Does Amazon Advertising Still Work in 2023?

November 9, 2022 Chuck Kessler

Does Amazon Advertising Still Work in 2023?

How Does Amazon's Ad Platform Compare to Facebook and Google? Here's a Deep Dive to Help You Improve Your eCommerce Marketing Results!

If you’re selling on Amazon, the advantages of leveraging the eCommerce giant’s massive reach 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 you consider to drive Amazon traffic to your listing?

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

To answer that question, let’s look more closely at the differences between the “Big 3” advertising platforms, Google, Facebook, and, of course, Amazon PPC.

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How Does Amazon Advertising Compare To Google And Facebook?

Alongside Amazon ads, Google and Facebook ads are common weapons in a business’s advertising arsenal. But, which one of these digital advertising platforms wins in a head-to-head match-up?

Google has an enormous reach that allows for the broadest search of other advertising sources. Facebook is 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 champions in their own advertising niches, but they’re also all very different when it comes to how they can be used by eCommerce sellers.

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

The next few sections will put them head-to-head to break down the main differences you should be aware of before you begin putting money behind an ad campaign.

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

Let’s start with the most important advertising consideration for most eCommerce businesses, cost. As an advertiser evaluating marketing channels, you’ll probably want to know two things, how much to spend, and, what will I get in return?

To answer those questions, here’s a closer look how ad spend is calculated on each platform.

Google PPC Ads

With Google’s PPC ad platform, you bid on keywords to determine your ad’s placement.

First, you create an ad that utilizes keywords your potential audience are using to find either your own, or similar products. Then, once you have the keywords in place, Google prices 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 cost is around $0.97 per click. Less competitive keywords may only cost cents on the dollar. With a good targeting strategy and niche, long-tail keywords, you can get high-quality clicks directed to people who are ready to purchase.

The downside is that sought-after keywords are highly competitive and expensive, ranging from $1.90-4.90 or more per click. Without a good understanding of searchers’ intent, your ad clicks may become an expensive way to generate brand awareness without the sales you need to offset the expense.

Facebook Ad Campaigns

Facebook’s ad 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 you can’t control the number of impressions or clicks an ad gets, on Facebook, you can set a budget for the total possible reach.

Facebook allows you to target a particular audience to budget ad amounts, and the algorithm handles the rest. With a set budget, advertisers are more able to control their spend.

Amazon PPC Ads

Similar to Google’s ad platform, on Amazon you bid for keywords. Amazon’s PPC option is based on auction, meaning that to win the bid, 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.

In the last year, the monthly average cost-per-click (CPC) of ads on Amazon in the United States has ranged from 0.79 to 1.20 U.S. dollars.

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, you need to be cautious about spending too much without realizing a solid return on your investment.

The key is determining the stage of the purchase process your audience is at. Buyer intent is crucial in determining whether a platform is suited to your advertising objectives or not.

Purchase Intent on Facebook

Facebook is designed for engagement. For the most part, people are there to check up on their friends and engage with others.

Typically, a Facebook user is not on the platform because they’re looking for a particular product, service, or deal.

At the same time, website browsers usually don’t want to leave the platform they’re on. Because of that, 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 a checkout page.

Google users, on the other hand, may be a bit farther along with 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

Amazon users are on the platform to shop!

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.

This is really the key selling point of Amazon ads.

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 Platform Wins?

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 the cornerstone of your strategy to drive sales and revenue.

The truth is that Amazon ads are extremely effective in driving traffic to your Amazon product listings. They 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 perform at their maximum for your business.

Getting Started With Amazon Ads

To get the most from your Amazon marketing strategy, it helps to have a fundamental understanding of how the ad platform is structured.

Digital marketing can be a little confusing for a novice. The next few sections will detail specific solutions to increase your return on investment, avoid potentially costly mistakes, and position your Amazon ad campaign for optimal impact.

Step 1: Amazon Ad Strategy

To begin crafting your Amazon ad strategy, you’ll need to consider the right type of ad for your campaign. Then, determine the ideal keywords that your potential customer may use in a search. After doing that, it’s a matter of setting a budget that leaves room for a profit.

Amazon Ad Types

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

Amazon search engine results showing Sponsored Brand and Product Ads

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 Sponsored Ads dominate the most prominent locations in search results’ real estate.

Sponsored Brand Ads: These ads is displayed as a banner headline on the search result page following a shopper’s search query 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, with a display ad, you target specific audiences or products. These ads will often have a bold image with a short headline copy that grabs the shopper’s attention. The goal is to persuade them to click on your product detail page.

Step 2: Budget

Everyone wants to know exactly how much they should spend on Amazon PPC. The answer can range widely between different 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.

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 Sponsored Display Ads), 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 help narrow, or filter the search process, 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 (such as “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. 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.

Putting Negative Keywords to Use

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

Selecting negative keywords helps Amazon to match your ad more precisely to buyers by making sure your ad isn’t placed in front of irrelevant audiences.

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

All Face Masks are Not Equal

You could easily have your ad for “women’s face mask” appear to 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.

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

Don’t Forget Amazon DSP

The IOS 14 update from Apple could mean changes to your Amazon advertising strategy.

Apple is forcing a prompt asking for explicit permission to track across platforms for every app and website Apple users visit/use. This means there is no more pixel tracking for those who opt out (most people).

One way to take advantage of the wealth of Amazon’s massive first party data is through Amazon demand-side-platform (DSP).

Remember those external websites that Amazon owns that they can serve ads on (mentioned above)?

Those are Amazon DSP ads.

A DSP ad offers one of the most impactful opportunities for advertisers to scale in the post-third-party-data world.

Ads for your products are placed on the Amazon advertising platform, audience network partner sites and apps, as well as a number of placements and media player options within the Amazon website itself.

And, it gets better!

Amazon lends targeting options to DSP advertisers as well.

That’s right. Amazon DSP ads give YOU, the advertiser, the power of their first party data.

Targeting Options Offered by Amazon DSP

In-Market – These are actual browsers and shoppers of specific products or categories ON Amazon.com.

Lifestyle – These are people who’s shopping patterns have been identified to fit a specific pattern that can categorize them as tending to make certain lifestyle choices.

Demographic – Gender, age, income level, etc.

Retargeting – Re-marketing people who viewed your detail pages but didn’t convert.

Advertiser Audiences – Not only can you upload a custom audience of your own (email list or customers from your website), but you can also add a pixel to your site to create this audience.

Other Custom Audiences – You also have the ability to target interests based on things like Prime Video views.

The Verdict

A solid Amazon ad strategy will help your Amazon marketing. It can definitely help support 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?

Many otherwise successful Amazon sellers don’t have the time or expertise to successfully manage their own Amazon PPC or Amazon DSP campaigns.

That’s why they reach out to our team of Amazon advertising experts at CANOPY Management.

Inc 5000 award with a canopy management background

CANOPY Management is Here to Help

CANOPY Management is a “full service” marketing agency for Amazon sellers, and our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the ways in which CANOPY Management is able to help you grow your Amazon business, you’ll know why.

  • Strategic Growth Planning
  • Listing Copywriting Optimization
  • Listing Photography
  • Product Videography
  • Advertising Management
  • Customer Service
  • Demand Side Platform (Amazon DSP)
  • Amazon Posts
  • Full Service Management
  • Amazon Review Aggregation

Ready to Grow Your Amazon Business?

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Chuck Kessler

I'm a western Colorado based trail runner, climber, surfer, and adventurer who loves to write. My focus is on eCommerce and technology as the Content Manager and SEO Strategist at CANOPY Management.