Amazon is one of the most trusted ecommerce platforms, so sellers can increase visibility and sales on Amazon. The average CTR on Amazon US is 0.36%, so sellers can easily find and engage buyers.
However, Amazon also attracts a lot of competition. Fortunately, there are many advertising solutions for Amazon so sellers can stand out from other ecommerce brands. The right ads will also make leads more inclined to purchase your products, improving ROI and ROAS.
But how much does advertising on amazon cost? This guide will cover average costs for common advertising services and how sellers can optimize ad spend.
How Much Does Amazon Advertising Cost?
The Amazon advertising cost you’ll pay depends on the advanced ad tactics you’re using. Here’s a breakdown of each and the fees that come with them.
PPC
Before we cover the price of PPC, we must know how Amazon ads work with PPC. Pay-per-click (PPC) is one of the most common advertising strategies. In this strategy, you bid on keywords related to your niche and products.
As the name suggests, you only pay when a buyer clicks your ad.
The Amazon advertising cost depends on many factors, such as the price of each keyword and how often buyers click on your ads. While it can be difficult to budget for PPC, sellers can take some shortcuts.
Many marketers use the 25% rule when calculating the Amazon PPC cost. In short, you should spend 25% of the product’s sale price on PPC. Since the average Amazon conversion rate is 10%, 1 in 10 buyers will click on your ads. This means you’re devoting enough funds to advertise your products while maintaining a good ROAS.
Let’s say one product costs $11. You shouldn’t spend more than $2.75 on keywords for that one product. You can use those funds toward one keyword, though it may be best to bid on several cheaper search terms.
Nearly all keyword tools offer a cost-per-click (CPC) section showing each keyword’s average prices.
Sponsored Ads
Sponsored ads are a type of PPC advertising. On a PPC Google ad, your website will appear on search terms you’re bidding on. However, you have more advertising options on Amazon, such as Sponsored Brands, Displays, and Products.
What’s the difference between these sponsored advertising services? Sponsored Brands showcases your store on Amazon’s homepage, search, and can appear as a banner ad anywhere on Amazon.
While still new, Sponsored Display uses multi-format creatives to appear on top of SERPs. Sponsored Products are still the most popular option and will list your products first on Amazon SERPs.
The Amazon advertising cost of each also varies. As with all PPC advertising, sellers must bid on certain keywords to optimize results. Sponsored Products and Brands use keyword bidding, though sponsored brands can also use product targeting.
The only difference is Sponsored Display, which targets users based on shopping behaviors and interests. Therefore, this has its own advertising cost on Amazon.
You still pay per click for all sponsored services, and the cost still varies. For keyword bidding, the cost depends on the price of the bid.
The cost per click for Sponsored Display and product targeting can vary between 5 cents and $10. It’s best to set a daily budget, so Amazon knows how often to display your ads.
The most effective campaigns cost $50-$100 daily, but beginners can still get impressions with as little spending as $5-$10/day.
A+ Content
While technically not advertising, A+ content can elevate your listings. This service allows sellers to use advanced content types on product pages. Examples of advanced content include enhanced images, videos, product comparison charts, and text placements.
Not all sellers qualify for A+ content. You’ll need a professional seller’s account and be enrolled in Amazon brand registry.
Does A+ content cost anything? Basic content and brand stories have no Amazon advertising cost. Premium content comes with a cost, and this varies for brands. When you first sign up, there is a promotional period, so you can create premium content for free.
Video Ads
Amazon video ads often appear as display ads. They’re part of Premium Content and can appear as banner ads while customers shop.
Since video ads are part of other advertising and content services, the Amazon advertising cost depends on these pricing models. For Sponsored Brands and Display, you can pay via a PPC or product targeting model. And for Premium Content, you’ll pay the fee Amazon sets.
Amazon video ads may also appear in live videos. These are live shopping experiences where buyers can view content created by influencers. Self-service live videos are free, though collaborating with hosts and influencers can cost as much as $50,000.
Audio Ads
Sellers can also invest in audio ads on certain services, such as Amazon Music. Unlike the other advertising services, audio ads operate on a cost-per-thousand (CPM) basis. That said, you should still reserve an Amazon advertising cost budget of $50,000.
OTT
People consume entertainment through over-the-top media (OTT) these days. Viewers no longer watch cable or satellite TV–they stream movies, TV shows, sports, and more over the internet.
Amazon is one of the many platforms that developed an OTT model. Prime subscribers can stream Prime Video, and Amazon ads can also be played on other OTT channels and third-party websites.
How much does OTT Amazon advertising cost? As with audio ads, Amazon charges on a CPM basis. The average price point is $30 per CPM, which is lower than many competitors.
How to Optimize Ad Spend on Amazon
There’s a lot more that goes into the Amazon advertising cost. Sellers must ensure their ads are performing well to prevent wasted advertising dollars. What are some ways to weigh ad cost over performance?
ACoS
Advertising cost of sales (ACoS) is a metric used to measure PPC campaigns. When you use this metric, you’ll see how much you spent on your campaign versus how much you earned. This metric ensures your cost of advertising isn’t more than what you’re taking in.
The formula is ad spend divided by revenue, which is multiplied by 100. This converts the figure to a percentage. The average ACOS is about 30%, but even 15% to 20% is still good.
ROAS
Return on ad spend (RoAS) is similar to ACoS, but this metric focuses more on the revenue you gain from your advertising campaign. To find your RoAS, divide your revenue by ad spend.
There is no best ROAS, however. This figure depends on your business goals. The most common goal is a 4:1, where you earn four times the cost of advertising on Amazon for each dollar. For most sellers, a ROAS of 5 or 6 is good.
Understanding Amazon Advertising Cost
If you need to increase visibility and sales to your online store, Amazon is one of the best options for sellers. With so much competition on Amazon, sellers will want to invest in advertising.
If you’re on a budget, you may be concerned with the Amazon advertising cost. All ad types come with different pricing models; most types are PPC, while some charge via CPM or require a minimum dollar amount.
Have you tried Amazon advertising, and are still spending more than you earn? When you work with AMZ Advisers, you collaborate with an expert team in advertising and marketing services on Amazon.
Click here to learn more about our services.
Author
Stephanie Jensen has been writing ecommerce content for seven years, and her copy has helped numerous stores rank on Amazon. Follow her on LinkedIn for more insight into freelance writing and creating high-quality content.
