Amazon DSP has become a powerful channel for brands looking to scale their reach, drive more awareness and traffic, and generate measurable conversions across Amazon. However, as competition increases on this ecommerce platform, many advertisers face a common challenge of rising CPMs without proportional performance gains.
The good news is that a higher CPM does not have to mean lower returns. With the right Amazon DSP optimization strategies, brands can improve CPM efficiency while maintaining or even improving overall ad performance.
This blog breaks down how to achieve the right balance between improving CPM and performance without sacrificing ROI.
Understanding What is Cost Per Millie (CPM)?
Cost per mille (CPM) is a pricing model commonly used in marketing and advertising. Also called cost per thousand impressions, CPM refers to the total price spent for showing an ad to 1,000 users. CPMs are never constant, it keeps on fluctuating based on:
- Audience demand
- Inventory type
- Bidding strategy
- Targeting precision
Many advertisers try to lower CPM aggressively, which directly impacts the reach, quality, traffic and conversion rate negatively. The end goal is not to lower CPM but to maximize ROI on Amazon DSP with proportionate performance.
Why CPM Increases in Amazon DPS?
It is important to understand the reasons behind the rising CPM if you want to improve it. Taking guidance from an experienced Amazon Ad performance marketing expert greatly helps in addressing the causes and controlling the cost. Some of the common reasons are:
- An overly broad target customer base
- High levels of competition for the premium audience
- Inefficient frequency management
- Poor creative performance
- Lack of bid and placement optimization
How to Improve CPM Without Losing Performance?
Smart planning and optimization are the keys to improving your CPM on Amazon. Striking a balance between them ensures cost efficiency while maintaining strong Amazon DSP performance. Some of the ways are listed below.
Refine Your Audience Targeting
One of the common mistakes that marketers make is targeting a broad range of audiences. Audience segmentation is one of the most effective ways to improve CPM without losing performance. The more refined the audience is, the higher the engagement rates are. Instead of targeting large, generic audiences, break them into:
- In-market shoppers
- Lifestyle-based audiences
- Purchase and brand viewers
- Competitor audiences
- Retargeting segments
Improve Your Bid Strategies
Since DSP campaigns run on a CPM bidding model, bid optimization is crucial. Many advertisers set bids once and forget them. In these competitive times, dynamic bid management is essential. The goal is to improve CPM efficiency while maintaining enough bid pressure to win high-quality impressions. Best practices include:
- Gradually adjusting bids rather than making drastic cuts
- Using different bids for prospecting and retargeting
- Lower bids for awareness, higher bids for conversion-focused campaigns
Enhance your Creative Performance
Creative quality has a direct impact on CPM and performance. Ads that generate higher engagement often win auctions more efficiently. Poor creatives result in lower customer engagement rates, wasted impressions and higher and ineffective CPM, whereas high-performing creatives improve click-through rates. To improve creativity:
- Refresh creatives every 30 to 45 days
- Use clear value propositions like Best-seller, Limited Offer, etc
- Match messaging to the target audience’s intent
- Test multiple formats and visuals to identify high-performing ads
- Use high-quality images and clear product visuals
Control Frequency to Avoid Waste
High frequency can inflate CPM while lowering effectiveness. If users see the same ad too often, engagement drops. Proper frequency control ensures impressions are not wasted and helps maximize ROI on Amazon DSP. Right-sized frequency ensures impressions remain meaningful while keeping costs in check. Recommended strategies are:
- Cap impressions based on campaign objective
- Use a lower frequency for awareness campaigns
- Apply tighter caps for retargeting audiences
Use Performance-Based Optimization Signals
Amazon DSP provides valuable performance signals that should guide optimization decisions. Instead of focusing only on CPM, evaluate the data and reports to know how each audience segment is contributing to revenue. Sometimes a slightly higher CPM delivers a significantly high return. These signals include:
- View-through conversions
- Purchase behavior
- New-to-brand metrics
- Audience overlap data
Align DSP Strategy With Business Goals
CPM improvement must align with your business objectives. Awareness campaigns, for example, may naturally have higher CPMs than retargeting campaigns. A strong Amazon Account Management Agency ensures DSP campaigns support both immediate performance and long-term growth. Before making changes, ask:
- Is the goal awareness, consideration, or conversion?
- Are we optimizing for short-term sales or long-term brand lift?
Final Thoughts: Less CPM Does Not Guarantee High Results
Improving CPM in Amazon DPS is not about targeting more while paying less. It is about practising smarter strategies that bring results and do not go out of your budget either. With refined targeting, strong creative performance, disciplined bidding, and data-driven optimisation, brands can improve CPM without losing performance. Scale only what delivers consistent performance. This disciplined approach prevents unnecessary CPM inflation and supports profitable growth.
In 2026, success on Amazon DSP belongs to advertisers who focus on efficiency, strategy, and long-term ROI rather than chasing lower costs alone. Partnering with the right Amazon Ad performance Marketing Agency ensures CPM efficiency is achieved without sacrificing scale or results.
