The cost of advertising is one product expense that sellers often overlook in the product research phase before selling on Amazon. Amazon FBA fees, shipping costs, and unit costs need to be factored in when calculating profitability. But what about PPC ads?
Online shopping is becoming more and more popular among consumers, which means advertisers must reach out to this ready-to-buy audience. The fact that almost 3 out of 4 consumers begin their search for products on Amazon.com. This gives brands and sellers a compelling reason for learning how to use the powerful advertising tools Amazon offers.
It is evident that sellers are using these resources to their advantage. According to forecasts, Amazon’s advertising revenue will exceed $31 billion in 2022. The purpose of writing this article is to let Amazon sellers understand how much Amazon PPC services cost if they plan to use them to promote their product. If you need guidance on the Amazon PPC campaign, reach out to our experts at Urtasker.
How much money do Amazon advertisers spend on advertising?
Every seller should invest in Amazon advertising, regardless of whether their product is new or has 1,000 reviews.
Sponsored Products and Sponsored Brands
There are three different types of Amazon PPC management ads that both professionals and brand-registered sellers can use. These include sponsored products, sponsored brands, and sponsored displays. You will access only Sponsored Products if you are not enrolled in Brand Registry.
The most popular type of advertisement among brands and sellers is sponsored products. Over the past three years, ad spend has shifted less towards Sponsored Products and more toward Sponsored Brands and Sponsored Display ads. There is a clear indication that sellers find that investing in their brand presence on Amazon is worth investing in, not just their products.
What is the cost of advertising on Amazon?
You can determine the cost of advertising on Amazon by selecting an ad type, setting a budget, choosing an ad targeting method, and bidding per keyword. In terms of spending, it’s up to you how much you wish to spend every day, yet there are more details involved.
A campaign that costs only $10 per day can be effective; however, you will spend more money than you make if the campaign is not profitable. When creating campaigns, you should target relevant keywords. Nevertheless, you also need to consider other important factors like the product you are selling to ensure your ads are successful. Furthermore, you should consider your product price, the images in your listing, as well as the types of reviews you receive.
The customer is less likely to buy from you if you send traffic to an under-optimized listing than your competitors. As far as ad expenditures on Amazon are concerned, there is no one-size-fits-all solution. Every product, every niche, and every seller requires a different approach. When your listings and campaigns are properly optimized, you will notice better conversions and a higher return on investment.
How much should I budget for advertising each day?
The recommended amount for launching your PPC campaign is $50 to $100 a day. However, you can get started with as little as $5 to $10 a day and increase it over time. Gather data while you let your campaigns run for a few weeks. Choosing the right keywords and setting up your keyword bids will help you improve your listings. Be aware that if you do not plan and your budget runs out too early, your campaign will get paused.
Suppose you have a daily budget of $20 a day and run your ads for a week. It is estimated that you will have spent $140 on advertisements at the conclusion of the week. You haven’t achieved profitability with that campaign if those ads just generated $180 in sales after Amazon fees and your costs of goods. To determine why you are not getting sales from the keywords you are targeting, you should take a look at what you are targeting.
However, If you succeeded in getting $600 sales from the ads, you certainly did something right. You should consider increasing the daily budget of your ads so that your effective ads run for the appropriate length of time, and as a result, you will get a boost in sales.
What is the purpose of keyword bids?
You set a keyword bid following your ad by inputting a value that you are willing to pay for each click. In the process of placing an ad bid, we are bidding against our competitors, who are also offering similar products. In the event that you set the keyword bid for your ad at $0.50, this is the amount that you will be charged for each click on your ad. As a result, your competitors’ ads will appear higher in the search results if they bid more on that keyword. In other words, you are not guaranteed an appearance before consumers, but it would be the case that your competitor’s advertisement would appear before yours.
Estimating your cost-per-click
Depending on the keywords you are targeting, Amazon will show you the recommended bid amount. However, what happens if you do not yet have an Amazon listing as well? Before you purchase a product, it is imperative that you know what the cost per click is for the keywords that are most relevant to your market. You may be able to deduce that a niche is very competitive if the average CPC per keyword is very high. There is a likelihood that getting impressions for your advertisements and listings is more difficult because of high CPC.
PPC campaigns generally have a cost per click of between $0.05 to $10, depending on the campaign. Although that is a very large range, the amount you actually pay for your niche will depend on the amount of competition you will face. CPCs can be extremely difficult to estimate since they will truly vary based on the product and market, so it is difficult to represent a CPC average accurately.
Conclusion
You will be far ahead of your competitors if you devote the time and effort to studying and learning how to determine your advertising costs. In order to succeed as an Amazon seller, especially if you are new, it is crucial to understand these points. You could end up spending your entire profit margin on advertising without knowing what your potential advertisements may cost. This article should help you understand how to start a PPC campaign, what budget you should allocate to advertising, and how to achieve good results from such a campaign.
