The rates you’ll pay for Amazon ads depend on a number of different factors. Here we’ll go over the average ad spends for Amazon vendors, how you’ll be charged, and how you can be smart about getting maximum conversions from your ad spend.
Amazon ads by the numbers
What’s the daily ad cost for an average, established seller on Amazon, and what results should it bring?
$.97 Average Cost per Click (CPC)
Your cost-per-click (CPC) is the amount you pay when a customer clicks your ad. Remember that Amazon CPC is auction-based, so the price you end up paying is just a penny more than what the next highest bidder is willing to pay for that keyword. If you can get a lower CPC than the average CPC of $0.97, you’ll be in a great position with your campaign.
$381.48 Average Daily Spend
Average daily spend is the amount of money an average high volume seller spends on Amazon advertising each day. It can be measured in various ways: by account, per campaign, total for an ad group, or at the base, keyword level.
35 Average Daily Conversions
A conversion happens when someone clicks your ad and then makes a purchase. Regardless of the price paid or quantity of items, one purchase = one conversion.
34% Average Advertising Cost of Sales (ACOS)
Your ACOS is your total ad spend divided by your total sales. For example, if your ACOS is 25%, you’re spending $0.25 on ads to make $1.00 in sales.
Source: Advertising Badger
If you’re just starting out with Amazon ads…
If you are new to Amazon advertising and preparing to launch your first campaign, it can be a bit confusing trying to figure out where to start with your budget. Ads are on an auction system based on bidding “up to” certain amounts for certain keywords.
There are also Premium Ads, which are fixed or rotating banner displays that appear at the top of the main Amazon home page. To get into this rotation costs tens of thousands per day. That’s probably not a category you’re interested in, so we will skip that category.
Some sellers like to break down their marketing budget and set a certain amount of money aside for PPC every month. Others prefer to adjust their level of spend as they go, figuring out optimization strategies along the way. Most recommend starting off with an automatic sponsored product campaign with a daily budget of ~$30.
Sponsored Product ads are the most commonly used ads on Amazon. These ads typically appear before the organic product listings but can also be seen in the middle of a results page or at the end of a product page. Sponsored ads are always tagged with the word “sponsored” or “ad” to indicate paid content.
Sponsored Brand ads are slightly different than sponsored ads in that you can promote three or more products in your ad. These ads appear in search results as headline banners. Sponsored Brand ads are used for keywords that are the middle ground between general and specific keywords. For example, someone who searches “cast iron pots” is specifically looking for pots made of cast iron, but there is no specification of what type of pot (soup, sauce, stock, etc).
Whichever type of ad you choose, all targeting is based on keywords used in product searches.
There are two options when it comes to choosing keywords. You can either select automatic or manual targeting.
Automatic targeting is driven by the content of the products. Amazon uses your product information to match your ads with relevant search terms. Your ads appear in search results based on the information you use in your product listing.
With manual targeting, you upload a list of keywords you choose yourself. With this option, there is a higher CPC but the better targeting option typically results in more sales.
How most keywords actually perform
Teikametrics, a retail ad optimization platform, analyzed all keyword and associated performance data for the first four months of 2019 –looking at roughly 6.5 million keywords across several thousand advertisers.
The Keyword Trap
Roughly 60% of all keywords received no clicks at all over the four-month period, and 97% received less than one click on average per day over the same period.
Only when a keyword captured an average of at least three clicks per day did it drive a share of campaign revenue commensurate with the amount being paid to place that ad.
The lesson to be learned here is that just throwing a bunch of keywords into the product’s hidden keywords on Amazon won’t result in striking gold. It requires tracking the performance on a regular basis, and re-allocating your ad dollars to the best performers–which may change over time.
A strategy to minimize your ACOS
To minimize your ACOS, you must commit to studying analytics on a regular basis, and frequent performance monitoring to fine-tune your campaign.
BEST PRACTICE TIP: Remove keywords associated with a product that has been active for at least 30 days which draw fewer than 0.1 clicks per day. This would allow you to focus your budget and time towards keywords that are driving meaningful sales.
As you monitor results, a few categories will yield top conversion rates that outstrip ad placement rates. View this as a market inefficiency you can take advantage of. In these categories, it’s more likely you’ll find relevant, fairly popular search terms where a Sponsored Product ad for your product can rank high on the page, without breaking the bank on a CPC basis.
Sponsored Products and Sponsored Brands advertising is particularly intense across certain categories on Amazon. If you’re a seller in those markets, you must be able to bid to value with efficiency in order to minimize your ACOS rate. .
If you have a thorough understanding of which search terms to target, both from a volume and margin perspective, you’ll succeed. Remember not to fall into the Keyword Trap.
Once you have enough data to make an informed decision, you may want to trim down the list of terms you are targeting against, and reallocate budget and adjust bids towards that smaller, higher volume subset, especially during high-traffic periods like Q4.
Shopping Feed is a major partner with Amazon, and helps clients optimize their product listings with error-free results. We syndicate search-optimized product listings on all of the world’s most powerful marketplaces, syncs and refines inventory data, and eases fulfillment with automated workflows. Contact us for more info: firstname.lastname@example.org (920) 333 3488