With so many different products, a competitive membership program, and an ad platform for advertisers, what can’t Amazon, Inc. do? As more customers are turning to Amazon and similar online websites for their shopping needs, it makes sense that more advertisers would seek a piece of the pie. After all, these advertisers usually represent several brands at a time, most of which have a stake in online visibility.
In this article, we look at Amazon advertising costs and examined the advertising process itself. When you choose to advertise on this or any other highly sought-after company, you should better understand the cost of doing business, and as a bonus, be able to maneuver around the platform more effectively.
This is How Amazon Advertising Works
In 2017, the total ad spend reached $3.4 billion, a number that has only increased in the last three years.
First, it’s essential to know that there are several different ways to advertise on Amazon’s platform. These are the main ones. P.S. You can also run Amazon OTT ads alongside any of these ad formats.
Self-serve ads are those which can be purchased without a sales representative as a go-between. These are area ads function similar to Google search ads; they’re useful for discovering search results for products.
This type of ad acts more like a display advertisement. Unlike self-serve ads, which are usually text-based, premium ads can appear as visual banners and sidebars that attract extra attention from users.
There are three major types of ads you can configure through Amazon which include sponsored products ads, product display ads, and headliner ads.
Sponsored ad products
Amazon Sponsored Product Ads are the ads that drive Amazon searchers directly to a specific product you’re selling on Amazon. These ads are keyword-targeted, and advertisers have the control of setting a daily budget, as well as the campaign duration. While the campaign can be paused at any time it must run for at least 1 day.
Product display ads
Amazon Display Ads are not keyword targeted, but rather interest or product targeted display ads. They drive shoppers to the products detail page and are also priced by a cost-per-click method.
These ads are cost-per-click, and lead searchers to any specified page on Amazon. These ads are also keyword targeted, and can be used to promote 3 or more products together. Headline search ads also use a cost-per-click method where the minimum bid per keyword is $0.10.
Other ways an ad can appear on Amazon are:
- Visual banners
- Sidebar ads
- Sponsored brand ads.
What is the Average Cost Per Click on Amazon?
The average cost-per-click (CPC) will always vary according to business, but advertisers spend about $0.81 for every click on each ad.
Advertising costs depend on the amount of competition in a given industry as well as the company’s budget. When competing for highly competitive keywords, expect to pay more for a spot, and there are often bidding wars drive up the price even more. It is not uncommon to see a sudden surge beyond the normal average.
Before signing up for anything, though, be sure to revisit campaigns and keywords for more effective and profitable advertising. These are the three most effective ways to help lower the CPC:
- Research the most effective keywords
- Optimize product listings for search
- Monitor your campaign’s performance.
How to Optimize Your Amazon Ads
- Create a well-structured campaigns by product category. The best strategy here is to have a separate campaign of each of your main product categories, and then under each campaign create ad groups that are more specific.
- Create compelling and urgent ad copy. Ensure your ad text is not only accurate in terms of what you’re selling, but try and insert some creativity and humor into your ads if possible.
- Ensure your ad copy is as specific as possible. While it might be hard to expose all of this information in the ad text, it’s important to jam the most important information in there.
- Bid on Popular Brands That Sell Similar Products. This will allow you to gain exposure and pursue someone to buy your much cooler, less well-known brand.
- Experiment with All Three Ad Formats. It’s worth experimenting with all three ad types to see which yields the highest returns, and then once your statistics can paint a clear picture you can re-allocate your budget based of the results of your campaign.
Amazon Advertising Costs
So how much do ads on Amazon run?
According to study by Practical Ecommerce, the average cost per click on Amazon is rarely more than $0.35, making it more cost-effective on a CPC basis than search ads on Google Ads or Bing Ads and comparable to some of the lowest CPCs on Facebook or Google display. Considering that Amazon searches show a lot of commercial intent, those are promising numbers.
What is the Average CPM on Amazon?
Cost-per-impression, or CPM, will vary as well. On average, there are a total of 101,265 impressions per user per day on Amazon. Advertisers can factor in the CPC to determine the final costs. These impressions are vital for driving up organic and paid traffic. When the traffic starts to mature, paid will be less necessary and you can focus on organic.
Amazon Advertising Minimum Budget
Amazon’s competitive advantage is based on their lack of monthly fees or minimum ad spend requirements. Advertisers are only charged when customers click the ads and are taken to a linked landing page. They can negotiate the maximum prices brands are willing to pay for the initial click and the overall daily budget. With this freedom, advertisers can measure the return on investment and optimize their budgets accordingly.
How Does Amazon Ad Auction Work?
Believe it or not, bidding on Amazon advertising is a ‘second price auction’. For advertisers, this means the seller who bids highest on a keyword will win the auction and see their ads displayed at the top of the search. Advertisers also only pay what the seller who came in second place bids.
For example: if a winner bids $1.50, but the second-place bidder puts up $1.25, the winning advertiser only pays $1.25.
What Determines Amazon Advertising Costs?
Keywords determine the cost of Amazon advertising. The more competitive a keyword is listed, the more money advertisers should plan on spending to secure it. To fully control the budget for an advertising campaign on Amazon, you must observe the positioning of the campaign as well as the chosen keywords.
How Does Amazon Compare to Other Platforms
It can be surmised that Amazon and Google are the main competition for one another in terms of ad revenue online. Amazon will rank ads based on their total profits, whereas Google ranks them based on the click-through-rate of the initial ad. While Google and Amazon offer different services to attract advertisers, their operations appear to be quite similar.
Tips to Help Lower Your Amazon Advertising Costs
In lowering your CPC, you get more clicks for your budget which invariably leads to more valuable leads finding your business’s products. So, how can we help you lower your CPC?
1. Choose the right keywords
Choosing the right keyword is the determines if your CPC is lowered or not. Ensure to select keywords that drives valuable leads and lowers the CPC.
2. Optimize product listings
Your product listings have to be optimized to earn valuable leads for your business. Usually, the more relevant and informative your product listing is, the more conversions your business earns.
3. Monitor your campaign’s performance
When you run your Amazon ad campaign, it’s important that you monitor your campaign to see if it is working. You don’t want to spend all your money on a campaign that isn’t optimized to drive the best results.
Are Amazon ads in your future?
Amazon has a huge influence on the industry, which is especially important to advertisers who want their products in front of a wide audience for higher returns on their marketing investments. If you’re considering Amazon as a place to run a campaign, they’ll provide access to a ton of resources and you can bid only what you’re comfortable with spending.
It’s an ideal setup for expanding your target market and demographic. With the added exposure and the right campaign execution, brands can increase their sales significantly.
Have you already used Amazon ads? Let us know what you think of the results, and if the cost is worth the return on investment.