Amazon’s. ad business has multiplied over the last few years, topping $30 billion in the trailing 12 months. Meta Platform’s Facebook and Alphabet’s Google have become central to conversations about a digital advertising triopoly. When asked where consumers begin their shopping journeys, 34% cited Amazon as the top destination.
Amazon claimed 10.3% of the US digital ad market in 2020, up from 7.8% in 2019 — competing with Google and Facebook for ad budgets. That growth has attracted Walmart, Instacart, Walgreens, and other retailers that have joined Amazon in vying for a slice of the ad pie. But other big retailers and delivery companies, including Albertsons, Instacart, and Walmart, are scrambling to build their ad businesses and hiring top talent to do so.
66% of Product Searches Originate on Amazon
If your product is featured on Amazon, it has a high chance of seeing consumers who use search engines.
Some 55% of retailers said everything available on their own website is also available to purchase on Amazon, compared with 23% that said only part of their product line is sold through Amazon.
- The majority of their customers begin their shopping journey on either Google or Amazon, and 83% of respondents said they have increased their interactions with Amazon over the past 12 months
- 61% said digital experience has become an increasingly important part of their brand, followed by 56% who say their competition is doing a better job acting on customers’ expectations
- 65% of retailers said more personalized offers and promotions are an important opportunity for an improved online shopping experience, and 61% said automatically suggesting relevant product recommendations would improve the online experience.
- Over half of the time, a mere 5% of shoppers log in to retailers’ sites while shopping, most opting to wait until checkout or simply using guest checkout
- 77% of respondents said that they are currently using AI and machine learning for search and product discovery, and 21% said they are planning to do so within 18 months
Ironically, according to the data, 40% of all retailers surveyed use technology five years old or more. Some 77% of respondents use AI or machine learning for search and product discovery, and 21% plan to do so within the next 18 months.
How Much Does Advertising Cost on Google, Facebook, and Amazon?
Google PPC Ads
For Google PPC ads, you bid on keywords to determine your ad’s placement.
The popularity of your keywords and the number of clicks your ad generates will vary, and your advertising cost may fluctuate widely as a result. Typical PPC ads can be reasonably low. The average cost is around $0.97 per click. Other less competitive keywords may only cost cents on the dollar. With a good targeting strategy and localized long-tail keywords, you can get high-quality clicks directed to people who are ready to purchase.
Facebook Ad Campaigns
Facebook as a platform charges advertisers based on impressions or clicks. The way Facebook defines an impression refers to the total number of times an ad appears on users’ pages. On average, Facebook ads cost $0.97 per click or $7.19 per 1000 impressions.
Amazon PPC Ads
Similar to advertising on Google, on Amazon, you bid for a keyword. Amazon’s PPC option is based on auction, meaning that to be more relevant than a competitor, you need to be willing to pay 1 cent more than others for the same keyword.
Let’s say that keyword is running ads that cost $1.00, and you bid $2.50 for it. If your bid is the highest, you’d only end up paying 1 cent more than the highest bid, so in this instance, you’d pay $1.01 for your targeted keyword.
The problem with the auction model is the “pay-to-play” system that those with bigger ad budgets can outbid those with a smaller bid, but there are ways you can optimize your ads to still have relevance. Oh, by the way, Amazon can place one of their own ads in the best spot to compete against you.
40% of all retailers surveyed use technology five years old or more. Some 77% of respondents use AI or machine learning for search and product discovery, and 21% plan to do so within the next 18 months. This leads to an important question: will online retailers spend the money necessary to keep up with Amazon?
The Average CTR on Amazon is at .41%
A low click-through rate means that consumers don’t find the ad very compelling. With so much competition, it can be hard to stand out.
The Average CPC on Amazon is $0.71
This is the average amount an advertiser pays when consumers click on Amazon advertising. The lower the CPC is, the larger the ROI will be.
The Average Amazon PPC Conversion Rate is 9.55%
For other websites, the average is 1.33%. This speaks for volumes for Amazon advertising, as it means more people who enter the site are making purchases.
The Average Advertising Cost of Sales on Amazon is 27.59%
ACOS is calculated as the total ad spend divided by the total sales. Most ACOS ranges from 20-40%.
The Average Impressions Per User Per Day on Amazon is 101,265
This represents the high amount of traffic driven toward any given product every day.
The Average Clicks Per User Per Day On Amazon is 382
Impressions most likely lead to clicks. On average, if there are 101,265 impressions, there are 382 clicks that follow.
The Average Conversions Per User Per Day On Amazon is 36.67
Think about the total units sold to each person per day. There is high potential for Amazon shoppers to purchase more than one unit per transaction.
The Average Spend Per User Per Day On Amazon is $268.21
The average amount shoppers spend is a couple hundred per day, meaning thousands per year.
The Average Revenue Per User Per Day on Amazon is $987.77
This includes any discounts, deductions, returns, and refunds. It’s a gross amount, where costs are subtracted to determine net income.
9 Out of 10 Consumers Price Check a Product on Amazon
This shows that Amazon is more likely to have better prices, and consumers know this. Since the prices are lower, the price checks lead to more sales on Amazon.