Did you know that Amazon’s ad revenue is about to reach nearly $42 billion? This will give Amazon 13.9% of the digital ad market. This shows that sellers are actively investing in Amazon advertising to market their products and reach more customers.
With this growth, understanding how much does Amazon advertising cost has become more important than ever. Why?
This is because Amazon offers different types of advertising solutions, such as Amazon Sponsored Products, Sponsored Displays, video ads, etc., each with its own pricing structure.
Sellers need to understand the different types of Amazon ads, their associated costs and Amazon Seller Statistics so that they can plan their budget properly and get the best ROAS.
But how?
The key is understanding how each ad type works and what factors influence their costs. And to help you with that, we have come up with this blog.
Through this blog, we will cover the factors influencing Amazon advertising costs, the different types of ads and their costs, tips to optimize your Amazon seller advertising costs, and more.
By the time you reach the end of this blog, you will be equipped with the knowledge required to keep your ad costs in check and drive better results for your business.
So, let’s get started!
Table of Contents
- TL;DR
- Factors Influencing Amazon Advertising Costs
- Amazon Ads Advertising Models
- Amazon Ads Pricing Models
- How To Select the Best Amazon Ad Type?
- What Should Be Your Daily Amazon Advertising Budget?
- How Much Should I bid on Amazon keywords?
- Tips for Optimizing Amazon Advertising Costs
- Tools for Tracking and Managing Amazon Advertising Costs
- FAQs
TL;DR
Average Costs of Amazon Ads
- Average Cost-Per-Click (CPC): The current average CPC for Amazon Ads is approximately $0.95.
- Average Cost Per Mille (CPM): The average CPM for ads sold through Amazon’s Demand-Side Platform is $5.65, as per the latest data.
| Ad Type | Pricing Model | Typical Costs |
| Sponsored Products | Cost-Per-Click (CPC) | You pay per click; costs vary based on competition and bid amounts. |
| Sponsored Brands | CPC or Cost Per 1,000 Viewable Impressions (vCPM) | Flexible, no minimum spend; costs depend on visibility and competition. |
| Sponsored Display | CPC or vCPM | Varies based on targeting and bidding strategy. |
| Amazon Video Ads | Cost Per Mille (CPM) | Minimum $10,000 for self-service campaigns; $50,000 for managed service. |
| Amazon Audio Ads | CPM | Minimum $10,000 for self-service campaigns and $50,000 for managed service. |
| Amazon Posts | Free | No charge for creation or posting. |
| Amazon Live | Free (additional costs for premium features) | Costs vary; specific pricing is available upon contacting Amazon. |
| Custom Advertising Solutions | Custom | Varies based on campaign specifics; minimum spending requirements may apply. |
Factors Influencing Amazon Advertising Costs
There are different factors that influence Amazon advertising costs. These include:
- Ad Type: Amazon seller advertising costs depends on the ad type you go with. For example, if you choose to go with Sponsored Product ads, you might pay around $0.75 per click. Whereas, if you go with Sponsored Brands, you might pay around $1.25 per click, as Sponsored Product ads are generally cheaper than Sponsored Brands.
- Bidding strategy: Many Amazon ads follow a pay-per-click model where ads are auctioned on keyword bids. Your probability of winning increases with the increase in your bid. Yet, this also leads to aggressive bidding, which can drive up costs quickly.
- Competitive keywords: Keywords that have higher search volume tend to have higher competition. And this results in increased costs. And if many sellers are bidding on the same keyword, the CPC value will rise.
- Relevance and Quality Score: Amazon ranks ads based on their relevance to the target audience. Ads with high relevance, quality content, and targeted keywords tend to perform better. Due to that, high-quality, relevant ads tend to have lower costs. Irrelevant ads with poor targeting often cost more per click.
- Targeting options: Targeting also affects the overall Amazon advertising costs. Broad targeting will help your ad reach more people but might cost more because it will receive clicks even from those customers who are not interested in your product.
On the other hand, narrowing your targeting based on customer interests or other parameters can help reducing Amazon advertising costs.
- Demand and Seasonality: During high-demand periods (like holiday seasons), sellers are more aggressive with their bids. And there is more competition in advertising. This often leads to higher CPC rates.
Amazon Ads Advertising Models
In this section, we will look at the different types of Amazon ads and their costs.
Pay-Per-Click (PPC)
With Amazon PPC ads, you only pay when someone clicks on your ad. These ads are easy to set up and are used by professional and Brand Registered sellers to reach more customers.
The cost of PPC ads depends on the ad type, keyword competition, and product niche.
Here are the different types of Amazon ads that work on the PPC model.
Sponsored Products
Sponsored Products are cost-per-click ads that help sellers promote their Amazon product listings across Amazon and other select premium apps and websites such as Pinterest, BuzzFeed, Hearst Newspapers, and more.
These ads appear in search results and on product pages.
And you can easily identify these ads on Amazon as they are tagged with the word ‘Sponsored’.
Sponsored Products fit any budget since you control the bids and budget. When a customer clicks the ad, they are directed to your product’s detail page, making it easy for potential buyers to find your listings.
Cost of Sponsored Product Ads
Sponsored Products have no monthly or upfront fees. You only pay when a shopper clicks your ad. You set the maximum bid amount per click, and higher bids increase the chances of your ad appearing in search results.
For example, if you set a maximum bid of $0.50 per click, you pay this amount each time someone clicks your ad. If you want your ad to appear more frequently in search results, you might increase your bid to $0.75 per click.
Sponsored Brands
Sponsored Brands help sellers boost the visibility of their products through static and video brand creatives. These ads are prominently displayed across Amazon, helping customers discover your brand.
Cost of Sponsored Brands Ads
You can choose between cost-per-click (CPC) or cost-per-thousand impressions (vCPM) models. With no minimum campaign spend, Sponsored Brands allow you to control your budget and adjust your bids anytime.
| Cost per 1,000 Viewable Impressions (vCPM) vCPM pricing means you pay every time your ad gets 1,000 viewable impressions. This billing method is available for both Sponsored Display and Sponsored Brands campaigns. It covers recognized traffic on Amazon platforms like Twitch, Amazon Fresh, and off-Amazon channels. vCPM works best for goals like growing brand impression share in Sponsored Brands campaigns or optimizing for reach in Sponsored Display campaigns. When your ad reaches 1,000 viewable impressions, your bid amount is deducted from your daily or lifetime budget. Example: If your daily budget is $20 and your bid is $1 per 1,000 impressions, your ad can get up to 20,000 impressions per day: Daily budget ($20) ÷ bid amount ($1) = maximum 20,000 impressions per day. |
Sponsored Display
Sponsored Display ads allow businesses to target customers across Amazon, apps, and websites, even if they don’t sell on Amazon. Using machine learning and creative formats, these ads reach customers wherever they spend time.
Cost of Sponsored Display Ads
Sponsored Display ads support both models: cost-per-click (CPC) and cost-per-thousand impressions (vCPM) pricing models. Just like in other ads, you can set daily bids and budgets for these, which you are allowed to change when necessary.
Demand Side Platform (DSP)
Amazon DSP, or Demand-Side Platform, allows advertisers to programmatically buy display, video, and audio ads to reach targeted audiences both on and off Amazon. Besides that, the DSP allows brands to reach both new and existing customers across multiple platforms.
Who is Amazon DSP for?
Amazon DSP is available for all advertisers, whether they sell their products on Amazon or not.
With DSP, you get two options: self-service — the advertiser will manage campaigns independently—or managed service with a minimum spend of $50,000.
Managed service is best for brands that need expert support to run their Amazon ad campaigns.
Amazon Video Ads
Amazon Video Ads empower brands to reach their targeted audiences with video content across different Amazon’s platforms like Prime Video, Twitch, etc.
They help brands promote their existing and newly launched Amazon products through interactive video ads.
The best part is that these video ads is that these can appear even in live streams or Amazon Originals.
Cost of Amazon Video Ads
Video ads are sold on a Cost Per Mille (CPM) model, which basically means cost per thousand impressions. The recommended minimum spend for a self-service campaign is $10,000, and the minimum for managed service is $50,000.
Amazon Audio Ads
Amazon Audio Ads help brands or advertisers to reach listeners both on Amazon-owned audio platforms, as well as third-party audio streaming services.
These ads are primarily designed to engage audiences during important moments when visual engagement is not possible. For example, during commutes or while working.
Cost of Audio Ads
Audio ads are also sold on a Cost Per Mille (CPM) basis. Both self-service and managed service options are available.
Contact an Amazon Ads account executive for pricing information on managed service. Or you can fill out this contact form. And for self-service, simple register for Amazon DSP, or sign in if you already have one.
Amazon Posts
Amazon Posts allow brands to display lifestyle images and videos to help customers discover their brand and products on Amazon.
These Posts appear organically within shopping feeds, allowing brands to tell visually rich stories and make better connections with customers.
Cost of Amazon Posts
Posts are free to create, so brands can try content out and reach customers at no cost.
Amazon Live
Amazon Live is a way for brands to stream live videos that appear both on the homepage of Amazon Live and on your product pages.
In these videos, hosts can talk about their product, demonstrate it, and also offer an interactive way to engage potential customers.
These live streams help customers form a better understanding of the product.
Your live streams will appear right on your product listings. And this further helps to provide more exposure to your products.
Cost of Amazon Live
Using the Amazon Live Creator app to create your own livestream is free.
Brands can create their own livestream on Amazon at no charge using the Amazon Live Creator app. For brands interested in being featured in an Amazon-produced show, there is a minimum cost of $50,000 (US).
| Note: Pricing may vary depending on the contract terms. |
Custom Advertising Solutions
Amazon’s Brand Innovation Lab helps to create personalized ad campaigns. And these are very helpful to engage customers across all stages of the marketing funnel. These ad campaigns help to:
- Build brand awareness
- Encourage customers to consider your products
- And drive conversions
Cost of Custom Advertising Solutions
Any business can access custom solutions, with or without selling on Amazon. Although, please note that a minimum spend is required.
Amazon Ads Pricing Models
There are different types of pricing models for Amazon ads. Below, we have discussed all of them and their differences, as well as the ads that operate on these pricing models:
| Pricing Model | Description | Ad Types Applicable |
| CPC | Pay per click. You pay each time someone clicks on your ad. Used for direct selling of products. | Sponsored Products, Sponsored Brands |
| CPM | Pay per thousand impressions. Charges are based on how many times your ad is shown, suitable for increasing brand awareness. | Sponsored Brands, Sponsored Display |
| CPA | Pay per action. You pay only when a specific action, such as a sale or signup, is completed, focusing on cost-effective conversions. | Varies |
| CPV | Pay per view of video content. Charges are based on the number of views a video ad receives, ideal for engaging potential customers with video content. | Video Ads |
| DSP | Programmatic buying across multiple sites. This model allows for targeted ad campaigns using automation to buy display, video, and audio ads. | Display, video, and audio ads |
Cost-Per-Click (CPC)
This model charges you each time someone clicks on your ad. It’s commonly used for direct-selling ads like Sponsored Products and Sponsored Brands on Amazon. The average cost is around $0.95 per click.
- How to Calculate: Divide the total cost of your clicks by the number of clicks you receive. For example, if you spend $95 on an ad campaign and receive 100 clicks, your CPC would be $0.95.
Cost Per Mille (CPM)
This model means you pay for every 1,000 impressions of your ad, not just for clicks. It’s ideal for ads that aim to boost brand awareness, such as Sponsored Brands and Sponsored Display ads.
The average CPM of ads sold through Amazon’s Demand-Side Platform is $5.65. And this is a big leap from $2.43 in 2020.
- How to Calculate: Divide the total ad cost by the number of impressions and then multiply by 1,000. For instance, if you spend $200 and your ad displays 50,000 times, the CPM would be ($200/50,000) * 1,000 = $4.
Cost-Per-Action (CPA)
You pay only when the ad results in a specific action, such as a sale. This model relies heavily on the ad’s ability to convert viewers into customers.
- How to Calculate: Divide the total ad cost by the number of conversions. For example, if you spend $500 on an ad that results in 50 sales, the CPA would be $500/50 = $10 per action.
Cost-Per-View (CPV)
This model applies mostly to video ads. You pay based on the number of people who watch your video, which is great for engaging potential customers with compelling content.
- How to Calculate: Divide the total campaign cost by the number of video views. If a campaign costs $200 and the video is viewed 1,000 times, the CPV would be $200/1,000 = $0.20 per view.
Demand Side Platform (DSP)
DSP allows you to automate the buying of ad placements and is used for targeted ad campaigns across Amazon’s network and beyond. Pricing is flexible, depending on the campaign’s reach and specifics.
| 💡ACOS (Advertising Cost of Sales) is one of the important metrics which is used to understand how the Amazon PPC campaigns are working. It shows how much you spend on advertising for each dollar of sales. The average ACOS is between 25% and 36%. But it’s important to note that there are fluctuations as well depending on the time of year and specific campaigns. For example, ACOS in January 2024 was 34.59%. And it dropped to 27.98% by March 2024. |
How To Select the Best Amazon Ad Type?
Now, the question is, with so many Amazon ads, each with its own pricing models, which one should you choose?
We will help you out. Consider asking yourself the following questions:
- What is your primary advertising goal?
- If you aim to increase sales directly, consider using Sponsored Products, which operate on a Cost-Per-Click (CPC) basis. This allows you to pay only when someone clicks your ad, leading them directly to your product page.
For goals centered around brand awareness, Sponsored Brands or Sponsored Display ads might be better as they expose your brand to a broader audience.
- Who are you targeting with your ads?
- Are you looking to reach a new audience or existing customers? If reaching new potential customers across various platforms is important for you, Amazon DSP (Demand Side Platform) ads can be very effective.
- How much are you planning to spend on ads?
- Different ad types come with different costs. CPC ads, like Sponsored Products, allow for precise budget control since you only incur costs when someone clicks on your ad.
On the other hand, CPM (Cost Per Mille) ads, like Amazon video ads, require a larger budget.
- What type of content do you have available?
- If you have engaging video content, video ads might be the best choice, especially for products that benefit visually from demonstrations or storytelling.
If you have a great collection of static images for your product, then going with Amazon Posts or any type of Sponsored ads might be beneficial.
| In case you are on a tight budget and want to go with an Amazon advertising solution that is free, you can also look at creating Amazon storefronts. |
What Should Be Your Daily Amazon Advertising Budget?
How to figure out your exact daily Amazon advertising budget? Let’s try to answer that in the sections below.
Setting Your Daily Budget
Your daily budget is the maximum amount you’re willing to spend on ads each day. Once your limit is reached, the ads stop running for that day. If some days don’t reach the daily limit, the leftover amount can roll over to other days within the month, helping balance the total spend.
Most advertisers suggest spending at least $10 per day on your ad, so it receives enough money to run throughout the day in order to meet potential customers.
On the other hand, some businesses also allocate 30-35 percent of their expected revenue for advertising.
For example, if your business is expected to make $1,000 in revenue; you might spend $300-$350 at least on the cost of ads.
Flexibility and Changes
Amazon averages your daily budget over the month, allowing you to spend up to 25% more on busy days.
You should keep reviewing your ad performance regularly. Based on how well your ads are doing, you can keep adjusting your budget. For campaigns that are underperforming, it will be wise to shift budget to ads that can do well.
If your budget is tight, focus on fewer products. That way, you will be able to get better data and optimize your ads properly.
Real-World Amazon Advertising Budget Insights
We did some research on Reddit to find out how much your Amazon budget should be.
And here’s what some users in the community had to say:
- Be Flexible with Your Budget Based on Your Total Revenue:
One user highlighted that you have to adapt your advertising budget to fit your expenses and revenue. And before you finalize the budget, you need to consider other factors like Amazon fees, product cost, etc. And then you should think about how much more you can spend on advertising.
Generally, advertisers allocate 20-35% of their expected revenue for advertising.
- Start Small:
Another user said that you should start with a budget of $25 to $50 per day if your cost-per-click is low. This will help you keep the initial risk pretty low. Once you have learned how to sell on Amazon, gained confidence, and started getting results, you can easily increase your budget to $100 per day.
- Gradually Increase your Budget:
Another seller emphasized the same: scale your budget with time. The user shared their own progression, where initially their daily spend used to be $20. But now have they have raised it to $100 as their results were great.
These insights show that there’s no one-size-fits-all answer. Starting small, adjusting based on results, and scaling up as you gain experience is the best!
How Much Should I bid on Amazon keywords?
What should you bid for Amazon keywords? This can be a tough question to answer. Why? Because there are different factors to consider when bidding on Amazon keywords. These include:
- How competitive are your keywords? Will you be targeting high-competition (popular) or low-competition (niche or less popular) keywords?
- Budget Constraints.
- Conversion Rates
- Advertising Goals
- Product Pricing and Margins
And so on.
But to help you answer the question, we have come up with a simple approach that you can use to decide how much you should bid on Amazon keywords.
Start by calculating the maximum amount you can afford to pay for each click while remaining profitable. Then:
- Calculate Your Profit Per Sale:
- Formula: Profit per Sale = Selling Price – Cost of Goods Sold (COGS) – Amazon Fees – Other Expenses
- Determine Your Target ACoS (Advertising Cost of Sales):
- This is the percentage of sales revenue you’re willing to spend on advertising.
- Example: If you aim for an ACoS of 25%, you will spend $0.25 on advertising for every $1 in sales.
- Calculate Your Maximum Cost-Per-Click (CPC):
- Formula: Maximum CPC = (Profit per Sale) × (Target ACoS) × (Conversion Rate)
- Example: If your profit per sale is $10, target ACoS is 25%, and conversion rate is 10% (0.10), then:
- Maximum CPC = $10 × 0.25 × 0.10 = $0.25
- Set Your Initial Bid:
- Start with a bid at or slightly below your maximum CPC.
- Use Amazon’s suggested bid range as a reference point.
- Monitor and Adjust:
- Regularly check your campaign performance.
- Increase bids for high-performing keywords and decrease or pause bids for underperforming ones.
Verdict
There isn’t any exact number for how much you should bid on Amazon keywords. Why? Because it can vary depending on your specific situation. But you can always start by calculating your maximum CPC using your profit margins and target ACOS. Then you can set bids that help you remain profitable.
Tips for Optimizing Amazon Advertising Costs
Below we have shared some great strategies that will help you optimize your Amazon advertising costs and boost your Amazon ROAS:
- Perform Thorough Keyword Research
Your focus should always be on relevant, high-volume, long-tail keywords. That will help you draw in the right audience. Plus, you can also use negative keywords to prevent your ads from appearing in unrelated searches. That will further help you save costs and improve targeting.
- Optimize Product Listings
Make sure you regularly optimize your Amazon listings. You can do the same by including high-quality product images and detailed descriptions with relevant keywords (for both the front end and back end). This helps your ads perform better by attracting more clicks, improving their CTR, and increase sales on amazon.
- Use Automatic Campaigns for Insights
Set up automatic campaigns to start gathering data on effective keywords. Use this information to improve your strategy in manual campaigns further.
- Adjust Bids Depending on Placement
Increase bids for top-of-search placements to achieve better visibility and more conversions. Monitor performance for different ad placements and adjust the bids accordingly.
- Use Dynamic Bidding Strategies
Dynamic bidding strategies can be lucrative for you. These adjust bids in real-time based on the likelihood of conversion. This can help manage costs and optimize spending.
Tools for Tracking and Managing Amazon Advertising Costs
Amazon offers advertisers several tools to help them manage their ad spend effectively. Those tools give a lot of information about campaign performance that they can use to reduce their advertising costs.
Amazon’s Built-in Tools
- Amazon Advertising Console: This is the main tool for managing Sponsored Products, Sponsored Brands, and Sponsored Display campaigns.
It provides specific data on impressions, clicks, spend, and Advertising Cost of Sales (ACOS). This information allows you to adjust your campaigns in real time to improve performance.
Pricing: It is free to use for registered Amazon sellers.
Third-Party Tools
- AdBadger: AdBadger is a tool that helps you with the optimization of Amazon PPC campaigns with both automated and manual bidding systems.
It offers a Bid Optimizer that helps you to make daily bid adjustments. Additionally, there’s a keyword tool that helps advertisers find the most profitable (or converting) search terms.
Pricing: AdBadger offers a starter plan for $275/month. It offers an automated bidding algorithm, support for Sponsored Brands and Display ads, and more.
Their website doesn’t clearly specify if they offer a free trial.
- SellerApp: SellerApp is an Amazon marketing tool that can help you manage and track your Amazon advertising costs. It uses AI to automate PPC campaigns and several other associated elements such as adjusting bids and modifying campaigns based on profit goals.
Pricing: Offers a free plan for sellers who are just starting.
Otherwise, their premium plans start from $99/month for those who have a minimum ad spend of $5,000.
They offer a 7-day free trial.
Amazon DSP-Specific Tools
- Amazon Marketing Cloud (AMC): Amazon Marketing Cloud (AMC) is a cloud-based platform. It helps advertisers to track campaign performance, build custom audiences, and make data-driven decisions.
AMC combines provides different data which is combined from Amazon properties, advertisers, and third-party sources. This helps with comprehensive analysis of any ad campaign.
Pricing: AMC is free for eligible advertisers. To qualify, you need an Amazon DSP agreement, active or recent campaigns, and technical knowledge of SQL. For API use, an Amazon Web Services (AWS) account is also required.
- Amazon Brand Lift: This is a tool for Amazon advertisers that helps to measure the impact of upper- and mid-funnel ad campaigns.
It provides insights into different metrics like customer awareness, preferences, intent, and ad recall. By using surveys from the Amazon Shopper Panel, advertisers gain insights into how their campaigns influence customer attitudes and behaviors.
Note: Only ad campaigns that run through the Amazon DSP and sponsored ads are eligible for Amazon Brand Lift, except for Sponsored Products.
Pricing: Amazon Brand Lift is free for eligible advertisers, provided campaigns meet minimum spend and impression requirements.
Conclusion
In summary, understanding how much does advertising on amazon cost and managing it is essential for getting the most out of your ad campaigns. By using Amazon’s built-in tools and external solutions, sellers can track key metrics, optimize spending, and make smarter decisions.
With a clear strategy in place, you can effectively control your ad budget and drive long-term success on Amazon.
FAQs
- How much does Amazon advertising cost?
The cost of advertising on Amazon can depend on the type of ad you choose to use. For example, if you are buying ads from Amazon DSP, then you should have a minimum ad spend. On the other hand, many Amazon Sponsored ads, like Sponsored Products, work on a CPC model. You only pay when someone clicks on your ad.
However, for reference, you should know that the average Cost Per Click (CPC) for Amazon ads is approximately $0.95.
- How much does Amazon Sponsored Products cost?
Amazon Sponsored Products operate on a pay-per-click (PPC) basis. Advertisers only pay when their ads are clicked, not when they are displayed. Thus, costs can vary.
- How much do Amazon promotions cost?
Amazon promotions, such as discounts, Buy One Get One (BOGO), etc., do not directly incur costs just for setting them up. As a registered seller on Amazon, you can create these promotions via the Seller Central platform.
- Do you pay for Amazon ads?
Yes, you pay for Amazon ads based on the number of clicks your ads receive (CPC model), or impressions in the case of Cost Per Mille (CPM) ads.
- How profitable are Amazon ads?
Amazon ads are quite profitable for businesses. The company’s advertising revenue jumped from $21 billion to $31 billion in one year, showing a 32% growth. This increase highlights how effective these ads are for increasing Amazon sales.
The average cost for each click on an Amazon ad is about $0.77, which is quite competitive compared to other advertising platforms like Google.
- How does Amazon’s cost-per-click (CPC) model work?
In Amazon’s CPC model, advertisers bid on keywords, and the cost is determined by the auction’s competitive landscape, with the advertiser paying a bit more than the next highest bid for their ads to appear.
- What are the average CPC rates on Amazon?
The average CPC rates can range from $0.50 to $1.00, influenced by factors like competition and ad quality.
- How can I reduce my Amazon advertising costs?
To reduce costs, consider using more precise keyword matches, improving the quality of your ads, and optimizing your overall ad strategy to better target potential buyers.
- How do I calculate my Amazon advertising cost per sale (ACoS)?
ACoS is calculated by dividing the total ad spend by the total sales generated from the ads. This metric helps determine the efficiency of the advertising spend in relation to the revenue it generates.
- How can I track the effectiveness of my Amazon ad spend?
Tracking effectiveness can be achieved by monitoring metrics such as click-through rates (CTR), conversion rates, and ACoS. Tools like Amazon’s own analytics, along with third-party software, can help in this analysis.
