The True Cost Of Amazon Ads
As more people turn to Amazon to meet their shopping needs, it’s perfectly normal to see an even higher volume of advertisers flooding the platform with ads and especially sponsored ads.
In this article, we look at the cost of advertising on the largest eCommerce platform in the online space, including the cost of sponsored ads on Amazon.
The cost of Amazon ads – A numbers game
Here are some generic figures to get you familiar with the cost of advertising on Amazon:
The average cost an experienced Amazon seller pays is 50p for CPC (cost per click). The cost-per-click is the money you’re charged every time a customer clicks on one of your ads. Since the CPC on Amazon is auction-based, the price you pay eventually is merely a penny higher than the next bidder. So, if you manage to beat this average, you’re in business!
The amount which an everyday, high-volume seller spends on Amazon ads each day, is around £400, but we have clients who can invest upto and exceeding £2000, otherwise known as Average Daily Spend. Now, daily spend can be measured in unique ways; e.g. according to ad groups or by base keyword cost. It all depends on what kind of insights you’re after.
The average daily conversions that most sellers saw between 2020-2021 is 35 while the ACOS or average advertising cost of sales is currently around 27.6% – the ACOS is calculated by dividing total advertising costs with total sales. Some of our clients have an ACOS as low as 8%, whilst categories where customers are likely to make much higher comparisons, such as clothing can be as high at 40 – 50%, particularly around Q4 and Christmas Holidays, average CPC costs regularly increase by over 30% on average.
Are you just starting out with Amazon advertising and sponsored ads?
If you’re foraying into the world of sponsored ads and Amazon advertising in general, it can certainly be confusing to draw out an appropriate budget. But don’t worry, this basic knowhow should point you in the right direction:
Amazon ads are on an auction-based system, which means you are merely bidding towards certain amounts only for certain keywords only. So, with that said, it’s important to understand the different kind of ads you can bid on:
Premium ads are displayed on fixed or rotating banner displays appearing at the top of your main Amazon page. Getting into this rotation can run your costs into tens to thousands of dollars each day. Most advertisers are not interested in this category due to the sheer costs involved.
For your pay-per-click (PPC) campaigns, it’s better to set your monthly budget on a ‘pay as you go’ basis rather than a fixed monthly one. In fact, most advertisers starting out with a sponsored product ad campaign allocate a budget of no more than £30 per day.
Sponsored ads, or more specifically, sponsored product ads, happen to be the most popular. They can be displayed anywhere on your Amazon page, but are usually placed on top. They carry a small label which says “Ad” or “Sponsored”.
Sponsored brand ads let you promote 3-4 products in headline banners within a single ad.
The importance and cost of sponsored ads on Amazon
Sponsored ads tend to be the most popular among advertisers for a good reason: they can be seen as ‘self-service ads’ which let you either manage the ads on your own or assign them to a reputable Amazon ad specialist or agency.
The minimal budget or cost of sponsored ads on Amazon is £1. They are a highly versatile form of advertising on Amazon and owing to that, the CPC can be anywhere from a few cents to a couple of dollars – which depends on the degree of competition within your sector or for a specific product placement.
Sponsored ads are pretty much the core of your advertising on Amazon and they support launching new product lines. They support the majority of your ads goals and can be super-profitable if you leverage them correctly.