Amazon PPC Costs: How to Optimize Ad Spend Without Killing ROAS

Amazon CPCs have increased roughly 30-40% over the past three years across most categories. If you are spending the same budget today as you were in 2022, you are getting fewer clicks and fewer sales. That is the reality.

But higher CPCs do not have to mean lower profitability. The brands we work with at Skale consistently maintain or improve ROAS even as costs rise — because the answer is not cheaper clicks, it is smarter structure.

What Amazon PPC Actually Costs Right Now

Average CPC across all of Amazon in 2025 is around $1.10-$1.30 for Sponsored Products. But that average is meaningless for your business. Category matters enormously:

Supplements and vitamins: $1.80-$3.50 CPC. One of the most competitive categories on the platform.

Electronics accessories: $0.80-$1.50 CPC. Competitive but manageable.

Home and kitchen: $0.90-$1.60 CPC. Wide range depending on subcategory.

Apparel: $0.50-$1.20 CPC. Lower CPCs but conversion rates vary wildly.

Pet supplies: $1.20-$2.20 CPC. Growing competition from DTC brands entering Amazon.

Sponsored Brands typically run 20-40% higher than Sponsored Products for the same keywords. Sponsored Display varies dramatically — retargeting audiences can be as low as $0.30 CPC while product targeting can reach $2.00+.

The ACOS Trap

Too many brands manage PPC by staring at ACOS. "Our ACOS is 35%, we need to get it to 25%." So they cut bids, pause broad match campaigns, and kill anything that is not immediately profitable. ACOS drops. Revenue drops faster.

ACOS is an efficiency metric, not a profitability metric. TACOS (total advertising cost of sale) tells you what percentage of your total revenue — including organic — goes to ads. A brand with 35% ACOS but 10% TACOS is in a great position. A brand with 20% ACOS but 18% TACOS has a problem: ads are efficient but they are the only thing driving sales.

We manage every Skale client's PPC against TACOS targets, not ACOS targets. That changes which campaigns you keep running, how you allocate budget, and what "efficient" actually means.

Where Budgets Get Wasted

After auditing hundreds of Amazon ad accounts, the same problems show up constantly:

No negative keyword strategy. Search term reports are a goldmine that most brands never mine. We harvest negatives weekly — not monthly, weekly — and the impact compounds fast. One client saved $14,000/month just from systematic negative keyword management.

Campaign structure that does not match margin structure. If a $50 product and a $12 product are in the same campaign with the same bids, one of them is getting killed. We structure campaigns by ASIN margin tier so bids reflect what each product can actually afford.

Over-reliance on automatic campaigns. Auto campaigns are great for discovery. They are terrible for efficiency at scale. Once you know which search terms convert, move them to exact match manual campaigns with dedicated bids. Keep the auto running for discovery, but at a fraction of the budget.

The Budget Allocation Framework

We split PPC budgets into three buckets: brand defense (15-20% of spend), category conquest (50-60%), and discovery (20-30%). Brand defense protects your own keywords at low ACOS. Category conquest targets high-converting non-branded terms. Discovery funds broad match and auto campaigns to find new opportunities.

This framework lets you scale total spend while keeping TACOS stable. When a discovery keyword proves itself, it graduates to conquest. When a conquest keyword becomes dominant, it moves to defense. The system creates its own efficiency over time.