8 out of 10 households in the United States are Amazon Prime members. As a sales channel, Amazon’s marketplace has become the go-to place for most consumers to purchase items. Manufacturers that are trying to go Direct-to-Consumer are now confronted with the question if it is worth it to invest into Amazon Advertising. Since Amazon takes on average around 15% sales commission, is it really worth it to spend more money with Amazon on their Amazon Advertising Platform.
What are the downsides of Running Ads on Amazon?
1. Cost of Advertising: While advertising on Amazon can achieve positive results, it also requires a financial commitment. Sellers and Manufacturer first should think through how much of their advertising budget they want to allocate towards Amazon Ads. It is also important to understand, that Ads won’t be profitable right away, and usually take 2-3 months before they are profitable.
2. Increased Competition: As more sellers sign up to sell on Amazon (still), they also automatically get access to Amazon’s advertising platform. Naturally, the number of advertisers increases, while the ad space for the most part stays the same. This increased competition drives up cost-per-click costs and make it more challenging for sellers to achieve profitable advertising campaigns and reach their target audience.
3. Ad Fatigue: Consumers are getting overloaded with Ads, from ads on Google, Facebook, X (formerly known as Twitter) and Amazon. Overexposure to ads can lead to ad fatigue among shoppers, causing them to become desensitized or annoyed by repetitive advertising. Sellers should find a balance between promoting their products effectively and avoiding overwhelming potential customers with excessive ads.
4. Complexity of Platform: Amazon’s advertising platform can be complex and daunting for sellers, especially those new to digital advertising. Navigating the various ad types, targeting options, and optimization techniques requires skills and know-how. The complexity can lead to quickly spending money on advertising campaigns that lose money, accelerating the cost of selling on Amazon. Advertising Agencies like Barrel Aged E-Commerce can help Sellers in those areas.
5. Performance Volatility: How effective Amazon Ads are going to be for your Brand can vary depending on factors such as product category, competition level, and seasonality. Sellers are going experience fluctuations in ad performance and ROI, requiring constant monitoring and adjustment of ad strategies. Again, strategic partners like Advertising Agencies can help you avoid or mitigate them.
What are the benefits of Running Ads on Amazon?
1. Increased Visibility & Brand Awareness: Amazon ads allow sellers to feature their products at the top of search results, on product detail pages, and in other high-traffic areas on Amazon.com. This increased visibility can significantly impact product brand recognition, brand awareness, but untimely also lead to more sales.
2. Better Targeting Options based on Shopping Behavior: Amazon’s advertising platform offers an increased amount of targeting options, allowing Manufactures to reach specific audiences based on their shopping behavior. Such as, re-targeting visitors that looked at your product in the last 7, 14, or 30 days. Also the targeting of competitor products that may have worse rating, or higher price, which makes your product more attractive to a potential buyer is an option. Amazon is actively working on adding new ways to allow advertisers to reach their target customers.
3. Flywheel Effect: Running ads on Amazon can lead to a direct boost in sales and with that a boost in sales ranking for your product listing. With that better sales rank, your organic sales (sales you got without advertising for it) should increase. So, by strategically promoting products to shoppers who are actively searching for similar items, sellers can capitalize on purchase intent and drive more conversions.
4. Advertising Dashboard & Insights: Amazon provides sellers with comprehensive analytics and reporting tools to track the performance of their ad campaigns in real-time. These insights enable sellers to optimize their advertising strategies, identify areas for improvement, and allocate budget more effectively.
5. Competitive Advantage: In a crowded marketplace, advertising can help sellers stand out from competitors and establish a stronger presence. By investing in targeted ads, sellers can gain a competitive edge and increase their market share within their niche.
Running ads on Amazon offers sellers a great opportunity to increase brand awareness, drive sales, and increase their market share. However, it’s essential for sellers to know the ins and outs of Amazon’s advertising platform and what advertising strategy to choose. Careful planning, strategic execution, understanding is something to think about BEFORE investing in Ads. By leveraging Amazon’s advertising platform effectively and continuously refining their ad strategies, sellers can maximize the impact of their advertising efforts and achieve long-term success on the platform. If you are struggling and need help getting your ads to the next level, reach out to schedule a call with Barrel Aged E-commerce. We’d be happy to help!