Amazon advertising: essential key figures

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This article was written by

Stephanie Hemmer

Reading time: approx. 11 minutes
January 10, 2024

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Place advertising correctly on Amazon

Know technical terms and get started with Amazon advertising

Amazon advertising
Technical terms or abbreviations for advertising measures that come up again and again in your everyday life, but which are not properly explained, are holding you back from an optimal online business. If you are not up to date with Amazon, you have no chance of asserting yourself against the large number of competitors.
In our guide, we explain the most important terms and correlations to help you understand your Amazon business even better. Optimize your product listing and your advertising on Amazon to sell your items in the best possible way.

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How does advertising on Amazon work?

Advertising on Amazon works through various advertising formats and platforms that allow merchants to target their products and increase visibility. Here are some of the most important advertising options on Amazon:

1
Sponsored Products
This advertising format enables retailers to place their products in the search results and on product detail pages. The ads are selected based on keywords that are relevant to the products. Retailers only pay when a customer clicks on the ad.

2
Sponsored Brands
Here, brand owners can advertise their products with a logo and user-defined headlines. These ads also appear in the search results and on product detail pages.

3
Sponsored Display
These ads appear on and off Amazon, e.g. on other websites. They are aimed at customers who have already been to your product page or have searched for similar products.

4
Display advertising on Amazon
These ads are placed on Amazon websites and apps and can include images, videos and other interactive elements. They offer a broader reach than the other advertising formats.

5
Video advertisements
Retailers can also place video ads on Amazon to showcase their products. These can appear in the search results, on product pages or in other areas of the website.

6
Amazon DSP (Demand-Side Platform)
The DSP enables advertisers to place their ads outside of Amazon and to address specific target groups on other websites and platforms.

Amazon PPC – Advertising space via auction model

The advertising spaces are sold via an auction model (Amazon PPC = Pay per Click), in which retailers place bids for the placement of their ads. The success of the advertising depends on various factors, including the quality of the ad, relevance to the search terms and the bid amount.

It is important to regularly monitor and adjust the performance of ads to maximize the effectiveness of campaigns and use the advertising budget efficiently.

The most important key figures that are
are crucial for your Amazon business

Advertising Cost of Sales (ACoS)

Advertising Cost of Sales (ACoS) is a key figure in online marketing.
It measures the percentage of advertising expenditure in relation to the sales revenue generated.
Optimizing the ACoS is crucial for a profitable online advertising strategy and maximizing the return on investment.

Return on Advertising Spend (ROAS)

ROAS is a key figure in marketing that measures the financial success of an advertising campaign by the ratio of sales achieved to the advertising expenditure incurred.

It is calculated by dividing the revenue generated by the costs of the advertising campaign. For example, a ROAS of 5:1 means that for every dollar invested in advertising, five dollars in sales were generated.
A higher ROAS figure indicates that the advertising spend is more efficient, while a lower ROAS indicates less profitable advertising. The objective is to achieve a positive ROAS that is as high as possible in order to maximize advertising success.

CPC (Cost per Click)

Cost per click (CPC) is a key figure in online marketing that measures the cost of each click on an advertisement.
It is calculated by dividing the total cost of the advertising campaign by the number of clicks received. For example, a CPC of €0.50 means that each click on the ad costs the advertiser 50 cents.

CPC is an important metric to evaluate the efficiency of online advertising campaigns and to control the cost per visitor on a website. A low CPC may indicate that the advertising is cost-effective, while a high CPC may require a review or optimization of the campaign.

Impressions

Key figure that measures the number of times an advertisement or message is viewed by the target group. An impression occurs when an ad appears on a user’s screen, regardless of whether the user has seen it.

The number of impressions provides information about the reach of an advertising campaign. A high number of impressions means that the ad has been seen frequently, which increases visibility but does not necessarily reflect the effectiveness of the campaign.

Impressions are important for increasing awareness of a brand or message. They serve as a starting point for other key figures such as click-through rate (CTR) and conversion rate in order to assess the effectiveness of the advertising campaign.

Click-Through-Rate (CTR)

The CTR measures the relationship between the number of clicks on an ad and the number of impressions of this ad. It is expressed as a percentage and indicates how effective an advertising campaign is in motivating users to click on the ad.

The CTR is calculated by dividing the number of clicks on an ad by the number of impressions multiplied by 100. A higher CTR indicates that the ad is more relevant or appealing to the target group.

The CTR measures the effectiveness of online advertising campaigns. A high CTR indicates that the ad attracts the attention of the target group and increases the likelihood of conversions. A low CTR can indicate a lack of relevance or ad quality and may require adjustments to the campaign strategy.

Conversion Rate (CVR)

The conversion rate (CVR) is a marketing metric that measures the percentage of visitors to a website or users of an advertisement who perform a desired action. This action can be, for example, a purchase, a registration or the completion of a form.

The CR is calculated by dividing the number of conversions by the total number of visitors or clicks on an ad, multiplied by 100. A higher conversion rate indicates that a larger proportional number of visitors become customers or leads.

The CVR is a crucial metric for evaluating the effectiveness of a marketing campaign. A high conversion rate indicates that the website or ad is successfully driving the desired actions. A low conversion rate may indicate problems in the user experience, landing page design or ad relevance and may require optimization measures.

FAQ

Frequently asked questions
about Amazon Advertising

What is Amazon PPC?

Amazon PPC stands for “Pay-Per-Click” and refers to Amazon’s advertising model where advertisers only pay for their ads when a user clicks on the ad. This pay-per-click advertising is part of the Amazon Advertising program and is used for various advertising formats on the platform, including Sponsored Products, Sponsored Brands and Sponsored Display.

How expensive is advertising on Amazon?

The cost of advertising on Amazon varies widely and depends on several factors, including the level of competition for your products, the choice of keywords, your bid per click and the quality of your ads. Amazon uses an auction model where advertisers bid for ad space in real time. The budget for Amazon PPC campaigns can be customized, and you only pay when a user clicks on your ad. The cost per click can range from a few cents to several dollars, depending on the factors mentioned and the industry. It is important to manage the budget effectively and to regularly monitor and optimize the performance of the campaigns.

How do my products become visible on Amazon?

To ensure that your products are visible on Amazon, optimize your product pages with appealing images, detailed descriptions and correct information.

Conduct thorough keyword research and integrate it into titles, descriptions and backend keywords to ensure your products appear for relevant search queries.

Use Amazon PPC (Pay-Per-Click) advertising to increase visibility. Create targeted campaigns, bid on relevant keywords and continuously optimize your ads.

Maintain positive customer feedback and reviews. Products with good reviews often have higher visibility and appeal to potential buyers.

Participation in special Amazon programs such as the Fulfilled by Amazon (FBA) program can also help increase visibility, as FBA products often qualify for Prime shipping and are given preferential treatment by Amazon.

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