Reevaluating Amazon Ad Spend to Align with the Increasing Demand

This post was developed with insights and data from our partners at Pacvue & Cleveland Research Company. 

With the consistent increase in Amazon marketplace sellers, the battle for ad space is becoming significantly more aggressive and equally, more expensive. And while the demand for ad space increases, advertising is still a large piece of the marketplace puzzle contributing to brand growth. Once brands are willing to face the fact that they may need to realign  advertising budgets to stay competitive, it’s crucial to make the right moves to maximize advertising efforts without maxing out advertising costs.

Pacvue’s Q2 2021 CPC Report showed an increase in Sponsored Product Ads cost-per-click (CPC) of 36% year-over-year and an increase in Sponsored Brand Ads of 18% year-over-year.

Advertising costs continue to rise due in large part to an increase in competition while ad space remains limited. It’s reported that nearly three-quarters of Amazon sellers are spending their ad budgets on Amazon, most of which are particularly more established brands, and then in turn raises CPC.

Additionally, during a survey conducted by our partners at Cleveland Research Company, audience members involved in their brand’s Amazon advertising efforts were polled on their expectations for advertising spend in 2022, “A net 57% of brands plan to increase their spend on this platform as a percentage of their Amazon sales next year, with the majority (52%) reporting plans to spend just slightly more as a percentage of sales vs. 2021 levels.”

Amazon continues to be a leader in innovation, particularly in their media business. In the first half of 2021 alone, they have launched over 40 new features and self-service capabilities.

In Amazon’s second quarter earnings report, they stated the following,

"Recent launches include regional sponsored product campaign creation tools; access to educational, technical, and marketing resources via the Partner Network; and a simplified creative asset management solution.”

These new features are focused on improving campaign performance and the ability to be discovered by buyers.

Amazon PPC Campaigns

Amazon Pay-Per-Click (PPC) solutions are available to sellers, agencies, and vendors on Amazon. There are three ad types considered under Amazon PPC:

• Sponsored Products – these ads allow you to choose the product(s) to be advertised and choose relevant keywords or product attributes to target with a specified CPC amount.
• Sponsored Brands – these ads appear as a banner on either the top, left, and below the search results page, and can be redirected to your brand’s Amazon store and include up to three featured products. There are also Sponsored Brand ad units on product detail pages. Additionally, the new and popular Sponsored Brand Video ad unit allows you to showcase a single product with an engaging video.
• Sponsored Display – these ads are used to target relevant customers both on and off Amazon and have the ability to increase visibility and reach.

Capitalizing on the various digital touch points, using these three PPC ad types above will allow you to maximize brand visibility and help you reach advertising goals and objectives.

Staying Competitive in a Saturated Market

For brands to grow their share of the market and stay competitive, it’s crucial to align advertising plans with the brand’s overall sales strategy. Investing in future trends presents an opportunity to engage in the market, but while still investing and assessing past ad strategies that has proven to capture ROI.

As we see the influx of advertisers willing to play in the Amazon advertising game, there is sure to be new opportunities, changes, and trends to continue innovating with brand advertising. Although there is no one-size-fits all approach, brands who understand the basics but are also willing to prioritize beta advertising methods will come out on top.

Feel free to reach out to us with questions, or for more details on this topic. 

Pacvue blends a deep history of advertising and eCommerce expertise, built by eCommerce veterans and supported by an expert team of practitioners dedicated to guiding advertisers through new strategies.