, and adjust accordingly. **ACOS, ROAS, and TACoS: Benchmarks That Actually Mean Something** The most common question brands ask about Amazon PPC is "What's a good ACOS?" The honest answer is: it depends entirely on your margins, your goals, and your product lifecycle stage. But we can provide frameworks for thinking about it. **ACOS (Advertising Cost of Sale)** is your ad spend divided by your attributed ad revenue, expressed as a percentage. An ACOS of 25% means you spent £25 in advertising to generate £100 in ad-attributed sales. **Your break-even ACOS** is your profit margin before advertising. If your product has a 30% profit margin (after COGS, Amazon fees, FBA costs, and other expenses), then a 30% ACOS means your advertising is breaking even — you're acquiring sales at zero profit. Anything below 30% is profitable advertising; anything above is a loss-making campaign. **Target ACOS** varies by strategy. For established products where you want profitable, steady-state advertising, target ACOS should be well below your break-even point — typically 15-20% for most categories. For new product launches where the priority is driving sales velocity and reviews, you might accept an ACOS above break-even for the first 2-3 months, treating the loss as a launch investment. **Typical ACOS ranges by category (UK market):** Health and personal care: 15-25%. Beauty: 18-30%. Home and kitchen: 12-22%. Electronics and accessories: 20-35%. Grocery and gourmet: 10-20%. Pet supplies: 15-25%. These are broad ranges — your specific ACOS will depend on product price point, competition intensity, and listing conversion rate. **ROAS (Return on Ad Spend)** is simply the inverse of ACOS — ad revenue divided by ad spend. A 25% ACOS equals a 4x ROAS. Some brands prefer thinking in ROAS terms because it frames advertising as an investment with a return rather than a cost. **TACoS (Total Advertising Cost of Sale)** is arguably the most important metric, though it's often overlooked. TACoS is your total ad spend divided by your total revenue (organic + paid). This metric tells you how dependent your brand is on advertising and whether your organic rankings are improving over time. A healthy Amazon business shows TACoS declining gradually — meaning organic sales are growing faster than ad spend. If your TACoS is increasing month-over-month, it's a warning sign that you're becoming more ad-dependent, not less. **Amazon DSP: When Does It Make Sense?** Amazon DSP is Amazon's programmatic advertising platform, and it operates quite differently from Sponsored Products, Brands, and Display. Understanding when DSP makes sense for your brand — and when it doesn't — can save you significant budget. **DSP is most valuable for:** **Retargeting at scale.** DSP lets you serve ads to shoppers who viewed your product page, added to cart but didn't purchase, or purchased a complementary product. These are high-intent audiences, and retargeting them across Amazon's network (including IMDb, Twitch, and Amazon's publisher network) can be highly effective. **Upper-funnel awareness.** If you're launching in a new category or building brand awareness, DSP's audience targeting capabilities — including lifestyle segments, in-market audiences, and lookalike audiences built from your existing customers — can drive consideration at a scale that keyword-targeted ads can't. **Competitor conquesting.** DSP allows you to target shoppers who have viewed or purchased from specific competitor ASINs. This is a more sophisticated version of product targeting in Sponsored Display, with better audience controls and off-Amazon reach. **DSP typically makes sense when:** You're spending more than £10,000-15,000 per month on Amazon advertising already, your Sponsored Products campaigns are well-optimised and you're looking for additional growth levers, or you have specific awareness or retargeting goals that keyword-targeted ads can't efficiently address. **DSP doesn't make sense when:** Your Sponsored Products campaigns aren't yet optimised (fix the basics first), your total Amazon ad budget is under £5,000-8,000 per month (DSP minimums and management complexity don't justify it at lower spend levels), or you don't have sufficient traffic and data to build meaningful audience segments. **The Rufus Effect on Amazon Advertising** Amazon's Rufus AI assistant is already influencing how shoppers discover products, and this has implications for your advertising strategy that aren't yet widely discussed. We've published a [deeper analysis of how Rufus, Alexa+, and COSMO shape what shoppers see](/search-lab/decode-amazons-ai-how-what-shoppers) if you want the full technical picture. **Rufus-influenced shopping sessions are changing the funnel.** When a shopper engages with Rufus before searching for a product, their behaviour changes. They often arrive at the search results page with more refined intent — they've already narrowed down what they want based on their Rufus conversation. This means the keywords they search may be more specific and long-tail, and their conversion rates from those searches can be higher. For advertisers, this suggests increasing investment in long-tail keyword campaigns that match the kind of specific, intent-rich queries that follow Rufus interactions. If Rufus tells a shopper to look for "sulphate-free shampoo for colour-treated hair with argan oil," having a Sponsored Products ad targeting that exact long-tail query positions you directly in front of a highly qualified buyer. **Sponsored Brands and Brand Video become more important** in a Rufus-influenced environment. Rufus often guides shoppers toward product categories or features, and Sponsored Brands ads at the top of the resulting search give you the opportunity to capture attention with a brand message that reinforces what Rufus recommended. **Your listing content affects your ad performance more than ever.** Rufus reads your product detail page. If your listing content supports the claims and features that brought a shopper to your page via Rufus, your conversion rate improves. If there's a disconnect — Rufus suggested looking for Feature X, but your listing doesn't mention it — you lose the sale despite winning the click. This means listing optimisation and PPC strategy need to be tightly coordinated. We've written a [practical framework for running fast feedback experiments](/blog/experiment-playbook-feedback-amazon-ai-search-2025) that ties listing changes to advertising performance. **In-House vs Agency: Making the Right Decision** This is the question most brands wrestle with once their Amazon advertising reaches a certain scale. Both approaches have legitimate advantages, and the right choice depends on your specific situation. **In-house management works well when:** Your catalogue is small (under 50-100 ASINs), your team has genuine Amazon advertising expertise (not just general digital marketing skills), you have the tools and time for daily optimisation, and your total ad spend is manageable enough that one person can give it adequate attention. **Agency management makes sense when:** Your catalogue is large or complex, you're spending enough that small efficiency improvements represent significant savings, you need expertise across multiple ad types including DSP, your in-house team doesn't have deep Amazon-specific skills, or you've hit a performance plateau and need fresh perspective. **The hybrid model** is increasingly popular — brands keep strategic control and brand knowledge in-house while outsourcing the tactical execution and day-to-day optimisation to specialists. This gives you the benefits of agency expertise without losing brand context. **What to look for in an Amazon PPC agency:** Transparency in reporting — you should have full access to your advertising console and raw data, not just agency-curated reports. A clear fee structure — percentage of ad spend (typically 10-15%), fixed monthly retainer, or performance-based arrangements all have trade-offs. Category-specific experience — Amazon advertising varies significantly by category, and what works in beauty doesn't necessarily work in electronics. A strategic approach — any agency can adjust bids and add negative keywords. Look for one that connects advertising strategy to your broader commercial goals, including organic rankings, new product launches, and marketplace expansion. **Building a 90-Day Optimisation Cadence** Amazon PPC isn't a set-and-forget discipline. It requires consistent, structured optimisation. Here's a practical cadence that balances thoroughness with efficiency. **Weekly (30-60 minutes):** Review search term reports and add negative keywords. Check budget pacing — are any campaigns running out of daily budget? Monitor any significant ACOS or spend anomalies. Harvest converting search terms from auto campaigns to manual campaigns. **Fortnightly (1-2 hours):** Adjust bids based on performance data (ensure you have at least 7-14 days of data before making changes). Review placement performance and adjust placement modifiers. Pause any keywords that have significant spend but zero conversions over 14+ days. **Monthly (2-3 hours):** Full account performance review against targets. Analyse TACoS trends — is your organic share growing or declining? Review competitor activity and new keyword opportunities. Assess campaign structure — do any campaigns need splitting or consolidating? Report and analyse results against commercial goals. **Quarterly (half day):** Strategic review of advertising's role in your overall Amazon strategy. Budget reallocation across campaigns and products based on performance. New campaign launches for seasonal opportunities or new products. Evaluate tools, platforms, and management approach — is the current setup still optimal? **What Lmo7 Brings to Amazon Advertising** At Lmo7, we approach Amazon PPC as one component of a larger visibility strategy — not as an isolated discipline. Our perspective as an agentic commerce agency means we see advertising through the lens of how Amazon's AI systems are evolving and what that means for how brands allocate their advertising budgets. We connect your PPC strategy to your organic visibility, your listing content, and your Rufus optimisation so that every pound of ad spend works harder. When your listings are optimised for both the A10 algorithm and Amazon's AI layer, your conversion rates improve — which means your ACOS drops and your advertising becomes more profitable without spending more. Our founder, Stephen Honight, managed multi-million-pound eCommerce operations at Mars, Unilever, and LEGO before founding Lmo7. That commercial background means we think about Amazon advertising in terms of profitability and growth, not just clicks and impressions. If your Amazon PPC performance has plateaued, your ACOS is creeping up, or you're not sure whether your current agency or in-house setup is getting the most from your budget — [get in touch](/contact). We'll run a free audit of your advertising account and show you where the opportunities are. --- *Lmo7 is an agentic commerce agency helping consumer brands build visibility across AI-powered shopping experiences — from Amazon Rufus to ChatGPT and Google's AI Overviews. [Explore our Amazon advertising services](/ai-search-for-consumer-brands) or [read more on the Lmo7 blog](/blog).*