If you sell on Amazon, investing in Amazon ads is a great way to help boost sales of
your products.
But as with any investment, there’s a cost, which is why I’m here to tell you all about
what you can expect to pay for your Amazon ads.
Hint: It’s not as much as you may think.
I’ll also go over how Amazon ads work, and a few ads you might want to try for your business.
Keep watching to learn more.
Before I get into the cost of Amazon ads, let me outline two types of ads you can use.
These aren’t the only ads available on Amazon, but they’re certainly great options for
businesses.
First are sponsored products ads.
These ads look like a typical product listing in the Amazon results pages, except they’re
labeled with a tag that says they’re sponsored.
When someone clicks on the ad, they see the full product description, images, and whatever
other information you include with your product.
Second are sponsored brand ads.
You can see these ads as a headline above, to the left of, or below the Amazon search
results.
They include your brand’s logo and up to three products.
These ads can connect users to your Amazon storefront or your product listings when they
click on it.
Both sponsored products and sponsored brand ads use a cost-per-click (CPC) model, which
means you pay every time someone clicks on your ad.
To use sponsored products and sponsored brand ads, you need a minimum daily budget of $1.
Okay, here it is.
How much do Amazon ads cost?
It depends.
Wait! Wait!
Don’t go.
I have numbers!
While Amazon’s cost per click can vary, industry pros tend to place it under $1.
Since Amazon uses a bidding system to determine when ads show up, this will fluctuate based
on what you’re targeting and the competition.
When it comes to your overall budget, there’s a big range since this is based on what your
business wants to spend.
Budgets could be anywhere from $100 to $50,000 each month...not saying you can’t go under
or over that.
Plus, if you partner with an agency, you can expect to invest a little more for things
like copywriting, product photography, and ad optimization.
The overall cost really depends on how competitive you want to be.
When planning out your ads, you should also focus on your Advertising Cost of Sale, or
ACoS.
ACoS deals with your Amazon return on investment.
Anyway...as the name says, ACoS is a calculation of how much you spend on Amazon ads as a proportion
of how much you make from your ads.
If that doesn’t make sense, here’s an example with more numbers.
To find your ACoS, you divide your ad spend by your sales revenue from your ads, and then
multiply that number by 100.
So if you spent $5,000 on your ads and made $15,000 in sales revenue, your ACoS would
be about 33%.
This means your ad spend takes up about 33% of your Amazon sales revenue, so the lower
the percentage, the better.
You definitely don’t want your ACoS to exceed 100%, or even be near 100%.
That means your ad spend is close to or greater than your revenue from that ad, and you may
need to rethink your campaign (or partner with a team of Amazon experts to rethink it
for you).
You also don’t want your ACoS to exceed your profit margin.
The ACoS formula doesn’t factor in things like production costs and other fees, so it’s
important to keep track of how much it really costs to sell your products.
If you have a profit margin of 20 percent, and your ACoS is 25 percent, you’re losing
money.
You might not start off with a low ACoS, but if you optimize your ads well for your target
audience, you can see improvements and take home more of your ad revenue at the end of
the day.
What you do with that revenue is up to you.
Adopt a company cat, invest in more ads, get matching shirts for all of your employees,
pay your bills.
It’s your business, so I’ll leave that decision to you.
If you’re looking for an agency with Amazon pros who know how to optimize campaigns, don’t
hesitate to reach out to us at WebFX.
And, of course, I can’t say goodbye without plugging our YouTube channel.
If you enjoyed this video, learned something new, or both, give us a thumbs up and subscribe
to our channel for the latest in digital marketing.
See you soon!