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The Concerns and Reality Around Amazon Advertising

March 5, 2019 | Posted By Rustin Nethercott
The Concerns and Reality Around Amazon Advertising

E-commerce sellers are often skeptical of new advertising platforms, even when the platform is as established as Amazon. But are these concerns backed up by the numbers? We dug into the top Amazon advertising concerns sellers had and analyzed the data behind them.

Here’s what the data shows:

Concern: Only certain categories see good ROI from advertising on Amazon

Reality: No matter what products you sell, it’s possible to see a strong return on ad spend from Amazon advertising.

Non-Amazon e-commerce products convert at an average of 1%. All Amazon categories we profiled converted at a rate of  8%-10%, meaning that even if your category isn’t as successful as some others, selling on Amazon will still bring you much better ROI than other platforms.

Concern: Smaller sellers can’t compete against larger advertisers since they lack their budget

Reality: As long as you follow best practices when creating your campaigns and make sure that you’re collecting data to refine and improve over time, you can see a positive result from your ad spend.

With more sellers using Amazon every day, you have to pay to play regardless of your budget. Just because you can’t spend as much as larger businesses, doesn’t mean you shouldn’t spend at all. As long as you’re bidding affordably, you can mitigate the risk of overpaying. This doesn’t change based on what your competition is spending.

Every single band of ad spend we profiled showed a sizable proportion of ad-driven revenue. Even the smallest ad band we covered showed an impressive 18.8% average proportion of ad-driven revenue. The average percentage of sales derived from ads is 30% across all categories.

Whether sales come from ads or from organic ranking, they still contribute to the flywheel effect, which will help you get more sales overall.

Concern: Amazon advertising won’t be able to deliver increased sales and conversions.

Reality:  The advertising flywheel effect shows how effective ad spend drives conversions, which leads to increased ranking and credibility. This, in turn, makes ad campaigns more effective, creating more conversions.

Put this data to use.

While the data we collected shows significant benefits to sellers advertising on Amazon, the only true way to find out how successful Amazon advertising will be for your business is to try it out and track your results. It may take some trial and error, but all the data suggests that your business will see the benefits.

Want help maximizing profit from Amazon Advertising? Try Teikametrics Flywheel for free!