Amazon Ads Benchmark Report: Q1 2022

Another day, another ad, and they are not going away anytime soon. Amazon continues to dominate retail media ad revenues, and this year, brands do not plan on holding back. This article examines Amazon sponsored ad efficacy, through advertising-related KPIs, for the first quarter of 2022, from January 1, 2022, to March 31, 2022. 

The last section of the article compares and contrasts Amazon advertising metrics from the first quarter of 2021 with this year’s metrics so that brands can more adequately allocate their advertising budgets for a more profitable first quarter of 2023.

Findings are supported by insights gleaned from 1,194 active and anonymized DataHawk user accounts from Amazon’s US Marketplace. Note that the trends and figures in this report are not meant to represent a holistic view of advertising performance on Amazon. 

Sponsored Product Ads Dominate

Based on the share of accounts using each Amazon sponsored ad campaign, 55% of them use Sponsored Brands Video ads, 65% use Sponsored Brands ads, 66% use Sponsored Display ads, and 98% use Sponsored Product ads.

Brands spend significantly more on Sponsored Product ads than all other ad types among the four Amazon sponsored ad campaigns. This can be seen in the graph below, which demonstrates how the average share of ad spend weighted by sponsored type for the first three months of the quarter did not vary and followed a similar pattern.

Weekly Median CTR and CPC

Throughout the first quarter of 2022, the weekly median CTR maintained a flat trend line with a weekly average of 0.38%, while the weekly median CPC followed an increasing trend line between December 28th, 2021, and April 4th, 2022.

Interestingly, ad spend for Amazon sponsored ads does not follow a similar trend as CTR. For instance, though marginally, CTR was the highest in February, whereas ad spend for all sponsored ads increased in January and decreased notably the following month.

Knowing which times during the first quarter of the year CPC is at its lowest can help brands launch more profitable ad campaigns in the years that follow. Cost-per-click growth weakened from its December highs in 2021 and reached a low of $0.91 during the week of January 18th to the 24th.

However, CPC grew by the end of the first quarter, climbing back up to $0.99. Given that Valentine’s Day and the Super Bowl come shortly after this dip in CPC, Amazon brands should consider launching more CPC ad campaigns during that week to promote their products and increase sales. 

Weekly Conversion Rate by Ad Type

Despite brands investing substantially more of their advertising budgets on Sponsored Product ads, Sponsored Brands Video ads yielded the highest weekly Amazon conversion rates throughout the first quarter of the year.

Sponsored Brands Video ads experienced notable peaks of 12% conversion rates during the weeks of January 11th to the 17th and March 1st to the 7th, while the weekly average conversion rate for all sponsored ads remained 9.3% for the first quarter. 

Sponsored Display ads were the only ad campaign that did not follow an upward-sloping trend line. Additionally, aside from Sponsored Display ads, all other ad types saw an increase in conversion rates during the week of February 8th to the 14th.

Given that this is the same week that CPC was at its lowest, it may be a good idea for brands to increase their ad spend during the week of February 8th, specifically for Sponsored Brand ads and Sponsored Brands Video ads in 2023.

Weekly Median ACoS by Ad Type

Much like throughout 2021, Sponsored Display ads were the most pricey ad type during the first quarter of 2022, with an average Amazon ACoS of roughly 56%, while the average ACoS for all other ad types was 34%.

Though beyond compare, the sponsored ad campaign with the second-highest ACoS is Sponsored Brands ads, and although marginally, Sponsored Product ads had the lowest ACoS of 31.5% during the week of February 8th to the 15th.

Weekly Median RoAS by Ad Type

Aside from two weeks during the first quarter (January 11th to the 17th and March 22nd to the 28th), Sponsored Product ads were the most profitable ad type, with a weekly average Amazon RoAS of 3.2x.

During the two weeks that Sponsored Product ads did not yield the highest return on ad spend, Sponsored Brand Video ads did, with a RoAS of 3.12x in January and again in March with a RoAS of 3.07x.

On the other hand, Sponsored Display ads generated the lowest RoAS all quarter long. Overall, the trend line appears to increase as the quarter progresses, with a slight dip from February 15th to the 21st.

In all, throughout the first quarter, brands selling on Amazon should consider increasing their ad spend for Sponsored Brand ads and Sponsored Product ads from February 8th to the 14th, as that is the week that yields the highest return on ad spend at large, presumably the time when shoppers are purchasing their Valentines Day gifts. 

Sponsored Ads Q1 2021 vs. Q1 2022

When comparing the weekly average Amazon advertising metrics from the first quarter of 2021 with this year, a few things stand out: 

• RoAS decreased from 3.46x (Q1 2021) to 2.92x (Q1 2022)
• ACoS increased by 18% from 28.94% (Q1 2021) to 34.23% (Q1 2022)
• CTR increased by 15% from 0.33% (Q1 2021) to 0.38% (Q1 2022)
• CPC increased by 15% from $0.83 (Q1 2021) to $0.96 (Q1 2022)
• Conversion rate decreased by 5% from 9.80% (Q1 2021) to 9.30% (Q1 2022)

These comparative findings suggest that sponsored ad campaigns deployed during the first quarter of 2021 were more profitable than those in 2022, given that the average ACoS and CPC were lower and conversion rates and return on ad spend were higher.

Conclusion 

For the most part, the sales revenue attributed to all sponsored ad campaigns during the first quarter of 2022 coincided with ad spend. With the exception of Sponsored Product ads, all other sponsored ad campaigns increased ad spend in January and saw a subsequent growth in ad sales that same month. Similarly, brands on Amazon decreased ad spending in February, which was reflective of sales revenue as it was the month that generated the least sales. 

While sponsored ad campaign spending decreased in February for all ad types, conversion rates predominantly increased that same month. Perhaps if brands decided to allocate more of their advertising budgets to sponsored ads in February instead of allocating the lowest amount of their ad budgets, they might see a significant increase in conversion rates. 

Click here to download the complete 2021 Amazon Advertising Benchmarks Report.