Advertising prices on Amazon

Advertising prices on Amazon depend on several factors, such as the competition within the category, the selected keywords, and the type of ad. Advertising on Amazon is a solid strategy for any business looking to reach new customers, though it requires an additional financial investment.

I'm Jordi Ordóñez, an Ecommerce & Amazon consultant, and in this article, I'll explain how much it costs to advertise on Amazon and the types of ads available.

What is advertising on Amazon?

Advertising on Amazon is a tool to increase product visibility through paid ads that appear in searches and on product pages. These ads work similarly to Google Ads: they use a bidding system for keywords, and advertisers pay when a user clicks on their ads. With more businesses using Amazon's marketplace, advertising has become essential for competing in a seller-saturated environment.

Types of advertising on Amazon

Amazon offers various types of ads that cater to different marketing approaches and goals.

Sponsored products

This is the most common ad type on Amazon. Sponsored product ads appear in search results and on product pages, ideal for highlighting specific products and capturing the attention of users actively searching for similar products. The cost of these ads varies depending on the bid and the competition for the keyword.

Sponsored brands

Sponsored brand ads allow businesses to showcase their logo and a custom headline at the top of search results. This option is excellent for building brand awareness and driving traffic to a brand's product page or a customized Amazon store page. It's useful for positioning a brand in front of customers who may not yet know it.

Sponsored Display

Sponsored Display is an option that enables brands to reach broader audiences both on Amazon and external sites. This ad type is particularly useful for businesses interested in retargeting, as it can show products to users who have previously shown interest.

Advertising costs on Amazon

Advertising on Amazon involves several costs that depend on the type of ad, the product category, competition, and daily budget. Below, we explain the key factors that influence pricing.

Auction and cost per click (CPC)

Amazon's advertising system is based on a cost-per-click (CPC) auction. This means that advertisers set a maximum bid for each relevant keyword, and Amazon displays ads based on these bids and product relevance. According to data from Practical Ecommerce, the average CPC on Amazon is around €0.35, though it can vary.

Product type and competition

Advertising costs also depend on the competition within a niche. For example, electronic products generally have higher advertising costs than other categories due to intense competition. If a niche is highly competitive, the CPC will be higher, and businesses must invest more to gain visibility.

Bidding strategy and daily budget

The daily budget and bidding strategy influence the final costs. Amazon allows advertisers to set a daily budget, which helps control campaign spending. If a high budget is set and highly competitive keywords are chosen, costs will increase, but so will the product's visibility.

How much does it cost to advertise on Amazon?

The costs of advertising on Amazon can vary widely. Some businesses spend between 5% and 15% of their revenue on advertising, but private brands often invest more to build recognition and differentiate themselves in a very competitive market. Below, we break down the average costs by ad type.

Costs of sponsored products

For Sponsored Products, the average cost per click ranges from €0.25 to €0.35, though in highly competitive categories, this figure may be higher. The flexibility of this ad type allows advertisers to start with low budgets and increase them as results improve.

Costs of sponsored brands

Sponsored brand ads generally have higher costs due to their prominent placement in search results. These ads, designed to improve brand recognition, usually cost a bit more, with a CPC that can range from €0.40 to €0.60, depending on the category.

Costs of sponsored display

For Sponsored Display, prices can vary greatly. This ad type uses retargeting, which can be more expensive, especially if targeting users outside of Amazon. The CPC for these ads can range from €0.20 to over €1, depending on the audience and competition.

Is advertising on Amazon profitable?

For many sellers, Amazon is a profitable platform for advertising due to its reach and the high purchase intent of its users. Products advertised on Amazon tend to increase their sales and may also improve their organic ranking on Amazon. This means that by advertising, direct sales increase and product visibility is also enhanced organically.

Advertising on Amazon can be costly, especially with rising fees and competition. However, if done strategically, ad investment can generate a positive return and boost your product visibility. At Jordi Ordóñez, we can help you achieve strong returns on your Amazon sales. Contact us for personalized guidance!

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