Amazon is a massive marketplace where businesses and individuals can buy and sell products. But with more and more businesses trying to leverage the Amazon platform, competition is stiff. Today, an in-depth knowledge of marketing goals and strategies is essential for both newcomers and long-time sellers if you want to turn a profit on Amazon.
Launching your dream Amazon ad campaign requires hands-on experience with online marketing tools and metrics, such as PPC, ad revenue, CTR, impressions, and plenty of others. The Amazon platform lets you adjust your bids to align with your goals. To outpace your rivals and become more visible to buyers, bid higher; if you are happy with your profits but want to reduce your PPC costs, simply bid lower. By taking advantage of Amazon’s Feedback Genius, you can track reviews and analyze buyer purchasing patterns. Use this incredible tool to find your audience and target your advertising campaign.
Learning the basics of advertising strategies is fundamental for successful sales, but the biggest goal for your brand campaign is to maximize conversions. With Amazon ad campaigns, you can spread the word about your brand, be recognized as a reliable seller, and win the trust of loyal customers. Tap into digital marketing to make impressions for your brand and reach potential customers for your Amazon store.
Amazon Advertising can help you increase sales and grow awareness of your brand. Amazon Ads offers two types of cost-per-click advertising solutions, available with Seller Central: Sponsored Products and Sponsored Brands. Check out our Amazon Sponsored Ads Guide to create your Amazon Advertising Strategy for 2020.
Getting Started with Amazon Sponsored Ads
Amazon Sponsored Ads: Basic Information
To get off on the right foot and lay the foundation for your Amazon advertising campaign, you need to first understand the basics of Amazon PPC:
- Keywords (or search terms) are words that web users type into the search bar to find certain products or services, for example, “buy a table in NYC.” You can intercept search signals by embedding certain keywords in your ads to indicate that you have exactly what your prospect is looking for. Depending on the match type, your ads will be shown in response to both narrowly-focused and broad searches.
- Match type is based on the precision of your keywords. It can be an exact match phrase or broader. Broad keywords cover a larger audience, but quantity does not always mean quality. Exact keywords reach users who are most likely to buy your products. The broad keyword “table” will display your ads to anyone looking for a table or information about tables. It is not specific enough. An exact keyword “buy a wooden table in NYC” is much more likely to reach customers looking for what you have to offer.
- Negative keywords are words you exclude from the ad text. Like keywords, they have different levels of precision. They keep your ads from being shown to unlikely customers. If you cannot ship tables to Ohio, you can use “Ohio” as a negative keyword.
- Amazon Ads campaigns can be either automatic or manual. For automatic campaigns, keywords are selected automatically by Amazon, and a single CPC bid is used for all ads. For manual campaigns, you can perform keyword research on your own to choose the most effective keywords and set different match types and CPC rates. Automatic campaigns are easier to manage, while manual campaigns give you more control over your advertising budget and ad performance.
Key Performance Metrics
To configure your Sponsored Ads campaign, you should understand the following metrics:
- Impressions – the number of times your ad pops up in search results or on related product pages.
- Clicks – the number of times users follow links in your ads and visit your product pages.
- Conversions – purchases made within a week after first visiting your product pages from search. This could be a target page or any other pages the client visits after following the ad to your website.
- Attributed turnover – the turnover associated with the PPC campaign.
- Click-Through-Rate (CTR, %) – a ratio of clicks to impressions. It shows whether your ads are driving shopping behaviors.
• Advertising Cost of Sales (ACoS, %) – a ratio of money spent on Amazon Ads to revenues generated by the campaign.
There are three kinds of Sponsored Ads: Sponsored Products and Sponsored Brands (formerly called Headline Search Ads), Sponsored Display.
Amazon Sponsored Ads are pay-per-click ads based on keywords and contextual targeting that drive traffic to a desired product detail, landing or store page within the Amazon platform. There are two kinds of Sponsored Ads: Sponsored Products and Sponsored Brands (formerly called Headline Search Ads).
Before you start advertising, check the eligibility requirements. Here are Amazon’s advertising terms and conditions to start Sponsored Products and Sponsored Brands Ads:
How to Get Amazon Sponsored Products
- Account: you must have an active professional seller account,
- Shipping: you must be able to ship to all US addresses,
- Product Categories: your products must fall under one or more eligible categories.
- Product Condition: listed products must be new. Used products, or refurbished products are not eligible for advertising.
- The products you advertise with Sponsored Products must be eligible for the Buy Box.
- In order to advertise with Sponsored Products the seller must be enrolled in the Amazon Brand Registry.
How to Get Amazon Sponsored Brands Ads
- Account: you must have an active professional seller account,
- Shipping: you must be able to ship to all US addresses,
- Product Categories: your products must fall under one or more eligible categories.
- Product Condition: product listings must be new. Used products, or refurbished products are not eligible for advertising.
- Sponsored Brands will be shown to shoppers regardless of who is winning the Buy Box.
- To use Sponsored Brands and Stores, you must be enrolled in the Amazon Brand Registry.
Eligible advertising categories
For Sponsored Products and Sponsored Brands in the US, product listings must be new and fall into one or more of the available categories listed below.
How to create a sponsored ad on Amazon
Create your Sponsored Products or Sponsored Brands campaign with Campaign Manager in Seller Central at sellercentral.amazon.com or Advertising Console (Formerly Amazon Marketing Services) at advertising.amazon.com. To create Sponsored Brands Ads you must enroll in the Brand Registry. Here is your step-by-step guide to creating Sponsored Products and Sponsored Brands campaigns.
How to Create an Amazon Sponsored Products Ads Campaign
1. Log onto your Amazon Account. Log into Seller Central at sellercentral.amazon.com
2. Go to Campaign Manager. Click the button “Create campaign” and select Sponsored Products. Seller Central Campaign Manager: sellercentral.amazon.com/cm/campaigns
3. Create Campaign (Sponsored Products Campaign Settings)
- Write a Campaign name;
- Choose Start and End dates;
- Enter a Daily budget;
- Select Targeting Strategy. For Sponsored Products campaigns, you can create two types of targeting: automatic and manual.
Automatic or Manual Campaign: Which is Right for You?
Each advertising type has its advantages. To achieve the best results, you should combine them in your campaigns.
When first getting started with Amazon advertising, it may be best to begin with an automatic campaign so you won’t need to perform keyword research and set bids. Your product descriptions will be used by Amazon to automatically select search terms. Once you get a feel for how things work, you will be able to distinguish the most profitable keywords and shift to a manual campaign.
Large amounts of manual work can be overwhelming at first, and you will likely make some mistakes. like bidding on the wrong keywords or not having an adequate advertising budget. But if you learn from your mistakes and constantly perfect your skills, your work will pay off. Patiently analyze intermediate results and adjust your strategy to reach the desired ACoS more quickly than you would with an automatic campaign.
If you don’t have time to fine-tune your campaign manually, consider delegating the management of your Amazon ads to PPC specialists like Digital Clever Solutions.
Also, Ad Badger software automates bid optimization to help you achieve your desired ACoS. This is especially useful for stores offering multiple products whose ads all need to be customized.
4. Create an ad group. An ad group is a group of ads sharing the same set of keywords and products. Consider grouping products that fall within the same category and price point range.
- Settings: Ad group name
- Products: Select the products from your inventory to include in your ad group. You can add from at least 1 product up to 1000 products to an ad group at a time.
- Sponsored Products Bid
- Select Sponsored Products Campaign bidding strategy. You can choose from three bidding strategies for Sponsored Products: 1) Dynamic bids – down only, 2) Dynamic bids – up and down, and 3) Fixed bids.
- Default bid. Sponsored Products Bid should be at least $0.02
- Bid adjustment (optional, Bid+). Adjust bids by placement. You can differentiate your bids and view the performance of your sponsored products ads by three placement groups: top of search (first page), rest of search, and product pages.
- Sponsored Products Targeting. You can add multiple ad groups to your campaign, but you can choose only one targeting type per ad group. Choose between Keyword targeting and Product targeting with specific products, categories, brands, or other product features to target your ads.
- Keyword targeting. You can add up to 1000 keywords per ad group. Add Keywords from the list of Suggested Keywords generated based on the products you are advertising, enter your keywords and their match types manually, or upload a file. Optional: specify Keyword bids (custom keyword bids will override default bids) and enter negative keywords to prevent your ads from displaying on irrelevant search terms.
- Product targeting (BETA). Choose product categories or target individual products that are similar to products in your ad. Optional: Refine your targeting by specific brands, price range, star ratings, and Prime shipping eligibility. Set up a category and product bids (custom bids will override default bids). Enter negative product targeting to prevent your ads from displaying on specific products or brands you want to exclude.
5. Well done! Click Launch Campaign.
Sponsored Products ads do nott have a review process or ad moderation, so your new campaign will be active after launching your campaign.
Sponsored Display Ads
Sponsored Display shows your ads to prospective customers both within and beyond the Amazon marketplace. For this ad type, Amazon forms a target audience from users who have visited your product pages but have not yet placed orders, along with those who have viewed similar products on the Amazon pages of your competitors, and are likely to shop from you. Sponsored Display Ads let you maintain contact with your audience until they are ready to place an order, so you can meet their needs more quickly than other brands.
Sponsored Display Ads show product images, descriptions, prices, ratings and a CTA button that takes customers to the order page. It is easy to create display ads and control their performance in Campaign Manager. This is especially helpful for new products, clearance items and products with long sales cycles.
If your brand is ready to move to the international level, you can capture a global audience with PPC ads. Amazon accommodates shoppers from all over the world and provides tools for advertising to numerous eligible countries. You can define your target locations in Seller Central.
How to Create an Amazon Sponsored Brands Campaign
1. Log onto your Amazon Account. Log into Seller Central at sellercentral.amazon.com or Advertising Console (Formerly Amazon Marketing Services) at advertising.amazon.com
2. Go to Campaign Manager. Click the button “Create campaign” and select Sponsored Products. Seller Central: sellercentral.amazon.com/cm/campaigns, or Advertising Console Campaign Manager: advertising.amazon.com/cm/campaigns.
3. Create Campaign (Sponsored Brands Campaign Settings)
- Enter a Campaign name.
- Choose Start and End dates.
- Enter a Daily budget or Lifetime budget.
- Select Landing page for ad traffic. Amazon Sponsored Brands advertise a landing page instead of a specific product detail page. The landing page must have at least 3 products, but no more than 100 products for advertising. Shoppers who click on your ad can be taken to your Amazon store, a product list page or a custom URL.
- Amazon Store (including subpages). Select your store and choose a page you want to promote. Note, if there are no Stores in your account, you can search for a Store on Amazon that is not associated with your account.
- New product list page. Create a page selecting 3 or more of your products from your inventory to be featured on a product list page.
- Custom URL. Advertise any Amazon page that showcases at least 3 of your brand’s products.
4. Creatives. Sponsored Brands Ads allow creatives with custom text and ad images.
- Enter your Brand name: 30 characters maximum;
- Add a logo image. Amazon Sponsored Brands ads logo image size is at least 400 x 400 px, smaller than 1MB, and format is PNG, JPEG, or GIF.
- Amazon Sponsored Brands Headline: 50 characters limit;
5. Keywords and bids.
- Sponsored Brands Bid
- Default keyword bid. Sponsored Brands Bid should be at least $0.10
- Automated bidding (optional). By using automated bidding, you allow Amazon to optimize your bids for other placements below top of search. Amazon may decrease your bids for other placements based on your observed conversion rate for those placements.
- Sponsored Brands Keyword targeting. You can add up to 1000 keywords per ad campaign. Add Keywords from the list of Suggested Keywords generated based on the products you are advertising, enter your keywords and their match types manually, or upload a file. Optional: specify Keyword bids (custom keyword bids will override default bids) and enter negative keywords to prevent your ads from displaying on irrelevant search terms.
6. Well done! Click Launch campaign
7. Sponsored Brands ads will go through Amazon’s review process. The review process is usually completed within 24 hours, but may take as long as three business days.
Amazon Advertising Cost
How Much Does Amazon Advertising Cost?
Amazon Sponsored Products, Sponsored Brands (Headline Search Ads), and Product Display Ads are cost-per-click advertising, meaning you pay only when your ad is clicked. The minimum cost-per-click bid is $0.02. Amazon offers sponsored ads self-service solutions for budgets starting at $1. You choose how much you want to spend per click, and you also choose your budget, which you can update at any time.
Other Amazon advertising products require a larger budget. US campaigns using display, video, custom ads and Amazon DSP (demand-side platform), require a budget of $35,000 or more.
See how much you are spending per click on your ads, and measure the cost of sales and revenue of your campaigns. Depending on the ad type you have selected, you will have different options for budgeting, bidding strategies, and advertising cost.
Amazon Advertising Cost per Click (CPC)
Since Amazon Sponsored Ads is cost-per-click advertising, let’s begin our Amazon advertising cost review with cost per click.
The cost per click (CPC) is the average amount paid for a click on a keyword, calculated as the total amount spent divided by the number of clicks (spend / clicks).
Your cost-per-click bid is the amount you are willing to pay each time someone clicks your ad. Your cost per click may actually be lower or higher than your cost-per-click bid, based on your selected bidding strategy. Never bid more than you are willing to pay per click.
Amazon PPC Ads works like an auction, so the price you end up paying is just a penny more than what the next highest bidder is willing to pay for the same keyword.
Amazon cost per click (CPC) varies, based on many factors such as ad type, bidding strategies, your selected cost-per-click bid, products, keywords, competitors, and competition in the auction. Amazon runs a real-time auction each time a shopper searches for products. Ads that compete in the auction are ranked and displayed to shoppers based on a combination of the seller’s bid and the ad’s relevance to the shopper’s search.
*Prior to this year, an Amazon cost-per-click bid was the maximum cost per click you were willing to pay when someone clicked your ad, and Amazon did not charge more than the CPC bid. Since January 2019, Amazon Sponsored Products has a new bidding strategy. Dynamic bids, up and down, allow some bids to exceed your cost-per-click bid. In campaigns with a Dynamic bids up and down strategy, you may find that some bids you set up are lower than your final CPC.
Amazon Advertising Average Cost per Click
Here are some recent Amazon Advertising CPC stats for 2019, according to data collected by Agencies and Third Party platforms:
The average CPC in Amazon advertising is $0.96 in 2019.
According to Ad Badger Data analyzing US Amazon sellers.
The average CPC in Amazon advertising was $0.79 in 2017, and increased to $0.84 in 2018.
According to CPC Strategy’s reporting from Tara Johnson. The analysis includes data from 54 U.S. Amazon sellers.
At Clever Solution, our analysis of CPC in 2019 finds our average Amazon advertising Cost per Click is $0.30 (total average Amazon CPC in 2019).
Our average Amazon Sponsored Product CPC is $0.34.
Our average Amazon Sponsored Brands CPC is $0.17.
Amazon Sponsored Products Cost per Click Bid
Our minimum Sponsored Products cost-per-click bid is $0.02
Amazon recommends a minimum of $0.05 to be competitive.
Sponsored Products bids must be less than $1,000.00.
Sponsored Products Bidding Strategy
Sponsored Products automatic targeting and manual targeting campaigns allow you to choose one of the following three bidding strategies.
Amazon Dynamic Bids – Down Only
This Sponsored Products bid strategy reduces your bids in real time for clicks considered by Amazon to be less likely to convert to a sale. Any Sponsored Ads campaign created before January 2019 used the Dynamic Bids – Down Only strategy.
There are two more bidding strategies to test in your campaign. We recommend you create your campaign using the Amazon Dynamic Bids PPC strategy and compare it with the other two.
Amazon Dynamic Bids – Up And Down
Sponsored Products dynamic bids – up and down strategy, helps raise your bids in real time when your ad is deemed more likely to convert to a sale, and lower your bids when conversion to a sale is less likely. Amazon will increase your bids by a maximum of 100% for placement at the top of the first page of search results, or by a maximum of 50% for all other placements.
This strategy adjusts your bid in proportion to the likelihood of a conversion. To deliver more conversions for your ad spend compared to the other two strategies, Amazon recommends that you take an existing campaign using dynamic bids – down only, and change its strategy to dynamic bids – up and down.
From our experience with Amazon advertising at Clever Solution agency, this PPC strategy brings more sales. However, it is important to note that sometimes this Amazon advertising strategy leads to higher advertising cost per sale. Remember, selecting the Dynamic bids – up and down bidding strategy may cause some bids to exceed your cost-per-click bid.
Amazon Fixed Bids Strategy
The Sponsored Products fixed bids strategy uses your exact bid and any manual adjustments you set, and Amazon will not change your bids based on opportunities for a sale. According to Amazon, compared to dynamic bidding strategies, you are likely to get more impressions but fewer conversions for your ad spend with this strategy.
Which Amazon Bidding Strategy is Best for Your Ads Campaign?
Testing is the only way to find out. For ad campaigns with different products, there are different best practice bidding strategies. Our experience shows that for some campaigns, Sponsored Products dynamic bids – up and down is the best strategy to increase sales with the right ACoS. Other campaigns do better with a Dynamic Bids – Down Only strategy. Unfortunately, we cannot say anything great about the performance of the fixed bids strategy because it did not generate many sales, reducing ACoS and impressions from fixed bids compared to the same campaigns with the two other bidding strategies. We are currently using Dynamic Bids, and we continue testing.
Amazon Sponsored Brands Cost per Click Bid
Sponsored Brands (Headline search ads) has a minimum bid per keyword of $0.10
Sponsored Brands Bids should not be more than $49.
Sponsored Brands Bids should not be more than your lifetime budget
Amazon Sponsored Brands Campaigns has one default bidding strategy that does not allow you to choose a PPC campaign strategy as you can with Sponsored Products. Sponsored Brands bidding works similar to Dynamic Bids – Down Only or Fixed bids. You can set up bids manually or let Amazon decrease your bids based on conversion opportunities by choosing Automated Bidding.
A Sponsored Brands keyword cost-per-click bid is the maximum amount you will pay for a click on your ad. Amazon will never charge more than this maximum bid, and your actual cost per click may be lower than your cost-per-click bid.
Note. For Sponsored Products and Sponsored Brands, custom keyword bids will override default bids (when you choose different bids for a specific keyword, it will override default bids of the campaign).
Sponsored Brands Automated Bidding
By using automated bidding, you allow Amazon to optimize your Sponsored Brands bids for placements lower than top of search. The keyword bids you provide are used as a maximum. Amazon may decrease your bids for other placements based on your conversion rate for those placements.
Amazon Sponsored Brand observation from the Clever Solution team: By having good advertising cost of sales, our Sponsored Brands CPC bids average much lower than our Sponsored Products campaigns for the same products.
Amazon Sponsored Ad Cost per Day (Campaign Budget)
Your Amazon Sponsored Products Campaign budget is the average amount you are willing to spend on your campaign per day. For Sponsored Brands, you also have the option to set a lifetime budget for your campaign. The minimum campaign daily budget is $1.00, and the maximum campaign lifetime budget is $20,000,000.
Sponsored Products Campaign Budget
In Sponsored Products campaigns, the budget amount is averaged over the course of a calendar month. On any given day you could spend less than your daily budget, or up to 10% more than your average daily budget. At the end of the month, you will not have spent more than your set daily budget, multiplied by the number of days in that month.
For example, if your budget is $100 and you receive $90 worth of clicks on the first day, you could receive up to $110 worth of clicks on the second day. This would bring your total spend over two days to $200, which averages to $100 per day.
Sponsored Brands Campaign Budget
For Sponsored Brands, the daily budget is the total amount you are willing to spend per day on a campaign. Each day is capped at the amount you have set, but you might not always hit your daily budget limit.
Amazon campaign daily budget – (Sponsored Products and Sponsored Brands)
Daily: Total amount you are willing to spend per day on this campaign.
Your campaign daily budget should be at least $1, but not be more than $1,000,000.
Amazon campaign lifetime budget – (Sponsored Brands)
Lifetime: The total amount that you are willing to spend on this campaign.
Your Campaign Lifetime budget should be at least $100 (regardless of date range or duration), and not more than $20,000,000.
You cannot switch between a daily budget and a lifetime budget once you have made your selection while setting up your campaign. To change your budgeting method for a Sponsored Brand, copy your campaign and create a new one.
Amazon PPC campaign out of budget
Out of Budget means your daily budget has been spent and your campaign will be paused. The campaign budget will automatically reset at the start of the next day and continue running. Amazon provides notifications via email and Campaign Manager when your campaigns reach their set budgets. You can choose to increase the budget, and the campaign will continue to be shown to customers.
Daily budgets are spent as quickly as possible, and your budget will not be spread out throughout the day. This means that a smaller budget could be spent in a few minutes if a lot of shoppers are interested in your advertised products.
According to Amazon, most campaigns with a budget over $30 run throughout the day.
The minimum daily budget is $1, but Amazon recommends a minimum of $10 to ensure your campaigns don’t stop showing in the middle of the day.
Depending on budget, the minimum Amazon advertising cost is $1.00 per day
Let’s calculate the absolute maximum Amazon advertising cost and spending for an ad account.
Your Campaign Lifetime budget should not be more than $20,000,000 (regardless of date range).
The maximum limit of campaigns in your account (active and paused) is 10,000.
To provide a theoretical model, $20,000,000 x 10,000 = $200,000,000,000, which is the maximum Amazon advertising cost of all Sponsored Brands campaigns per day.
Amazon Advertising Revenue
Amazon advertising provides detailed reporting data that advertisers can use to analyze a seller’s ad spend and understand their Amazon ad revenue. Campaign Manager simply shows your Advertising cost of sales (ACoS) for each campaign, ad group, keyword, and target.
Advertisers can also easily find Return on ad spend (ROAS) data through downloadable reports in Seller Central.
Campaign Manager does not provide complete data about return on investment (ROI) because ads reports include spends on advertising and product sales only, and do not include the actual profit margin of product sales or other spends such as shipping, gift wrapping, actual product cost with all Amazon selling fees and charges, product production cost, or other costs of investment. However, the seller can calculate the actual Amazon advertising return on investment (ROI).
There is a difference between advertising cost of sales (ACoS), return on advertising spend (ROAS) and return on investment (ROI), so there are different ways to find and analyze Amazon advertising revenue. Let’s see how to find your Amazon ad revenue.
Advertising Cost of Sales (ACOS)
Advertising cost of sales (ACoS) is an Amazon-specific metric to determinate cost, performance, and ads revenue. ACOS is the percent of attributed sales spent on advertising within the specified timeframe for a type of campaign, based on clicks on your ads.
How to calculate ACoS
ACoS is calculated by dividing the total spend by attributed sales.
For example, if you spent $2 on advertising and those ads resulted in sales of $20, your ACOS would be 10%.
Spend in Amazon advertising statistics is the total click charges for a product ad. Amazon provides the spend for each campaign, ad group, and target.
Sales – The total product sales generated from clicks. For Sponsored Brands this also includes purchases for your brand’s products made by shoppers who clicked on your ad, including sales of any product in your advertised brand made by Amazon and other sellers.
Amazon advertising revenue formula: ACOS
Sponsored Products ACOS includes attributed sales for advertised products as well as other products from your inventory purchased within 7 days. Payment failures and orders that are canceled within 72 hours will be removed from sales totals.
Sponsored Brands ACoS includes attributed sales for advertised products and all products within your brand sold by Amazon and third-party sellers within 14 days. Sponsored Brands total sales might include returns. Orders canceled within 3 days of purchase will be removed.
How to find your ACoS
ACOS is available to view in your Campaign Manager. You can check average ACoS for all campaigns in your ads account, and monitor and optimize your Advertising Cost of Sales for specific ad groups, products, keywords, targeting or placements.
What is an average Amazon ACoS?
The average ACoS in Amazon advertising is 37.51%.
(According to Ad Badger Recent Amazon Advertising Stats For 2019)
The average ACoS we see for Clever Solution Amazon ads campaigns is 6.12%
Our average ACoS for different ad types at 2019:
Amazon Sponsored Products average ACOS is 6.27%
Amazon Sponsored Brands average ACOS is 6.52%
Amazon Advertising RoAS (Return on Advertising Spend)
Return on Advertising Spend (RoAS) is a term used in the world of advertising that measures the efficacy of a digital advertising campaign. RoAS is the amount of revenue a company receives for every dollar spent on an advertising source.
How to calculate Amazon RoAS
Return on advertising spend (RoAS) divides the total sales by the total ad spend on advertising (total ad sales / total ad spend).
ROAS = total ad sales / total ad spend
Amazon ROAS formula
RoAS is the inverse of ACoS, so RoAS = 1/ACoS. Unlike ACoS, RoAS is represented as a number that is interpreted as an index (multiplier) rather than a percentage. For example, if you spent $2 on advertising and those ads resulted in sales of $20, your RoAS would be 10.
RoAS less than 1 (for example, 0.73) is considered negative. Any value above 1 (for example, 1.18) is considered positive. RoAS can be applied at campaign, ad group, ad and keyword levels for optimization purposes, or calculated for all advertiser spend to understand the basic profitability.
How to find your Amazon ROAS
Amazon Return on ad spend (RoAS) is available through downloadable reports. Amazon PPC campaigns do not show your RoAS on Campaign Manager like ACoS. You can simply convert your ACoS to RoAS, or go to the Advertising Reports tab, generate a report and download the data. Downloadable reports show account level data, excluding canceled orders, for Sponsored Products and Sponsored Brands.
The following Amazon reports include ROAS data:
- Search term report
- Targeting report
- Advertised product report
- Placement report
Amazon Advertising ROI (Return on Investment)
ROI (Return on Investment) measures the gain or loss generated on an investment relative to the amount of money invested. Return on investment is a ratio between the net profit and cost of investment resulting from an investment of certain resources. A high ROI means the investment’s gains are favorable compared to its cost.
In finance, ROI is a common widespread metric used to evaluate the forecasted profitability of different investments. Before any serious investment opportunities are even considered, ROI is a solid base from which to proceed. The metric can be applied to anything, including advertising, sales, services, or businesses. Anything that has a cost with the potential to derive gains from investment can have an ROI assigned to it.
What is the difference between ACOS, ROAS and ROI
One of the biggest differences between ACOS, ROAS and ROI is that ACOS and ROAS are ratios that compare how much you spend to how much you earn, while ROI reflects the amount you make after paying your expenses. The sole purpose of ROI is to determine whether a campaign is worth an investment or not.
How to calculate Amazon ROI
ROI is a ratio comparing the net profit and the net cost of an investment. In other words, Amazon advertising ROI compares the net income from advertising and related investments to the net expenses required to finance that advertising and investment. Customarily ROI is presented in the form of percentage points. Thus, when the calculated result of ROI = 0.1, the analysts reports the ROI as 10%.
Here is the simple Amazon ROI formula:
Let’s calculate Sponsored Products ROI
Save this checklist to calculate your Sponsored Products ads ROI for one product
- Go to Campaign Manager and find data for ASIN, units sold, and spend. For example, you have sold 10 units of ASIN#1, and your ads spend is $50,
- Find your Earning Per Unit (Excl. or FBA Fees):
- Open the Amazon FBA Fee Calculator: https://sellercentral.amazon.com/fba/profitabilitycalculator/index
- Enter your ASIN and find your product on Amazon.com
- Enter Item Price and fill out all fields, and be sure you enter your Cost of Product (The cost of acquiring the product from your supplier, or the cost required to manufacture/produce a single unit, also known as COGS). Click ‘’Calculate’’
- Copy Net Profit. For example, FBA Fee Calculator Net Profit = $20.51
- Copy Cost (Fulfillment Cost + Selling on Amazon Fees + Cost of Goods). For example, FBA Fee Calculator Cost = $68.95
Suppose a product is advertised for the price $89.46. Using the Amazon calculator, we can find out the indicator of Net Profit and All expenses (Cost):
If we sell 10 units we can count:
Net Profit Total = Net Profit x Unit Sold. Net Profit = $20.51 x 10 = $205.10
Total Investment = Cost x Unit Sold = $68.95 x 10 = $689.95
ROI = Net Profit / Total Investment x100
ROI = $205.1/ $689.95×100%=29.73%
If we also have advertising costs, let’s say $50:
ROI = Net Profit – Advertising Costs / Total Investment + Advertising Costs x100
ROI = $205.1-$50/ $689.95+$50 x100%=20.96%
Amazon Advertising Targeting
Amazon targeting provides solutions for different advertising types. Amazon Seller Central advertising for Sponsored Products has automatic, manual, keyword and product targeting. Sponsored Brands targeting is only keyword targeting. Advertising Console (AMS) for Product Display Ads provides contextual product targeting and Amazon behavioral targeting options. Finally, discover Exclusive Target Audiences on Amazon DSP.
Amazon Advertising Targeting Options for All Ad Types
We put together all Amazon advertising targeting options available for each ad type, to help you create your target audience.
|Targeting Type||Form of Targeting||Methods||Description||Ads Type|
|Automatic||Automatic||Automatic||Automatic Target Keywords and Products||Amazon chooses target keywords and products that are similar to the product in your ad.||Sponsored Products|
|Manual||Keyword||Keyword||Keyword Target||Manually choose keywords and keyword match types to fine-tune which customer searches trigger your ads. You can also use negative keywords to prevent your ads from displaying on irrelevant customer search terms.||Sponsored Products,
|Manual||Product||Contextual||Target Specific Products||Manually select detail pages of similar or complementary products for highly targeted ads.||Sponsored Products,
|Target Related Categories||Extend your reach to target sections of Amazon’s catalog related to your products.|
|Manual + automatic product selection||Product||Contextual||Target Specific Products||Manually select product detail pages to target and allow Amazon to automatically extend product targeting related to this item.||Product Display|
|Manual||Interest||Behavioral||Interest||Drive brand awareness to a broader audience by targeting shopper interest.||Product Display|
Exclusive Target Audiences: Amazon DSP Retargeting
|Remarketing||Pixel Based||Target your audience with remarketing pixels. Shoppers who visit your brand’s website.||Amazon DSP
Display ads and video ads using Amazon DSP
|Product Remarketing||Retarget shoppers who viewed your promoted products but did not convert.|
|Brand Halo Remarketing||Retarget shoppers who viewed other products of your brand.|
|Similar Product Remarketing||Reach shoppers browsing products similar to yours.|
|Amazon DSP Exclusive Target Audiences||Other Multiply Targeting||Contextual (content of the website)
Demographic (M/F, age, income, education)
Geo Targeting (Geographic, zip code)
Time of Day (by the hour)
Other (device type, browser, etc.)
Custom look-alike audience segments
How to Get Amazon Targeting and Create an Amazon Target Audience
Sponsored Products and Sponsored Brands Targeting are available with Seller Central Advertising Campaign Manager; create your campaign and select your targeting.
Amazon Product Display Ads Targeting is available with Advertising Console (Formerly Amazon Marketing Services) at advertising.amazon.com; create your campaign and select targeting simply as you create campaigns on Seller Central Campaign Manager.
Amazon DSP Exclusive Target Audiences
Amazon DSP is available to both advertisers who sell products on Amazon and those who do not. Amazon DSP is suited to advertisers who want to programmatically buy display and video ads at scale. Advertisers can begin using Amazon DSP with a minimum spend of $35K.
Amazon Automatic Targeting
Amazon Sponsored Products Automatic Targeting uses keywords and products to show your ads on search and detail pages to relevant shoppers. Amazon matches your ad with keywords and products that are similar to the product in your ad, based on shopper searches related to your product information. There are multiple default strategies on your behalf to match your ad to a shopper looking for your product. Automatic Targeting is available for Sponsored Products campaigns only.
Automatic Targeting unites automatic keywords targeting to show your ads on search, and automatic product targeting to show your ads on relevant product detail pages.
Amazon Automatic Targeting Strategies
With Amazon Sponsored Products Automatic Ads we can use different targeting strategies.
After you create your campaign, you can see close match, loose match, substitutes and complements targeting strategies in Campaign Manager, and make changes to meet your campaign objectives. For example, you can increase your bid for one tactic versus another to meet your objectives.
How to Find Match Types in your Automatic Targeting Campaign
Campaign Manager > Campaign > Ad Group > Targeting
Note, you can find Amazon Targeting Strategies in Automatic Campaigns created this year. Amazon Automatic Campaigns before 2019 did not offer these target strategies. If you cannot find these match types in your ad group targeting, just create a new campaign to see these new Amazon targeting strategies.
Automatic targeting match types mean that Amazon shows your ad to shoppers who are:
- Close match: use search terms closely related to your products.
- Loose match: use search terms loosely related to your products.
- Substitutes: view the detail pages of products similar to yours.
- Complements: view the detail pages of products that complement your product.
Amazon Sponsored Products Tips for Automatic Targeting
- Start your Amazon PPC strategy with Amazon Sponsored Products Automatic Targeting. Launch your automatic campaign and collect data for further campaigns. Download a search term report of your automatic campaign, find a list of search terms and products. Create new manual campaigns with the best targeting keywords and products from your report.
- Advertise your products using both automatic and manual Targeting campaigns.
- Adjust bids to optimize your Automatic Targeting. Close match and Loose match strategies are related to Automatic Keywords Targeting optimization. Substitutes and Complements match types can be used for Automatic Product Targeting optimization.
Amazon Keyword Targeting
Amazon advertising provides Keyword Targeting for Sponsored Products and Sponsored Brands. Sponsored Products uses Keywords in its automatic and manual campaigns, Sponsored Brands Keyword Targeting offers only the manual campaign option. Amazon Keyword Targeting uses manual keyword targeting for Sponsored Products or Sponsored Brands Targeting.
Keyword targeting allows you to choose keywords to show your products in customer searches and detail pages. Your keywords (word combinations and phrases) are used to match your ads with search terms that shoppers are using to find products. Negative keywords prevent your ads from displaying for undesirable search terms.
Keyword Targeting Sponsored Products VS Sponsored Brands
Sponsored Products and Sponsored Brands Keyword Targeting works the same for both of these ads types, but with a difference in creatives and placements where ads are shown for triggered selected keywords. One minor difference in Keyword Targeting for Sponsored Brands is that you can add broad match modifiers to indicate words that must appear in the customer’s search in order for your ad to run. Add a broad match modifier by adding a plus symbol “+” before the word.
Amazon Product Targeting
Amazon Product Targeting option is available for Sponsored Products and Product Display Ads. With Product Targeting we can show ads on specific products, and choose categories, brands, or other product features to target ads.
Categories are products that are grouped by similarity. We can select target categories like Health & Household, Home & Kitchen, Clothing, Shoes & Jewelry and others, or target specific subcategories like Women’s Dresses. When you choose a product to advertise, Amazon provides suggestions of categories and products to consider and choose as your target. You can search specific categories by name or select from the category catalog. Refine your targeting by choosing specific brands, setting a price range, star ratings, and Prime shipping eligibility.
Individual Products Targeting
In the products tab, you can target suggested individual products that are similar to the product in your ad. You can also search for specific products in the search field or add your list of ASINs.
Product Targeting Sponsored Products VS Product Display Ads
There are many differences between Sponsored Products and Product Display Ads (PDA). When it comes to targeting, Amazon Sponsored Products targeting works the same as Amazon Product Display Ads Product Targeting. The difference is that PDA Product Targeting has the option of Manual + automatic product selection. For Sponsored Products and Product Display Ads, we manually select product detail pages to target, and with Product Display Ads we can also allow Amazon to automatically extend product targeting related to this item.
Amazon Ads Placement
Where do Amazon ads appear?
Sponsored Products and Sponsored Brands display ads in a variety of places across Amazon to make it easier for shoppers to find your products. Ads may appear in desktop, tablet, mobile browser and app placements.
When a shopper searches for a product, Amazon runs a real-time auction to decide which ads, if any, will appear for that specific search, and in which order those ads will show on the page. Ads that compete in the auction are ranked and displayed to shoppers based on a combination of the seller’s bid and the ad’s relevance to the shopper’s search.
Here is a common well-known placement for Sponsored Products and Sponsored Brands. Look at the image below and you can easily distinguish the Sponsored Products Ads from Sponsored Brands Ads on the search results heading. Sponsored Brands ads feature the brand logo, a custom headline, CTA button “Shop Now”, and up to three of your products.
Sponsored Products Ads (yellow) and Sponsored Brands Ads (orange)
Where do Amazon Sponsored Products Ads appear? (Ad Placement Examples)
Top of Search
Middle of search
Bottom of search
Top of Search – Ads can appear in the top row of search results.
Middle of search – Ads can appear in the middle of search results.
Bottom of search – Ads can appear at the bottom of search results.
Ads can appear in the last row of the browse results page for category-specific browse pages.
Ads can appear after product information on detail pages.
Ads can appear in the last rows of search results.
Ads can appear in the last rows of search results.
Ads can appear in the top of search results and in the last rows of search results.
Amazon continually tests new ad placements and designs to deliver the best shopping experience possible. When there are new ad placements, you may see an increase in impressions, clicks, and sales for your campaigns. Amazon continually analyzes the performance of new ad placements.
You do not need to make any changes to your campaigns to take advantage of these new ad placements. However, you might want to evaluate your campaign budgets, as the new placements may lead to increased impressions and clicks for your ads, which can result in increased spend.
Where do Amazon Sponsored Brands Ads appear? (Ad Placement Examples)
Here are examples where will your Amazon ads will show.
Top of search: Desktop ad
Top of search: Mobile ad
Top of search: Mobile app ad
Wide skyscraper ad
Search footer Desktop ad
Search footer Mobile ad
Inline search Mobile app ad
Amazon Sponsored Products VS Sponsored Brands (Infographics)
When creating your Amazon Ads strategy and deciding between Sponsored Products and Sponsored Brands, check this infographic to review the key differences and features of Sponsored Products and Sponsored Brands Ads that you can implement in your advertising.
Amazon Ads FAQ
What are Sponsored Product Ads?
Sponsored Product ads target your prospects based on their shopping behavior and your campaign’s selected keywords. They appear on product pages and on Amazon’s internal search pages. Use automatic settings to launch your first SP campaign, collect and analyze data and manually customize it. Setting a suitable budget and bids optimizes the expenditure of your advertising resources.
What are the key reasons to use Sponsored Products?
It is not enough to register your company on Amazon and create dozens of product pages. Without proper advertising, your pages are unlikely to be visited by prospective customers. Sponsored Products boosts your visibility by displaying your ads in online locations frequently visited by your target audience.
The best argument for using Sponsored Products is cost-effectiveness. Advertising fees are only charged when users click your ads, showing their interest and the likelihood of placing orders.
What requirements must I meet to take advantage of Amazon’s advertising solutions?
Amazon provides advertising campaign access to brands with active trademarks that are enrolled in its registry. You will have to register your brand on the marketplace, submit requested documentation and pass Amazon’s verification process. A PPC agency like Digital Clever Solutions already has all the necessary permits to run your ads, so you can avoid Amazon’s registration process.
What is an Amazon Store?
You can create your branded store on Amazon, provide information about your company, link to an official website, and upload product cards to a catalog.
How do I know whether my store is effective?
You can access a special dashboard and view performance metrics such as the number of visitors, views and conversions generated by the store. If you run external campaigns to promote your store, you can link them to your campaigns to gauge their performance.
Where will my ads appear?
Amazon’s internal ads pop up on product pages similar to yours, and on internal search pages. Sponsored Display Ads may appear both within and beyond the Amazon marketplace. All ad types are displayed on both mobile and desktop devices.
Are there any product type limitations?
Amazon does not authorize advertising campaigns for brands selling adult, used or refurbished products. There are also some additional closed categories.
What do I need to get started?
To run any Amazon Ads campaign, you need an active professional seller account.
To use a branded store, Sponsored Brands or Sponsored Display ads, you need to enroll in the Amazon Brand Registry.
To use Sponsored Products ads, you should confirm your eligibility for chosen product listings. If you try to display ads about furniture on pages showing cosmetics, Amazon might disable your ads, and the disabled ads will be flagged in Campaign Manager.
How much do Amazon ads cost?
Amazon empowers sellers to decide on their promotional budgets and bids. Your costs depend on the number of clicks your ads generate, and the upper limit you have set for your campaign.
You can launch an Amazon Store free of charge.
What is a Featured Offer?
Featured Offers are product pages where users can add items to their shopping carts. If multiple brands sell the same product on Amazon, they compete for FOs and the customers interested in the item. To win this privilege, you need to meet Amazon’s requirements and demonstrate your store’s performance.
What is CPC advertising?
With cost-per-click (CPC) advertising, impressions are free. Your brand only pays when users click on them to visit your product pages. Amazon Ads are CPC-based.