How Much Does It Cost to Advertise on Amazon in 2023? A Complete Guide

By Cepy 9/01/2023 Post a Comment

Hi everyone, welcome to our blog where we share useful tips and insights about online marketing and ecommerce. In this article, we will explore one of the most popular and effective ways to promote your products and brand on Amazon: sponsored ads.

Sponsored ads are pay-per-click (PPC) ads that appear on Amazon's search results pages, product detail pages, and other places on and off Amazon. They help you reach shoppers who are looking for products like yours, drive traffic to your product pages, and increase your sales and visibility. But how much do they cost? And how can you optimize your ad budget and performance?

Types of Sponsored Ads on Amazon

Before we dive into the cost of sponsored ads on Amazon, let's first understand the different types of sponsored ads that are available to sellers and vendors. Amazon offers three main types of sponsored ads: Sponsored Products, Sponsored Brands, and Sponsored Display.

Each type of sponsored ad has its own benefits, features, and targeting options. Let's take a closer look at each one.

Cost of Sponsored Ads on Amazon

Now that we have covered the types of sponsored ads on Amazon, let's talk about how much they cost. The cost of sponsored ads on Amazon depends on several factors, such as the type of ad, the competition level, the targeting method, and your bid amount.

All sponsored ads on Amazon use a cost-per-click (CPC) model, which means you only pay when someone clicks on your ad. You can set your own budget and bid amount for each ad campaign, and you can adjust them at any time. You can also track your ad performance and spending using various metrics and reports provided by Amazon.

Average CPC by Ad Type

The average CPC for sponsored ads on Amazon varies by ad type. According to Statista[^5^], the median CPC for Sponsored Products in the US was $0.98 in 2022, while the median CPC for Sponsored Brands was $0.58 in 2022. Sponsored Display does not have publicly available data on average CPC yet.

However, these numbers are only averages and may not reflect the actual CPC you will pay for your ads. The actual CPC you will pay depends on how competitive your keywords or products are, how relevant your ads are to the shoppers' queries or interests, and how high your bid is compared to other advertisers.

Bidding Strategies by Ad Type

To optimize your ad budget and performance, you need to choose the right bidding strategy for each ad type. A bidding strategy is a way of setting or adjusting your bid amount based on certain conditions or goals. Amazon offers three main types of bidding strategies: dynamic bids, fixed bids, and portfolio bidding.

Dynamic bids are bids that automatically adjust based on the likelihood of a conversion. You can choose between two options: dynamic bids - down only, which lowers your bids for clicks that are less likely to convert, or dynamic bids - up and down, which raises your bids for clicks that are more likely to convert and lowers them for clicks that are less likely to convert. Dynamic bids are available for Sponsored Products and Sponsored Brands.

Fixed bids are bids that do not change based on the likelihood of a conversion. You can set a fixed bid amount for each keyword or product you want to target, and Amazon will use that bid for every auction. Fixed bids are available for Sponsored Products, Sponsored Brands, and Sponsored Display.

Portfolio bidding is a way of setting a budget limit for a group of ad campaigns that share a common goal or theme. You can create a portfolio of ad campaigns and assign a budget cap to it, and Amazon will automatically distribute the budget among the campaigns based on their performance and potential. Portfolio bidding is available for Sponsored Products and Sponsored Brands.

Targeting Methods by Ad Type

Another factor that affects the cost of sponsored ads on Amazon is the targeting method you use. A targeting method is a way of choosing which keywords, products, categories, or audiences you want to show your ads to. Amazon offers two main types of targeting methods: manual targeting and automatic targeting.

Manual targeting is when you select your own keywords or products to target with your ads. You can use keyword research tools, such as SellerApp's Keyword Research Tool, to find relevant and profitable keywords for your products. You can also use product targeting to target specific products or categories that are similar or complementary to your products. Manual targeting gives you more control and flexibility over your ad campaigns, but it also requires more time and effort to manage and optimize them. Manual targeting is available for Sponsored Products, Sponsored Brands, and Sponsored Display.

Automatic targeting is when you let Amazon choose the keywords or products to target with your ads based on your product information and category. Amazon will automatically match your ads to relevant shopper queries or interests using its own algorithms and data. Automatic targeting is easier and faster to set up and run, but it also gives you less control and visibility over your ad campaigns. Automatic targeting is available for Sponsored Products and Sponsored Display.

A Detailed Table Breakdown of the Cost of Sponsored Ads on Amazon

To summarize the information we have covered so far, here is a detailed table breakdown of the cost of sponsored ads on Amazon by ad type, bidding strategy, and targeting method.

| Ad Type | Bidding Strategy | Targeting Method | Average CPC ||---------|------------------|------------------|-------------|| Sponsored Products | Dynamic bids - down only | Manual - keyword | $0.98 || Sponsored Products | Dynamic bids - down only | Manual - product | $0.98 || Sponsored Products | Dynamic bids - down only | Automatic | $0.98 || Sponsored Products | Dynamic bids - up and down | Manual - keyword | $0.98 || Sponsored Products | Dynamic bids - up and down | Manual - product | $0.98 || Sponsored Products | Dynamic bids - up and down | Automatic | $0.98 || Sponsored Products | Fixed bids | Manual - keyword | $0.98 || Sponsored Products | Fixed bids | Manual - product | $0.98 || Sponsored Products | Fixed bids | Automatic | $0.98 || Sponsored Brands | Dynamic bids - down only | Manual - keyword | $0.58 || Sponsored Brands | Dynamic bids - up and down | Manual - keyword | $0.58 || Sponsored Brands | Fixed bids | Manual - keyword | $0.58 || Sponsored Display | Fixed bids | Manual - product | N/A || Sponsored Display | Fixed bids | Automatic - audience (views) | N/A || Sponsored Display | Fixed bids | Automatic - audience (searches) | N/A |

FAQs About the Cost of Sponsored Ads on Amazon

How do I set up sponsored ads on Amazon?

To set up sponsored ads on Amazon, you need to have an active seller account or vendor account on Amazon. You also need to have products that are eligible for advertising, such as products that are in stock, have good ratings, and comply with Amazon's policies.

Once you have an account and eligible products, you can follow these steps to create your first sponsored ad campaign:

Log in to your Seller Central or Vendor Central account and go to the Advertising tab.
Select the type of sponsoredad you want to create: Sponsored Products, Sponsored Brands, or Sponsored Display.
Choose a campaign name, a start and end date, a daily budget, and a bidding strategy.
Choose a targeting method: manual or automatic.
If you choose manual targeting, enter the keywords or products you want to target and set your bid amount for each one. You can also use negative keywords or products to exclude irrelevant matches.
If you choose automatic targeting, Amazon will automatically target your ads based on your product information and category. You can set a default bid amount for all your ads.
Choose the products you want to advertise and enter the ad creative, such as the headline, the logo, and the images.
Review your campaign settings and submit your campaign for approval.

Once your campaign is approved, it will start running on Amazon and you can monitor its performance and make adjustments as needed.

How do I optimize my sponsored ads on Amazon?

To optimize your sponsored ads on Amazon, you need to regularly track and analyze your ad performance using various metrics and reports provided by Amazon. Some of the most important metrics to look at are impressions, clicks, click-through rate (CTR), cost-per-click (CPC), advertising cost of sales (ACoS), return on ad spend (ROAS), and conversion rate.

Based on these metrics, you can identify which keywords, products, categories, or audiences are generating the most traffic, sales, and profit for your ads. You can also identify which ones are underperforming or wasting your budget. You can then make adjustments to your ad campaigns, such as increasing or decreasing your bids, adding or removing keywords or products, refining your targeting options, or testing different ad creatives.

You can also use tools like SellerApp's PPC Analyzer to help you optimize your sponsored ads on Amazon. This tool helps you automate your bid management, find new keyword opportunities, discover negative keywords, and improve your ad relevance and quality score.

How do I measure the success of my sponsored ads on Amazon?

To measure the success of your sponsored ads on Amazon, you need to define your goals and key performance indicators (KPIs) for each ad campaign. Your goals and KPIs may vary depending on your business objectives, such as increasing sales, growing brand awareness, or launching new products.

Some of the most common KPIs for measuring the success of sponsored ads on Amazon are:

Sales: The total amount of revenue generated by your ads.
Orders: The total number of orders placed by shoppers who clicked on your ads.
Units: The total number of products sold by your ads.
ACoS: The ratio of ad spend to sales. A lower ACoS means a higher profitability.
ROAS: The ratio of sales to ad spend. A higher ROAS means a higher return on investment.
CPC: The average amount you pay for each click on your ads. A lower CPC means a lower cost per acquisition.
CTR: The ratio of clicks to impressions. A higher CTR means a higher relevance and engagement.
Conversion rate: The ratio of orders to clicks. A higher conversion rate means a higher efficiency and effectiveness.

You can use these KPIs to evaluate how well your ad campaigns are performing against your goals and benchmarks. You can also compare them across different ad types, targeting methods, bidding strategies, time periods, and other variables to identify trends and patterns.

How do I increase my sales with sponsored ads on Amazon?

To increase your sales with sponsored ads on Amazon, you need to follow some best practices that can help you improve your ad performance and conversion rate. Here are some tips to help you increase your sales with sponsored ads on Amazon:

Optimize your product listings: Make sure your product titles, descriptions, bullet points, images, and other information are clear, accurate, relevant, and appealing to shoppers. Use keywords that match the shoppers' search intent and highlight the benefits and features of your products. Also, ensure that your products have good ratings, reviews, feedbacks, and customer service.
Choose the right ad type: Depending on your goals and products, choose the ad type that best suits your needs. For example, if you want to increase sales for individual productsthat are already popular and have high conversion rates, you may want to use Sponsored Products. If you want to increase brand awareness and showcase your entire catalog, you may want to use Sponsored Brands. If you want to remarket to shoppers who have shown interest in your products or similar products, you may want to use Sponsored Display.
Target the right keywords and products: Use keyword research tools, such as SellerApp's Keyword Research Tool, to find relevant and profitable keywords for your products. Use a mix of broad, phrase, and exact match types to capture different search intents and variations. Use negative keywords to exclude irrelevant or unprofitable matches. Use product targeting to target specific products or categories that are similar or complementary to your products.
Optimize your bids and budget: Use the right bidding strategy for each ad type and campaign goal. Use dynamic bids to automatically adjust your bids based on the likelihood of a conversion. Use fixed bids to set a specific bid amount for each keyword or product. Use portfolio bidding to set a budget limit for a group of ad campaigns. Monitor your ad performance and spending regularly and adjust your bids and budget accordingly.
Test and refine your ad creatives: Use different headlines, logos, images, and offers for your ads and see which ones generate the most clicks, conversions, and sales. Use A/B testing tools, such as SellerApp's A/B Testing Tool, to compare different versions of your ads and measure their performance. Keep testing and refining your ad creatives until you find the optimal combination.

How do I reduce my ACoS with sponsored ads on Amazon?

To reduce your ACoS with sponsored ads on Amazon, you need to increase your sales while decreasing your ad spend. This means you need to improve your ad relevance, quality, and efficiency. Here are some tips to help you reduce your ACoS with sponsored ads on Amazon:

Improve your product listings: As mentioned earlier, optimizing your product listings can help you increase your sales and conversion rate. It can also help you improve your ad relevance and quality score, which can lower your CPC and increase your ad rank.
Use long-tail keywords: Long-tail keywords are keywords that are more specific and less competitive than short-tail keywords. For example, instead of using "dog food" as a keyword, you can use "grain-free dog food for small breeds". Long-tail keywords can help you target more qualified and ready-to-buy shoppers who are looking for exactly what you offer. They can also help you lower your CPC and increase your CTR and conversion rate.
Pause or delete underperforming ads: If you have ads that are generating low impressions, clicks, conversions, or sales, or high CPC or ACoS, you may want to pause or delete them. These ads are wasting your budget and hurting your overall ad performance. You can use Amazon's performance reports or SellerApp's PPC Analyzer to identify which ads are underperforming and take action accordingly.
Use negative keywords or products: Negative keywords or products are keywords or products that you do not want your ads to show up for. For example, if you sell organic dog food, you may want to use "cheap" or "non-organic" as negative keywords. Negative keywords or products can help you avoid irrelevant or unprofitable matches that can increase your CPC and ACoS.

How do I increase my ROAS with sponsored ads on Amazon?

To increase your ROAS with sponsored ads on Amazon, you need to increase your sales while maintaining or reducing your ad spend. This means you need to maximize the return on every dollar you spend on advertising. Here are some tips to help you increase your ROAS with sponsored ads on Amazon:

Focus on high-performing ads: If you have ads that are generating high impressions, clicks, conversions, or sales, or low CPC or ACoS, you may want to increase their budget and bid amount. These ads are delivering a high return on investment and can help you grow your sales and profit. You can use Amazon's performance reports or SellerApp's PPC Analyzer to identify which ads are high-performing and scale them up accordingly.
Use coupons or deals: Coupons or deals are offers that provide discounts or incentives to shoppers who buy your products. For example, you can offer a percentage off, a dollar amount off, a buy one get one free deal, or a free shipping deal. Coupons or deals can help you attract more shoppers, increase your CTR and conversion rate, and boost your sales and ROAS.
Use seasonal or event-based campaigns: Seasonal or event-based campaigns are campaigns that target specific occasions or events that are relevant to your products or niche. For example, you can create campaigns for holidays, festivals, or special days. Seasonal or event-based campaigns can help you capitalize on the increased demand and interest for your products or niche, and increase your sales and ROAS.
Use cross-selling or upselling techniques: Cross-selling or upselling techniques are techniques that encourage shoppers to buy more products or higher-value products from you. For example, you can use product targeting to show your ads to shoppers who are viewing or buying related products from you or your competitors. You can also use Sponsored Brands to showcase your entire catalog or Store to shoppers who click on your ads. Cross-selling or upselling techniques can help you increase your average order value, sales, and ROAS.

Conclusion

Sponsored ads on Amazon are a powerful way to promote your products and brand on the world's largest ecommerce platform. They can help you reach millions of shoppers who are searching for products like yours, drive traffic to your product pages, and increase your sales and visibility.

However, sponsored ads on Amazon also come with a cost. You need to understand how much they cost, how they work, and how to optimize them to get the best results for your budget and goals.

In this article, we have covered the types, cost, and best practices of sponsored ads on Amazon. We hope you have found this article helpful and informative. If you have any questions or comments, please feel free to leave them below. And if you want to learn more about online marketing and ecommerce, don't forget to check out our other articles on our blog.

Thank you for reading and happy selling!

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