Amazon may not get as much recognition as other digital advertising platforms like Google or Facebook, but it can drive traffic and sales to your ecommerce store. Around 56% of U.S. adults begin their search for a product on Amazon. If you’re an ecommerce brand, you could be missing out on one of the best channels to acquire new customers.
If you have or are considering Amazon Ads, explore why brands use it and how it can be effective for your marketing in this article.
Why Amazon Ads Work
In 2022, Amazon brought in $37.7 billion in ad revenue, a 21% increase from 2021. By the end of 2023, Amazon will account for 10.2% of all global digital ad spending.
Here are a few more statistics that show Amazon’s advertising reach and potential impact on your ecommerce business.
- In 2021, Amazon accounted for 11.3% of digital ad revenue share in the U.S. — not far behind Facebook at 23.8%.
- Forecasts suggest Amazon Prime members will increase to 176 million by 2025.
- According to Amazon Advertising Benchmark Report 2022, the platform’s average ad cost per click (CPC) is $0.89. While the CPC is high in the U.S., it’s lower in other countries.
- The Advertising Cost of Sales, which shows what brands spend for every $1 earned, is around 35.6%. It means that on average, advertisers spend $0.35 for every $1 earned.
- A survey found that 20% of U.S. retailers spend $41,000 to $60,000 in ads per month on Amazon Ads. Another 20% spend $100,000.
- Amazon’s advertising services business segment accounted for 7.3% of the company’s total net sales in 2022 — a 6.6% increase from 2021.
- There was a 77% year-over-year increase in Amazon video ad spend, with 23% of advertisers using them in 2022 compared to 13% in 2021.
Best Amazon Ads for Ecommerce
You can advertise on Amazon through PPC (pay-per-click), sponsored:
- Products
- Brands
- Display ads
- Video ads
- Audio ads
Amazon also offers programmatic advertising through its Amazon demand-side platform (DSP). In plain terms, you can automate part of the process of media buying and advertise on and off Amazon.
If you’re wondering which are the best types of Amazon Ads to run for your ecommerce business, it depends on your product, audience and creative assets.
However, some ads can be more effective than others.
In a survey, 44% of respondents said they received the highest return on advertising spend (ROAS) through sponsored products. Amazon DSP ads were close behind at 40% and video ads (39%).
Metrics for Measuring and Analyzing Amazon Ads Performance
Let’s look at the metrics you can use to measure the performance and what the average numbers are for each on Amazon Ads.
- Click-through rate (CTR) – 0.35%
- Conversion rate (CR) – 10% to 15%
- Return on ad spend (ROAS) – $3 and $5
- Advertising cost of sales (ACoS) – around 30%
Expert Amazon Advertising Tips for Ecommerce Brands
Perfecting your Amazon advertising strategy isn’t child’s play. The platform has different rules compared to other channels. But with tactics like capitalizing on performing keywords and automatic targeting, you can make your Amazon advertising strategy work for you.
1. Build Awareness and Increase Conversions With Optimized Product Listings
Amazon SEO helps products rank higher in search results. The simplest way to tap into this is to use relevant keywords.
Long-tail keywords are more specific and have a low search volume, but they may be more cost-effective to bid on and reach target audiences. Negative keywords eliminate specific search terms from your ad campaigns, so you don’t spend money on keywords that aren’t relevant.
You can find relevant search terms for your product by typing different phrases and words in Amazon’s search box. The drop-down suggestions will guide you further. For example, if you’re an ecommerce brand selling protein powder, possible keywords might include:
- Protein powder for weight loss
- Flavors (Protein powder vanilla, chocolate, etc.)
- Protein powder for smoothies
2. Use Product Attribute Targeting (PAT)
Product Attribute Targeting (PAT) lets vendors get ad space alongside specific brands, times or products. It’s similar to contextual targeting. The people that are interested in those products may also buy yours.
You can identify specific ASINs (unique numbers for Amazon product listings) and ratings. So, your product appears alongside specific products that have a four-star rating.
Setting up product attribute targeting is more complex and not the most beginner-friendly. Our Goodway experts can help you identify the right audience targeting parameters and set it up for you within Amazon.
3. Expand Reach With Programmatic Ads on Amazon’s DSP
According to a Perpetua study of $18 million DSP spend, researchers found that Amazon DSP ads improved the performance of sponsored products and gave advertisers a large share of new customers.
The same analysis also found that sponsored product ads do better when used in conjunction with Amazon DSP. For instance, the ROAS was 19% higher for Sponsored Products ads run with Amazon DSP. Goodway can also help you set up programmatic ads on Amazon, The Trade Desk and other DSPs.
4. Get Ahead With Amazon’s Social Shopping
People are going to social media to discover new products and shop directly in-platform. On top of that, more advertising platforms are taking a page out of TikTok’s playbook.
TikTok’s short-form videos get more engagement, and they’ve increased social shopping. YouTube, Amazon, Google and more are adjusting their platforms to emulate it.
In December 2022, Amazon announced it would introduce a TikTok-like social shopping feed for its users. It already partnered with more influencers, but now brands should think about how to make their ads more social shopping friendly. Part of that is creating short-form videos and leveraging user-generated content.
5. Improve Audience Targeting and Data With Amazon Marketing Cloud
The Amazon Marketing Cloud is a safe clean room solution for advertisers to conduct analytics. With Amazon Web Services (AWS) as its underlying infrastructure, the AMC helps advertisers ace media optimization and audience analysis.
6. Prove Impact With Amazon Reporting
The Amazon search term report gives you insights into metrics like click-through rate, search term use, impressions and keyword targeting. It keeps track of your ACOS and ROAS.
Find these reports in your Seller Central and use the data to curate future ad campaigns.
What’s Next for Your Advertising?
Goodway doesn’t only provide advertisement solutions for Amazon. We take a holistic approach to marketing and measurement. Our services include programmatic ads, data clean room solutions, paid search, paid social and other solutions which drive tangible results for your business.
FAQ
Do you have to be an Amazon Seller to run Amazon Ads?
Amazon Advertising is not limited to Amazon sellers only. Amazon Advertising is also available to other ecommerce brands that want to advertise their products on Amazon’s platform. Businesses can create Amazon Advertising accounts through Amazon Advertising Console, which is separate from Seller Central.
Elly Tedrow is the content and search marketing manager at Tuff, a Goodway brand. She has eight years of experience in marketing. Her experience spans partnership strategy, email marketing and branding, but SEO and content are her specialties. When she’s not digging through a website’s SEO, she’s hiking with her dog Buster, watching YouTube tutorials, reading a book or trying out a new food truck.