Oct 12, 2022

Amazon Advertising for Businesses of All Sizes

Written by Dan Hughes

Right now, the global revenue from online advertising stands at $237.5 billion according to Statista —a number that is likely to keep on rising.

Yes, the online advertising space is thriving with new platforms emerging all the time—including the brand-boosting Amazon Ads.

With the right approach, and used as part of your greater digital marketing strategy, Amazon advertising will not only increase your profits but will showcase your brand to a wider audience, accelerating your growth in the process.

If you’d like to get ahead with your Amazon marketing strategy, we’re going to shed more light on the platform while sharing some essential tips and advice.

What is Amazon advertising?

Much like Google ads, Amazon advertising is an effective form of paid, or PPC marketing. When someone punches a search term into Amazon, a selection of sponsored ads will appear. These are ads created through Amazon ads.

While Google and Facebook are still the dominant forces in the online advertising space, Amazon's attractive features, functionality, and depth certainly stack up against the competition.

Amazon offers the magic combination of user experience and consumer convenience, making advertising on Amazon a potentially lucrative playing field for brands willing to participate.

Did you know? A study by Analytic Partners shows that Amazon Ads earn a 20% higher return on investment (ROI) than average brand marketing. That’s pretty impressive.

What are the benefits of advertising on Amazon?

So, are Amazon ad campaigns worth it? In a word, yes. Here we’re going to look at 5 key benefits of a consistent Amazon marketing strategy.

1. Visibility on Amazon search results

There are 150 million Amazon Prime customers around the world. Plus, on average, small to medium-sized businesses in the US alone sell a collective of 4,000 items per minute. From these (rather impressive) numbers alone, it’s easy to imagine just how searches take place on the platform across categories.

If you target the right key terms for your products and produce compelling sponsored ads, you will increase your search visibility significantly, earning droves of extra sales in the process.

2. Small businesses can gain an edge over big stores

If you get your Amazon advertising efforts right and target the right audience, your sponsored ads are likely to target the right people at the right time in their journey.

Essentially, this means that if you’re a small business, you have as much chance of earning a sale or winning a customer as a big brand or business operating on the platform. The playing field is more even.

Dreamfoam Bedding, for example, has seen great success through Amazon in recent years. This small US-based mattress chain store decided to sell customized products to specific segments of its audience through Amazon during the recent recession, expanding brand reach and earning more sales in the process.

3. Flexibility on spend and paying only for clicks

Amazon Ads allows you to set both manual and automatic campaigns. With the ability to set manual budgets and targeting or use the platform’s smart automatic algorithm to guide you through a campaign, you have maximum flexibility at your fingertips.

This level of flexibility means that you can spend exactly what you want on your paid ad content. Plus, as Amazon Ads operates with a pay-per-click (PPC) model, you will only spend when a consumer interacts with your ad.

4. You can compute ROI with ease

As a slick and functional platform, Amazon Ads makes it easy to calculate your ROI from straightforward profits and ad spend data as outlined in its jargon-free tutorial on the subject.

To help you calculate your Amazon ROI, here is a simple formula you can use:

Total ad attributed sales / Total ad spend

This ease of use lets you set realistic benchmarks for your Amazon advertising strategy, enjoying steady growth in the process.

5. Reaching the audience that is already ready to buy

Last but certainly not least, advertising on Amazon will put you in front of an audience that is at the lower end of the online sales funnel.

Most Amazon consumers have a direct intent when visiting the platform and on the whole, are ready to buy. If your sponsored ad appears for the right search term, you’re very likely to land a sale.

How do I advertise on Amazon?

To advertise on Amazon, developing a solid strategy is essential. To earn sustainable success on the platform, you need to outline your specific goals and understand the essential features and aspects of Amazon Ads. Here are a few pointers that will help you on your journey.

What are the features of Amazon ads?

Here is an overview of Amazon’s key functions and features for brands and businesses looking to find success and enjoy a healthy ROI through the platform.

Entry requirements

First of all, to take full advantage of Amazon Ads, you must be a qualified member of the “Amazon Buy Box” - this is the white box located at the right-hand side of the product page that allows shoppers to add suggested items to their shopping cart (for your reference, it’s the ‘Other Seller’s Box’ detailed in this image):

In addition to the necessity of being a Big Box member, if you’re a brand or seller in the EU, owning a verified Professional Seller Account or Pro Merchant Account is also an essential entry requirement.

Product Category Targeting

Another notable feature of Amazon Ads is its product category-based targeting options.

A feature referred to as Product Display Ads (PDAs), this option empowers brands or marketers to select specific categories relevant to the items they’re looking to promote - categories that are pre-determined by Amazon.

This new piece of targeting functionality stands to make your product promotions more focused, more relevant, and ultimately more appealing to your target audience.

What are the types of Amazon ads?

To squeeze every last drop of business-boosting value from the platform, it’s important to get to grips with the essential types of Amazon ad.

Sponsored ads: Sponsored Amazon ads are listings that appear as a regular result on a search results page on the site. These typically appear near the top of a search results page and operate on a traditional PPC model.
Display ads: Display ads are dynamic and usually appear in the form of a highly-visual banner format across the top, middle or bottom of an Amazon results page.
Video ads: Video ads are powerful as you can bring your product USPs to life with a short, snappy narrative that creates a strong emotional connection. This is a solid sales conversion as well as a brand awareness tool.

For smaller brands and businesses with less experience on the platform, starting with sponsored posts is the most accessible entry point. But, once you’ve gained momentum, working with a mix of the three ad types is likely to maximize your ROI.

How much does it cost to advertise on Amazon?

When considering using the platform, these are questions that are likely to whirl around your head: How much should you spend on Amazon advertising? How much does Amazon PPC cost? Are Amazon ads expensive?

When it comes to advertising on Amazon, you can set a campaign budget from $1 to $20,000,000 and an ad bid for as little as $0.10.

So, Amazon advertising is inherently flexible, meaning it doesn’t have to be expensive. You should set a budget that is affordable based on the size or scope of your business and focus on the products you believe will yield the best results.

Doing so will help you enjoy the most rest return for your Amazon advertising efforts—which is the main aim of the game.

Can I advertise Amazon products on Instagram, Facebook and & other platforms?

It’s not possible to advertise your Amazon products directly on other platforms like Instagram and Facebook as they are direct ad competitors. To expand your brand reach, you should develop separate ads for each platform.

You can advertise your Amazon products through guest posts and publications through affiliate marketing.

Read our essential beginner’s guide to affiliate marketing for tips and advice on how to get started.

How do you grow sales on Amazon?

To grow your sales on Amazon consistently, it’s important that your ad targeting as well as your content and visual assets are just right. Here are some other proactive strategies you can use.

Use thumb-stopping copy and photos for product listing

Most Amazon shoppers have a strong buying intent, which means they’re likely to look at ads or product listings at a glance.

So, to grab their attention and compel them to click through, having a strong product title, a striking product image, and a snappy product description with a bulleted list of USPs (or reasons to buy) is likely to drive more conversions.

Encourage positive reviews

Consumer reviews are one of the ultimate forms of social proof. The more reviews your product or listing earns, the more people are likely to trust you. Positive reviews are also likely to increase your visibility on the Amazon platform.

Check out our blog on '5 Essential Tactics for Earning Customer Reviews' to help you with your social proof-gathering efforts.

Engage your customers and transform them into a community

If you’re a small business or new to using Amazon, engaging with your customers as much as possible will build trust and encourage engagement.

Respond to reviews and customer questions as much as you can and incentivize consumers to join your mailing list to maximize your presence and visibility on the platform.

Big stores can retarget

Certain Amazon Ad formats allow you to retarget either existing customers or people that have interacted with your products or ads previously

Retargeting is an effective advertising tool and as a particularly personalized form of ad delivery, is likely to earn you a healthy ROI for your efforts.

Explore our short retargeting lesson and discover how to drive growth with your advertising activities.

Do a competitor analysis

Without a doubt, looking at what your competitors are doing on Amazon will give you inspiration for your campaign strategy while giving you an insight into potential gaps you can exploit.

To carry out effective competitor analysis, you should switch on updates to see what products your competitors are advertising and what is performing best. Plus, if you notice that a competitor has overlooked a valuable seasonal promotional opportunity, for instance, you could pip them to the post with a better deal or offer.

Track data and optimize ads based on findings

To optimize every one of your ads or campaigns for success, you should regularly work with Amazon’s in-built data tracking and analytics tools.

By working with regular sales and performance metrics, you will be able to get to know your existing customer base better, discover new audiences, and gain a deeper understanding of what does or doesn’t work. In doing so, you will significantly increase your chances of your ads resonating with your target audience.

Work with influencers

Another way of boosting your sales through Amazon is by working with influencers relevant to your niche or industry.

Building relationships with the right influencers will present your brand and Amazon products to a highly captive audience, earning you a steady flow of additional sales in the process.

Explore: Our 'Ultimate Guide to Influencer Marketing' and download our free template to hit the ground running.

Tip: For a deeper dive into some of the key concepts featured above, read our 'Ultimate Amazon Marketing Playbook'.

Amazon Advertising FAQs

What is a good CTR for Amazon ads?

As a general rule of thumb, Amazon ad click-through rates (CTRs) should be at least 1% to be considered ‘good’. Anything that sits around the 0.3% is poor and indicates that your advertising efforts need attention.

Across industries, the average CTR for an ad is 0.41%. If you're consistently earning around 0.5% to 1%, you’re doing well. And, if you enter the 1 to 3% bracket, you’re likely to see a steady hike in profits.

What is the best type of Amazon ad?

Each style of Amazon ad is effective for boosting search visibility, improving brand awareness, and increasing sales.

Video ads are perhaps the best for brand awareness and promoting a new product from your range as visually, it offers additional scope. But, to enjoy a consistently healthy ROI from your Amazon advertising efforts, working with a balanced mix of sponsored, display, and video ads is the best approach.

Is it worth it to run Amazon ads for big stores?

If you’re a big brand with healthy visibility and a sizable audience, you won’t have to lean on Amazon advertising to earn a consistent stream of platform sales.

But, if you’re looking to make maximum impact with the promotion of a new product or product range, well-targeted Amazon ads will give your campaign an additional boost that is likely to lead to more sales.

When should I advertise on Amazon?

There is no set formula for launching your ads at exactly the right time for your audience. But, by working with data and analytics, you can drill down into your consumers’ buying patterns and schedule ads when specific segments of your audience are most likely to be engaged.

Planning your ads around annual events or seasonal occasions (Valentine’s Day, Easter, Thanksgiving, Xmas, and more obscure or regional dates) can help you boost your ROI.

How do you write good Amazon ad copy?

Good copy is the cornerstone of an effective ad. To win customers with your ad copy, you need to speak in plain conversational language and outline your product benefits in as few words as possible.

To help you improve your Amazon advertising copywriting efforts, here are a couple of resources for your reading pleasure:

How do I improve my Amazon ads?

To improve your Amazon advertising strategy, it’s important that you have a firm grip on your specific goals (more product sales, better brand awareness, more customer loyalty, etc.) and take the time to understand the platform features in detail.

Setting realistic benchmarks and budgets as well as brushing up on your ad copywriting efforts will also significantly boost your success. Most of all, consistency and persistence will get you where you need to be and earn you a consistently solid ROI.

Get ahead of the pack with Amazon advertising

To gain all of the essential skills needed to win with your Amazon advertising strategy, enroll in our flexible, practical, and industry-respected eCommerce course.

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Amazon Advertising for Businesses of All Sizes

What is Amazon advertising?