Amazon advertising isn't one tool — it's three distinct ad types that serve different purposes at different stages of the customer journey. Most brands default to Sponsored Products because it's the easiest to set up and generates the most obvious return. But the brands that dominate their categories use all three strategically, each serving a specific role in the funnel.
Here's when to use each one — and how to budget across them.
Sponsored Products — The Workhorse
Sponsored Products ads appear in search results and on product detail pages. They look like organic listings with a small "Sponsored" label, and they drive direct sales from high-intent shoppers who are actively searching for products like yours.
You can target Sponsored Products by keyword (your ad shows when shoppers search specific terms) or by ASIN (your ad shows on specific competitor product pages).
Best for: driving direct sales on your highest-converting terms, defending your brand name against competitors who bid on it, conquesting competitor keywords and ASINs, and launching new products that need initial velocity.
Sponsored Products typically generates the highest ROAS of any Amazon ad type because it reaches shoppers at the bottom of the funnel — they're searching with intent to buy. For most brands, SP should be the foundation of the ad strategy.
Key metrics to watch: ACOS (advertising cost of sale), conversion rate by keyword, impression share on brand terms, and TACoS (total advertising cost of sale — ad spend as a percentage of total revenue, not just attributed revenue).
Sponsored Brands — The Billboard
Sponsored Brands ads appear at the top of search results in a banner format featuring your brand logo, a custom headline, and up to three products. They can link to your Brand Store or a custom landing page.
Sponsored Brands Video is a particularly powerful format. Video ads auto-play in search results and consistently achieve higher CTRs than static ads. For brands with product demo or lifestyle video content, SBV is often the highest-performing awareness format on Amazon.
Best for: building brand awareness among shoppers who are browsing your category, driving traffic to your Brand Store (where there are no competitor ads), launching new products alongside established ones, and owning the top of search results for your most important keywords.
SB campaigns typically have a lower ROAS than SP campaigns, but that's expected — they serve a different function. Evaluate SB performance on metrics like new-to-brand customers, Brand Store visit rate, and impression share rather than direct ROAS.
Sponsored Display — The Retargeter
Sponsored Display ads appear on product detail pages, on Amazon's homepage, on Twitch, and on third-party websites in Amazon's advertising network. They target audiences rather than keywords.
You can target Sponsored Display by audience (shoppers who viewed your products, shoppers who viewed similar products, or shoppers with specific purchase behaviors) or by product (your ads appear on specific ASINs or category pages).
Best for: retargeting shoppers who viewed your product but didn't buy, conquesting competitor product detail pages, cross-selling within your catalog (showing your other products to people who bought one of your items), and reaching shoppers outside of Amazon search who are in your target demographic.
SD campaigns typically have the lowest immediate ROAS because they operate at the top and middle of the funnel. But they play a critical role in the full customer journey — reminding shoppers about products they considered, introducing them to products they didn't know about, and maintaining brand visibility across the web.
Key metrics: viewable impressions, detail page view rate (DPVR), and purchases attributed to view-through (not just click-through).
Budget Allocation Framework
A reasonable starting allocation for most brands: 60% Sponsored Products, 25% Sponsored Brands, 15% Sponsored Display.
Adjust based on your goals. Brands focused on direct sales and profitability should weight more heavily toward SP. Brands focused on awareness and market share should shift more toward SB and SD. Brands launching new products need more SB and SD investment to build visibility before SP can generate returns.
Always maintain SP on brand terms as defensive spending. If you don't bid on your own brand name, competitors will — and you'll pay for it in lost conversion.
As your brand matures on Amazon and organic rank strengthens, you can often shift more budget from SP to SB and SD. Established brands with strong organic rank don't need as much SP spend to maintain velocity — they can invest in upper-funnel awareness that grows the total addressable market.
Common Advertising Mistakes
Only running auto campaigns. Auto campaigns are useful for keyword discovery but terrible for strategic targeting. Use them to find converting terms, then move those terms into manual campaigns with proper bid management.
Not using negative keywords. Every irrelevant search term that triggers your ad wastes budget. Review search term reports weekly and negate terms that generate clicks but not conversions.
Ignoring Sponsored Brands Video. SBV is consistently one of the highest-performing ad formats on Amazon and many brands don't use it, leaving a significant competitive gap. More PPC optimization tips.
Same ACOS target across all ad types. SP, SB, and SD serve different purposes and should be measured against different benchmarks. Expecting the same ACOS from a brand awareness campaign (SB) as a direct response campaign (SP) will lead you to underfund awareness and overindex on bottom-funnel spend.
Not reviewing search term reports regularly. The search term report is the most valuable data source in Amazon advertising. It tells you exactly what shoppers are searching, which terms convert, and where you're wasting money. Review it weekly.