Amazon Ads Analysis: A Comparative Study on Sponsored Ads Performance
When you are selling on Amazon, you are also buying ad space on Amazon. Amazon advertising has been growing to become increasingly important every year.
The rollout started in 2019 when Amazon added a number of programs within the Amazon advertising platform, for instance, new targeting options, increased access to display and video ads, and several recent reports and data points.
The following article is a quick look at the ad real estate on the search results page.
At this point, it is essential to understand, do all ad types perform equally well.
- Looking at our data, Sponsored Products are way up front in terms of popularity, followed by Sponsored Brands and then Sponsored Display
- Sponsored Brands have been gaining a lot in popularity recently.
Out of all of the sellers & vendors who use Sponsored Products, not many are still using sponsored brands & sponsored display ads. This surely means that for most of the brands & sellers using the later ad types, the ad revenue generated is only a small piece of the pie.
Does this mean Sponsored Display & Sponsored Brands Ads are any less than Sponsored Products?
>> Keep reading as we dig in further
Amazon Sponsored Ads Types
Amazon Sponsored Products ads
Amazon Sponsored Products ads are pay-per-click ads that help brands drive the traffic to the desired Amazon product detail pages on the Amazon platform. When an Amazon shopper searches for your keywords, your ad is eligible for display alongside the search results.
Amazon Sponsored Brands ads
When it comes to advertising, visibility is essential. It can bring in more sales and increase brand awareness. This is what Sponsored Brands are all about. If you want more success with PPC ads, you should be turning to sponsored ads.
Before we continue further, you should know that Sponsored Brands can be used by agencies that have clients who are Amazon sellers, registered Amazon sellers, and vendors.
They offer greater creative control, brand exposure, and the opportunity to send shoppers directly to your custom build brand store.
Amazon Sponsored Display ads
With such immense potential, each ad type can be leveraged to drive growth & maximize profits. But, which one or what combinations work the best for most sellers & vendors?
Our research is based on anonymized Sponsored Products & Sponsored Brands & Sponsored Display Ads data from a sample of our clientele on Amazon US.
*The data & graphs included depicting only trends based on a sample & not the official performance statement of the entire Amazon Advertising.
Amazon Sponsored Ads: Performance Metrics
- CPM – Cost Per Thousand
The average cost per thousand for Sponsored Products is $3.6. Sponsored Brands is $5, and Sponsored Display is $1.6 – meaning that when looking at average-cost from a click-per-thousand perspective, Sponsored Brands are the most expensive, followed by Sponsored Products. Sponsored Display is the least costly.
- Click-Through Rate/ CTR
In the analyzed six months, the average click-through rate for Sponsored Products is 0.34%, Sponsored Display 0.2%, and Sponsored Brands 0.4% – meaning that when looking at the average ads performance in terms of click-through rate, Sponsored Display Ads are the least performing type.
However, your ad performance also depends on your overall ad strategy; it could work out for a lot of people. Still, the data suggest that the margin for error is higher for Sponsored Display and Sponsored Brands than Sponsored Product Ads.
It is known that Amazon Sponsored Brands are less likely to get clicks because of their traditional banner ad-like appearance. To get clicks on Amazon Sponsored Brand ads, brands must leverage their most valuable features to create compelling ads.
- Leverage Amazon Store: Since Amazon Sponsored Brands dive traffic to Amazon Stores, shoppers can view your entire Brand Catalog without having to browse elsewhere.
- Optimize Search Terms: Look at your Amazon ROAS that is a direct determinant of how aggressively you should be bidding on a Keyword. Identify the most converting search terms from your campaigns, and move them to the exact match type.
- New-To-Brand Metrics: Amazon Sponsored brand ads provide unique reporting metrics called “new-to-brand.” The reporting is to help sellers to measure the first-time customers for products, total first-time sales your brand acquired on Amazon, along with the percentage of total sales that are ‘new-to-brand’ within the past 12 months.
- Continuous Campaigns: Amazon recommends running Product Display Ads 24/7. More than 50% of Amazon shoppers purchase more than once a month; that is why running the campaigns continuously will help you with more clicks and eventual conversions.
- Coupons: While setting your Product Display Ads, you can choose to promote your Vendor Powered Coupons; this will encourage your shoppers to click on your Ads and make buys.
- Product and interest-based targeting: Focusing on targeting will give you a more data-driven approach and increase your Ads efforts’ reach.
- Conversion Rate:
We see that the average conversion rate for Amazon Sponsored Products is 6% higher than Sponsored Brands’ & 7% higher than Sponsored Display Ads.
Sponsored Brands ads are to serve brand awareness and build brand presence. It is, therefore, a better idea to look at impressions when looking at Sponsored brands and display ad performance.
When comparing the ad types on different KPIs, it is advisable to keep the buyer’s intent in mind. For instance, sponsored products see more conversion because a shopper likely intends to purchase the product, which is not the case for the other two ad types. The shopper is only gaining information about the brand or product by visiting the store or clicking on the banner.
- Cost Per Click
The average cost-per-click is very similar for Sponsored Products & Sponsored Brands, $1.1. The average CPC for Sponsored Display is lower than the two types, $0.8
This difference in numbers for Sponsored Products, Sponsored Brands & Sponsored Display as we go from October 2020 to March 2021 is likely due to the change in level competition. Lower adoption of an ad type can be attributed to fewer bidders, fewer bids, and ultimately a lower CPC price.
- Amazon ACOS (Advertisement Cost Of Sales)
How much do you pay in ads for each dollar earned?
You can see clearly on this chart that Sponsored Brands and Sponsored Products have lower ACos than Sponsored Display and thus perform better.
- Sponsored Products ~ 23%
- Sponsored Brands ~ 24%
- Sponsored Display ~ 32%
However, comparing ACoS based on ad type performance will give mixed results. Why?
Amazon ACoS is dependent on several KPIs, including – Average Selling Price, Cost Per Click, Conversion Rates, etc.
We saw that the CVR for Sponsored Products is the highest, the CPC, however for the two ad types is quite comparable. A combination of ad types could work for one and not work for the other. It also depends on the category or subcategory you are targeting.
What is the result?
From the above analysis, we see that some KPIs suggest that Sponsored Brands or Sponsored Display are the least performing ad types. But is it proper for different/multiple product categories? Our Brands & Sellers finding more value in Sponsored Brands, even better than Sponsored Products?
We analyzed the top 2 categories on Amazon US to see the usage of each of the ad types.
Ads Spend division between sponsored types on top two categories on Amazon US
We are looking at the two big categories in the USA: Electronics vs. Beauty & Personal Care. Which Sponsored Type is the most popular among a specific category?
Here we did not include the Amazon Sponsored Display ads as it is not used to bid on keywords, and we are using a list of keywords to define a specific category. As you can see in the following charts, the Beauty & Personal Care category has very similar stats to the global division of sponsored types among all categories (see charts above).
Whereas, the Electronics category shows a completely different behavior:
The top-performing categories like the above two: Electronics & Beauty & Personal Care category have a low Cost Per Click and generally higher selling price, and a lower ACoS. The Sponsored Brands have higher CTR in these popular categories, attributed to the popularity of Brands, and, consumer behavior of investing more in trusted brands for more significant expenses.
The above analysis on top categories suggests that most there is a window of opportunity here. The CPC of Sponsored Products on an average in the past 12 months is higher than Sponsored Brands & Sponsored Display. And that Sponsored Brands adoption is slowly catching pace. Advertisers can benefit now more than ever from less competition within Sponsored Display & Sponsored Brands.
- Leverage Amazon’s targeting campaigns. Targeting your direct competitors is a great way to display your products on their search results. Also, when targeting by category, choose to refine by price range, brand, prime eligibility, star ratings, etc. This will help you increase your conversion rates & direct your ad spend towards the max. profits.
- Leverage video marketing on Amazon. The video ads are keyword-targeted CPC ads and take customers directly to the respective Amazon PDP.
- It is essential to advertise on your branded keywords even if you are ranking higher in search results for them. It’s super important to secure your loyal customer base, and it helps when you launch new products under your brand’s umbrella.
- Use the data to monitor and optimize your bidding according to your inventory headroom as well. This technique is beneficial when running promotions or discounts.
- Earn Amazon Badges: Amazon offers multiple badges to highlight the top products in every category. Amazon Badges helps to increase your organic traffic that boosts your conversion rates leading to more traffic.
- Leverage social media to drive external traffic to your Amazon Listings. It is very advantageous as it helps you increase your organic ranking and boosts the sales momentum, building a customer base outside of Amazon.