Advertising on Amazon provides you with a way to get your products in front of targeted customers and increase your sales.
While your listings will always show up somewhere in the organic search results, they may not be particularly visible, especially when you start selling a new product. Advertising can give your listings a significant boost.
But one of the issues you may be concerned about is the cost.
How much do Amazon ads cost? Can you afford the extra money? Will it be worth it in terms of extra sales?
There’s no one set cost of advertising on Amazon, and it depends on a wide range of factors. These include the type of ad, your budget, and how you target the ads, to name a few.
In this guide, we look at the issues surrounding the cost of advertising on Amazon. Then you can start advertising without going over budget or wasting money on advertising that doesn't generate the results you expect.
- Advertising on Amazon can help you get more visibility for your products and boost sales.
- The cost of advertising is affected by the ad type and the bidding strategy you use, among other factors.
- You can start with a daily budget of $5 or less, but a more realistic budget is $50 per day.
- There are several ways to lower your advertising costs, including optimizing your listings, carrying out effective keyword research, and optimizing your campaigns.
Why Advertise on Amazon?
The key reason to advertise on Amazon is to increase sales. Selling on Amazon can be competitive, and many sellers may be selling the same product as you or very similar products.
Getting visibility for your listings in the search results can be difficult. And if no one finds your products, they won’t buy them.
Amazon ads can give your listings more visibility and get them in front of targeted customers. When people search for something on Amazon, there’s more chance they will see your product, leading to more clicks and, hopefully, more sales.
Even if you don’t advertise on Amazon, you can still get sales. Your listings will appear in the search results, and if you have a good record and your listings are optimized, you could get more visibility for them. But advertising can certainly give your sales a boost.
The problem is that you don’t want to spend additional money promoting your products if the results don’t make up for the extra costs.
Amazon Ad Types
Before we start looking at the actual costs of advertising, we have to consider the types of ads you can use.
Amazon provides sellers with several ad types. The main ad formats most small businesses use are Sponsored Products, Sponsored Brands, and Sponsored Display.
There are others (audio, video, etc.), but they’re typically for larger companies with bigger budgets, so we won't mention them here.
With the Sponsored Products, Sponsored Brands, and Sponsored Display ads, you set them up on your own. These are cost-per-click (CPC) ads, so you pay for every click.
Sponsored Product Ads
Sponsored Products are the most popular. These provide you with an easy way to get started with a low ad spend to get more exposure for your products.
With Sponsored Products ads, you advertise individual products, directing shoppers back to your listings to hopefully get a conversion.
Sponsored Brand Ads
Sponsored Brands (previously known as Headline Search Ads) are slightly more complex. There’s more customization involved, and you can advertise three products, a custom headline, and your logo.
You can also bid for ad placements with sponsored brand ads, and you can send customers to a custom landing page. They’re a great way to create a branded experience, and they often result in higher Return on Advertising Spend (RoAS).
Sponsored Display Ads
Sponsored Display ads can be more expensive. However, product display ads are a good option for building your brand presence and becoming more visible on Amazon. For Sponsored Display and Sponsored Brands, you must also be enrolled in Brand Registry.
You can experiment with all of these forms of sponsored ads, but it may be best to begin with Sponsored Products. Try them out first, then move on to the other ad types.
It’s easy to get started, and you can get your products in front of targeted customers immediately.
Related: The Complete to Advertising on Amazon in 2023
How Bidding Works
With Sponsored Product ads, you choose the keywords you want to bid on manually, or you can let Amazon select them automatically.
If you do it manually, you’ll bid on keywords against other sellers with the aim of ranking for a specific keyword or search term.
Ads are ranked based on the amount you’re willing to bid as well as other factors like the ad’s relevance to the query.
The bid is the maximum you’ll pay per click. If you bid 40 cents per ad and the next-highest bidder has a bid of 30 cents, you won’t be charged 40 cents. Instead, you’ll be charged something like 31 cents per click.
When you set up your ads, Amazon recommends bid amounts for the keywords. This is not a guarantee that you’ll get your ads ranked, but they’re a helpful guide. Alternatively, you can ignore them and bid what you want.
If you bid too low, your ads might appear far down, resulting in fewer clicks. Or the ads might not appear at all. So while you may save money by bidding less, the returns may not be worth it, and you could end up wasting money.
There are several types of bidding to choose from:
- Dynamic Bidding (Down Only) is a good option if you’re starting out and want to optimize your ad spending. This lowers your bids by up to 100% if the chances of getting a sale are low.
- With Dynamic Bidding (Up and Down), Amazon increases or decreases the bid by up to 100%, depending on the chances of making a conversion.
- With Fixed Bids, you set a default amount, and this will not change.
What’s a Suitable Daily Advertising Budget?
So, with all this in mind, what is a good budget to spend on Amazon advertising?
You can set a daily budget on Amazon. With Sponsored Brands, you can also set a lifetime budget for your campaign, but it’s best to stick to daily when starting out.
With a daily budget, you can make changes based on performance. There’s no set figure to spend, and it comes down to experimentation.
If you’re just starting out, set a small daily budget, perhaps $10. Stick with this for a few weeks until you understand the platform and start gathering data, then you can change your budget based on what you learn.
In general, this is still quite low. To get the best results, you’ll probably want to scale up to $50 or more.
But it depends on your niche, your budget, how many additional sales you make, and whether you make enough profit to spend more.
If you spend $40 a day on advertising, or $280 a week, and you only make $250 in extra sales, it’s not worth it and you may need to optimize your campaigns.
If, on the other hand, you make more than you spend, you may want to spend more on your ads and scale up to get even more sales.
Related: 7 Ways Your Small eCommerce Business Can Advertise on Amazon
How to Lower Your Advertising Costs
Now we’ve looked at the general costs of advertising on Amazon, the next area to focus on is lowering the costs as much as possible while still enjoying positive results.
In short, how to get more bang for your buck.
The CPC you pay will depend on the niche of your product. You may spend more on advertising costs for one product than another based on its niche.
Some keywords are very competitive, and you could pay a few dollars per click compared to a few cents. If you decide to spend $8 or so on a click, for example, you should be sure that it will lead to good results.
Carry Out Effective Keyword Research
It all starts with choosing the most suitable keywords. You want to drive the best leads with a low CPC, and this comes down to carrying out extensive keyword research.
The aim is to pick out the best keywords to drive targeted traffic and lower the CPC. There are lots of tools that can help you do this such as Ahrefs, or you can carry out the research yourself.
Don’t just carry out keyword research once and then forget about it. Instead, make it a regular habit. Work out which keywords are generating clicks and sales and which ones are costing you money unnecessarily. Then change which keywords you’re bidding on to improve your results.
Optimize Your Listings
Don’t just throw money at your ads without optimizing your listings first. Otherwise, you’re paying for clicks and sending people to your listings that might be unappealing.
The more relevant your listings are, and the more informative they are, the more conversions you’ll get.
Use the best keywords based on data and your research to optimize your listings. You need to integrate the keywords you have found during your keyword research, then optimize the title, bullet points, and product description.
Use enticing copy that convinces shoppers to buy, include all the expected information so customers can make an informed decision, and use professional images to make your listings eye-catching.
Choose Your Products Carefully
When you’re starting out, be careful about which products you advertise. If you sell several products on Amazon, choose the best products to promote.
Which ones are optimized already? Which have the best reviews? If you lack reviews because you're selling a new product, you’ll end up spending more on the ads.
It may be better to start with a product that already has a few sales and some good reviews to reduce your advertising costs.
Organize Your Campaigns
Make an effort to organize your advertising campaigns. Make them well structured and separate your campaigns and ad groups.
This will give you a better idea of what’s working and not working, which will make scaling them a lot easier.
Try Different Types of Targeting
Experiment with different types of targeting. You can often get a lower CPC by using loose-match targeting compared to tight-match targeting. However, you may be less likely to get a sale, so it comes down to experimentation.
Keep a Close Eye on Metrics
Keep track of all your metrics to find out which ads are performing best. Don’t spend money on practices that don’t work. Every week, track your results, work out what’s working best, and change things up.
Keep on optimizing and improving to get better results and reduce your advertising costs.
Focus on the Essentials
No matter how much you spend on your advertising budget, don’t forget to get the essentials right.
We’ve already mentioned optimizing your listings, but don’t stop there. Focus on improving customer service to get more positive customer reviews, which are a powerful form of social proof and can generate more trust.
Get your pricing strategy right too. By using a repricing tool like Repricer, you can win the Buy Box more frequently and stay there for longer. You can also make your products more competitive and increase profits.
These are all things you should be doing alongside advertising. Don’t just throw money at your ads and hope for the best, and make sure you’re doing everything else right to get the best results from your advertising.
Advertising costs on Amazon vary. You could spend a lot of money on advertising if you’re targeting competitive keywords, or you may only spend a few dollars a day.
The information in this guide should help you understand more about what you can expect to spend.
But nothing compares to trying it out and discovering for yourself how much you’ll spend on advertising.
Start by experimenting with Amazon advertising. Put aside $10 a day for a month, set up a Sponsored Products campaign for one of your products, use automatic targeting, and see how it goes.
Gather data, optimize different parts of your campaign, and after a few months, you should have a very clear idea about the costs of advertising and whether it’s worth it for your business.
You’ll never know for sure unless you try it yourself. So set up an advertising campaign on Amazon and see how you get on. It could become an essential tool for boosting your Amazon sales and taking your business to the next level.