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In 2022 How Much Will Amazon Ads Cost?

When sellers are in the product research phase to sell on Amazon, one product expense that they often overlook is advertising costs. To estimate profitability, each seller needs to factor in unit costs, Amazon FBA fees, and shipping costs — but what about the costs to run PPC ads?

As more and more consumers choose online shopping over in-store shopping, advertisers need to take advantage of this audience of ready-to-buy customers. Nearly 3 in 4 consumers start their product search on Amazon.com — a compelling reason for sellers and brands to learn how to use Amazon’s powerful advertising tools.

And sellers are taking advantage of these resources. In 2021, Amazon is expected to generate more than $26 billion in advertising revenue alone.

However, the cost of advertising on the platform is increasing as brands become more and more competitive. 62% of Amazon sellers are concerned about increasing ad costs on Amazon in 2021.

Despite these concerns, it is still possible to run profitable PPC campaigns on Amazon — with the proper pricing strategy. To secure your profitability, it’s essential to be informed about advertising best practices, what ad costs you’re up against, and how to figure out what your cost-per-click might be.

Sponsored Products and Sponsored Brands

Professional sellers and brand-registered sellers can use the three PPC ad types on Amazon: Sponsored Products, Sponsored Brands, and Sponsored Display. If you are not enrolled in Brand Registry, only Sponsored Products are available.

According to AMZVZ s eCommerce data, Sponsored Products is the most popular ad for sellers and brands. But in the last three years, there has been a noticeable shift in ad spend from Sponsored Products ads towards Sponsored Brands and Sponsored Display ads — a clear indication that sellers find value in investing not just in their products but also in their brand presence on Amazon.

Sponsored Products are still an excellent option for sellers who are not brand registered. This ad type is straightforward to set up and allows you to get in front of the right customers from day one of your launch. Even though this ad type is available to every professional seller, it still presents an ample opportunity to uniquely advertise your products and convert visitors into customers.

Loose match type

In Sponsored Products, you have the option to run a manual campaign or an automatic campaign. You choose the keywords you want to target in a manual movement. Amazon will choose keywords for you based on your listing’s title, bullet points, description, and back-end keywords in an automatic campaign.

Within automatic targeting, there are four different match types you can turn on: Close match, Loose match, Substitutes, and Complements. The targeting type you choose for your ads helps determine your RoAS.

How much does it cost to advertise on Amazon?

The cost of advertising on Amazon depends on a few different factors:
The ad types you choose.
Your daily budget.
Your ad targeting type.
Your bids per keyword.
You get to decide how much you want to spend daily, but there’s more to it than that.

Spending just $10 a day on your campaign can work, but if the drive is not profitable, you’re going to end up spending more money than you make back. You need to target relevant keywords in your campaigns. Still, your ad conversions also depend on other important factors such as the type of product you’ve chosen to sell, your product price, your listing’s images, and the kinds of reviews you’ve gained.

What should my daily advertising budget be?

We recommend starting with $50 to $100 a day for your PPC campaigns, but you can quickly begin with just $5 to $10 a day and make adjustments over time. Gather data while you let your campaigns run for a few weeks, so you can make informed decisions on which keywords to target and what keyword bids to make — and further improve your listings. Watch your budget: if it runs out early, your campaigns will be paused. If you find your budget running low, increase your daily budget if you’re profitable, or remove/change costly keywords that are not converting into sales.

How do keyword bids work?

A keyword bid is an amount you are willing to pay when someone clicks on your ad. When you place a bid, you are bidding against your product competitors for ad placement. If you set your keyword bid at $0.50, that is the maximum amount you will pay each time someone clicks on your ad. If your competitor has a higher bid for that particular keyword, they will have better ad placement. This does not mean your ad will not appear before consumers, but your competitor’s ad will be in a spot ahead of yours.

How to estimate your cost-per-click

As mentioned above, Amazon will show you the recommended bid amount for each keyword you are targeting in your campaign. But what if you don’t have a listing up yet?

It is essential to understand what it will cost per click for the main keywords in your niche before you invest in a product. If the average CPC per keyword is very high, that may tell you that the slot is very competitive, and it will be harder to gain impressions on your ads and listing.

Understand your Amazon advertising pricing

If you invest the time to study and learn how to determine your advertising costs, you’ll be well ahead of your competition who neglected to do the same. It is essential to understand as an Amazon seller — especially as a new seller. Without knowing what your potential ads may cost, you could be spending your entire profit margin — and more — on advertising. Just by reading this article, you are already ahead of the curve!

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