Amazon Advertising Cost: How Much Will Your Campaigns Cost You?
Last update: 27 April 2023 at 10:56 am
The world’s biggest online retailer is Amazon. It serves a variety of merchants.
Almost any company can sell their goods on Amazon similarly to how they would to any other wholesaler or retailer. But with Amazon, they can reach 300 million customers.
In order to do so, however, you’ll have to focus a lot on marketing and advertising your brand. Which, in turn, can give rise to concerns like, “What is the advertising cost on Amazon? Will I be able to reach the target audience, given the size of the potential audience? And so on.
What is Amazon advertising?
Similar to Google’s pay-per-click ads, Amazon Advertising (previously AMS or Amazon Marketing Services) charges vendors only when customers click on their advertisements (regardless of whether the item sells).
Amazon’s advertising campaign revenue is expanding quickly, especially as it diversifies its product offerings throughout its ecosystem.
Amazon advertising campaigns have built up a huge audience of consumers who are ready and eager to buy from you if you can reach them.
They have a reputation for being super-sensitive about privacy and giving their data to only those who earn it. Thus, being able to advertise on it means that your paid ads will be seen by people who have already expressed an interest in what you offer.
Amazon’s dominant position and the fierce competition among Amazon professional sellers go hand in hand. As a result, Amazon Advertising is expanding, and sellers must develop a strategic and adaptable marketing strategy that will yield the best ROI.
Why is a budget important when selling on Amazon?
Too frequently, when researching how to get their products on Amazon, Amazon sellers overlook the need to budget for marketing.
However, that is typically a necessary ad spend expense that you must pay attention to. While listing products on Amazon is simple, selling them is much more difficult.
Additionally, Amazon has minimum sales requirements that must be met before the sellers are paid. Many never get paid because they have yet to meet these requirements.
Amazon US generated $24.47 billion in revenue from digital advertising in 2021, and it is anticipated that this figure will rise to $39.45 billion in 2023. There are over 9.7 million Amazon sellers worldwide.
So, if you decide to advertise on Amazon, you will need help to do it. A bidding system is used in most Amazon ads, just like in ads on Google and Facebook.
You need to make sure your products are more visible than your competitors, so you want your products (or brand) to rank higher in Amazon’s search listings than others.
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What are the different types of Amazon ads?
Many Amazon advertising options can assist you in finding, attracting, engaging, and keeping customers throughout your entire sales process. These include managed services on and off of Amazon and self-service options.
Let’s dissect them further.
Amazon-sponsored brands ad
One of the best methods for promoting your products to Amazon customers is through sponsored display ads. However, if you target them effectively, you will typically only show them to people looking for products similar to yours.
Because sponsored brand ads are integrated with Amazon’s advertising natural search results, users aren’t even aware they are viewing an advertisement. They resemble the other product search results but frequently appear before the organic listings and have a small “Sponsored” tag.
Typically, you’ll aim for certain keywords or phrases that Amazon users type into the search bar when looking for products. You want your sponsored display ads to be pertinent to users’ search terms so that people will consider your product the obvious choice for purchase.
Amazon-sponsored product ad
Sponsored Products Ads use cost per Click (CPC) ads, and the amount you pay is based on how many potential customers click on your ads in their search results.
To have your products appear in a higher position in Amazon’s listings for your preferred keyword searches, you should bid the highest amount you are willing to pay (per click).
You can choose to run an automated campaign or a manual one with sponsored ads on Amazon. In manual targeting campaigns, you select the keywords to target, whereas an Amazon algorithm does it for you in automated campaigns.
If you choose an automatic targeting campaign, there are close matches, loose matches, substitutes, and complements. Amazon generally does a great job of ensuring that its automatic targeting is pertinent to customer queries.
Check out our article on building an Amazon PPC strategy to get familiar with this technique of advertising
Compared to self-serve ads, premium ads demand a significantly higher advertising budget. When creating ads, you will always work with a sales representative rather than doing it yourself in Amazon Advertising, which would help with self-service ads.
The price of Amazon premium ads varies depending on the circumstance, so it isn’t easy to estimate.
You can use your imaginative copy and imagery in premium ads, which are more akin to conventional advertisements. These advertisements do not have cost-per-click-based pricing.
Product display ads
Advertisements that aren’t targeted with keywords are called product display ads. These advertisements, however, focus on people based on their interests.
These advertisements can be seen at the top and bottom of pages, on customer reviews, and in Amazon marketing emails. A person who sees a product display advertisement does so because it is for a product they would or have been considering purchasing.
When your company runs a display advertisement, it directs visitors to your product detail page. It’s a fantastic way to gather leads and increase their interest in your goods.
The pay-per-click model is also used for this advertising choice, so you only pay when potential customers click on your advertisement.
To target consumers, advertisers must choose from a wide range of products. You must decide which goods to promote to your target market. You can only select one target type of product for each amazon advertising campaign you run.
What factors affect the cost to advertise on Amazon?
As per Ad Badger, in 2020, the cost to advertise on Amazon was an average of $0.71 per ad click. But COVID-19 played a key role in impacting the cost, resulting in an increase of $0.18 dollars, making the CPC $0.89 per click.
However, it is imperative to note that this is just an average estimation. How much you pay for the Amazon ad will differ wildly from your competitors. With bid-based advertising, it is certainly hard to pinpoint the definitive cost to advertise on Amazon.
Also, there are a wide range of factors that impact the final Amazon ad costs, including –
- The type of ad you choose (discussed above)
- The ad budget you set
- Your technique of targeting the ads
- Specific bids you make
Some niches, for instance, have a particularly competitive marketplace, thereby resulting in high CPCs.
Even if your ad spend is $10 per day on your advertising campaign, you may still find that you spend more than you earn if it is unsuccessful.
This is because, your ad conversions depend on different crucial elements like the kind of goods you’ve decided to sell, your product price, the photographs on your product listing page, and the kinds of reviews you’ve amassed. You must target appropriate keywords in your campaigns.
The CPC has increased significantly over the past few years due to increased competition among Amazon sellers. This has resulted in you bidding against a pool of sellers to secure the best ad placements for your advertisement.
Many companies struggle to find the right strategy to advertise on Amazon, but advertising agencies have now adapted to this kind of advertising to help businesses reach a wider audience.
What is the best bidding strategy for Amazon Ads?
It is partly determined by the type of ads you choose. Sponsored Product ads, or sponsored brand ads, on the other hand, require you to select keywords on which to bid. As previously stated, you can do this manually or have Amazon select keywords for you using one of their match types.
When you place a bid, you compete with other sponsored brands that want to rank for specific search terms (keywords). For example, at the time of writing, F Fityle had bid the two highest amounts for the keyword “Quadcopters & Accessories,” and their products were ranked first and second.
Low bids may save you money upfront but could have terrible after-tax consequences. If you place a low bid, your sponsored product ads might show up very far down the Google search ads’ results, and potential customers might choose more prominent sponsored brands and products. Low bids may prevent your sponsored product ads from showing up for your ideal clients.
Dynamic bids (down only)
In many situations, the best and safest option is active bids (down only), which are the least aggressive of these three Amazon bidding strategies.
With active bids (down only), Amazon is free to modify your pre-set bids. It is very helpful because sales conversion can occasionally be much lower than anticipated. In that case, Amazon may lower the bids by up to 100% if you foresee a high likelihood of low sales conversion.
Dynamic bids (up only)
According to its estimated sales conversion, Amazon can modify the bids using the active bids (up and down) strategy by either increasing them by 100% or reducing them by 100%.
This approach works well when using keywords you are confident will produce the best results. Additionally, it is the most aggressive of these three Amazon bidding techniques.
When you use a fixed bid targeting strategy, Amazon won’t alter your bids based on the likelihood of a sale; instead, the bid stays the same for all opportunities.
In contrast to dynamic bidding strategies, this strategy may result in more impressions overall, but you will see fewer conversions for your ad spend.
How can you cut costs on Amazon Ads?
When working with Amazon Ads, the most important thing to remember is the cost per click (CPC). It is the amount that you pay for every click on your ad. The lower your cost per click, the more clicks you get and the more money you make.
The other thing to remember is how many impressions (how many times an ad appears) you need to reach a certain number of people interested in buying what you’re offering. For example, if you want to get 100 visitors per day but only have $10 in amazon advertisers’ spending budget, then it’s better to buy 100 clicks at $1 each than 50 clicks at $2 each.
If your target audience is very specific and has a very low conversion rate (buying), then it may be best not to use Amazon Ads at all—instead, try other platforms like Google AdWords or Facebook Ads.
Regular keyword research
The keywords you choose are crucial since advertising is shown in accordance with them and their applicability to client search inquiries. You may find that some of those keywords are attracting clicks but no conversions after completing keyword research and selecting the ones you want to target for your ads.
Tools for automation and optimization
PPC advertising is a crucial component of the selling process when using Amazon. You need the appropriate Amazon PPC advertising solutions in place because managing your PPC campaigns can seem like a demanding process.
These products use AI-based algorithms to assist you in lowering your ACoS and managing your display ad spending.
Dayparting is one strategy you can use to cut your advertising budget. Why does this matter? This basically means that you may plan your campaigns to run at particular times of the day, typically during the hours of peak traffic, in order to maximize sales while minimizing expenses.
Have you ever thought about Amazon Automation…we were doubtful and did the research ourselves.
Advertising the right products
You must choose wisely select items from your inventory to promote when doing product advertisements on Amazon. A product listing’s elements play a crucial function. The pricing, reviews, ratings, title, bullet points, and description were all used in the product photos.
Amazon advertiser’s spending on marketplaces is driven by the ever-expanding eCommerce sector and the escalating competition. As a result, Amazon’s advertising business and Amazon professional sellers are expanding quickly, especially now that it has diversified its ad products throughout its ecosystem.
Try out some of the tactics mentioned above, keep an eye on them for a while, and then modify them to fit the demands and objectives of your company.
Amazon advertising presents both opportunities and difficulties. As a result, to stand out in a crowded market, sellers need a better Amazon ad campaign strategic and adaptable advertising plan. They must continue to be adaptable in the rapidly shifting business environment.