Effective Strategies for Reducing Amazon PPC Costs in 2026

Controlling Amazon PPC costs requires more than just budget cuts; it demands a precise operational strategy focused on eliminating waste and reallocating spend to high-performing campaigns. The process begins with an objective analysis of current market pressures, followed by a detailed review of campaign structure, bidding, and targeting. A successful approach ultimately hinges on improving the conversion rate, which makes every advertising dollar more effective and drives profitability.

The financial reality for Amazon sellers in 2026 is one of increased competition and rising advertising expenses. This environment, driven by platform saturation and more sophisticated advertisers, has rendered passive “set it and forget it” bidding strategies obsolete. To maintain profitability, brand owners must adopt proactive and data-driven methods for managing their PPC campaigns, acknowledging that escalating costs directly impact their bottom line.

The Reality of Rising Amazon Advertising Costs

If your Amazon ad budget doesn’t seem to go as far as it used to, you’re observing a documented trend. The platform is more crowded with sellers than ever, and as advertisers become more skilled, competition for top ad placements has intensified. In this environment, a passive bid strategy is a fast track to unprofitability.

This steady climb in advertising expenses directly erodes your profit margins. Before you can build a resilient advertising plan, you must accept the financial landscape you’re operating in.

1. Understanding 2026 Numbers

The data reveals a story of consistent cost inflation. The average cost-per-click (CPC) on Amazon has been on a steep incline for years, jumping from $0.71 in 2020 to $0.95 in 2024. Projections for 2026 show the average CPC has reached approximately $1.00, a trend that shows no signs of slowing down.

This represents a 15–25% increase in just a few years. For sellers managing thousands of clicks daily, that’s a significant financial impact.

The ongoing rise in Amazon’s average CPC is a critical factor for advertisers. The table below outlines this trend, providing a clear view of how costs have evolved and highlighting the increasing financial pressure on sellers.

2. Amazon PPC Cost Evolution

This year-over-year increase demonstrates why a static ad budget is no longer viable. Smart optimization is the only way to combat rising costs and protect your margins.

Of course, costs also vary significantly by ad format. Sponsored Products CPCs can range from $0.25 to $3.76, while Sponsored Brands often sit between $0.13 and $2.51. Understanding the average Amazon PPC cost is a good first step to benchmark your own spending.

3. Why Increasing Budgets Fails

Simply increasing your campaign budget is like trying to fix a leaky bucket by adding more water. Without a solid strategy, a larger budget only translates to more wasted spend on irrelevant clicks and keywords that fail to convert. The objective is not just to spend less, it’s to spend with greater intelligence.

A strategic approach to reducing your Amazon PPC costs is essential for sustainable growth. It involves shifting your mindset from chasing impressions to maximizing the value of every single click. If you want a deeper look at the total investment required, you can explore information on how much it costs to advertise on Amazon.

Auditing for Wasted Spend

Before you can reduce your Amazon PPC costs, you need to know exactly where every dollar is going. A systematic account audit functions as a diagnostic tool to uncover wasted spend that silently erodes profits. Without this critical first step, any optimization efforts are merely guesswork.

A proper audit serves as a financial health check for your ads. It pinpoints the specific campaigns, ad groups, and keywords draining your budget without delivering a return. The goal is to build a repeatable process to find these inefficiencies, stop the financial bleed, and prepare for more profitable advertising.

1. Start with Search Terms

Your Search Term Report is the definitive source for identifying wasted ad spend. It details the exact customer search queries that triggered your ads, the cost per click, and whether that click led to a sale. This is where you find the most actionable opportunities for improvement.

Look for search terms with a high number of clicks but zero conversions. These are your primary culprits. For example, if you sell premium ‘stainless steel water bottles,’ your report might show you’re spending money on broad terms like ‘school supplies.’ While seemingly related, that query is likely too general to convert.

Next, identify terms with an unacceptably high advertising cost of sale (ACoS). A keyword driving some sales but at a 90% ACoS when your target is 30% is actively destroying your profit margin. These require immediate action, either by reducing the bid or adding them as negative keywords.

2. Evaluate Campaign Structure

A disorganized campaign structure is a common source of inefficiency. When you group keywords with vastly different performance metrics into the same ad group, you lose control over bidding and budgeting. A thorough audit involves scrutinizing this setup.

Here are key structural flaws to look for:

• Over-reliance on Auto-Campaigns: Unchecked auto-campaigns can exhaust your budget by targeting irrelevant or low-performing search terms. They are useful for keyword discovery but require active management.
• Lack of Segmentation: You should separate branded, competitor, and generic keywords into their own campaigns. Mixing them makes it impossible to allocate budget strategically, such as defending your brand while aggressively targeting competitors.
• Poor Match Type Organization: A frequent mistake is combining broad, phrase, and exact match keywords in one ad group. This prevents you from controlling traffic flow and directing your budget toward your most proven, high-converting exact match keywords.

A well-structured account gives you control over traffic. Your goal should be to “graduate” converting search terms from broad match discovery campaigns into precise, high-control exact match campaigns. This is a fundamental process for cutting wasted spend.

3. Assess Bidding and Placements

Your bidding strategy directly controls your cost-per-click. An audit must verify if your bids align with profitability goals. For example, are you using fixed bids when a dynamic strategy would be more effective? As a starting point, Amazon’s ‘Dynamic bids – down only’ setting is a conservative way to prevent overspending on clicks less likely to convert.

You also need to review placement performance. It’s common to find that ‘Top of search’ placements have a high click-through rate but an unsustainable ACoS, while ‘Product pages’ placements convert more profitably. You can adjust placement bid modifiers to allocate more budget toward the locations that deliver a return. This review almost always uncovers significant opportunities for reducing PPC costs.

For brands that want to go deeper, our complete guide offers an in-depth checklist for your next Amazon PPC audit.

Rethinking Campaign Structure

A disorganized campaign structure is a direct path to a high ACoS. If your campaigns are a jumble of different match types, keywords, and products, you have no real control. The first step to cutting your Amazon PPC costs is to restructure everything into a clean, segmented system that lets you manage bids and budgets with precision.

This involves a sophisticated level of segmentation that isolates variables. This way, you can see exactly what’s working and what’s just burning cash. When you can pinpoint your top performers, you can finally allocate your budget where it will drive real growth.

1. Segmenting Campaigns

The best way to regain control is to break campaigns into smaller, more focused units. This allows you to set specific bids and budgets for different keyword types, ensuring your most profitable terms get the resources they need.

Here’s how to segment your campaigns:

• By Match Type: Do not group broad, phrase, and exact match keywords into the same ad group. Create separate campaigns for each. Your broad match campaign becomes your keyword discovery engine, while your exact match campaign is where you focus on proven, high-converting terms.
• Brand vs. Non-Brand: Your brand name is often your most valuable keyword. Dedicated “branded” campaigns are needed to defend your position from competitors. These campaigns almost always have a much lower ACoS and a higher conversion rate. Your “non-brand” or “generic” campaigns are for capturing new customers searching for the product category.
• Product Lifecycle Stage: A new product launch requires an aggressive campaign focused on visibility and data collection. In contrast, a mature, profitable product needs a maintenance campaign focused on efficiency. Segmenting by lifecycle lets you tailor your strategy to each product’s specific needs.

2. The Financial Impact

Clean campaign segmentation has a direct, measurable impact on your bottom line. Proper segmentation and keyword targeting are among the fastest ways to lower Amazon PPC costs without sacrificing sales volume.

In one case, a seller separated their branded keywords from their category keywords. The results were revealing: branded keywords converted at 22% with an ACoS under 15%. Meanwhile, broad category keywords had a dismal conversion rate and a 60% ACoS. By reallocating the budget based on that insight, the seller cut their overall CPC by 18% without losing sales.

This table illustrates the difference in control between a flat and a segmented campaign structure.

Campaign Segmentation Comparison

The segmented approach is designed for active management and cost control, while the basic structure often leads to runaway spend.

3. Advanced Targeting

Once your keyword-based campaigns are structured, you can layer in advanced targeting to reach shoppers at different stages of their buying journey. To build a robust approach, it helps to explore proven, scalable PPC advertising strategies that prioritize both growth and efficiency.

Two powerful options are:

• ASIN Targeting: This lets you place your ads directly on the product detail pages of your competitors. It’s an effective way to capture market share from shoppers who are close to buying a rival’s product. You can target specific ASINs of direct competitors, complementary products, or even older versions of your own items. For more details, our guide breaks down building a winning Amazon product targeting strategy.
• Category Targeting: Instead of picking individual ASINs, you can target entire product categories. This is a great way to reach a broader audience browsing for products like yours. You can refine this by filtering by brand, price point, and star rating to ensure your ads are shown only to the most relevant shoppers.

Finally, use Sponsored Display to retarget customers who viewed your product but didn’t buy. A multi-layered targeting approach ensures you’re reaching the right person at the right time, which is the most effective way to stop wasting clicks.

Negative Keywords

Wasted ad spend often comes from two main sources: irrelevant clicks and poorly set bids. They bleed your budget dry without you noticing.

Your negative keyword strategy and bid optimization are your primary tools to combat this. Negative keywords act as a defense, preventing you from paying for clicks that will never convert. Simultaneously, your bid strategy determines the price of every click you do want. In the hyper-competitive Amazon marketplace of 2026, mastering both is essential for survival.

1. Building Negative Lists

Your Search Term Report is an invaluable resource. Reviewing this report weekly is one of the highest-impact habits you can build. It tells you exactly what shoppers are typing before clicking your ad, and it’s where you’ll find all the irrelevant terms you need to block.

As you analyze the report, you’re looking for terms that consume your budget without generating sales. But simply finding them isn’t enough; you must choose the right method to block them.

• Negative Phrase Match: Use this for broad cleanup. It blocks any search that includes a specific, unwanted phrase. If you sell premium ‘leather dog collars,’ adding “for cats” as a negative phrase is a simple, effective move. It instantly stops your ads from showing for queries like ‘leather collars for cats,’ saving you from an entire category of wasted spend.
• Negative Exact Match: This provides surgical precision, blocking only the specific search term you enter. Let’s say the term ‘cheap leather dog collar’ gets clicks but no sales. It’s clearly attracting the wrong shopper for your premium product. Adding it as a negative exact match stops you from paying for that specific query but won’t block you from showing up for more profitable variations.

Your negative keyword list should be a dynamic part of your campaign management. A consistent weekly review of your search term report is non-negotiable.

2. Bidding Strategy

If you’re still using a single fixed bid across an entire campaign, you’re leaving money on the table. The Amazon marketplace is constantly changing. A static bid can’t keep up with competitor adjustments, shifts in shopper behavior, and fluctuating conversion rates.

Amazon provides powerful built-in tools to make your bidding more adaptive.

1. Dynamic Bids – Down Only: This is the safest way to move away from fixed bids. Amazon will automatically lower your bid in real-time for any auction it deems less likely to result in a sale. It’s a simple, effective way to reduce overspending on low-quality clicks.
2. Dynamic Bids – Up and Down: This is a more aggressive strategy. With this setting, Amazon can increase your bid by up to 100% for top-of-search placements and up to 50% for all others. Only use this on your proven, high-converting campaigns, as it can quickly exhaust your budget on an unproven campaign.

More advanced sellers often use tactics like dayparting, adjusting bids based on the time of day or day of the week. By analyzing your data, you might discover your product sells best on weekend evenings. You can then schedule bids to be more aggressive during those peak hours and pull back during slower periods to conserve your budget.

For a deeper look into these techniques, explore our guide on Amazon PPC bid optimization. This strategic approach ensures every ad dollar is working as hard as possible.

Experiment with Ad Formats

If you’re only running Sponsored Products campaigns, you’re likely dealing with high CPCs and leaving money on the table. Broadening your ad portfolio isn’t just a growth strategy; it’s a core method for cutting your Amazon PPC costs by lowering your overall, blended cost-per-click.

Using a smart mix of ad formats allows you to connect with shoppers at different points in their buying journey, often at a much lower cost. Sponsored Brands and Sponsored Brands Video can build top-of-funnel awareness with CPCs that are often lower than their hyper-competitive Sponsored Products counterparts.

1. Diversify Ad Formats

The goal is to build a full-funnel advertising machine. When you move beyond a single ad type, you build brand recall that makes converting customers later on much cheaper.

• Sponsored Brands: These banner ads at the top of search results let you showcase multiple products, your logo, and a custom headline. They are ideal for capturing shoppers using broad, category-level searches and introducing them to your entire product line.
• Sponsored Brands Video: Video is a dominant format on Amazon. These ads auto-play in search results, grabbing attention and telling your product’s story in a way a static image cannot. We consistently see higher click-through rates and lower CPCs on video campaigns compared to standard Sponsored Products ads targeting the same keywords.

A customer might see your Sponsored Brands Video, not click, but remember your brand name. Later, when they search for you directly, your Sponsored Products ad can secure the sale at a fraction of the cost because you already built that initial interest.

2. Embrace Automation

In 2026, managing bids manually is a losing battle. The marketplace moves too quickly. Competitors adjust bids 24/7, and trying to keep up by hand guarantees you will either overspend or miss profitable impressions.

Automation is a necessity. A fitness brand we worked with shifted 30% of their ad budget from Sponsored Products to Sponsored Brands Video, slashing their CPCs from $1.20 down to $0.72. This 40% reduction also came with a 1.5x higher conversion rate on the video ads, proving that a smarter ad mix can radically improve efficiency. You can find more ideas on how different ad formats impact your campaign performance.

3. Choosing Automation Tools

You don’t need expensive third-party software immediately, though many offer advanced features. Amazon’s own platform has powerful tools.

1. Amazon’s Dynamic Bidding: Using “Down only” or “Up and down” bidding strategies lets Amazon’s algorithm adjust your bids in real-time based on conversion likelihood. Every seller should be using this.
2. Portfolio Budgets and Rules: Portfolios are an easy way to control spend. You can group campaigns by product line or ACoS target, then set budget caps and performance-based rules, like automatically increasing the budget for any portfolio that’s hitting your target ROAS.
3. Third-Party AI Tools: For brands with many campaigns, AI-driven PPC platforms offer a level of control that’s not humanly possible. These tools analyze historical data and market trends to make thousands of micro-adjustments daily.

A blended approach of different ad formats and smart automation creates a resilient, cost-effective advertising engine that can adapt to the Amazon marketplace.

Improving Your Conversion Rate

You can build the most precise PPC campaigns, but if your product detail page doesn’t convert shoppers, you’re just paying for window shoppers.

A low conversion rate is a primary, yet often overlooked, reason for a high Advertising Cost of Sale (ACoS).

Every ad click is an investment. When more of those clicks turn into sales, each investment pays off more. This simple math is the key to lowering your cost per acquisition and making your advertising more efficient.

1. Your Listing is Half of PPC

Your ad makes a promise, and your product detail page must deliver on it. A disconnect causes shoppers to leave, and you’re left with the bill for a wasted click. Optimizing your listing is a fundamental part of cutting your Amazon PPC costs.

Meaningful improvements to your listing can have a massive impact on your ACoS.

Here are the elements that matter most:

• Main Image: Your first impression must stand out in search results while adhering to Amazon’s rules. A lifestyle shot or an image showing a key benefit can make all the difference.
• Title: Your title needs to sell. Place the most compelling benefit within the first 80 characters so it isn’t truncated on mobile devices.
• A+ Content: Use high-quality graphics and comparison charts to answer common questions and overcome purchase objections.
• Customer Reviews: Social proof is critical on Amazon. A low star rating or a lack of recent reviews will negatively impact your conversion rate, regardless of your ad quality.

A common mistake is pausing a high-ACoS campaign without examining the listing’s conversion rate. Often, the traffic is fine, but the landing page is failing to close the sale.

2. Actionable CRO Steps

Boosting your conversion rate is an ongoing cycle of testing, learning, and refining. Start by diagnosing where your listing is underperforming.

To get a sense of where you stand, it helps to know what a “good” number looks like. Our guide on the average Amazon conversion rate can provide valuable benchmarks for your category.

From there, let data guide your improvements. If customers are asking the same questions repeatedly, create an infographic in your A+ Content that answers it visually. If your main image is getting lost in search results, A/B test a new one with a bolder background or a different angle.

Turning your product page into a high-powered sales tool is the most sustainable way to lower your ACoS for the long haul.

Frequently Asked Questions

1. How much should I spend?

There’s no single magic number, but a solid rule of thumb is to allocate about 10% of your total revenue for your ad budget.

For a new product launch, be more aggressive, closer to 15-20% initially. In the beginning, you’re buying data as much as you are buying sales. Treat that initial budget as an investment in learning. Once you’ve identified winning keywords and strategies, you can adjust your spend for efficiency.

2. What is a good ACoS?

A “good” ACoS is entirely dependent on your profit margin. Before setting a target, you must know your break-even ACoS.

Here’s the simple formula:

(Product Price – Cost of Goods Sold – Amazon Fees) / Product Price

Your target ACoS must be lower than that number to be profitable. For instance, if your break-even ACoS is 40%, aiming for a target ACoS in the 25-30% range is a healthy goal. This provides a comfortable cushion and ensures every ad-driven sale is profitable.

3. How long to see results?

You can see the impact of small changes, like adding new negative keywords, within a week. You’re plugging leaks in your ad spend, and that shows up fast.

For larger, structural changes like a full campaign overhaul or significant listing improvements, be more patient. It typically takes 30 to 60 days to see the full, measurable impact. PPC is a long game; consistent, data-backed tweaks create sustainable results.

4. Should I use third-party software?

It depends on your scale. If you’re managing a few products, you can likely get by with Amazon’s advertising console.

However, once you manage a larger catalog or your monthly ad spend climbs into the thousands, third-party software becomes a smart investment. Tools like Helium 10 or SellerApp offer advanced automation, rule-based bidding, and deeper analytics. At a certain scale, that level of efficiency is essential for cutting PPC costs and growing effectively.