Amazon Ads: Overview of All Ad Formats
Advertising on Amazon is no longer an optional channel. It's the infrastructure through which visibility on the marketplace gets distributed. If you're not advertising, you're handing your placements to competitors who are.
But Amazon Ads isn't one system. It's an ecosystem of different ad formats that serve different goals, require different budgets, and vary in complexity. As an Amazon agency, we see sellers struggle with this ecosystem every day, not because their products are bad, but because they use the wrong formats or use the right ones incorrectly.
This post gives you the full picture: which ad formats Amazon offers, what they cost, when to use each one, and how they work together.
The Four Pillars of Amazon Advertising
Amazon Ads breaks down into four main areas:
Sponsored Products are the foundation. Individual product ads that appear in search results and on product pages. Any seller with an active product can use them.
Sponsored Brands showcase your brand: logo, headline, and multiple products simultaneously. Requires Amazon Brand Registry.
Sponsored Display reaches customers on product pages, in the app, and on external websites. The most flexible format but also the hardest to optimize.
Amazon DSP (Demand-Side Platform) is the programmatic system for display and video ads. Aimed at advertisers with larger budgets and a full-funnel marketing focus.
Each format serves a different function in the purchase journey. Sponsored Products capture existing demand. Sponsored Brands build brand awareness. Sponsored Display extends reach. DSP reaches customers who aren't actively browsing Amazon yet. Understanding and combining all four gives you a real competitive advantage.
Sponsored Products: The Foundation
Sponsored Products are the first ad format you should use on Amazon and the last one you turn off. They appear where purchase decisions happen: in search results and on product detail pages.
How it works: You bid on keywords or product targets. When a customer searches for a keyword you're bidding on, your ad can appear in the search results. You only pay when someone clicks (CPC model).
Campaign types: Automatic campaigns (Amazon chooses the keywords) and manual campaigns (you choose the keywords). The optimal workflow: auto campaigns for keyword discovery, manual campaigns for targeted control. Regularly migrate the best keywords from auto into your manual exact campaigns.
Typical CPCs: Depending on category and competition, between $0.20 and $2.00+. Competitive categories like supplements or electronics often run significantly higher.
When to use: Always. Sponsored Products are the most efficient way to generate direct sales. They deliver the cleanest data and the clearest ROI. For detailed optimization tactics, see our dedicated PPC optimization guide.
Sponsored Brands: Showcasing Your Brand
Sponsored Brands ads appear prominently above search results (Headline Search Ads), within the search results grid, or as video ads. They display your logo, a custom headline, and up to three products.
How it works: You bid on keywords, similar to Sponsored Products. But instead of a single product, you showcase your brand. When the customer clicks, they can be directed to your Brand Store, a product list, or a custom landing page.
Formats: Three variants. Product Collection shows logo plus selected products. Store Spotlight shows logo plus categories from your Brand Store. Video shows a single product with autoplay video in search results. Video typically has the highest CTR and lowest CPC of the three formats.
Requirement: Active Brand Registry. No registered brand means no access to Sponsored Brands.
Typical CPCs: Generally 10-30% higher than Sponsored Products, especially for top-of-search placements. Video ads are often cheaper per click than Product Collections.
When to use: Once your Sponsored Products are running profitably and you want to build brand awareness. Sponsored Brands are especially valuable for defending your own brand keywords (preventing competitors from appearing above your organic results) and driving traffic to your Brand Store.
Sponsored Display: Reach and Retargeting
Sponsored Display is the most versatile ad format on Amazon but also the most frequently misused. It reaches customers on product detail pages, in the Amazon app, on Amazon-owned properties, and on external websites in Amazon's ad network.
How it works: Two targeting options. Product Targeting shows your ad on selected product pages (e.g., on competitor listings). Audience Targeting reaches customers based on their behavior: Views (viewed your product), Purchases (bought in your category), Interests (shows interest in related categories).
Billing model: CPC (Cost per Click) or vCPM (Cost per 1,000 viewable impressions). CPC is more intuitive and easier to optimize. vCPM suits awareness campaigns where visibility is the goal.
When to use: Product Targeting on competitor listings is the easiest entry point and often very effective. Retargeting (Views Remarketing) brings back customers who viewed your product but didn't buy. Audience Targeting is for advanced advertisers looking to expand their funnel.
Common mistake: Starting Sponsored Display with overly broad targeting, then complaining about high costs and low conversions. Start narrow (Product Targeting on direct competitors), optimize, then expand gradually.
Amazon DSP: Programmatic Advertising
The Amazon Demand-Side Platform (DSP) is Amazon's system for programmatic display and video advertising. Unlike Sponsored Ads, which run within Amazon search results, DSP reaches customers across the entire Amazon ecosystem and beyond: on Amazon.com, IMDb, Twitch, Fire TV, and thousands of partner websites.
For a deeper analysis of whether DSP makes sense for your business, read our Amazon DSP guide.
How it works: DSP uses Amazon's first-party data (purchase and search behavior from millions of customers) to reach audiences precisely. You can serve ads to customers who viewed specific products, purchased in specific categories, or match specific demographic profiles.
Formats: Display banners in various sizes, video ads (pre-roll, mid-roll), audio ads (via Amazon Music), and streaming TV ads (via Fire TV and Freevee).
Costs: DSP operates on a CPM model (Cost per Mille, cost per 1,000 impressions). Minimum budgets vary: self-service campaigns typically start around $10,000. Managed-service campaigns directly through Amazon have higher minimums (around $35,000+). Agencies often offer more flexible entry points.
When to use: DSP is not a starter format. It makes sense when your Sponsored Ads campaigns are maxed out and you want to reach new audiences beyond Amazon search. Typical use cases: retargeting website visitors, conquest campaigns targeting competitor customers, awareness campaigns for new product launches, and cross-selling to existing customers.
What Does Amazon Advertising Cost?
There's no flat rate. Costs depend on your category, competition, and strategy. But here are realistic benchmarks:
Sponsored Products: CPCs between $0.20 and $2.50. In most categories, the average falls between $0.50 and $1.20. Target ACoS for profitable campaigns: between 15% and 30% depending on margin.
Sponsored Brands: CPCs typically 10-30% higher than Sponsored Products. Video ads often cheaper. ACoS tends to be higher, which is acceptable because the branding effect isn't fully captured in direct conversion metrics.
Sponsored Display: Highly variable. Product Targeting can be very cost-efficient (CPCs similar to Sponsored Products). Audience Targeting often has higher CPCs and lower conversion rates but is designed for reach.
Amazon DSP: CPMs between $2 and $15 depending on targeting and placement. Total investment is higher than Sponsored Ads because DSP is designed for volume and reach.
Which Format for Which Goal?
Maximize direct sales: Sponsored Products. This remains the most efficient format for performance marketing on Amazon.
Build brand awareness: Sponsored Brands (especially video) and DSP. Both formats showcase your brand prominently and reach customers early in the purchase journey.
Attack competitors: Sponsored Display (Product Targeting on competitor listings) and Sponsored Products (targeting competitor ASINs).
Win back customers: Sponsored Display (Views Remarketing) and DSP (Retargeting). Both reach customers who viewed your product but didn't purchase.
Reach new audiences: DSP (Audience Targeting based on purchase behavior and interests) and Sponsored Display (Audience Targeting).
How the Formats Work Together
The biggest waste in Amazon advertising happens when sellers treat each format in isolation. The formats are designed to work together.
A typical full-funnel approach: DSP and Sponsored Brands create awareness (customer becomes aware of your product). Sponsored Products capture demand (customer actively searches and clicks your ad). Sponsored Display brings back non-buyers (customer viewed but didn't purchase).
In practice, most sellers start with Sponsored Products. That's correct. But the next step shouldn't be simply "more budget" on the same format. It should be the deliberate addition of Sponsored Brands and Sponsored Display. DSP enters the picture when Sponsored formats are maxed out and you want to grow beyond them.
Amazon Ads: Best Practices
Start with Sponsored Products. No exceptions. Learn the system, understand your keywords and your economics. Only once that runs profitably should you add the rest.
Keep your campaigns cleanly separated. Each product, each match type, each format in its own campaigns. This makes optimization possible and budget waste visible.
Measure the right metrics. ACoS for individual campaigns, TACoS for your overall business. Don't expect Sponsored Brands or DSP to deliver the same ACoS as Sponsored Products. Each format has a different role and different benchmarks.
Don't distribute budgets by gut feeling. Invest where the return is there. If Sponsored Products are profitable, increase the budget until the campaigns are no longer limited. Only then add new formats.
Test and iterate. Amazon advertising is not a set-and-forget system. Weekly optimization, regular testing of new keywords, placements, and formats is mandatory. If that feels like a burden, consider working with a specialist for PPC optimization.
Amazon advertising is not a sprint. It's an ongoing process. The sellers who advertise profitably long-term are the ones who understand their data and continuously optimize their campaigns.
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