05 Jul Demand for Amazon Advertising continues to rise
On average, advertising on Amazon is estimated to cost $1.20 per click, up 30% from the beginning of the year ($0.93) and more than 50% year-over-year.
The demand for advertising on Amazon is growing faster than the advertising space available on the platform, and this is the main reason why the price of ads is increasing more and more.
During the year 2020, the average cost per click (CPC) was $0.85 and reached its lowest point ($0.70) in early May when, during the health crisis, hundreds of brands ran out of stock and were forced to withdraw advertising from the platform.
In mid-September, advertising on Amazon returned to normal numbers and then reached three distinct peaks: Prime Day in October, Black Friday and Cyber Monday in November, and the Christmas campaign in December. During the first quarter of 2021, the CPC was set at around $0.90.
The ACOS (Advertising Costs of Sales) shows how much you have earned in relation to the spend made with an advertising campaign. In the U.S., Amazon’s largest marketplace, the average ACOS was at 22% in 2020 and has been rising to 30%. This means that, in order to reap the same benefit, brands have had to increase ad spend on the platform.
But advertising prices haven’t changed just in the U.S. They have followed the same trajectory across all of Amazon’s marketplaces.
Sponsored Products, at the forefront of Amazon Advertising’s rise
Most of the ad spend on Amazon is for Sponsored Products ads, which make products instantly visible. These ads work on a PPC (pay-per-click) basis, which means full control over the budget.
As more and more brands are investing in Sponsored Products campaigns on Amazon, CPC (cost per click) has also increased, although the price is generally higher for all types of ads on the platform (Amazon Sponsored Sponsored Products, Amazon Sponsored Brands, Sponsored Productsand Amazon Product Display Ads).
Sponsored Products
Despite the increase in prices, brands based on the platform continue to allocate part of their budget to advertising on Amazon. Only then will they be able to compete for advertising space, as is the case on other advertising platforms such as Google or Facebook.