Amazon Advertising for New Sellers
With the ever-expanding range of products available on Amazon, now serving over 310 million customers across 21 marketplaces, it can be challenging for new products to gain traction. The primary obstacle is simple: your listing lacks a sales history.
Historical listing performance factors form the foundation of Amazon’s ranking algorithm. A product’s position in search results depends heavily on sales history, customer reviews, and conversion rate. Without any of these, your listing starts at a disadvantage in the eyes of Amazon’s algorithm.
The Challenge: Why Organic Growth Alone Falls Short
Waiting to build a sales history through natural search will take a long time. And in many categories, you may never gain enough visibility to accumulate meaningful sales. The algorithm rewards products with momentum, creating a catch-22 for new sellers: you need sales to rank, but you need ranking to get sales.
Paying for ads accelerates this process significantly. Rather than hoping customers discover your listing organically, advertising puts your product in front of shoppers actively searching for solutions to their problems.
Three Ways to Drive Traffic to a New Listing
- Amazon Advertising. Sponsored Products campaigns build sales history directly within Amazon’s ecosystem, allowing you to climb organic rankings as you accumulate sales and reviews. This remains the most effective method for establishing a foothold on the platform.
- External Traffic. Social media, affiliate sites, and Google Ads are increasingly important for new sellers. External traffic brings customers to your listing from outside Amazon, complementing your paid Amazon advertising efforts and reducing reliance on Amazon’s algorithm.
- Promotions. Running lightning deals or percentage discounts can drive massive traffic. However, this requires your product to have a minimum level of feedback already, making it less suitable for brand-new listings.
Budget Planning: How Much Should You Spend on Ads?
New sellers typically allocate a significant portion of revenue to advertising during the critical launch phase. This isn’t wasteful. It’s an investment in establishing the sales velocity and review velocity needed to compete.
As your product matures and natural search improves, spending on ads can be reduced substantially. Mature accounts with strong historical performance often spend only 5-10% of sales on advertising, as their listings are already positioned well in organic search results.
During your product launch, aim to allocate 10-15% of revenue to advertising. This budget should be front-loaded heavily in the first 4-8 weeks, when gaining initial traction is most critical.
Consider this allocation as temporary. Once you’ve established a foundation of sales and reviews, you’ll naturally reduce ad spending as your organic ranking improves. The goal is to reach a self-sustaining position where organic sales carry the majority of your volume.
Campaign Strategy: From Automatic to Manual
Start with automatic campaigns, where Amazon automatically places your ads against relevant search terms. Automatic campaigns serve two purposes: they generate initial sales and reviews, and they provide valuable keyword data you’ll use later to optimize performance.
While automatic campaigns typically have higher ACoS (Average Cost of Sale), they generate the quick wins you need early on. Monitor these campaigns for 2-3 weeks, noting which search terms drive conversions.
As you accumulate data, graduate to manual campaigns. Manual campaigns give you precise control over which keywords you’re bidding on, allowing you to eliminate low-performing terms and increase bids on keywords that convert well.
Managing ACoS During Launch
Your acceptable ACoS during launch will be significantly higher than during maturity. In the early stages, you’re willing to operate at 30-50% ACoS or even higher because your goal is sales velocity and review accumulation, not profitability.
As your product ranks higher organically and accumulates more reviews, your conversion rate will improve naturally. This improvement allows you to lower your bids and reduce ACoS while maintaining sales volume. Eventually, you should target the industry benchmark: 30% average ACoS across your portfolio.
The Reality: Why You Cannot Skip Advertising
Some sellers attempt to launch products organically without paid advertising. In nearly all cases, this approach fails. Without advertising, your listing receives minimal visibility, which means minimal sales, which means minimal reviews. The algorithm simply doesn’t push new listings with poor historical data.
The harsh truth: if you do not invest in promotion, your product launch will likely fail. Amazon’s ecosystem is too competitive and too large for new products to gain traction passively.
This doesn’t mean you need to spend recklessly. Structured, data-driven advertising with clear targets will deliver results. The investment pays for itself through the reviews and sales velocity you generate.
Match Types Explained
Understanding how keyword matching works is essential for effective campaign targeting. Amazon offers eight match type options across automatic and manual targeting, each controlling when your ads appear for different search variations.
Manual Targeting Match Types
When you create manual campaigns, you specify keywords and choose a match type that controls how broadly your ads match to customer searches.
Broad Match
Your ad shows for the keyword plus related variations, in any order. This generates the most impressions and traffic. For example, if you bid on “soft toy”, your ad appears for searches including “soft teddy bear”, “baby plush toys”, “stuffed animals”, and “cozy fabric toys”.
Broad match is best for discovery and generating sales volume quickly. However, it may include less relevant searches, so monitor for wasted spend on irrelevant traffic.
Phrase Match
Your ad shows for the exact phrase plus additional words before or after it, in order. If you bid on the phrase “soft toy”, your ad appears for “silicone soft toy”, “soft toy for babies”, and “durable soft toy”, but not “toy that is soft” (wrong word order). Phrase match balances reach with relevance.
Exact Match
Your ad shows only for that precise keyword or very close variations. Targeting “soft toy” shows only for searches very close to “soft toy”. Exact match generates the fewest impressions but targets the most relevant searches with typically the highest conversion rates.
Negative Keywords
Negative Phrase prevents your ad from showing for searches containing that phrase. If you add “cheap soft toy” as a negative phrase, your ad won’t show for any search containing those words together, even if it matches your other targeting criteria. This prevents wasting budget on irrelevant searches.
Negative Exact prevents your ad from showing for that specific keyword. Adding “plastic” as a negative exact prevents your ad from appearing for searches for “plastic”, but allows it for “plastic-free”.
Automatic Targeting Match Types
With automatic targeting, Amazon’s algorithm determines where to show your ads. You don’t specify keywords, but you can set different bids for four targeting types based on expected relevance:
Close Match
Amazon shows your ad for searches very closely related to your product title, description, and backend keywords. Close match has the smallest reach but the highest conversion rate. For a “soft toy” product, your ads appear only for searches directly related to soft toys.
Loose Match
Amazon shows your ad for searches broadly related to your product. This generates more traffic than Close Match but may include less relevant searches. Your “soft toy” ad might appear for “children’s toys”, “stuffed animals”, and “plush gifts”.
Substitutes
Amazon shows your ad for searches related to products your product could substitute for. If you sell a fabric soft toy, your ad might appear for searches like “silicone teething toy” or “plastic baby toy”, since shoppers searching for these alternatives might also buy soft toys.
Complements
Amazon shows your ad for searches related to products that complement yours. Your soft toy ad might appear for “baby blanket” or “nursery décor” searches, since shoppers buying these items often purchase soft toys as well.
You can set a default bid for automatic targeting, or set different bids for each of these four types. For example, bid higher for Close Match (expecting better conversion) and lower for Substitutes (expecting lower conversion).
The Amazon Ad Auction System
Amazon uses a second-price auction model for all sponsored advertising. Understanding how the auction works helps you bid effectively and avoid overspending.
Two-Stage Auction Process
Stage 1: Relevancy Filter
Before the auction even begins, Amazon applies a relevancy filter. Your ad must be relevant to the customer’s search query. If Amazon determines your ad isn’t relevant to a search, it won’t even enter the auction, regardless of your bid. This ensures customers see relevant products.
Stage 2: Second-Price Auction
For searches where your ad passes the relevancy filter, Amazon conducts a second-price auction. You don’t pay your maximum bid. Instead, you pay just above what the second-highest bidder is willing to pay (plus £0.01).
Here’s a practical example: Five sellers are bidding on the search term “soft toy for infants”:
- Seller A bids £0.75
- Seller B bids £0.60
- Seller C bids £0.45
- Seller D bids £0.40
- Seller E bids £0.30
Seller A wins the auction (highest bid), but pays only approximately £0.61 (just above Seller B’s £0.60 bid). Seller A didn’t need to bid £0.75 to win; any bid above £0.60 would have been sufficient. This system rewards aggressive bidding without penalizing you by making you pay your full bid.
Implication for Your Bidding Strategy
This auction structure means you should bid your true maximum value, not conservatively. Bidding conservatively reduces visibility and may cause you to lose auctions you could afford to win. Since you pay just above the second-highest bid, aggressive bidding doesn’t necessarily cost proportionally more. The second-price auction protects you from overpaying.
Budget Planning for New Sellers: Detailed Guide
New sellers must approach budget planning strategically. Your budget isn’t just about total spending; it’s about duration, daily allocation, and timing of spend relative to your product lifecycle.
Minimum Budgets by Campaign Type
Sponsored Products: Minimum daily budget is £1. However, meaningful testing and results require at least £10-20 daily. At £1 daily, you’ll generate insufficient data to measure campaign effectiveness or optimize performance.
Sponsored Brands: Minimum lifetime budget is typically £100, meaning you must commit to at least £100 total spend. Given the minimum monthly commitment, this translates to approximately £3-4 daily minimum if spread over a full month, but it’s more practical to allocate £100-300+ monthly for meaningful results.
Daily Budget Flexibility
Amazon allows your daily spend to exceed your daily budget by up to 10% on high-traffic days. A campaign with a £10 daily budget could spend up to £11 on a particularly high-traffic day. Plan for this when budgeting. This flexibility allows Amazon to capture high-demand moments without strictly capping your spend.
Attribution Window and Campaign Duration
Amazon uses a 7 to 14-day attribution window depending on your product category. This means if a customer clicks your ad on Day 1 but purchases on Day 7 or Day 14, that purchase is attributed to your campaign.
Because of this attribution window, you must run campaigns for at least 2-4 weeks before evaluating performance. A campaign running for only one week will have incomplete data because many customers who clicked your ads may convert later within the attribution window. Running for at least 3-4 weeks ensures you capture the full conversion window and can accurately measure performance.
Recommended Budget Allocation
For new sellers launching a product, allocate 10-15% of expected revenue to advertising. This allocation is front-loaded heavily in weeks 1-8, when gaining initial traction is most critical. Once you achieve positive momentum with reviews accumulating and organic ranking improving, you can reduce this percentage to 5-10% of revenue for mature products.
For example, if you expect to sell £500 worth of inventory in your first month, allocate £50-75 to advertising (10-15%). This might translate to £12-18 daily for your Sponsored Products campaign during your critical launch window.
Frequently Asked Questions
- How much should a new seller spend on Amazon advertising?
- Allocate 10-15% of revenue to advertising during your product launch phase. This ensures sufficient visibility to accumulate sales and reviews quickly. As your organic ranking improves, reduce this to 5-10% of revenue for mature products.
- Should I start with automatic or manual campaigns?
- Start with automatic campaigns to generate initial data and sales volume. After 2-3 weeks, transition to manual campaigns using the keyword data you’ve gathered. Manual campaigns allow you to optimize bids and eliminate underperforming keywords.
- What ACoS should I aim for as a new seller?
- New sellers should expect higher ACoS during launch (30-50% or more) because the goal is sales velocity and reviews, not immediate profitability. As your product matures and your conversion rate improves through reviews and ranking, target the industry benchmark of 30% ACoS.
- Can I launch a product without advertising?
- Launching without advertising rarely succeeds. Without paid visibility, your listing receives minimal traffic, sales, and reviews. The algorithm doesn’t promote products with poor historical data, creating a circular problem. Investing in structured advertising is essential for launch success.
- When can I reduce my advertising budget?
- You can begin reducing ad spending once your product achieves strong organic ranking, accumulates meaningful review velocity, and demonstrates consistent sales volume. This typically takes 8-12 weeks of active advertising, depending on your category and competition level.
Ready to Launch Successfully?
New seller advertising requires strategy, discipline, and constant optimization. Getting your budget, campaigns, and keyword targeting right from day one determines whether your launch succeeds or stalls.
VendLab specializes in helping new sellers navigate this critical phase. Our Amazon consulting team has managed launches across dozens of categories and understands the specific advertising strategies that work in your market.
Contact VendLab today to discuss your launch strategy, or learn more about our full Amazon consulting services.
Go Deeper: How to Grow Your eCommerce Business
This article draws on insights from How to Grow Your eCommerce Business by Trevor Ginn, founder of VendLab. The book covers everything from product sourcing and listing optimisation to advertising, international expansion, and building a sustainable multi-channel online business.