Is Amazon Advertising Worth It? The Benefits of Sponsored Products
Online eCommerce businesses using the Amazon selling platform are met with a bunch of different options for approaching their business. One of them is the option to use “Amazon Sponsored Products” advertising to gain product visibility and (hopefully) drive sales.
But is Amazon Advertising worth it? Are Amazon Sponsored products good for driving revenue?
The short answer is yes! In fact Amazon’s Sponsored Products advertising options are not only good for business on the famous marketplace platform, they’re critical to your overall performance. Businesses using Amazon for greater eCommerce reach should consider using Amazon advertising if they want to grow the success of their business over time.
By 2019 advertising on the online marketplace giant reached almost $10 billion in US ad revenues, a number that represents nearly 8% of the digital ad market. By 2021 it could be closer to a tenth of total US ad revenue as marketers continue to realize the platform’s potential.
Amazon Sponsored Products ads are managed by sellers and businesses on their own. But the option for advertising is only available to professional sellers, vendors, book vendors, Kindle Direct Publishing (KDP) authors, and agencies. These types of ads appear on the top of the search results page anytime some one looks for something on Amazon, they can also appear at the bottom of product pages.
Amazon’s organic performance algorithms and its ad algorithms are actually closely tied together. Because of the way it prioritizes product reviews and keyword presence, getting #1 rankings on Amazon is extremely difficult to do without a comprehensive marketing strategy.
We’ve laid out a few of the reasons why Amazon advertising is worth it for businesses that want to improve their organic success.
Amazon Sponsored Products ads can improve your overall rankings
The Amazon marketplace is powered by the A9 algorithm. This algorithm is what decides which products are moved up to page 1 rankings, and even the coveted spot #1 rankings.
The A9 algorithm looks at a few factors including, each product’s title, its click-through-rate, its conversion rate, and its verified reviews – along with other factors that determine whether your products are visible in the Amazon index.
In this case click-through-rate (or CTR) is a measure of the percentage of people who click on your product out of all the people who view it (for marketers, Amazon is able to track impressions). Conversion rate is a measure of how many people actually buy the product out of all the people who click on it.
So what does this all mean? Amazon doesn’t distinguish on how clicks are gained or how conversions are made. Amazon advertising can immediately put your products at the top of page 1, where potentially thousands of shoppers can see them, which means that paid ads can help your organic performance as well. This is a fast way to get more clicks, more sales, and (if your products are good) better verified user reviews!
Because of the competitive nature of Amazon eCommerce, it’s very difficult to appear on page 1 naturally. And it’s also difficult to get your products in the “Buy Box” in order to win more sales. This is why taking advantage of Amazon’s various paid advertising options means your business can do better overall.
Of course you can naturally wait for your products to gain user reviews, and thus slowly climb up the rankings. But this could take forever, if it even happens at all. 70% of Amazon visitors never click past the first page of results, which means without the quick results of paid ads, you never get any views at all. This is why taking advantage of Amazon Sponsored Products can be crucial for getting your products in front of more people.
Many Amazon sellers know that using keywords in their product titles can help with Amazon organic SEO rankings. But this might not be enough by itself. Likewise placing keywords in your product description, bullet points, and in your back-end keywords can help increase visibility by placing you in the Amazon index – but these things alone aren’t ranking factors and so they won’t help your rankings.
This is why Amazon Sponsored products are worth it. Amazon advertising can help your organic performance by launching your products to the top of the results – legally! This means you can immediately start gathering reviews, driving clicks, and of course making sales!
Research suggests that 35% of Amazon shoppers click on the first product on the search page. The first three products are able to boast, on average, 64% of clicks by themselves! Amazon doesn’t care how sellers get there, they only care that product listings are quality enough to drive sales and get shoppers what they need.
Amazon Sponsored products are good for immediately launching your brand to the first of the results. For sellers and businesses that are new to Amazon this is a crucial way of quickly getting sales traffic and boosting your rankings.
Amazon advertising also gets you revenue
Here’s another reason why Amazon advertising is worth it. It makes money!
Up until now we’ve glossed over the fact that Amazon ads are still, at the end of the day, ads. This means that in addition to improving your organic product performance, they also of course drive traffic on their own. But is Amazon advertising worth it even when you factor in the cost?
Because amazon Sponsored Products work on the cost-per-click model, you pay a small fee anytime someone clicks on your ad. The amount you pay for each click is up to you so you can have more control over the cost. Advertisers can set their own advertising daily budget. When you place ads for certain search terms you are able to set a bid for each one to ensure you stay under your desired budget. Amazon advertising also offers broad match, phrase match, and exact match ad strategies to make sure you can target only the keywords you want to target.
You can spend as little or as much as you want to make sure that Amazon advertising is worth it for your business’s bottom line. This means that an expert ads strategy can make sure your ad revenue outpaces your budget to ensure ROI. With the Amazon advertising report you can use data to see where you are paying for keywords not relevant to you. Adding these keywords to your campaign’s negative keyword list is a way to save ad budget and improve ACoS (Advertising Cost of Sale).
Amazon’s Sponsored Products help your business reach a range of goals, from generating awareness of a new product to promoting seasonal items or creating more demand for a best seller. In addition to the Sponsored Product ads that we’ve described Amazon also offers other forms of advertisements for its business users. They include Sponsored Brands ads (or “headline search” ads which emphasize your brand and show several products) and Product Display ads (which focus on shopper interests instead of search keywords).
They also provide a bunch of analytics tools and reports that let you analyze campaign performance and measure success.
According to Ad Badger research the average cost-per-click for many Amazon sellers is about $0.97. Plus, average daily spend is about $380, which might sound like a lot, but when you consider average daily revenue (sales) is closer to $1,050 the benefits are clear. Paying even a small amount for Amazon advertising can help increase the amount of revenue you receive at a much greater rate. Of course these numbers aren’t guaranteed. Seeing good revenue and lower ACoS is all part of a carefully managed ads campaign that’s done properly.
But because the cost of Amazon ads are easily customizable, and because they often promise good returns, then Amazon advertising is worth it for most businesses.
You are probably halfway there anyway
Here’s one last point. As we described above, Amazon performance is a combination of multiple strategies, so your organic performance is tied largely to product title, descriptions, ratings, bullet-points, etc. – and all these things are necessary for your ads. Once you have these set up and optimized you’re already set for Amazon advertising.
In fact, unlike Google PPC, you don’t need to create any extra ad copy for Amazon Sponsored Products. All you have to do is opt in and Amazon uses your existing product info automatically.
This is why Amazon ads are worth it for many who are unsure about using a paid strategy. Sponsored Products are good for people who want to increase product/brand visibility without overextending their resources or creating too much work for themselves. Ads are easy to set up, but the more adjustments you make, and the more you use data to fine-tune them, the better your long-term advertising results will be.
Amazon advertising is available to qualified sellers who are eligible, and the ads platform is done through the Seller Central access area just like all your other product management. This means no other accounts or software to use.
Their ad campaign section is available in the “Advertising” section of the Seller Central nav-bar. Here ad campaigns can be set up in the Campaign Manager, or you can find data about your ads performance with reports generated by Amazon. Advertisers have access to the “Search Term Report” which gives insights on which keywords that ads are performing best for, as well as CTR, total sales, conversion rate and more.
This data is accessible to anyone running ads and can help give insight on the value of ad campaigns. It can also help inform the rest of your Amazon business strategy as well.
Interested in expanding your Amazon sales strategy? Contact our team to learn more about professional Amazon ads management or to see if Amazon advertising is worth it for your business.