In the realm of e-commerce platforms, Amazon has helped a large number of companies and businesses to approach millions of customers easily. Amazon advertising creates awareness of the launch of a product and drives conversions. In this context, we will dive deep into Amazon advertising cost, its types, and benefits.
Advertisers willing to achieve higher visibility for their Amazon products will pay for the respective positions by placing bids on keywords, which leads to high visibility in the SERPs of Amazon. Furthermore, the advertiser has to pay whenever a shopper views or clicks on his/her advertisement.
What Is Amazon Advertising?
Amazon advertisements work in the same way as the functions performed by Google search. This means, whenever you type a keyword in the search box of Amazon, it shows a few of the results related to sponsored posts, which are Amazon ads. This is how Amazon ads assist businesses reach out to their potential clients and highlight their products.
Why Go For Amazon Advertising?
- Over 60% of the sellers rake in profits within a year of bringing their business on Amazon.
- Till date, the platform has over 2 Million Seller Accounts, wherein the majority are small and medium business enterprises, and over 290 Million Active User Accounts.
- Over 65% of the purchasers explore products from new brands on Amazon.
- In 2021, Amazon Launchpad disbursed $240,000 as grants for Small and Medium Businesses.
- The platform helps garner a wider audience base for your brand or niche on a global level as it liberates the sellers to sell in over 150 countries.
- More than 15% of businesses seek Amazon SEO Services to upturn their business growth.
What Is The Average CPC That Amazon Advertisers Spend In 2024?
The average CPC that an Amazon seller spends on advertising is $0.91, at present. However, this amount is highly variable due to various factors that impact CPC. One such key factor is the type of Amazon ads, so let’s begin with that.
Types of Amazon Ads
Amazon advertisements can be divided into 3 categories that are as follows:
1. Sponsored Product Ads
Sponsored Product ads let you approach shoppers with relevant searched terms while they research the products they want to buy. You’ll see a tag of “Sponsored” against such ads while searching for a product on this platform.
These ads work on the PPC (pay-per-click) model, which generates costs when a person clicks on your product ad. Sponsored ads thus allow businesses to control their campaign budget more systematically.
Where Do Sponsored Ads Get Placed?
Amazon displays its sponsored product ads on both desktop and mobile devices in different locations-
- On the top of search results or alongside them
- In between the organic search results/product pages
Based on the positions of Sponsored Product Ads in Amazon search results, businesses can improve their product conversion rate. These results also encourage shoppers during the later phases of the buying funnel to purchase the products.
2. Sponsored Brands Ads
With the help of Sponsored Brands Ads, sellers get a chance to drive both sales and brand awareness.
These ads are only open to sellers who have registered themselves under the Amazon Brand Registry programme. These ads feature many new products from a brand at the same time. Your ad will display above the search results to enhance your exposure in front of the shoppers. These ads target keywords that imply a buyer is searching for different products in a category or a specific brand.
In addition, sponsored brand ads let you create custom landing pages to display your products and their respective features and benefits. These include the display of products with image galleries and videos and are segregated with a tag of “Sponsored.”
Where Do Sponsored Ads Get Placed?
Amazon displays its sponsored brands on both desktop and mobile devices in the following locations-
- On the top of the search results
- In search results
3. Sponsored Display Ads
Sponsored Display Ads focus on targeting audiences based on their search interests. These ads are displayed to the audience based on their Amazon browsing history. Such ads improve the chances of conversions and provide valuable exposure.
In addition, these ads also target audiences outside the Amazon app and make you reach potential buyers through third-party platforms.
Where Do Sponsored Ads Get Placed?
Amazon places Sponsored Display Ads in the mentioned locations-
- Pages of Amazon customer reviews
- Pages related to product details
- Merchandise based emails
- Amazon Demand Side Platform (DSP)
- Third-party platforms supported by Amazon
What Should Be Ideal Daily Amazon Advertising Budget?
To begin with, you can start targeting the audience with Sponsored Products Ads since they are open to all the sellers. You can start by investing $0.5 per click at the time of bidding. This implies if you receive 10 clicks on an ad, you’ll be charged $5 for 10 clicks. However, if you want to invest more, your ad placement can improve. It all depends on how competitive the niche and keyword are, who is your target audience and what ad objective you need to attain.
Two metrics that are highly used for assessing Amazon Advertising budget are:
- Advertising Cost of Sales (ACOS): It is a key metric used to measure the CPC for an ad campaign. A seller must try to bring down its ACOS so that his profits can be increased. For this, one can evaluate the shortcomings in a failed campaign and work on them. If you’re just beginning with Amazon ads, you can evaluate case studies of such instances.
- Return on Ad Spend (RAOS): It helps in determining the return on the amount invested in an ad campaign. RAOS is represented in an index number, whereas ACOS is represented in percentage form.
There isn’t any definite value that can be declared as an ideal ROAS or ACOS. It is dependable on the industry competition, campaign frequency, target audience, duration of campaign, organization size, etc. This is to say that the bidding amount isn’t the only factor that impacts Amazon advertising cost. Several other factors are responsible for affecting your Advertising Cost of Sales (ACOS) on this platform.
As per Statista, online retailers spent $20.3 billion on advertising on Amazon in 2023. Furthermore, the past trend for over ten years shows that this cost has shot up.
Benefits Of Advertising On Amazon
Until now, Amazon advertising platforms have benefitted companies in various ways, which are as follows-
- Improved Reach & Audience Targeting
With the help of Amazon sponsored posts, you can expect to increase the visibility of your product in prime locations present in the Amazon ecosystem. When you place your ad campaign in the appropriate position, sellers can expect to increase product listing views, drive more sales, and convert clicks.
- Economical Ad Options
Amazon provides sellers with four different options related to the bidding. The seller has to pay whenever a buyer views or clicks the ads. Yes, you read that right! Thus, as a seller, you get the flexibility of monitoring your expenses and utilize the best ad spot diligently.
- Track Performance
Amazon helps sellers in measuring their campaign performance. This allows sellers to keep track of changes in CTR, and conversion rate and identify best-performing keywords in their niche.
How To Estimate Average Cost-Per-Click (CPC) For Amazon Ads?
Short and simple answer: it depends. The cost of advertising varies from business to business due to certain factors. These include target audience, ad type, objective, keywords, etc. Now that you know these factors can influence your advertising cost on Amazon, you must not ignore a key determinant which is your budget.
Budget constraint plays a crucial role in deciphering your amazon ad spend. In addition, how optimized your product listings are is another point of discussion here. Under-optimized or non-optimized product listings won’t perform better and won’t be discoverable no matter what amount you’re investing in advertising. Furthermore, to make your product listing rank well on Amazon, you need to be considerate about the ad type, audience targeting, and how you’re targeting them.
Social Samosa revealed that Amazon’s ad revenue has escalated by 24% in the first quarter of this year. This is a significant growth that highlights how crucial role advertising plays for the platform. Now to boost this revenue the wise-heads behind the platform have been working out ways long ago. This gave birth to systems like Amazon DSP (Demand-Side Platform), a programmatic ad spot buying mechanism and Amazon automated bidding.
How Does Ad Bidding Work On Amazon?
Amazon bidding can be divided into 4 categories:
(i) Dynamic Bids (Up and Down)
In this type of bidding, Amazon will increase the bid amount for every click (by up to 100% for placement on top of the first page, otherwise not more than 50% for other placements) that has a higher conversion rate. For every click that has less chance of converting, your bid amount will be reduced by 100%.
(ii) Dynamic Bidding (Down Only)
In this case, amazon will lower the bid amount for clicks that don’t have good potential to convert into sales. For instance, a keyword that is less relevant or underperforming placement.
(iii) Fixed Bidding (Down Only)
In fixed bidding, the seller sets a fixed amount for every bid irrespective of the expected results (in the form of conversions). Amazon doesn’t change the bid amount at all and assigns the placement accordingly. Opting for such a bidding mechanism generally generates higher impressions but lesser conversions.
(iv) Rule-based Bidding
This mechanism works on predetermined or preset rules that are framed to attain a particular ROAS. Given the criteria, Amazon may change the base bids accordingly to improve the conversion rate. To know more about bids, read here.
Factors Affecting Amazon Advertising Cost
Answering how much Amazon advertising costs will remain incomplete without discussing various factors that impact it. The below-stated factors are what can affect your Amazon ACOS:
(a) Target Audience
The segment of the audience you’re targeting plays a key role in deciding your bid amount for Amazon. Since the platform serves a vast and diverse audience group, you must analyze how well you can reach out to your target audience.
(b) Ad Type & Objective
Ad type and objective matter a lot in case of Amazon advertising cost evaluation. If you aim to improve product visibility, Sponsored Product ads are the feasible solution to reach out to specific audiences and ad spending will be accordingly impacted. On the other hand, if you want to improve brand reach and presence, Sponsored Display ads will suit you best.
(c) Budget
Then comes the budget you are willing to allot because the amount of bids a seller is willing to invest can range from $0.50 to $100 or even more a day. This is in your hands to decide how much you’re willing to spend on the business’s day-to-day operations, overheads, promotions, etc.
(d) Keyword Competition
Keywords play a huge role in making your Amazon advertising campaign a success. Search Terms that your audience is using can be great to start, however, it must be noted that if the keyword difficulty is higher, it can be hard to make your product ranking withstand the competition.
(e) Loose v/s Complement Match Type
If you opt for Automatic bidding on Amazon, you’ll get different types of ad placements based on your ad spent and targeted search terms. For instance, if a person searches for “metal decor for the living room,” search results will show both wall art and wall hangings, which is a Loose Match Ad. In contrast, Complement Ads are also there which shows related product ads, for instance- a mirror in the “customers who bought this item also bought” section.
(f) Ad Format
The ad format that you chose has a great impact on your ad campaign. Where video ads are highly impressive for products that require demos, image ads are best while describing a packaged food product. Make sure your video/image quality is HD with the proper size and background.
How To Lower Amazon Advertising Cost?
We’ve talked about Amazon advertising costs in detail, here are some tips to boost your Amazon ad campaign and reduce your ad spend:
- Picking the Right Keywords Is Essential
Undoubtedly, keywords are very much critical to giving product listings a boost on Amazon. But many times, backend keywords are neglected by sellers, which is why those who opt for Amazon advertising services stay at a competitive edge in comparison to others.
- Customer Reviews Should Not Be Overlooked
Customer Reviews directly affect the purchase decision of a buyer. Though it might be a little painstaking task to spirit up the customers to provide feedback, Amazon SEO Service Providers can be of much assistance as they design E-Mail Campaigns for clients targeting their customer base to rake in reviews from them.
Even if a customer isn’t gratified with your product, a seller must try to resolve the issue instead of leaving it unattended.
- You Can’t Fool Amazon
Like in SEO, some players try to outsmart Amazon Algorithms by using unscrupulous activities and showcasing their products as superior in terms of utility and value. Amazon Algorithms pick out unethical practices such as getting paid/fake reviews, keyword stuffing, or providing consumers with wrong information about the product. And if caught, a seller’s Amazon Account can get suspended. Therefore, be aware while choosing an Amazon Advertising Service Provider for your business.
- Images Must Be Up To The Mark
Images play a vital role in SEO for Amazon. A professional image portfolio that compiles with the set standards of Amazon gives an upper edge in the competition.
- Amazon SEO Is Different From General SEO
Though general SEO and Amazon SEO are imperative for a product seller who wants to be a part of the e-commerce industry, it must not be overlooked that both are distinct. Where a search engine like Google focuses on fetching out quality information for its users, Amazon Algorithms are set to make quality products rank higher so that the buyer can have the best value for money. Thus, both have distinctive benchmarks to compare the parameters.
Frequently Asked Questions (FAQs)
1. Which Amazon Ad Format Generates Maximum Exposure?
This depends on your campaign goals and budget. Statista reported in a 2022 report that video ads are way more enticing to audiences and make them respond the most.
2. How Much Should I Spend On Amazon Advertising Daily?
It depends on your goals, marketing objectives, budget, keyword competition, ad format, and target audience. However, initially, you might feel it is right to start with a little amount to see how things work out for business.
3. Does Amazon Charge For Impressions?
Yes, Amazon charges for viewable impressions on advertisements. In addition, it also charges for the total number of clicks.
4. How Much Amazon Sponsored Product Ads Cost India?
Amazon Sponsored Products ads might cost between $0.02 to $1 per click, depending upon the target audience, keyword competition, campaign duration, etc.
Conclusion
Amazon ads refers to sponsored ads and their targeting options based on audience interest and bidding options. The cost of advertising on Amazon works on the platform’s own algorithms and innovative approach to reach a target shopper. It searches for similarities present in the shopper’s interests and product utility, category, keyword, description, and many more aspects that have been discussed in this article. Both automated and manual options are available to the sellers for running their ad campaigns which should be diligently designed. it’s also a part of small business marketing
Spending adequate Amazon advertising cost on campaigns allows sellers to stand out from the intense competition, promote products to their customers.
