Does Amazon Advertising Work?

March 23, 2021
Posted in News
March 23, 2021 Alex Smythe

Does Amazon Advertising Work?

Anyone selling on Amazon has probably asked this question at one point or another…

Does Amazon advertising really work, or are there better, more cost-effective ways to drive more sales?

When a person shops on Amazon, they have immediate access to over 600 million products from sellers worldwide. The advantages of leveraging Amazon’s massive reach to sell your product are obvious. What’s less clear is how your business can compete and stand out in such a crowded marketplace.

Advertising is an obvious answer, but what kind of advertising should a business consider for driving Amazon traffic?

To answer that question, we need to look more closely at the differences between the “Big 3” advertising platforms available for Amazon sellers: Google, Facebook, and, of course, Amazon PPC.

 

How Does Amazon Advertising Compare To Google And Facebook?

If we want to know if Amazon advertising really works, we need to see how it compares to its closest competitors. In addition to Amazon ads, Google and Facebook ads are two more common weapons in your business’s arsenal, but which one of these digital advertising giants wins in a head-to-head match-up?

On one hand, we have Google—the leading search engine worldwide. Google has an enormous reach that allows for the broadest search of other advertising sources.

Then, we have Facebook—the largest social media platform in the world with approximately 3 billion users.

And finally, coming in at over 197 million monthly visitors, Amazon is the world’s largest retailer.

These three platforms are all heavyweight champs in their own niches, but they’re also all very different when it comes to advertising.

How do we know which platform performs best for Amazon sellers?

Let’s put them head-to-head and break down the main differences advertisers should know before they start running ads on these three popular platforms.

 

How Much Does Advertising Cost on Google, Facebook, and Amazon?

Let’s start with the most important advertising consideration for most ecommerce businesses—cost. Any advertiser who is evaluating a marketing channel wants to know two things. First, how much will I need to spend? And second, what will I get in return?

To answer those questions, let’s break down how ad spend is calculated on each platform.

Google PPC Ads

For Google PPC ads, you bid on keywords to determine your ad’s placement.

First, you create an ad that utilizes keywords your potential audience may use to get the results for which they’re searching, and once you have the keywords in place, Google selects a cost for your ads based on the projected number of clicks you attract and the competition for keywords you designate in your ads.

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, with the average costing around $0.97 per click, while 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.

The downside is that some keywords can be highly competitive and expensive, ranging from $1.90–4.90 or more per click, and without a good understanding of searchers’ intent, your ad clicks may become an expensive way to generate brand awareness without any sales to offset the costs.

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.

While advertisers can’t control the number of impressions or clicks an ad gets, they can set a budget for the total possible reach.

Facebook allows advertisers to target a particular audience to budget ad amounts, and the algorithm handles the rest. With a set budget, cost doesn’t fluctuate as users click ads and advertisers can easily control their spend.

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.

How it works is that you, as an advertiser, put a dollar amount bid on a 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.

As of 2020, the average cost-per-click (CPC) for keywords on Amazon was $0.71 CPC with an average range between $0.50-$1.00.

At a lower average cost than Google or Facebook, Amazon PPC seems, at first glance, to be the most cost-effective option.

However, as any advertiser would know, it’s not just about how much you spend. It’s about your results.

That means, if we want to know if Amazon advertising really works, we still need to compare Amazon, Google, and Facebook in terms of overall effectiveness.

 

Which Advertising Channel is Most Effective for Driving Sales?

As an advertiser on these platforms, you want to be cautious in spending too much without seeing a reasonable return on your investment.

What you need to understand is at what stage your audience is with their decision to purchase. This buyer intent is crucial in determining whether a platform is suited for your objectives or not.

Purchase Intent on Facebook

Facebook is designed for engagement. People are there to check up on their friends and engage with others by commenting on an article their aunt just shared, posting a photo from their beach vacation, or dropping a thumbs-up on a friends’ post.

Typically, you’re not on Facebook because you’re looking for a particular product, service, or deal. When you’re not in that “purchase mindset,” ads can even feel intrusive.

Plus, browsers don’t typically want to leave the platform they’re on, so they’re less likely to click on an ad that they know will direct them to another site.

You can take advantage of Facebook’s social engagement to promote awareness of your product, but as a means for a direct sale, there’s a clear barrier between Facebook users and your checkout page.

Google users, on the other hand, may be a bit farther into the buying process.

Purchase Intent on Google

Google is the world’s leading search engine with the most traffic and searches. As a user types in their query, Google will use keywords and intuitive search to find the best results. Google recognizes the inputs and assigns different relevant ads to searches that a user conducts.

In general, if you are running Pay-Per-Click (PPC) ads that have relevant keywords that Google finds as a match for the search, they will position your ad on the results page.

Typically, if someone is searching for something on Google, it’s because they have a question. They’re aware that they have a problem, and they’re actively searching for a solution. Serving your ad to users at this stage is a great way to boost brand awareness but requires you to tighten down your keyword optimization to be relevant.

However, most people are using Google to research their options, and they’re usually not ready to make an immediate purchase.

There are a lot of reasons why someone uses Google. They could be looking for a solution to a problem with no intention to buy, browsing for options, or comparing specific products.

In other words, as related to purchasing decisions, Google is the broadest search possible for the user. Users at this stage are often looking for necessary information and may be multiple steps away from being ready to make a purchasing decision.

Purchase Intent on Amazon

Let me ask you a question—Why do people use Amazon?

They are there to shop, of course!

While some may just be researching for a future purchase, the majority of users on Amazon are there because they are ready to make a purchase.

As a retail shopping site, Amazon attracts people who are already far enough into their buyer journey to not only recognize their problem but to be ready to spend money on a solution.

This is really the key selling point of Amazon ads.

Yes, it’s always important to consider using Facebook or Google to expand your reach, boost awareness, and drive some off-Amazon traffic, but only Amazon ads can directly reach the people who are already on the platform and ready to buy.

That’s why Amazon ads tend to have an advantage over other ad channels when it comes to having a real, measurable impact on your bottom line. On average, Amazon ads tend to return 20% more on investment than a brand’s average marketing ROI.

Which Ad Channel Wins?

As you can see, when it comes to both raw ad cost and concrete ROI, Amazon delivers more sales and tends to cost less than Facebook or Google.

That’s not to say that Facebook and Google aren’t useful to people selling on Amazon. It just means that your Amazon ads should be at the cornerstone of your strategy to drive sales and revenue.

Does Amazon Advertising Really Work?

Now, that we’ve delved into the differences between Amazon, Facebook, and Google ads, we can give you a definitive answer on whether or not Amazon advertising really works…

That answer is… yes and no.

Does that clear things up?

The truth is that Amazon ads are extremely effective in driving traffic to your Amazon product listings, and it tends to give Amazon sellers a distinct advantage that they just can’t get from other marketing channels.

However, like any marketing channel, you need an effective strategy to make Amazon ads work for your business.

 

Getting Started With Amazon Ads

You need to know some tricks to the most from your ad campaigns. Otherwise, you may not get the results you want.

Getting started on Amazon advertising can be a little confusing for a novice, so let’s dig into some specific solutions to increase your return on investment, avoid potentially costly mistakes, position your ad for optimal impact, and ultimately, make Amazon advertising work for your business.

Step 1: Amazon Ad Strategy

Before diving into Amazon ads, you need to have a carefully crafted strategy.

You need to consider the right type of ad for your campaign, the ideal keywords that your potential customer may use in a search, set a budget that allows you room for a profit, and crafting your copy to match those factors.

If you jump headfirst, you could waste a lot of money and time with a random campaign structure and keyword selection.

Types of Amazon Ads

There are three main Amazon Ads types to consider: Sponsored Product, Sponsored Brand, and Sponsored Display.

  • Amazon search engine results showing Sponsored Brand and Product Ads

    Amazon Sponsored Ads dominate the most prominent spaces in the search results.

    Amazon Sponsored Product Ad: This type of ad highlights a specific product, gets a prominent placement in relevant searches, and drives buyers directly to the Amazon sales page for this particular product.

  • Amazon Brand Ads: This ad is displayed as a banner headline on the search result page after a buyer search and prominently features your brand logo, a customizable headline, and a few of your products.
  • Amazon Sponsored Display Ads: This is not a keyword-driven ad. Instead, you choose to target specific audiences or products. These ads will often have a bold image with a short headline copy that grabs the shopper’s attention to, hopefully, persuade them to click on your product detail page.

Depending on your goals, you can allocate your budget toward these different campaign types. Typically, Amazon sellers put most of their budget toward Sponsored Products Ads.

That’s why it’s so important to make sure you’re getting your product in front of searchers by fully utilizing Amazon’s available ad types. Between Sponsored Brand Ads at the top of the page and Amazon Sponsored Ads along the top row of search results, a lot of the best real estate on Amazon search is occupied by paid ads.

Step 2: Budget

Next, comes budget. Everyone wants to know exactly how much they should spend on Amazon PPC, but the answer ranges widely between sellers and depends on countless factors both in and out of the business’s control.

If you’re new, a good rule of thumb is to start slow and focus on your top-performers to drive additional profit so you can continually build upon that success.

As you decide on your ad budget, keep in mind that high-performing ads convert at approximately 36%, with the average spend being a little more than $260 with a return of roughly $900.

Because Amazon ads (with the exception of SDAs) are pay-per-click, you only pay once your ad is clicked. If you strategize well, you can keep costs low while getting your ads in front of people who are ready to buy.

Step 3: Keyword Strategy and Optimization

Plan your keyword strategy to narrow down from broad search terms to a specific search result. The trick is to target long-tail phrases that are specific to your product.

For example, if you’re selling a skincare mud mask, targeting keywords such as “face mask” may be too broad, making it less relevant as far as targeting a specific buyer. The result could be that you’ll spend more than you may get back in return.

The more specific your targeted keyword, like “hydrating mud mask for skin,” the more you narrow your potential audience down to people searching for similar products.

Of course, there are dangers to whittling down this audience too much, but generally, long-tail keyword phrases that are specific and relevant to your product tend to attract higher quality traffic that is more likely to convert.

You’ll also want to look into excluding irrelevant audiences by adding negative keywords into your campaigns.

Even if you create more specific keyword searches such as “women’s face mask,” you could potentially have your ad appear for people looking for any entirely different type of face mask. Now we’re not talking about skincare. We’re talking about the kind of mask that suddenly became a very popular seller in 2020.

Using negative keywords like “cloth face mask” or “medical face mask” within the ad campaign tells Amazon to exclude specific search terms to make your ad appear in fewer irrelevant searches.

You can choose between negative phrases and negative exact matches to help Amazon determine how your ad and product should be placed when search terms match your keyword campaigns.

When you compile your list of negative keywords to use, think about how a person could accidentally get your product for an unrelated search. A little initial brainstorming could help you save some money in the beginning.

Once your campaigns have run for 2-4 weeks, you’ll have a better sense of additional keywords to exclude.

To optimize your keyword strategy, you can analyze underperforming keywords using a tool like PPC Scope. While you’re combing your keyword report for potential negative keywords, stay on the lookout for terms that have…

  • Low click-through rates
  • High clicks but low conversions
  • High ACoS and low conversions

Selecting negative keywords is the process of slimming down your keywords and force Amazon to match your ad more precisely to your target audience. The goal is to put your ad in front of only those buyers looking for the exact thing you’re offering.

If you’re not using negative keywords, you run the risk of…

  • Low click-through rates
  • Low conversions
  • High ACoS
  • Possible lower product placement for some searches

Lower click-through rates as a result of poor keyword strategy can be deadly to your Amazon sales.

In the eyes of the Amazon algorithm, low CTR signals low quality, and your ad placement and organic ranking may suffer as a result. With low CTR, You may find your ad placement dropping lower than competitors, which will cost you sales.

The Verdict

To go back to our original question—Does Amazon advertising work?—as you can see the answer is complicated.

A solid Amazon PPC ad strategy can help support any of your business goals—from boosting brand awareness to gaining market share to driving revenue. For Amazon sellers, Amazon advertising offers benefits that you just can’t get with Facebook or Google ads.

On the flipside, going in without a strategy or failing to continuously adapt your strategy to fit your situation can end up costing you thousands of dollars.

So, what’s the solution?

If you don’t have the time or expertise to successfully manage your own Amazon PPC campaigns, reach out to our team at CANOPY Management. Our team of Amazon experts and insiders work with top brands selling on Amazon to help them grow to become “Category Kings and Queens.”

If you’re interested in working with the best and brightest in the Amazon industry, request a call to get started.

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