Amazon ads cost 68% less than Google ads and 44% less than Facebook ads, Sellics study shows

In an extensive Big Data study of more than two million active advertising campaigns on Amazon spanning seven marketplaces over two years, Sellics compared the costs of different advertising platforms

Sellics’ comprehensive 2022 eCommerce Advertising Benchmark Report reveals that Amazon’s US marketplace has been booming since the start of the pandemic, and continued to do so in 2021, with seller ad revenue from Sponsored Products campaigns growing by 23 percent in 2021. Furthermore, the report also provides detailed insights into trends and opportunities for advertisers across the different Amazon marketplaces and product categories.

The study was conducted by experts at Sellics, a leading provider of Amazon Advertising software and market intelligence. Sellics looked at Amazon Sponsored Products, the main advertising format on Amazon, with ads appearing in search results and on product pages.

Amazon is uniquely attractive for B2C and retail advertisers
Google and Facebook are the two largest players in the digital advertising space. Amazon, as the third-largest competitor, has caught up significantly in recent years. At the same time, global advertising costs on Amazon (cost per click of $0.75 globally, $0.87 in US), are still lower than on many other platforms. Amazon compares favourably in terms of global costs not only with Google (-68 percent) and Facebook (-44 percent), but also other major players like Instagram (-79 percent) and LinkedIn (-86 percent), as well as close competitor Walmart (-25 percent internationally or -13 percent compared with Amazon US).

Graphic 1: Worldwide cost per click averages on social and online platforms; Source: Sellics

However, “It’s not just the lower cost per click that makes Amazon stand out for advertisers. Amazon is unique as an advertising platform as it combines a high purchase intent retail platform that generates revenue cost-efficiently with an enormous reach and traffic. Don’t forget that Amazon is the top starting point for product searches across the whole web, which makes it extremely attractive for B2C and retail advertisers,” said Thomas Ropel, an advertising veteran and CMO at Sellics.

In 2021 Amazon.com’s seller ad revenue stabilized well above the pre-pandemic level and its ad space became more competitive
The pandemic made 2020 a boom year for Amazon.com (and e-commerce in general). In 2021, sellers’ revenues from Amazon Advertising campaigns grew by 23 percent.

This represents a surge in ad revenue above the already-high 2020 baseline and reveals that ad revenue is stabilizing well above pre-pandemic levels. It’s also a strong indicator that Amazon remains a highly attractive platform for advertisers, despite growing competition driving a 22 percent increase in cost per click in 2021.

Canada and Germany present opportunities for US sellers
In 2021, Amazon.com (US) was by far the largest but also the most competitive Amazon marketplace, with the highest cost per click ($0.87) and lowest return on ad spend ($2.81) compared to other large Amazon marketplaces.

The Canadian Amazon marketplace represents an opportunity for US sellers with a slightly higher return on ad spend (+15 percent). US sellers should, however, prepare for a somewhat different environment with lower conversion rates (-39 percent) and lower cost per click (-41 percent).

For sellers weighing up options for entering European marketplaces, the UK has a very similar environment to the US and a low language barrier. Germany is an attractive opportunity as the second-largest Amazon marketplace globally in 2021, with a high return on ad spend (39 percent higher than the US), due to its relatively low cost per click (46 percent less than the US) and strong conversion rates (only 20 percent less than the US).

Graphic 4: Cost per click trends for Amazon Sponsored Products Ads by marketplace; Source: Sellics

Product categories Tools, Sports, and Scientific have the highest Return on Ad Spend
Diving even deeper into the US Amazon marketplace, Sellics analyzed the main advertising performance metrics (click-through rates, conversion rates, cost per click, average order value, return on ad spend, and advertising cost of sale), in addition to opportunities across all main product categories on Amazon.com.

The overall best and worst categories in terms of return on ad spend (ROAS) and advertising cost of sale (ACOS) were:

  • Best categories: “Tools & Home Improvement” (ROAS $4.04, ACOS 24.8%), “Industrial & Scientific” (ROAS $3.47, ACOS 28.8%), and “Sports & Outdoors (ROAS $3.31, ACOS 30.2%)
  • Worst categories: “Beauty & Personal Care” (ROAS $2.27, ACOS 44.1%), “Baby Products” (ROAS $2.37, ACOS 42.1%), and “Health & Household” (ROAS $2.55, ACOS 39.3%)
Graphic 5: ROAS for Amazon product categories – Amazon US marketplace; Source: Sellics

One of the key takeaways is that there are large differences between product categories on Amazon, not only for overall ad efficiency but also for its determining factors like click-through rates, conversion rates, cost per click, and more.

Brands need to understand what is happening in their specific categories so that they can see where to optimize. “If you’re selling cameras at $125 a unit, a conversion rate of 5 percent will put you well ahead of the other sellers in your space. But if you’re selling HDMI cables at $10, you’ll need a lot of shoppers to convert or else you’ll really struggle to turn a profit,” said Thomas Ropel from Sellics.

Sellics offers a free tool—the Sellics Benchmarker—that brands can use to get average values for all the advertising performance metrics in their specific category, subcategory, and marketplace.

Sellics’ 2022 eCommerce Advertising Benchmark Report can be downloaded for free here:
https://sellics.com/amazon-advertising-benchmark-report-2022/?utm_campaign=benchmark-report&utm_medium=referral&utm_source=pr&utm_content=EN_Benchmark_Report_2022_PR