SUMMARY: It’s estimated that 60% of online advertising dollars are being shifted to Amazon but is it really worth it? Although Amazon.com has many advertising choices, advertisers’ abundance of paid ads is making it harder for your ad to stand out.
Amazon Prime has over 100 million paid Prime members globally. In 2017, Amazon.com, Inc. delivered over 5 billion items through Prime subscriptions across the globe, and a large number of members – both internationally and in the US – joined Prime as compared to any of the previous years.
Amazon’s ads are similar to Google’s. Advertisers who want to gain more visibility to their products on Amazon can pay for positions by bidding on specific keywords, which will lead to higher visibility. Advertisers will be charged when a shopper clicks on their ad.
The problem that a lot of brands face is that you’re competing against Amazon’s own brands. For example, a seller of skin care products wanted to outbid competitors for the best spots by promising Amazon about $7 each time someone clicked on the product. While the brand never attained the top left slot, it regularly landed in the top row. Unfortunately, Amazon’s own brand, Solimo, had taken over the top left, while some paid advertisers’ products had been bumped to a lower row.
Amazon restricts some of its biggest device rivals from buying advertisements tied to search results for its own products, giving its devices an advantage over competitors, a Wall Street Journal investigation had found.
Essentially, if you want to sell a product on Amazon, it must be seen; if you want it to be seen, you must pay, and right now, that could be a huge spend. Even if you spend the money, there is no guarantee that you’re not going to be outbid or that your ad will be highlighted next to Amazon’s own brand.
So is advertising on Amazon worth it? According to Ad Badger, the average cost per click (CPC) for Amazon PPC is $0.97. This is on par, if not less, than similar advertising on Google and other platforms, which means that there is opportunity for success using Amazon ads.
While there are over five million Amazon Sellers worldwide, in the USA, only 140,000 sellers are doing more than $100,000 in sales. When you look at data for things like “cost per day” and “sales per day,” understand that it trends downward as more users enter our system.
According to Ad Badger:
The average CTR on Amazon is 0.41%
The average CPC on Amazon Ads is $0.71.
The average conversion rate on Amazon is 9.55%.
The average advertising cost of sales (ACOS) on Amazon is 27.49%
The average amount of conversions on Amazon Ads is 36.67 conversions daily.
The average seller spends about $268.21 a day.
The average Amazon advertiser is making $987.77 per day in sales.
So is it worth it? If your product can COMPETE against product searches within Amazon and offers buyers a real alternative it might be. If you’re just another “me-too” product probably not unless you’re competing on just price.
Online advertisers need to understand where that “moment of choice” is going to happen. Is it on Google, or is it on Amazon? It’s been my experience that it’s tough to cut through the clutter on Amazon unless you have a truly unique product.
I usually suggest to clients that they test Amazon ads for a short period of time. If they have a great online eCommerce brand experience, it’s better to use Google if they’re looking to “move competitive products,” Amazon may be a better choice.