Amazon Sponsored Ads Benchmark Report: Q2 2022

Research

21 Jul 2022

30 min reading

This report aims to examine Amazon sponsored ad efficacy through advertising-related KPIs for the second quarter of 2022, which includes the weeks of March 28 to April 3 through June 27 to July 3. This Amazon ads benchmark report is particularly interesting as the culmination of this year’s second quarter marks the preliminary weeks before this year’s Amazon Prime days (July 12-13).

The findings outline critical insights into how major global factors such as the pandemic’s remnants, Amazon Prime Days’ timing, and the disrupted supply chain impact sponsored ad behavior. The goal of this quarterly Amazon advertising benchmark report and last quarter’s is to provide brands, sellers, and agencies with data and insights on how to better understand the state of advertising on Amazon so that they can adjust their strategies accordingly.

Methodology

The report’s findings are pulled from a comprehensive analysis of anonymized data from 1,062 DataHawk user accounts from Amazon’s US marketplace. Each KPI uses median and weekly values. As a reference, the ad spend interquartile range (IQR), which measures the spread of the middle half of the data, ranges between $301.54 to $4,841.19, and the weekly average price IQR spans between $18.49 to $46.47.

Keep in mind that the trends and figures in this report neither represent the collective performance of Amazon advertising nor the experience of every brand advertising on Amazon, as each benchmark is based on the median of each metric. Nevertheless, the figures are relatable and relevant to a larger share of sellers compared to referencing an average or quartile.

What Is an Amazon Benchmark?

In simple terms, an Amazon benchmark is a point of reference in which things can be compared to measure performance standards. As it relates to this report, the four most important advertising metrics to benchmark are CPC, CTR, conversion rate, and ACoS.

According to the eCommerce giant, Amazon states that sponsored advertising benchmarks are used to evaluate your performance with your peers’ performance values. Insights gleaned from the metrics in this report allow brand, sellers, and agencies to compare their performance relative to their peers and identifies areas of improvement such as insufficient ad spend for a particular ad campaign.

Amazon Sponsored Ads Benchmarks

Brands, sellers, and agencies can reference the following weekly average summary metrics to benchmark KPIs, assess ad campaign efficacy, and gauge the overall performance of their Amazon Sponsored ad campaigns.

Ad sales: $4,204 (47% increase from Q1)
Impressions: 342,669 (31% increase from Q1)
Orders: 105.79 (28% increase from Q1)
Ad cost: $1,247.08 (22% increase from Q1)
Clicks: 1,196 (20% increase from Q1)
Conversion rate: 10.15% (12% increase from Q1)
CPC: $1.06 (10% increase from Q1)
RoAS: 3.08x (8% increase from Q1)
ACoS: 32.47% (7% decrease from Q1)
CTR: 0.36% (5% decrease from Q1)

How Do Last Quarter’s Metrics Compare?

This quarter’s summary metrics increased considerably from last quarter’s 2022 Amazon advertising benchmarks. Two reasons can explain this growth in weekly average summary metrics. For one, the increase could be attributed to the impending Prime Days, as it is standard practice for Amazon merchants to increase their ad spend to increase product visibility in the weeks leading up to major online shopping events.

The second reason could be due to the fact that brands, sellers, and agencies tend to increase ad spend as the year progresses since there are no significant online shopping occasions at the beginning of the year. Moreover, these findings suggest that it is fiscally advantageous for Amazon merchants to hold off on ad spend during the first quarter and progressively spend more on sponsored ads throughout the second quarter.

Weekly Median CTR, CPC, and Conversion Rate

While the weekly median CTR followed a marginally decreasing trend line as the quarter evolved, the weekly median CPC maintained a flat trend line. CTR appears to be at its highest at the beginning of the quarter and starts declining during the week of May 2nd to the 8th.

As it pertains to Amazon ads, four factors impact CTR:

Your position in the search results – the closer you are to top positions, the higher your CTR would be
Your price relative to other search results – the more attractive your price is, the higher your CTR would be
Your rating relative to other search results – the better your rating is, the higher your CTR would be
Your title and image comparative to other search results – the more attractive your image and title are, the higher your CTR would be

Moreover, a decreasing CTR and a stagnating CPC suggest that it may be becoming more competitive to appear in the search results. The increased competition may result from competitors enhancing other variables such as pricing, product, and listing. Therefore, brands, sellers, and agencies should consider alternatives instead of increasing CPC, like optimizing SEO and image quality to improve the CTR.

Although the weekly median conversion rate accelerated in Q2 compared to Q1 2022 by 12%, like CPC, conversion rates maintained a flat trend this quarter. Notable peeks in conversions occurred during the week of May 9th to the 15th, which don’t necessarily correspond to CTR highs that transpired during the weeks of April 11th to May 1st.

Weekly ACoS and RoAS by Sponsored Type

Interestingly, compared to the first quarter of 2022, the advertising cost of sale for all sponsored ad campaigns dropped by 7%, and RoAS increased by 8%. The advertising campaign with the lowest ACoS and highest RoAS are Sponsored Product ads generating an average weekly ACoS of 32% and an average weekly RoAS of 3.1x.

Conversely, Sponsored Display ads continue to be the campaign type with the most elevated ACoS and lowest RoAS, producing a weekly average ACoS of 57% and a weekly average RoAS of 1.7x, while all other ad types generated at least 3.0x. Despite Sponsored Brands Video ads constantly yielding the highest conversion rates during this year’s Q1 and Q2 and last year’s Q2, Sponsored Product ads generated the highest return on ad spend, especially toward the end of the quarter.

What’s more, Sponsored Brands Video and Sponsored Brands ads followed a similar pattern throughout the second quarter. However, among all ad types, Sponsored Brands Video campaigns were the only ad type whose RoAS increased from last year’s second quarter, growing from 2.9x to 3.1x.

Ad Spend and Ad Sales

Regarding ad spend, the two sponsored ad campaigns that increased during this year’s second quarter compared to last year were Sponsored Display ads and Sponsored Product ads, which grew by a mere 2%. However, ad spend on Sponsored Brands Video decreased by 26%, subsequently causing ad sales to decrease by 27%. Despite being the ad type with the highest ACoS, lowest RoAS, and least conversion rates, Sponsored Display ad spend increased by soaring 65% in Q2 2022 compared to last year’s second quarter. Similarly, ad sales for these same ad types increased by 44%.

Although Sponsored Display ads continue to account for the smallest share of overall ad spend, it appears it is becoming a more important aspect of ad budget as brands, sellers, and agencies lean into its targeting capabilities to reach shoppers on and off Amazon. It may very well be that brands, sellers, and agencies are spending more on Sponsored Display ads, notwithstanding their heightened cost of sale and low return on ad spend because of a depreciated CTR.

Weekly Metrics Q2 2021 vs. Q2 2022

When comparing weekly average metrics from the second quarter of 2021 with this year’s second quarter, except for click-through rates, which had no change, there was a noteworthy drop in the average weekly orders, ad sales, impressions, and clicks.

Although insignificantly, the overall sponsored ad campaigns conversion rates and RoAS decreased. However, while last year’s weekly median RoAS revealed a downward slope going from 3.15x at the beginning of the second quarter to 2.81x at the end of the quarter, this year’s weekly media RoAS for Q2 maintained a flat trendline, starting and ending the quarter with a RoAS of 3x RoAS.

CTR: 0.36% (no change from Q2 2021)
Conversion rate: 10.15% (1% decrease from Q2 2021)
RoAS: 3.08x (3% decrease from Q2 2021)
ACoS: 32.47% (3% increase from Q2 2021)
CPC: $1.06 (11% increase from Q2 2021)
Ad cost: $1,268.48 (21% decrease from Q2 2021)
Ad sales: $4,204 (23% decrease from Q2 2021)
Impressions: 342,669 (25% decrease from Q2 2021)
Clicks: 1,196 (29% decrease from Q2 2021)
Orders: 105.79 (30% decrease from Q2 2021)

Amazon Sponsored Ads Performance Q2 2022

Key Insights

Three major factors have undoubtedly influenced consumer buying habits and, subsequently, Amazon sponsored ads performance in 2022: the remnants of the pandemic, the timing of Amazon Prime Days, and a disrupted supply chain. But to what degree have these factors impacted ad performance?

It is no surprise that Amazon benefitted immensely from the pandemic while brick-and-mortar stores closed, making 2020 and 2021 boom years for Amazon. Just three months into 2021, Amazon reported that its net sales increased to $108.5 billion, up 44% compared to a year earlier. However, eCommerce growth does not start and end with the pandemic. Studies noted that higher prices due to the rise of inflation had driven last quarter’s online sales growth with no indication of a lack of consumer demand.

Regarding the disrupted supply chain, of course, it will be difficult to bear the burden of surges in demand. Although, it is not so much a question of the frequency at which consumers are buying but more so what they are buying. A recent Forbes article examining how Amazon Prime Days will survive a trifecta of challenges indicates that seven out of ten respondents said they would make fewer impulse purchases during this year’s Prime Days.

The drop in average weekly orders, ad sales, impressions, and clicks may very well be attributed to the fact that last year Amazon Prime Days happened during the second quarter of 2021, from June 21st to the 22nd. With this year’s Prime Days occurring from July 12th to the 13th (during the third quarter of 2022), it is no surprise that ad sales growth in Q2 2022 relative to last year’s second quarter reflected a 23% decrease from Q2 2021. Nevertheless, ad sales, conversion rate, RoAS, clicks, impressions, and orders continue to rise from the first quarter of 2022 and are expected to yield promising results in the coming months.

Interestingly and notwithstanding the many factors impacting eCommerce, CTR remains unaffected. Such a finding could suggest that although advertising on Amazon is becoming increasingly competitive, online shoppers are just as inclined to click on sponsored ads and that sponsored ads are just as likely to convert. Amazon merchants should not be discouraged as this finding also reveals that Amazon sponsored ads still have a chance of performing well despite the increase in CPC, the marginal ACoS increase, and the decrease in all other ad metrics.

Click here to download the complete 2021 Amazon Advertising Benchmarks Report

Click here to download the complete 2022 Q2 Amazon Advertising Benchmarks Report

Click here to download the complete 2022 Q1 Amazon Advertising Benchmarks Report