Last updated on December 8th, 2023
Written by Mohamed Aden
Amazon stands as the dominant marketplace for online shoppers. With users all over the world, you strive to make your products in the platform/stand out, but often at a price. Understanding Amazon advertising cost is important to ensure you get the most out of your ad spending.
More than being well-versed with paid ads costs, having a thorough knowledge of Amazon’s advertising can help you manage your ad campaigns efficiently. As a result, they can elevate ad visibility and sales.
Let us help you familiarize yourself with the different Amazon advertising cost structures and weigh their potential benefits. That way, you are empowered to make strategic and cost-effective decisions that maximize your advertising efforts, leading to greater success.
Is It Worth Paying for Amazon Ads?
Amazon Sponsored Ads is worth paying if you know how to make it work for you, and it can be a valuable investment if managed effectively. You can do this by understanding how it works, its different cost aspects, and how to analyze and evaluate its performance.
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Understanding Amazon Advertising
Advertising is essential if you are looking for buyer exposure on Amazon. It’s important to grasp the basics of Amazon Ads and their different types to maximize their potential.
Types of Amazon Ads
Three basic ad types exist within the Amazon Advertising ecosystem: Sponsored Product Ads, Sponsored Display Ads, and Sponsored Brand Ads. Each of them caters to specific advertising objectives and budgets.
- Sponsored Product Ads appear on individual listings. They are available for both auto and manual targeting campaigns.
The following Amazon ads type are only available if you are enrolled in the Amazon Brand Registry:
- Sponsored Display Ads focus on reaching customers both on and off Amazon. They use display placements on Amazon and third-party websites and apps. Sponsored Display Ads are primarily used to retarget customers who have previously viewed or engaged with a product or page. This ad type is best suited for advertisers with a larger ad spend.
- Sponsored Brand Ads showcase multiple products and a custom header image to build brand awareness. These ads are shown on top of Amazon’s search results and link to the brand’s Amazon Store. Sponsored Brand Ads are mainly used by well-established brands with higher advertising budgets.
Amazon Advertising Platforms
Amazon advertising also offers a range of platforms that help you engage your audience and bring products and services exposure. The two major options available are the self-serve platform and the premium platform. Each has its unique features and benefits, targeting different advertising goals.
Amazon’s Self-Serve Platform
Amazon’s self-serve platform allows advertisers to create and manage Pay-Per-Click (PPC) campaigns easily. Sponsored Products and Sponsored Brand ads are the primary ad types offered on this platform. These ads target specific keywords and appear in various spaces within Amazon’s search results, product pages, or across the Amazon marketplace.
The self-serve platform is an attractive option for businesses of all sizes looking to optimize their Amazon advertising efforts. It is often compared to Google search ads and Facebook’s advertising solutions regarding functionality and targeting options.
Amazon’s Premium Platform
For advertisers seeking a more immersive and engaging advertising experience, Amazon offers its premium platform, which provides a range of ad formats, including display ads, premium ads, and audio ads. We’ll provide more details about premium and audio ads below:
- Premium Ads: Premium ads offer higher ad placement and visibility, reaching wider audiences across Amazon’s various platforms. These ads require a higher budget and are suitable for giving your brand exposure to the target audience and bringing in traffic to your listings.
- Audio Ads: With Amazon’s audio ads, you can tap into the growing market of audio content consumers by promoting your brand on Amazon Music’s ad-supported tier. These ads are played between songs, allowing businesses to tap a highly engaged audience.
What Affects Amazon Advertising Costs?
Amazon advertising costs are essential to consider when planning a successful advertising campaign on this e-commerce platform. The main elements of Amazon ads cost include cost per click (CPC), advertising budget, and ad spend.
Cost Per Click
Cost per Click is the price you need to pay every time a user clicks on your ad. This method ensures you only spend money when someone clicks the ad. Amazon uses a bidding system for determining CPC, where you set your maximum bid based on your willingness to pay for each successful click.
Cost per click may vary depending on several factors, such as the type of ad product, the competition in your targeted market, and the relevance of your ad. Analyzing and adjusting your CPC bids regularly is important to stay competitive.
Advertising Budget
The advertising budget is the amount allocated to fund your Amazon advertising campaign. This budget must be set thoughtfully, considering the expected ROI, cost per click, and the overall duration of the campaign.
Dividing your advertising budget equally among designated campaigns can be a simple approach. However, allocating a larger budget to high-performing campaigns or highly competitive products should be more strategic.
One of the key questions most sellers ask when strategizing for a budget is how much to spend on Amazon PPC. Let this video guide you.
Ad Spend
Ad spend is the actual amount of money you spent on advertising within a specified period. In Amazon advertising, ad spending depends on these factors.
| Daily Budget | Serves as a spending cap on a specific campaign. Amazon will stop showing your ads once that limit is reached, ensuring you don’t exceed your budget. |
| Ad Spend Over Time | It is crucial to track your ad spend throughout the campaign, comparing it with your sales and ROI to determine the efficiency of your advertising efforts. |
Amazon Advertising Optimization for Better Returns
When advertising on Amazon, optimization is a task required to create and manage an effective and successful ad. In this section, we’ll delve into the following aspects of Amazon search engine optimization (SEO): keywords, bidding, targeting, and listings.
Keywords
In conducting keyword research, you must identify the ones highly relevant to your brand and products. These keywords will be the tools to display your ads and become visible to potential buyers. When doing keyword research, consider the three match types below where these words fall asthey will determine your ad’s conversion.
Broad Match
Keywords with broad match types are trigger ads as long as the search term captures them in any order. Broad match types may include the keyword’s plural form and queries close to the keyword with a broad match type.
| Broad Match Keyword |
| cap |
| Queries Broad Match Types Will Trigger |
| Baseball cap Blue basketball cap Caps for golf players |
Phrase Match
Keywords with this match type will trigger ads when the query matches the keywords in the same order. This match also gets triggered when the plural form is queried.
| Phrase Match Keyword |
| baseball cap |
| Queries Phrase Patch Types Will Trigger |
| Blue baseball cap baseball caps for professionals baseball cap types |
Exact Match
This match type will trigger ads only if they are identical to the query. The exact match also permits plural search terms but is the most restrictive of all the match types. Exact keywords, however, are more likely to bring conversions.
| Exact Match Keyword |
| basketball cap |
| Queries Phrase Match Types Will Trigger |
| basketball cap basketball caps |
Targeting
Once the ad is created, it’s time to decide on the targeting strategy for your campaign. Amazon’s cost-per-click bidding model allows you to target in three different ways.
| Campaign Targeting Strategies | |
| Manual Targeting | A targeting strategy wherein you determine the keywords to be used when launching a product ad. This gives you more control over how your products show up and to whom. |
| Automatic Targeting | Automatic targeting is a great starter targeting strategy if you are new to sponsored ads. This strategy allows the ads to automatically appear on queries that match the product you offer. |
| Negative Targeting | Allows you to block out keywords you deem irrelevant to your product. The result is a more cost-efficient ad campaign with more chances of converting. |
Meanwhile, there are four match types in automatic Amazon’s targeting system:
| Campaign Automatic Targeting Options | |
| Loose Match | Your ad will appear for search terms similar but not identical to your target keywords. This is a less targeted approach, which may result in a higher number of lower-quality potential buyers. |
| Close Match | Your ad will only appear for search terms that closely align with your target keywords, leading to a more focused set of potential buyers and higher chances of conversion. |
| Substitutes | Your ad will show up to potential buyers looking at listings that closely relate to your product. |
| Complements | Your ad will show up to shoppers browsing products that can go well with your own. |
Bidding
You can either set specific bids for each keyword or use Amazon’s automatic bidding option, which adjusts the bids based on the competition and the relevance of the keywords to the product. Below are thebidding strategies when managing advertising costs on Amazon.
| Bidding Strategies | |
| Dynamic Bids – Down Only | Dynamic bids (down only) is a bid strategy that lowers bids when the ad isn’t likely to turn into a sale. This helps prevent unnecessary ad spend costs. |
| Dynamic Bids – Up and Down | Dynamic bids (up and down) adjusts your bids accordingly depending on whether or not the ad will result in a sale. This optimizes your bidding and helps you get more qualified sales, giving you higher returns on ad spend. |
| Fixed Bids | For fixed bids, the bids will stay the same regardless of the conditions. Amazon will use the bids that you set manually. |
Listings
Once you’ve set up a campaign, the next step is developing the appearance of your Amazon product listings. It’s an important element because the listings are what will show up when a shopper clicks your ad.
To successfully make your ads count, you’ll need to do listing optimization. This practice involves crafting the copy and selecting the right images to showcase your brands and products. Remember that your listing should be relevant, visually appealing, and informative, as this will encourage more click-throughs and engagements from potential buyers.
To know more about how to optimizing your listing on Amazon, watch this video:
Effects of Amazon Advertising
Once you’ve set up your advertising campaigns on Amazon, you can enjoy long-term benefits such as sales boost, product reviews, and a higher Best Seller Rank (BSR). You can enjoy these benefits even in the first few runs.
Boost to Product Search
By creating well-planned advertising campaigns, you can ensure your products appear on the search result’s first page and generate more traffic to a product detail page. Higher search rankings, in turn, can result in increased sales and sustained visibility.
Brand Protection For Wider Visibility
Enrolling in Amazon’s Brand Registry provides various benefits for product visibility. With Brand Registry, your branded products get protection from counterfeiters and product hijackers. By using Brand Registry benefits alongside advertising campaigns, sellers can improve their brand prominence and establish a strong presence on the platform.
Brand Registry grants access to advanced advertising tools such as Sponsored Brands, which showcase the brand logo, tagline, and multiple products in one ad. Building brand recognition can lead to enhanced click-through rates and conversions.
Product Detail Page Visibility
A product detail page provides potential customers with detailed product information should they wish to dig deeper than what the feature bullet points offer. Advertising can help drive more traffic to this listing part, increasing the likelihood of a sale.
Reviewing and Evaluating Advertising Performance
Effective monitoring of advertising performance is paramount to ensure a successful Amazon \campaign. Performance data analysis allows you to strategize and decide better, ultimately maximizing returns on your investment.
Reading Key Performance Indicators (KPIs)
KPIs provide valuable insights for assessing the efficacy of advertising efforts. Critical KPIs include impressions, clicks, click-through rate (CTR), conversion rate, and cost per click.
| Key Performance indicators | |
| Impressions | Impressions refer to how many times an ad shows up for potential shoppers to see. High impressions suggest increased product visibility, essential for brand awareness and sales. |
| Clicks | Clicks are times users click on an ad, indicating interest in the showcased product. |
| Click-Through Rate (CTR) | CTR calculates the percentage of clicks divided by impressions. A higher CTR signifies that users are more inclined to engage with the advertisement. |
| Conversion Rate | Conversion rate measures the clicks that lead to completed sales. A higher conversion rate typically indicates the ad effectively persuades users to purchase the product. |
| Cost per click (CPC) | CPC gauges the cost incurred for each click, helping you manage your advertising budget efficiently. |
Identifying Trends
Another crucial aspect of reviewing advertising performance is identifying trends and patterns in ad performance. You can use these insights to tweak your campaigns by adjusting strategies, targeting, or ad creatives.
Conducting A/B Testing
A/B testing can be a valuable tool in optimizing advertising efforts. In the context of Sponsored Product ads, the test involves running multiple product listing variations to compare their performance and determine which one performs best.
Here’s a video to further give you an idea about product testing.
Setting Enough Ad Budget
Allocating an adequate budget plays a significant role in achieving desired outcomes. By setting a suitable daily or lifetime budget, you can avoid under-spending or overspending and ensure a consistent ad presence on the platform.
Yield Better Ad Cost Returns With Seller Interactive
Incorporating Amazon advertising into a well-rounded marketing strategy can benefit you significantly. By leveraging the program, you can strategically position your products in front of potential customers, increasing visibility, driving sales, and ultimately, achieving growth.
But playing at a high level requires more than playing the long Amazon Ads game. To go beyond your target sales and achieve growth, you must know how to make the most of every penny you invest in a paid advertisement and make high returns. This is where professionals like us here at Seller Interactive can help. We have years of experience in the Amazon marketplace and have knowledge and expertise in PPC management. Our skills allow us to use your advertising budget to get more than the full return of your costs. If you’re interested to know about how this can be possible, book a call now. We’d love to discuss our offers with you!
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