Is Amazon Advertising Worth It in 2023?
August 17, 2023
If you’re an Amazon seller - or aspiring one - you’ll already know that setting up a storefront takes time, money, and all kinds of investments - and you’ll also likely know that deciding when and where to invest your time can be a lengthy, complicated process. In short, all any Amazon seller wants to know is this: where should they invest their marketing budgets to reap the most significant returns?
Enter Amazon Advertising: with complex yet effective advertising strategies available, Amazon Ads can be an easy and quick way to get your brand in front of your customers - and hopefully drive sales. But with the competition on Amazon soaring year on year, the more pressing question for businesses in 2023 is: is the investment in Amazon's ad ecosystem truly worth it? Spoiler alert: we certainly think so - but let's take a look at - and break down - the important info.
The State of E-commerce and Amazon
E-commerce Landscape and Growth
In the span of just a few years, e-commerce has evolved from a convenient shopping alternative to a dominant market force. With the global pandemic of 2020 acting as a catalyst, consumers embraced online shopping at an unprecedented scale, and in 2023, e-commerce now accounts for a substantial portion of all retail sales worldwide. Digital storefronts are no longer an accessory to physical shops but a core component of a brand’s retail strategy, and many brick-and-mortar stores have decided to shut up shop and take their businesses digital.
And it’s important to note that these trends are global; as an Amazon advertising agency working with clients all around the world, we can confidently confirm that upticks in online shopping and the formation of online stores have no postcode identity; everyone wants a slice of the e-commerce pie.
Amazon's Dominance in Online Retail
Among the vast array of online retailers, Amazon stands apart, not just in magnitude but in its holistic ecosystem. With its unparalleled product assortment, Prime memberships, and customer-centric approach, Amazon has cultivated a loyal user base. For many, Amazon is the starting point of their online shopping journey, making its marketplace a potent platform for sellers to showcase their offerings.
Key Trends in Online Advertising
As e-commerce has flourished, so has the arena of online advertising. Brands aren’t just battling for the consumer's money but also for their attention, with video ads, interactive banners, influencer marketing and AI-driven personalized ad experiences on the rise. But what sets Amazon Advertising apart is its intricate blend of e-commerce and advertising, providing brands the double advantage of visibility and immediate sales conversion.
Understanding Amazon Advertising
So, what do you need to know about Amazon Advertising as a seller? Let’s take a look at how the platform’s ad services work:
Much like the sponsored search results on search engines, Sponsored Products are ads for individual product listings on Amazon. These ads appear on search result pages and product detail pages, giving products an increased visibility, especially for competitive keywords. Given that these ads operate on a pay-per-click model, businesses only shell out when a potential customer shows direct interest, making it a cost-effective solution.
Ad Placement and Targeting
Amazon’s sophisticated algorithm ensures that your ads reach the most relevant audience. Based on keywords, products, or interests, advertisers can pinpoint their target demographic with surgical precision. Furthermore, with the introduction of new ad placements not just on product pages, but within the broader Amazon ecosystem, including Fire TV and even on Amazon-owned IMDB, the reach is more expansive than ever.
Cost and Budget Considerations
Navigating the financial landscape of Amazon Advertising requires a mix of strategy and adaptability. While the platform provides tools to set daily or campaign budgets, the real game is in bidding. Advertisers need to determine the most effective bid amount for their keywords, ensuring visibility without overspending. It’s a delicate balance, underpinned by continuous monitoring and adjustment, but when mastered, it can yield an impressive ROI.
Pros of Amazon Advertising
So, now for the good stuff - why is Amazon Advertising worth your time? Here are just a few reasons:
Enhanced Visibility and Discoverability
In the vast ocean of products that Amazon encompasses, standing out is the first hurdle for any brand. Amazon Advertising acts as a beacon, directing potential customers right to a brand's digital doorstep. Whether it's a seasoned seller or a newcomer, these ads offer a unique advantage: ensuring that products appear right where the potential customer is looking. This increased visibility can be pivotal, especially for new product launches or niche items, enabling them to gain traction in a crowded marketplace.
Access to a Vast Customer Base
Amazon isn't merely a marketplace; it's a global phenomenon with an established and expanding user base. Every ad campaign executed on the platform grants businesses access to this vast pool of potential customers. Beyond sheer numbers, it's the quality of this audience that stands out. With a significant portion being Prime members, these are customers conditioned for frequent purchases and, more importantly, trust the platform, making them more likely to convert.
Opportunity for Increased Sales and Revenue
Visibility is one side of the coin; conversion is the other. With Amazon Advertising, these two go hand in hand. Ads drive traffic directly to product listings, meaning there's a shorter journey from discovery to purchase. Consequently, when optimized correctly, these campaigns can significantly boost sales volumes. Moreover, the ripple effect of increased sales — better rankings, more reviews, and enhanced organic visibility — can further augment a brand's revenue on the platform.
Measurable Performance and Data Insights
One of the standout features of Amazon Advertising is its transparency. Brands aren't left in the dark, wondering about their campaign's performance. Instead, a suite of analytics tools provides granular insights into metrics like impressions, clicks, conversion rates, and more.
This data-driven approach allows businesses to continuously refine their ad strategy, ensuring they get the maximum bang for their buck. Furthermore, these insights can offer valuable lessons for a brand's broader marketing strategy, making them more adept in other arenas.
Cons of Amazon Advertising
Now, everything has a downside - so what are some potential problems that sellers might run into when using Amazon Advertising? We’re all about transparency when helping our clients, so here are some potential problems you could end up navigating:
Increased Competition and Bid Wars
The allure of Amazon Advertising is evident to most sellers, and therein lies its first drawback. With an ever-growing number of brands vying for prominence within Amazon's marketplace, the competition is fierce.
High-demand keywords and product categories often become battlegrounds, as sellers engage in bidding wars. This escalating competition can result in inflated bid amounts, potentially eroding profit margins for businesses that get embroiled in the fray.
Potential Budget Constraints and Cost-Per-Click (CPC)
While Amazon's pay-per-click model offers a semblance of cost-effectiveness, it can quickly become a double-edged sword. The CPC for coveted keywords has been on an upward trajectory, owing to the aforementioned competition. For businesses with limited advertising budgets, this escalation can pose significant constraints. There's a tangible risk of exhausting one's budget quickly without achieving the desired visibility or sales conversion, especially if the ad strategy isn't meticulously crafted and perfected to a T.
Impact of Organic Rankings and SEO
It’s also important to think about organic rankings when using Amazon. Organic rankings refer to where your listings appear when customers search popular keywords relevant to your products, and are important for long term success on the platform.
While the allure of immediate visibility through paid ads is tempting, it can end up diverting attention and resources away from organic SEO strategies, which are crucial for long-term visibility and credibility on the platform. Moreover, a heavy reliance on paid ads could potentially skew a brand’s performance metrics, masking the true organic appeal and demand of their products. This is why we always recommend pairing any advertising campaign with solid SEO techniques, allowing these two strategies to compliment, rather than cannibalize each other.
Success Stories and Case Studies
When it comes to the effectiveness of Amazon Ads, you don’t need to just take our word for it. Let’s take a look at a couple of case studies from companies we’ve worked with:
Canadian brand Protein Co, known for its gym supplements, aimed for rapid market growth. Initial analysis revealed inefficiencies: generic ad targeting and an unspecialized campaign structure that didn't differentiate between repeat and new customers.
Solution & Results
By refining their marketing focus on both customer types and optimizing ad strategies, Protein Co achieved a 50.6% increase in total sales YoY in just 8 months. Furthermore, their ad sales soared by a staggering 139.4%.
Given this success, the brand is now eyeing the competitive US market, with high hopes of replicating their Canadian achievements.
Design a Stone
Design a Stone, a niche enterprise specializing in crafting custom outdoor stones, faced a paradox: growing business but suboptimal advertising. Though witnessing revenue spikes, they hadn't reached the crucial $10,000 monthly revenue. Our deep dive into their business landscape unearthed an interesting discovery: the advertising vacuum in this market segment.
Solution & Impact
The initial month, where we focused on reorganizing campaigns and data acquisition, depicted slow growth. However, laying this groundwork allowed us to aggressively test and identify pivotal keywords, driving unparalleled traffic. This robust approach led not only to surges in PPC sales but also reinforced organic sales by optimizing keyword rankings. The results? A staggering sales growth of $84,380 (185.4%) over five months and a reduced Total ACOS by 26%, even as competitors began marking their territories.
As competition started advertising, our strategic pivot involved launching defensive branded campaigns, ensuring Design a Stone maintained market dominance.
How can AMZPPC Help You Get Started?
So, if you’re ready to take the leap and get started with Amazon Advertising, why are we the best team to help you achieve your goals? It’s simple - at AMZPPC, we offer a comprehensive strategy to help make your advertising strategy as profitable as possible. Here’s our process broken down into 3 simple steps:
Set-up and Audit
Just like any marketer would audit a website, we at AMZPPC will set up and audit your store to ensure that your listings are as engaging, enticing, and conversion-worthy as possible. Why? There’s no point in setting up a hefty ads budget if aspiring customers are only going to be disappointed with what they find - we make sure that your product photos, descriptions and tags encourage shoppers to buy, not immediately click off.
Next up, we want to ensure that your Amazon store is targeting profitable, growth-based keywords. Rather than working on building your brand name, we target relevant product categories, and use an advanced AI-Data-Driven bid management to optimise bids efficiently.
Advanced Advertising Strategy
Our third and final step is to work alongside you to create an advanced advertising campaign that works best for your needs. Whether you’re looking to simply obtain more visibility or want to drive sales fast, we’ll adapt our strategies to suit what works best for your goals. And with a solid foundation built in steps one and two, we’re sure to be able to help you meet them.