Amazon PPC – Statistics & ROI Expectation

Illustration showing effective Amazon PPC strategy for higher sales and visibility

Feeling lost in the Amazon jungle of competition? Dominating sales requires more than just shouting your product into the void.

Amazon PPC is an advertising model where sellers need to pay for each click by the users on the ads. That way, sellers can capture the attention of users amidst the cut-throat competition.

However, simply throwing money on ads will not guarantee success. That’s where the need for a strong PPC strategy arises. 

But what’s the secret to creating a good PPC strategy? Money, human resources, or creativity? Well, hard facts and fresh figures are the key to creating an effective PPC strategy. In this blog, you will get to know the latest Amazon PPC stats and trends to frame a data-driven strategy.

General Amazon PPC Statistics

As the competition gets tougher day by day, more and more companies are testing out various Amazon PPC options to stay intact. Check out some latest stats that show this trend:

  • Over 2 million small and medium-sized brands sell on Amazon. (Source: Amazon)
  • In the US alone, there are over 500,000 Amazon sellers. (Source: Amazon)
  • Three out of four Amazon sellers use Amazon PPC ads. (Source: JungleScout)
  • 500,000 businesses use brand analytics features to track and increase their sales figures. (Source: Amazon)
  • An average Amazon seller spends 22% of revenue on ads. (Source: MarketPlace Pulse)
  • 38% of Amazon brands and sellers are worried about increasing ad costs. (Source: JungleScout)
  • Amazon generated almost $12 Billion worldwide on Prime Day, 2023. (Source: Statista)
  • 56% of customers start searching for a product on Amazon. Facebook stands just behind with 42%. (Source: JungleScout)
  • 36% of Amazon brands invest in search engine marketing. (Source: JungleScout)
  • 72% of Google ad conversions on Amazon are from new-to-brand customers. (Source: JungleScout)
  • 70% of Amazon sellers are third parties. (Source: JungleScout)
  • Amazon records $4,722 in sales each second. (Source: Repricer Express)
  • 60% of sellers sell on at least one other platform than Amazon. (Source: Enterprise Apps)
  • The top alternatives of Amazon that sellers use are eBay (23%), Shopify (21%), Facebook (10%), and Alibaba (9%). (Source: JungleScout)
  • 73% of Amazon sellers make a profit margin of more than 10%, and 35% achieve more than 20%. (Source: Repricer Express)
  • 56% of American consumers check out Amazon when they see a brand online for the first time. (Source: JungleScout)
  • 38% of consumers shop at least once a month on Amazon. (Source: JungleScout)

Amazon PPC Sales and Revenue

The latest revenue figures show that Amazon, the industry giant, is hardly affected by new ecommerce platforms. A large credit of these tremendous sales figures goes to the unique Amazon PPC advertising facilities available. Check out the latest sales and revenue figures of Amazon:

  • Amazon’s advertising revenue figures in 2023 stand at $46.9 Billion, with an annual increase of over 24% as compared to the previous year. It has grown over 272% as compared to 2019. (Source: Amazon)
  • More than 65,000 American sellers improve their sales by 10% each year and have over $100,000 in sales. (Source: Amazon)
  • Number of American sellers who crossed $10 million in sales grew by almost 40%. (Source: Amazon)
  • Amazon alone accounted for 37.6% of e-commerce sales in 2023. This figure is expected to shoot up by 11.7% in 2024. (Source: Statista)
  • Amazon is the third-most advertising revenue-generating company just behind Google and Facebook, respectively. (Source: Statista)
  • The advertising revenue of Amazon is growing faster than Facebook or Google, with a quarterly growth rate of about 25%. (Source: MarketPlace Pulse)
  • Amazon generated $46.9 Billion from advertising revenue in 2023. (Source: Amazon)
  • Amazon’s advertising revenue accrued to 8.2% of their net sales in 2023. (Source: Amazon)
  • Amazon’s revenue from third-party sellers shot up by 19% in 2023. (Source: Amazon)

Amazon PPC Traffic Channels

Even though advertising on e-commerce platforms is the most popular traffic acquisition method, it has seen a slight decrease. Currently, trends are tilting in favour of paid search ads and social media marketing. Check out how brands attract viewers to their Amazon stores:

  • In 2023, investment of ecommerce brands on e-commerce platform advertising slightly dropped.  (Source: JungleScout)
  • 38% of brands focus on external paid traffic options like social media ads, Google, etc. to drive traffic to their Amazon store. (Source: JungleScout)
  • 58% of sellers rely on advertising on ecommerce platforms while 44% focus on social media. 36% of brands are working on paid ads to generate traffic to Amazon stores. (Source: JungleScout)
  • 87% of advertising spend on Amazon comes from the US. (Source: JungleScout)

Amazon PPC Types

Figures show that most brands favour investing in Sponsored Products ads as compared to other Amazon PPC options as it enables them to automatically target the relevant keywords to attract customers. On top of that, Sponsored product ads are compatible with a wide variety of goals from increasing sales to improving visibility. Here’s a deeper overview of the types of Amazon PPC ads and how brands invest in them:

  • 76% of Small and Midsize Businesses (SMBs) use Sponsored Products ads while 63% of enterprise brands rely on them. (Source: JungleScout)
  • Just 47% of SMBs spend on Sponsored brands while 57% of big enterprise brands use them. (Source: JungleScout)
  • 54% of high-earning enterprise brands invest in Sponsored Display but just 39% of SMBs use it. (Source: JungleScout)
  • 82% of the advertising revenue of Amazon comes from Sponsored Products. Sponsored brands and displays are responsible for 14% and 4% respectively.
  • Investment in Sponsored Brands reduced from 17% to 15%. (Source: Amazon)
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ROI Expectation of Amazon PPC Ads

When it comes to Return on Investment (ROI), most sellers expect a return of at least 3-4x. But the question is how do you measure it? Well, unlike other PPC ads, RoAS (Return on Ad Spend) is primarily used as the main ROI metric for Amazon PPC ads.

RoAS shows how many dollars of revenue is generated from a single dollar spent on advertising. It is calculated by dividing total attributed sales by the total cost of an ad campaign. 

The reason why RoAS is the preferred metric for Amazon PPC is that Amazon’s ad platform is directly integrated with their marketplace sales data. Therefore, the sales revenue can be calculated accurately to the corresponding ad spend on Amazon. Check out some latest RoAS stats of Amazon sellers:

  • Sponsored Products generate the highest RoAS ($3.41) as compared to Sponsored Brands ($3.06) and Sponsored Displays ($1.85). (Source: JungleScout)
  • RoAS for products priced under $10 falls considerably as of the previous year but still remains the highest at $3.09. Products ranging between $31 to $40 stand second with $2.31 RoAS. (Source: JungleScout)
  • 51% of third-party brands (3P) said they experienced a return of 7x or more, while 31% of first-party brands (1P) said they experienced a return of 7x or more. (Source: Statista)
  • Close match targeting generated the highest RoAS in 2023 ($4.35). (Source: JungleScout)
  • 50% of Amazon sellers earn between $1,000 and $2,500 per month. (Source: Influencer Marketing Hub)
  • Like previous years, dynamic up-and-down strategies have the best RoAS ($3.64). Dynamic down-only stands just behind that with a RoAS of $3.60 and Fixed Bids have the least return ($3.09). (Source: JungleScout)

Category Wise Ad Spending and RoAS

Now, let’s have an overview of how much percentage does Amazon brands of different categories spend on ads out of their revenue and their Return on Ad Spending (RoAS).

Industry Ad SpendingRoAS
Health & Household22%$2.27
Clothing. Shoes & Jewelry11%$2.27
Beauty & Personal Care10%$2.81
Home & Kitchen8%$3.76
Pet Supplies6%$2.23
Grocery & Gourmet Food6%$3.04
Office Products6%$7.42
Kitchen & Dining5%$4.07
Tools & Home Improvement3%$3.71
Automotive1%$4.26
Source: JungleScout

Key Performance Indicators (KPIs) of Amazon PPC

Apart from RoAS, many brands consider other Key Performance Indicators (KPIs) like CTR, CPC, conversion rate, etc. Here are some average figures of such metrics:

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  • Amazon’s average click-through rate (CTR) is 0.36%. (Source: Perpetua)
  • The average CTR figures of Amazon have an annual growth rate of 2.9%. Even though this seems to be a positive trend, the truth is that the clicks on organic search results are getting lesser. (Source: Perpetua)
  • 9.58% of clicks on Amazon PPC ads are converted to sales. (Source: Ad Badger)
  • The average cost-per-click (CPC) on Amazon PPC ads is falling and is now recorded at $1.06. (Source: MarketPlace Pulse)
  • Italy is the cheapest country to market with an average CPC of just $0.28. (Source: Perpetua)

Case Study Of Amazon PPC

To have a more realistic ROI expectation, let’s have a look at a raw case study of Ultra, an ecommerce brand on Amazon with thousands of products.

Problem

Ultra faced some serious problems with its Amazon PPC management. Here are some of them:

  • Lack of Bid Optimization: Ultra was bidding the same price for all of its products. Therefore, they missed the chance to focus and bid more aggressively for their high-converting products. Moreover, their Advertising Cost Over Sales (ACOS) also shot up drastically by spending more on products with low conversion.
  • No Search Term Management: Brands are supposed to manually monitor regularly to ensure that their ads are appearing for the relevant search terms and for the right audience. Unfortunately, Ultra ignored such a crucial area.
  • Lack of Proper Campaign Management: When a brand sells thousands of products on a saturated platform like Amazon, campaign management is a must. Many products were not placed in the right ad groups and this severely affected the performance.

Solutions

  1. Product bids were optimized in accordance with profitability and performance.
  2. All the ad keywords were analyzed. Keywords with high ACOS were listed as negative keywords and those with higher conversions were added as positive keywords.
  3. Campaigns are split into two parts: automatic and manual targeting. Here’s how they used them:
  • In auto campaigns, Amazon scans the products and uses a list of keywords that are most appropriate. This is beneficial as Amazon has tons of data but the brand needs to sacrifice keyword control.
  • After running auto campaigns, Amazon generates a Search Terms Report. By analyzing these data, the company identified the right keywords for each product and blacklisted the underperforming ones as negative keywords.

Results

As part of the Amazon PPC ad campaign refining process, over 14,000 negative keywords were added and 720 ad groups across 17 campaigns. And, the results were nothing less than impressive:

  • Generated 561,215,398 impressions and 2,898,012 clicks.
  • Achieved a click-through rate (CTR) of 0.52%.
  • Reduced the Advertising Cost Over Sales (ACOS) to 7.14%.
  • Spend Sales Ratio was dropped to 1:14.

As we all know, the Amazon marketplace is expanding day by day delivering new opportunities and challenges to sellers. Read some future trends and predictions in the field of ecommerce to get yourself prepared:

  • The role of social media in ecommerce is drastically increasing. More than one-third of consumers say that they are willing to purchase through social media.
  • Even though the US passed a bill that may ban TikTok, it still remains one of the best social media platforms for ecommerce brands. According to stats, 20% of Amazon sellers plan to expand their shops to TikTok this year.
  • As brands are expanding their sales channels through different social media platforms, Amazon responds positively to this trend by making it easier for them to do external promotions. So, stay tuned for Amazon tools that let sellers use multiple marketing channels effectively.
  • Amazon was one of the first companies to jump to the AI tech wave by introducing many AI-powered features to brands. 48% of Amazon brands have used these features to improve their operations. That means you can expect more advanced AI tools and features in the future.

Final Words

Gone are those good old days when store owners could sit back and wait to get sales done. Nowadays, as competition is getting intense, brands must constantly optimize their Amazon PPC strategies. Only ecommerce brands that keep a close eye on the market to stay updated with the trends and figures can survive in the future. Good luck with that!

Sources

Amazon Advertising Stats (2024 Update)

Amazon Advertising Statistics: The Must-Know Trends (2024)

Amazon advertising in the U.S. – statistics & facts

JungleScout Amazon Advertising Report 2024

Amazon Filing Details Official

20 Amazon Statistics You Need to Know in 2024

Amazon Ad Business Growing Faster Than Google, Facebook

Amazon PPC Management: Growing Campaigns from 6-Figure to 7-Figure Monthly Revenue in 6 Months

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