How Do You Advertise on Amazon?

Thanks to Amazon, you can now sell your products to buyers worldwide. But it's not easy; you must face one major obstacle—high competition.


Amazon is the most crowded marketplace on the Web, with sellers competing in nearly every product category. How do you stand out? There's a hard way and an easy way.


The hard way involves using a combination of methods that drive traffic organically, such as SEO, social media marketing, email campaigns, and influencer partnerships, all of which take time and effort.


The easy way is to run ads. This can cost a lot of money, especially if you aim for the first pages, but the results are guaranteed.


In this article, we'll focus on running ads on Amazon. I'll explain how it works and answer frequently asked questions, such as how much Amazon advertising costs, what options are available, and whether or not it's a worthwhile investment.


Let's dive in.


When to consider advertising on Amazon?


Advertising on Amazon can significantly boost your sales and visibility. There are certain times when it's particularly beneficial to do this or even enhance your existing campaigns.


For example, you might run ads when introducing a new product. Amazon ads can quickly get your product in front of potential customers, which is essential for building early sales momentum and securing initial reviews.


Another opportune time is when you're entering a competitive category or aiming to increase your market share. Advertising can drive additional traffic to your listings and improve your product's ranking in search results.


Paid ads are also invaluable during peak shopping seasons, such as the holidays, Black Friday, or back-to-school periods. They ensure that your products are visible when consumers are most likely to purchase.


If your products convert well but aren't receiving enough traffic, advertising can expand your reach. This is also true for products that perform well in specific niches but are less visible.


Additionally, if you have excess inventory, particularly items that are seasonal or at risk of becoming obsolete, ads can help clear stock more quickly. This also applies if you have new or lesser-known brands in your inventory that could use more exposure.


Are you targeting specific customer segments? Amazon ads might be the solution you need. With Amazon's advanced targeting options, you can reach specific demographics, locations, or even customer behaviors, which can be particularly useful if you understand your target audience well.


Is advertising on Amazon worth it?


Advertising on Amazon is highly effective because it not only shows your products to millions of active customers but also allows you to target the most relevant audience based on their demographics, locations, and behaviors.


But how about the return? How much profit do you make from running Amazon ads?


Amazon advertisers typically see a strong return on investment, with an average Return on Ad Spend (RoAS) of 4.5x. This means that for every dollar spent on ads, sellers make about $4.50 in sales.


Also, Amazon's advertising revenue has been growing steadily, reaching $37.7 billion in 2022, up 20% from the previous year. This growth suggests that advertising on Amazon is effective for many sellers, and it might also be successful for you.


But it's not all sunshine and roses. There are downsides to running Amazon ads, too.


First, advertising can be expensive, especially in competitive categories. If you don't carefully manage your budget, you could lose money.


Additionally, setting up and managing Amazon ad campaigns can be complex, especially for those unfamiliar with digital marketing or Amazon's specific platform.


There's also the risk of becoming dependent on Amazon ads for traffic and sales, potentially limiting your reach to customers who do not use Amazon.


Lastly, your customers may experience ad fatigue if your ads keep appearing wherever they go. This means you need to constantly refresh the creative elements of your ads to maintain their effectiveness.


Given these pros and cons, would you still consider investing in paid ads? The answer is different for each seller since no two situations are identical. Whether advertising on Amazon is worth it depends on your business goals, product type, and budget.


It's crucial to weigh these pros and cons against your specific circumstances and possibly start with a small campaign to test the waters before committing a significant portion of your marketing budget.


Factors to consider when advertising on Amazon?


Before you start an advertising campaign on Amazon, it's important to consider several key factors to ensure your money is well-spent. Here's a quick rundown of what to consider:


Budget and Cost Management

What is your target Return on Ad Spend (RoAS)? How much are you willing to spend on Amazon Ads to achieve this? Consider the cost-per-click (CPC) rates, which can vary significantly depending on the product type and market competitiveness.


Target Audience

Get to know your customers and their preferences. Amazon offers tools that target specific customer groups based on their previous purchases, interests, and browsing history.


Product Selection

Choose which products to advertise wisely. Opt for items with clear advantages, such as unique features, better prices, or superior quality compared to competitors. Products that already sell well and have positive reviews tend to perform better in ad campaigns.


Keyword Strategy

Conduct thorough research to find popular keywords related to your products. Determine what search terms your potential customers are using and incorporate these terms into your ads to enhance both visibility and relevance.


Advertising Cost of Sales (ACoS)

This metric indicates how effectively your ad spend generates income. The ideal ACoS depends on how much profit you aim to make and what you're trying to achieve with your ads, such as increasing brand awareness or boosting direct sales.


Competitive Analysis

Examine what your competitors are doing on Amazon—their product features, pricing, and marketing tactics. This insight will help you spot trends and refine how you present and price your own products. It will also give you ideas on how to set your ad bids and strategically place your ads.


Ad Types and Placement

Amazon offers various ad formats, such as Sponsored Products, Sponsored Brands, and Sponsored Display Ads. Each type serves a different purpose, like boosting sales of specific products or increasing brand awareness. Choose the ad format that best fits your marketing goals.


Seasonality and Timing

Consider when to run your ads. Advertising during busy shopping times like holidays may cost more due to intense competition but can also increase your sales. Adjust your ad strategies to align with these peak times and other important shopping events on Amazon.


Performance Tracking and Analytics

Use Amazon's analytics tools to monitor your ads' performance. Review metrics such as click-through rates (CTR), conversion rates, and ACoS regularly. This data will help you optimize your campaigns and make informed decisions about future ad spending.


Legal and Compliance Issues

Ensure that your ads comply with Amazon's advertising policies and legal regulations in your market. This includes adhering to guidelines related to claims, trademarks, and copyrights.


What advertising options are available on Amazon?


Amazon offers a range of ad types to fit different goals and budgets. Here's a quick overview of the main ad options on Amazon and a rough idea of what they might cost:


  • Sponsored Products: These are pay-per-click (PPC) ads that help promote individual product listings and appear in search results and product pages. The cost varies significantly based on the category and competition, but the average cost-per-click (CPC) can range from $0.02 to $3 or more.


  • Sponsored Brands: These ads are also PPC and appear above, beside, or below search results. They feature your brand logo, a custom headline, and multiple products. Costs for Sponsored Brands tend to be higher than for Sponsored Products, with CPCs generally ranging from $0.10 to $2 or higher, depending on the competitiveness of the keywords and categories.


  • Sponsored Display Ads: These ads appear on Amazon and other websites and apps to target audiences who have previously interacted with your products or similar items. Sponsored Display Ads operate on a PPC basis as well, and the costs are comparable to Sponsored Brands, often falling within the $0.10 to $2 CPC range.


  • Amazon DSP (Demand-Side Platform): DSP allows advertisers to buy display and video ads across Amazon-owned sites and other websites. Unlike the PPC model, Amazon DSP operates on a cost-per-thousand impressions (CPM) basis. The cost can vary widely based on the targeting specifics and the value of the audience, with CPMs typically ranging from a few dollars up to $10 or more.


  • Video Ads: Amazon offers video ads that can appear in Amazon search results, product detail pages, or Amazon-owned and third-party sites and apps. Video advertising is generally the most expensive option, often requiring a higher minimum spend and running on a CPM basis, similar to DSP.


Note: The cost of advertising on Amazon can vary greatly depending on your product category, its competitiveness, the keywords you choose, the type of ads you run, and your campaign settings. It's crucial to set a clear budget and monitor your campaigns closely to ensure a good return on your investment.


So, how do you run ads on Amazon?


Creating Amazon ads is relatively straightforward. Log into your seller account, select "Advertising" from the menu above, and click "Campaign Manager." Then, look for the "Create Campaign" button, click it, and choose an ad type. If you're a beginner, I recommend starting with "Sponsored Products."


Once you select your ad type, you'll be taken to the ad campaign page. Here, fill in the details of your campaign. You can opt for automatic targeting, where Amazon targets your ads based on keywords and products, or manual targeting, where you select your own keywords and audiences.


If you're registered as a brand on Amazon, you can also use Sponsored Brands and Display ads. For these types of ads, creating captivating content that truly represents your brand is crucial. Always use high-quality images and engaging text to capture the attention of shoppers.


After setting up your ads, launch them. Regularly monitor their performance using Amazon's reporting tools to track how many impressions, clicks, and sales they generate.


Continuously track your ads' performance and adjust your bids, keywords, and ad content based on the data you've gathered. Experiment with different strategies to find what works best for your products and categories.


Start Your Amazon Advertising Journey Today!


When you start advertising on Amazon, you'll find that despite the stiff competition, there are many ways to enhance the visibility of your products and boost your sales. You can choose between organic methods and quick paid ads—either way, it's crucial to utilize Amazon's advertising tools effectively.


With the right strategies, you can expand your online presence, attract more customers, and ultimately increase your profits. Remember, success on Amazon involves being strategic about connecting with your audience.