In 2022, Amazon was the third-largest company in the world in terms of revenue. With millions of customers and sellers on the platform, it’s one of the biggest e-commerce sites ever. Whether you’re a small or large business, Amazon has room for you.

However, because of its popularity, it can be hard to compete in your industry. That’s where sponsored ads come in. Some are hesitant to use such ads because of the cost of Amazon sponsored ads. 

The truth is that every ad campaign is different. Keep reading to discover how your product can be an Amazon headline search ad and why sponsored ads are worth it.

What Are Amazon Sponsored Ads?

First, you have to know what you’re selling.

Amazon sponsored ads are a tool for professional sellers and vendors. When you type a product in the search bar, these are the first ads that appear. They may also appear at the bottom of pages.

Amazon ads are a pay-per-click, or PPC, model. This means you only pay when someone clicks on your ad. Ads on Amazon work to increase brand visibility and revenue. 

How Amazon Ads Work

Amazon ads may seem intimidating at first. Let’s break them down for you.

Bidding 

The cost of Amazon sponsored ads largely depends on how you bid. The bidding process involves bidding against other businesses for keywords. The more you bid, the higher your product will appear in the search results and product rankings.

In a PPC campaign, your bid is always the maximum amount you’ll pay for the ad. The next-highest bid will determine the price you pay. For example, if you bid $1.00 for a keyword, and your opponent only bid $0.80, you will only have to pay $0.81 per click.

If you’re unsure where to start, Amazon will recommend keywords for you to bid on.

There are several bidding strategies to choose from:

• Fixed
• Rule-based
• Dynamic (up and down)
• Dynamic (down only)

Fixed bids remain the same regardless of how your ad performs. Dynamic bids will automatically increase or decrease by as much as 100%, depending on their performance. Rule-based ads are middle-ground options, giving you power over how your bid changes over time. 

The Cost 

In 2022, the average amount spent on an Amazon ad was $0.98 per click, according to Statista. The cost of Amazon sponsored ads depends on your bids, strategies, and budget. The more competitive your industry and keywords are, the more you’ll need to increase your ad budget. 

Your ad’s performance will also affect how much you spend. Planning beforehand is crucial so you know how much you are willing to spend to increase your rankings on Amazon.

Types of Ads

The two primary categories of Amazon ads are self-service and premium. Most Amazon ads are self-service. 

Self-service ads include: 

• Sponsored Products
• Sponsored Brands
• Sponsored Display 

The type of ad you choose will depend on your goal. Sponsored product ads are a good option for promoting a specific product. Alternatively, if you want to focus on brand awareness, consider a sponsored brand ad. Sponsored display ads are great if you’re trying to target a niche audience and want to target them on and off of Amazon.

Sponsored Display ads tend to be more expensive than Sponsored Product and Sponsored Brand ads.

Sponsored Product and Sponsored Brand ads are our favorite to use early on since they are more budget-friendly and give you more control with spend.

Bonus tip: If you have video content make sure you are using Sponsored Brand Video ads- they are very catchy and typically see strong click-through rates and conversions if it addresses customer needs and pain points.

Budgeting Your Amazon Sponsored Ad

When you choose a budget for your Amazon ad, you can pick between a daily budget and a monthly budget cap. For a business just starting on Amazon’s ad platform, a daily budget is crucial to avoid overspending and costly mistakes. It will allow you to change your budget over time as you experiment.

Pro tip: Your monthly budget should always be set to ends “never” (found inside your modify portfolio in the Amazon advertising console) to ensure monthly spending does not get out of control.

Your daily budget will shift in the beginning stages as you learn the platform and adjust according to performance. You can always start low, and then increase your budget as you see a return on investment. This is our favorite strategy we use for clients that helps us meet goals for ROAS and monthly ad budgets.

You may not see a profit immediately, but that is how you know you need to adjust your strategy. If you are doing ads yourself you will want to move slowly and understand may be costly mistakes while you are learning how to run Amazon ads. There are also some ways you can lower your cost per click: 

• Choose less competitive keywords 
• Choose your products with more positive reviews for a higher probability of profit
• Use Amazon’s automation and optimization tools (we don’t recommend relying on all their tools as some are flawed)
• Use Amazon dayparting to have ads running during high-traffic parts of the day
• Do keyword research 

The Benefits of Using Amazon Sponsored Ads: Why It’s Worth It

Now that you know what Amazon sponsored ads are and how they work, you might wonder what makes them a good investment. 

Beat the Competition

Your product might be incredible, but your customers will never find you if your competitors’ products bury yours in the search results. Most customers don’t look past the first couple of pages of results (or even past the first page!) Make sure yours is there to catch their eye.

Pro tip: Be an early adapter of beta features inside your Amazon advertising portal to stand out from the competition even more!

Improve Your Ranking

Amazon ranks products by click-through rates, conversion rates, and reviews. The more visible your product is, the more these rates will increase. When your ranking improves, shoppers will likely see and buy your product. Another factor that will help you to improve your ranking is keeping inventory in stock through FBA (fulfilled by Amazon).

Increase Revenue 

The goal, ultimately, is to increase your revenue — which is exactly what Amazon ads do. You do not want to increase money spent just for the sake of spending so it is important you lay the foundation for your ads correctly to avoid excess spend with little results. With the right strategy, the revenue you make from your ads should drive a decent profit compared to what you spent- if not you may want to have your ads evaluated to see what needs to be fixed. 

Transform Your Amazon Sales Channel With Click Fluency

The cost of Amazon sponsored ads is worth it. If you’re ready to take your business to the next level, contact Click Fluency. Click Fluency offers awareness, conversion, and elevation services to help you win on Amazon- and do it in a way that grows with your business and not burning money with unsuccessful ad campaigns. 

Click Fluency has extensive experience with Amazon and offers an entire team of resources for less than the cost of one employee. Learn more about Amazon retargeting ads and other effective strategies.

You can start today by scheduling a call or simply email us contact@clickfluency.com.