The True Cost Of Amazon Ads
How much do Amazon ads cost in 2022?
It’s common for Amazon sellers who are in the product search phase to overlook advertising costs. Granted, sellers must factor in expenses like Amazon FBA fees, shipping costs and unit costs, but what about PPC ad costs, for example?
More and more people are choosing to shop online – in fact, the Amazon advertising UK market is in very high demand as Amazon has now become the “biggest advertiser in history”, having spent a record $16.9B this year. It is, therefore, imperative that advertisers take advantage of this type of ‘ready-to-buy’ consumers. Almost 3 in 4 consumers begin their search on Amazon, which makes for a highly compelling reason for both sellers and brands to embrace Amazon advertising strategies, and do everything possible to understand “how much do Amazon ads cost in 2022”.
Experts believe that in 2022, Amazon will likely generate over $31B in just advertising revenue, so sellers need to take advantage of Amazon advertising in the UK or wherever they may be. However, this also means that the cost of Amazon advertising continues to rise, especially with brands becoming ever more competitive.
According to a recent survey (can’t link as they are possibly your competitor – Junglescout), 59% of Amazon sellers are quite concerned about “how much do Amazon ads cost in 2022”. But that doesn’t mean you can’t run a successful and profitable campaign on Amazon, that is, as long as you have integrated the right pricing strategy.
Therefore, when we talk about securing our profitability on Amazon, we need to know what the Amazon advertising best practices are, the ad costs we’re up against, and how to work out our cost-per-click.
Where do Amazon advertisers spend the most?
Brand-registered sellers and professional sellers can use any one of the three PPC ad types made available by Amazon: Sponsored Display (SD), Sponsored Brands (SB), and Sponsored Products (SP). However, if you haven’t enrolled in Brand Registry, then the only option available to you is Sponsored Products.
Now, with that said, Sponsored Products tends to be the most popular ad type among sellers and brands. However, as of late, there’s been a shift in ad spend from SP ads towards SB and SD ads, clearly indicating that sellers are now finding value in investing not only in their products, but also their brand presence.
No matter which one you end up choosing will, of course, be governed by your own unique circumstances, but just to give you a fair idea of what they mean:
Sponsored Brands will typically yield the highest ‘RoAS’ or return on ad spend compared to both Sponsored Display and Sponsored Products, due to the advanced placements and customisation options.
Sponsored Products is a really good option for sellers who are not brand registered. It’s quite easy to set up and lets you get right in front of your customers from the very first day.
Sponsored Display could possibly be the best option if you’re currently looking for brand visibility and awareness, and not necessary profitability, allowing you to easily reach both on and off Amazon audiences.
Amazon advertising in the UK – how much will it cost?
We offered some quick insights at the start of the article to give you an idea about what kind of budget you should have for Amazon advertising – let’s expand on that some more:
The cost of Amazon advertising in the UK, or anywhere else, really, depends on what kind of ad types you select, your daily budget, your bids per keyword and your ad targeting type.
Now, spending around £7-8 may be a good starting point in order for your campaign to take off initially, but what if it’s not profitable? In all likelihood, you may end up spending even more than you get back. Ad conversions also depend on what kind of product you’re selling, your listings’ images, the reviews people have left you, and the price, of course. So, if traffic is going to a poorly optimised listing to begin with, people are less likely to buy from you.
You see, when we talk about Amazon advertising costs, there’s no ‘one size fits all’, which is why forward-thinking sellers will always work with an Amazon marketing agency to work out all the kinks. This is also an excellent starting point when we talk about minimising losses, maximising profits and overcoming the competition.
With that said, we would say that allocating between £38 and £382 ($50-500) may be appropriate for PPC campaigns, but it isn’t etched in stone – you may start with just £3-8 a day and make refinements over time. It’s vital that you ask an Amazon marketing expert to gather key data while your campaigns run, especially for the first few weeks – it’ll help you make well-informed decisions around what kind of keyword bids to make or the keywords you should be targeting, for example.
Let’s put this into context:
Your ads run for a total of 7 days with a budget allocation of just £7.66 ($10) a day. At the end of the week, you will have spent £53.6 ($70). If those ads got you just £76.57 ($100) in sales once Amazon’s fees and the cost of your goods have been deducted, then we didn’t have a very profitable campaign, did we? You’ll need to go back to the drawing board and figure out which keywords to target and why your current keywords are not converting.
Now, let’s say those ads got you £383 ($500) in sales – bravo, you did something right! At this point, you might want to increase your daily budget in order to get your ads to run longer.
Then there’s also keyword bids which require in-depth understanding – something we’d have to dedicate an entire article to – to be honest – as well as accurately estimating your cost-per-click.
Invest a little time to learn “how much do Amazon ads cost in 2022”, and you’ll thank yourself that you did!
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.