Amazon Advertising Cost: How Much Do Amazon Ads Really Cost?

Before knowing about Amazon advertising costs, let’s take a look at what Amazon advertising is. Amazon advertising allows us to run ads in different formats using the cpc model. These ad formats include sponsored product ads, sponsored display ads and sponsored brand ads. The advertising costs for each of these methods vary. These advertisements are the tools that help Amazon sellers reach the right customer who is looking to purchase the products. These advertisements help the seller reach a high intent audience, increase visibility, drive sales and revenue, and build brand awareness.

How Amazon Advertising Works

Amazon ads run on the CPC model. Cost per click pricing model means the seller only pays when the buyer clicks on the ad.

Pricing Model for Amazon Advertisements –

How pricing works for amazon advertisements –

1. Sponsored Products Ads – CPC
2. Sponsored Display Ads – CPC or vCPM (cost per thousand viewable impressions)
3. Sponsored Brands Ads – CPC or vCPM (cost per thousand viewable impressions)

How keyword bidding and the auction system work—

Let’s take an example of how the Amazon system works. Let’s say you are a seller and you sell coffee mugs. Your one mug costs Rs 150. After doing keyword research, you decide to bid on the keyword “coffee mug” and the maximum amount that you can pay for a click is Rs 5. That’s the max you can pay if someone clicks on your ad (bidding amount).

Now, when a customer types “coffee mug” on the Amazon page. Let’s say there are 2 more sellers – seller A and seller B. Seller A’s bidding amount is Rs 3, and seller B’s amount is Rs 1. Amazon runs an instant auction where you win the auction with the highest bid of Rs 5.

Because your bidding amount was the highest and your ad was the most relevant, amazon will now show your ad on top of the search whenever a customer types “coffee mug” and sellers B and C may show somewhere lower on the page.

Another thing amazon does is it uses a second price auction. meaning even though you bid Rs 5, you are not going to pay the whole amount. You’re going to pay 1 paise more than the second highest bidder. The second highest bidder here was seller B with Rs 3, so you will only have to pay Rs 3.01.

adding .1 to the next highest bid. You won by bidding 5 rs but only ended up paying Rs 3.01. If someone clicks on your ad, you are going to pay Rs 3.01 and if no one clicks, you will pay nothing. Even if they only click and do not buy any cup, you are still going to pay the cpc amount of Rs 3.01.

Types of Amazon Sponsored Ads

There are 3 main types of ads that you can run on amazon.

1. 1. Sponsored product ads
  2. Sponsored display ads
  3. Sponsored brand ads

(1) Sponsored Product Ads

Sponsored Products Ads – these ads are the most used ads on amazon with high conversion rates. Product ads are used for increasing visibility and driving product sales. Sellers use this type of ad for boosting individual product sales and promoting their best sellers.

Pricing – These ads run on cpc model, meaning you pay only when someone clicks on your ads. The most affordable and most used by sellers and great for conversions. It can be as low as Rs 7-30 per click depending on the competition. You can set a daily budget of around Rs 300/400.

(2) Sponsored Display Ads

Sponsored Display Ads – these ads are different from the other two ads. Display ads don’t target keywords but customers’ interests and hence are great for retargeting purposes. It retargets people who have visited your page or products in the past but didn’t buy anything these ads are shown to those customers. Display ads help grow your business by engaging with shoppers in their purchase journey. Amazon not only shows these display ads on the amazon search page but also on third party websites.

Pricing – Display ads can run on cpm as well cpc. There is no fixed amount that you have to spend in a day on a campaign. Whatever budget you set, once it is reached, Amazon stops showing your ads. You can start with as low as Rs 300/day.

(3) Sponsored Brand Ads

Sponsored Brand Ads – only available for registered sellers, these are used to promote brands. These ads promote brand awareness about the brand, its values and its story. Brand ads help you connect with your customers rather than just selling. It features your logo, headline and product collection. Sponsored brand ads appear on top of search pages and product pages. With high visibility placements, these ads are a great way to boost engagement and drive traffic to your store.

Pricing – like all the above ads, brand ads run on cpc and vCPM. These ads are more expensive compared to display and product ads. With brand ads as well, you can set a daily budget and a total campaign budget. You can start with as low as Rs 300 – 500/day and you can stop the campaign anytime you want.

How Much Does Amazon Advertising Cost?

Amazon ads cost depends on your budget, there is no minimum cost that you must spend. For small or new businesses it can start from 9k to 30k and for established and bigger brands it can range from 90 thousand to Rs 3-4 lakhs. You can even spend Rs 1/day but the thing with such a low budget is that you may not get any clicks. The ads will be effective only when the budget is enough to get a reasonable number of clicks.

Who Can Advertise on Amazon?

Anyone who is selling on amazon can run ads. You will need –

● An active seller account
● Listed products eligible for advertising

But if you are a regular seller and not brand registered, you won’t be able to run sponsored display ads and sponsored brand ads. To be a brand registered seller on Amazon, you will need a trademarked logo.

Ad type	Regular Seller	Brand Registered
Sponsored product ads	Yes	Yes
Sponsored brands	No	Yes
Sponsored display	No	Yes

Factors That Influence Amazon Advertising Cost

Amazon ads cost fluctuate based on –

Seasons
Bidding Competition
Product Category
Keyword Competition
Ad Type
Product Quality Score

1. Seasons

Festive season sales such as Republic Day Sale, Prime Day Sale, Great Indian festival can increase ad costs During these days more sellers compete for visibility, which can drive up the bidding prices. And during normal days, costs are usually lower.

2. Bidding Competition

If many sellers are bidding on the same keywords, the cpc increases, increasing the advertising cost.

3. Product Category

Some categories are more competitive and expensive such as beauty, clothing etc, compared to other niche categories. So they have lower advertising costs because there are few competitors.

4. Keyword Competition –

Popular keywords that have high volume cost more because many advertisers want them. Whereas with long tail keywords or highly specific keywords, that is not the case, and they cost less.

5. Ad Types –

Some ads are high in cost. There are 3 main types of ads –

● Sponsored products – they usually have the lowest cpc
● Sponsored brands – they have higher costs because they give better brand visibility
● Display ads – costs can vary based on the target audience and placement, these are usually higher than product ads and lower than brand ads.

6. Product Quality Score –

Listings with optimised titles, quality images, good reviews and high conversion rates get lower cpc.

Conclusion

Even though you can start amazon advertising with a minimal amount, its cost varies and can be influenced by different factors. The only way you can control the advertising cost is by using a strategic and data driven approach. Knowing your goal, the kind of advertisements you will require, how much you can spend and making data based changes can bring the result you need.