What are Amazon Ads?
Just like many other online platforms, the pay-per-click model of advertising on Amazon is called Amazon ads. This is often called by other names as well like Amazon Sponsored ads, Amazon PPC, and Amazon Advertising. In this model, you just have to pay for the ads when some user clicks on your ads. There are several benefits of using Amazon ads such as reaching a wider target audience, creating a brand image, and increasing sales volume.
To cater to your different advertising needs based on your business goals, Amazon offers different types of ads.
Types of Amazon Ads
There are three main types of Amazon ads
Sponsored Products
Amongst all the types, Amazon Sponsored Product ads are used most frequently by advertisers. You can use them to promote your products. When you use these ads, they make your product appear on search results and product detail pages on Amazon. And the best part is that you can easily set up sponsored ads without too much of an effort. You have two options for creating your ad campaigns; Manual and automatic.
Sponsored Brands
This particular type of Amazon ad is not available to all sellers but only to those registered on the Amazon Brand Registry. The distinguished feature of this type of ad is that you can promote multiple products at the same time. Along with that, you can also feature a tagline with your brand’s logo. The major benefit of this type of ad is that it helps you build your brand presence while increasing its visibility to potential buyers on Amazon.
Sponsored Display
If you want to focus on retargeting, these ads are suitable for you. The major purpose of these ads is to reach out to those shoppers who have already been in the sales funnel either by viewing, buying, or checking other similar products on Amazon. Another great feature of these ads is that they can help you target customers on and off Amazon, unlike other Amazon-sponsored ads.
Based on findings from a survey involving Amazon advertising brands, it was revealed that 61% of the participants employed Sponsored Products advertisements, while 54% made use of both Sponsored Brands and Sponsored Displays
What are the Amazon Advertising Costs In 2023?
Using Amazon ads is really important for your brand to get more sales. But it’s a little tricky to know how much Amazon ads cost. Knowing that will help you plan your advertising strategy accordingly to avoid wasting your budget.
So, the big question is: How Much Does Amazon Advertising Cost?
The answer isn’t simple because it depends on several factors. The most important factors include the type of ad, cost-per-click CPC (how much you pay each time someone clicks on your ad), your bidding strategy, SEO strategy, targeted keywords, and competitors.
Just like many other online selling platforms, Amazon follows a Pay Per Click (PPC) model for advertising. There are varying costs on Cost Per Click for ads on different products, but on average, it’s around $0.81. However, you cannot say that it’s a fixed cost. There are a lot of factors that decide how much is your CPC.
CPC can be defined as the money Amazon asks for each time someone clicks on your ad.
Let me make it more clear to you with an example. Imagine you’re putting $100 into an ad, and it gets 200 clicks. To figure out your Cost Per Click, you divide the money by the clicks: 100 ÷ 200 = $0.5 for each click.
What is the Average CPC for Amazon Advertisers?
When you start an ad campaign for your product on Amazon, knowing the cost is the key to a successful ad campaign. Amazon ads usually cost around $0.81 per click. But you must always keep in mind that this cost is not fixed. It depends on several factors including your competition and budget. If you’re running ads to compete for popular keywords that other sellers are also using, you probably have to pay more. This is the case when many companies want the same ad spots on Amazon. Considering that, you must understand that this cost might go beyond the average of $0.81.
Another important thing that matters is your CPC budget. If your budget is tight, it affects your bid. For example, with $1000, bidding $2 is better than $10. You would get 500 clicks with $2 or 100 clicks with $10. In order to get more clicks and leads, find the right CPC to make the most of your budget.
If you’re looking for a team of PPC experts who can bring lucrative results for your business on Amazon, we’re always here to help you. Reach out to us today!
Amazon Advertising Bidding Strategies / Types
Amazon’s PPC model works like an auction where if you want to opt for your targeted keywords, you will have to make a bid. And as a general rule for auction, the seller who makes the highest bid wins that keyword to run ads on. Amazon offers you different ways to make bids so there are different bidding types available for advertisers.
Dynamic Bidding (Down Only)
If you’re a new seller on Amazon and doing PPC for the first time, there’s a bidding approach called Dynamic Bidding (Down Only) that can help. At this stage, this method is good for saving your spending on Amazon ads. It works by reducing your bids by as much as 100% when it seems unlikely that a click will lead to a sale. And that’s the reason it’s beneficial for new sellers, as it helps them spend their money wisely.
Dynamic Bidding (Up And Down)
In this bidding approach, your bidding amount is adjusted in response to the possibility of making potential sales.
In any case, if the system predicts that the chances of selling your products are higher, it might increase your bid automatically by as much as 100%. This will result in showing up your ad more often to the target customers, so there’s more potential in selling your product. Alternatively, Amazon could lower your bid by up to 100% if there are fewer chances of selling your products.
Fixed Bids
It’s a bidding method that allows you to fix a specific amount for your bid and that remains unchanged no matter how many conversions occur. This bid amount is fixed even if there are changes or adjustments that you make in other factors in your ad campaign.
In this type of bid for your Amazon sponsored advertising, you have a fixed level of consistency in your bidding strategy. A beneficial aspect is that it’s not affected by any alterations in conversion rates or other metrics.
Rule-Based Bidding
This kind of bidding uses a strategy that aims for a particular Return on Ad Spend (RoAS). Here it’s important to understand that RoAS is a measure of how efficiently ad spending converts into revenue.
There are predefined rules and conditions involved in this strategy and sellers are at liberty to select what they think is right for the campaign.
Moreover, they can create these rules based on specific criteria. As a seller, you can define specific criteria or conditions using “if/then” statements. When these conditions are met, the bidding strategy automatically makes adjustments to bids and keywords.
For example… If you have a bidding budget of $1000 and you want to create a rule that states:
If the RoAS decreases below 2, then decrease bids by 15%.
It means if your desired RoAS, which is 2, is not accomplished, the bid will automatically be reduced by 15%, which is $850. This way, it will increase the efficiency of your ad strategy.
How to Cut Down On Ad Spend to Reduce Amazon Advertising Cost
Your brand’s success depends greatly on how you manage the spending on advertising. And that’s the reason sellers are always struggling to cut down on ad spend. Therefore, it’s important to keep track of your ad campaigns and keep an eye on all the critical PPC metrics. There are several ways to bring down your ACoS (Advertising Cost of Sale). Let’s check out how you can reduce your ad spending in different ways.
Targeting Relevant Keywords
Keywords are extremely important when you run ads on Amazon because these keywords will bring in relevant traffic to your ads. You might have noticed after conducting keyword research and running ads on particular keywords, you may generate many clicks but they are not converting into sales. And so, it costs you money but you’re not making any sales out of it. In that case, you must stop using those keywords in your advertising and rather focus on the ones that cost you less and bring in more sales.
PRO TIP: If you go for longtail keywords, they usually have less competition and higher conversion rates.
Automation And Optimization Tools
Advertising on Amazon is not a piece of cake and PPC being its critical part can be overwhelming for many sellers. But if you use Amazon PPC tools, you can make this process easier. These tools work on AI-based algorithms and so they help you manage your ad budget effectively by reducing your ACoS.
PRO TIP: By implementing dayparting, you can reduce your ad spend. It helps you schedule your ad campaigns that run at those times of the day when there is high traffic. Therefore, it helps you make more sales at optimal costs.
Advertising The Right Products
When it comes to advertising products, especially on a platform like Amazon, it’s extremely important to figure out which products you have to promote. Of course, all the products cannot be promoted due to budget constraints or other reasons.
But now the question is which products must be promoted.
There are some factors that you must consider before choosing the products to put ads on.
- Product Reviews: Buyers prefer to look at the reviews that are left by other shoppers. So choose the product that has more positive reviews. Generally, new products don’t have many reviews so it will definitely increase your ACoS and will not generate more sales. So avoid putting new products on ads unless you have received good reviews on them.
- Prime Badge: Running ads on the listings with a Prime badge is likely to generate more sales.
- Good Content: Buyers are attracted to the products that are presented nicely using listing images, titles, bullets, and A+ content. So running ads on your listings with the best content can be beneficial.
Streamlining
To streamline your advertising expenses effectively, it’s important that you first organize your products in different categories before running any campaigns. This approach enables you to fine-tune your ad expenditure by aligning products with their respective categories. Also, to make the most out of your advertising options, it’s always a good approach to use both manual and auto-targeting strategies.
Ecomfleet Will Help You Lower Your Ad Cost For Amazon
Being an advertiser on Amazon, the major goal is to keep your CPC as low as possible so that you can earn more profit. At Ecomfleet, we have a team of experts who are passionate about helping your business thrive on Amazon. Over the years, we’ve helped many businesses to establish a strong presence on Amazon.
With years of experience and a deep understanding of Amazon’s latest algorithms, we have been able to strategize successful PPC campaigns for hundreds of our clients. We focus on reducing Amazon advertising costs while bringing in more sales and revenue for your brand on Amazon.