It may be the world’s worst-kept secret: advertising on Amazon is getting more complex. Not only are there several different ad formats to choose from, each with their own purpose, mechanics, and individual set of KPIs to optimize for, but the setup and features of the ads themselves are continuously evolving.
That’s why more and more brands on Amazon are bringing their focus back to one fundamental question: how are my ads performing?
One of the most important and powerful ways to gauge the success of your current advertising strategies and campaigns is using Amazon advertising benchmarks to compare your performance with that of your competitors.
We know other sellers aren’t posting their end-of-year numbers on social media or writing you emails to talk shop about what’s working for them and what’s not. And because each industry segment has a unique market for ads and performance varies across ad types, you need to compare your performance with peers in your marketplace and industry who are using the same ad type in order to make meaningful comparisons. A difficult set of conditions, to say the least.
That’s why Sellics has created a new, ground-breaking tool: the Sellics Benchmarker [Beta] gives you Amazon benchmarks on country, subcategory, ad-format, and individual-product levels.
No other analytics tool on the market provides performance data with this level of detail. The newest version includes:
- 20,000+ Amazon product subcategories
- an ASIN performance deep-dive for your top 100 products
- an Account Structure Analysis
- monthly Amazon PPC certification based on your account performance
- and more!
With our cutting edge analytics, you can finally understand within seconds how well your Amazon PPC campaigns are doing. Get access now for free.
In this article, based on the Amazon benchmarking analysis we used to create the Sellics Benchmarker [Beta], we take a look at Amazon advertising benchmarks for some key advertising KPIs for Sponsored Products and Sponsored Brands, focusing on three of the biggest categories on Amazon.com: Electronics, Health & Household, and Clothing.
Amazon Sponsored Products vs. Sponsored Brands—What’s the Difference?
Sponsored Products ads are a lower-funnel ad type that appears directly among organic search results and on product detail pages, reaching shoppers with a specific purchase intent.
Sponsored Products are the main performance marketing channel on Amazon and the most important advertising revenue driver for a majority of advertisers on Amazon. Sponsored Products ads look very similar to organic search results and they always link to product detail pages. They are only indirectly customizable as they are generated automatically based on the advertised product listing.
However, advertisers also keep spending more and more on Sponsored Brands. Although Sponsored Brands can also reach customers with a specific purchase intent, they are mainly designed as an upper- and mid-funnel ad type to drive brand awareness and consideration with banner ads. These ads have highly visible placements above search results and are also shown on search and product pages.
Sponsored Brands ads have three different formats—Product Collection (the original), Store Spotlight, and Video—and they have customizable creative and landing pages. Additionally, they can also be linked to an individual brand store on Amazon to create a brand experience for shoppers.
Please note that in analyzing Amazon advertising benchmarks below, we have excluded Sponsored Brands video ads because they are very different from Store Spotlight and Product Collection.
Amazon Benchmark: Advertisers in Electronics Have the Highest Sponsored Brands Revenue Share (20%)
So, how much revenue could you be making with Sponsored Brands? The answer is, of course, different depending on your industry.
Comparing the Sponsored Brands PPC revenue share generated by adopters of Sponsored Brands across our selected product categories, we see that Sponsored Products revenue is higher than Sponsored Brands revenue across all three industries.
We also see that Electronics (20%) has the highest share of revenue coming from Sponsored Brand ads, followed by Clothing (13%) and Health and Household (8%).
This Amazon benchmarking analysis suggests that advertisers in the Electronics category who dedicate budget to Sponsored Brands find a favorable environment for running Sponsored Brands ads. It also suggests their ads bring in a significant amount of overall revenue.
One reason for that might be that a lot of electronics products fulfill consumers’ entertainment needs and are considered lifestyle products (home audio products, eReaders, headphones. etc.). Therefore, shoppers might show a higher brand affinity and value shopper experience more compared to when they are shopping in other categories.
Let’s see if this impression is confirmed by taking a closer look at the most important advertising performance KPIs (CTR, CVR, CPC, and ACoS) across our selected categories.
Sponsored Brands Ads in Electronics Have the Best CTR on Amazon
Click-through rate (CTR) shows the percentage of customers that click on your ad after seeing it.
Looking at your CTR in comparison with your peer group, you can understand:
- if there is potential to make your product ads more appealing to your customers;
- if your ads are able to stand out from the crowd and convince customers to learn more out more about your product;
- if you are targeting a rather narrow or broad audience compared to your peer group.
Across all Amazon categories, CTRs are generally higher for Sponsored Products. This suggests customers might perceive Sponsored Products ads less often as actual ads and therefore are more likely to click on them, or this could be because the ads are more streamlined with customers’ usual purchasing process of looking for specific products.
For Sponsored Brands, CTRs are often lower because they are perceived as (banner) ads. However, as the performance in Electronics shows, this isn’t necessarily a disadvantage in terms of CTR.
As previously mentioned, shoppers in Electronics and similar categories that have a higher brand affinity value the curated shopping experience of a brand store. For complex products (like electronics), shoppers might also be more likely to click on Sponsored Brands video ads that explain and showcase a product in detail.
Amazon Advertising Benchmarks: Health & Household Has the Best PPC Conversion Rate (14.6%)
Conversion rate (CVR) indicates the proportion of people who placed an order after clicking on your ad.
By comparing your CVR with your peer group you can understand if there is potential to improve the persuasiveness of your landing pages (store, product pages, or product collection pages) or the fit between your ads and landing pages in terms of expectation management and customer journey.
The result of our Amazon benchmarking analysis across all categories is as follows: conversion rates are mostly lower for Sponsored Brands than for Sponsored Products. This might be due to the fact that Sponsored Brands ads (with the exemption of video ads) are generally drawing the attention of shoppers to the brand or a collection of products, which could lead the customer to put off a purchase decision.
Sponsored Products are specifically designed to spark interest for a certain product. This means there will be fewer clicks from shoppers that are not actually interested in the products presented on the landing page, resulting in a higher conversion rate.
Sponsored Brands ads have the goal of generating brand awareness and consideration (high and mid funnel). They are designed to lay the groundwork for purchases that happen at a later stage in the customer journey and therefore are sometimes not attributed directly to the Sponsored Brands ad itself.
When used together, Sponsored Products and Sponsored Brands ads can produce powerful results. Research by Amazon suggests that using Sponsored Products and Sponsored Brands together increases overall CVR by 50% and ROAS (return on ad spend) by 24%.
Benchmarking conversion rates across Amazon categories, we see that Health & Household has a much higher CVR than Electronics and Clothing. This might be due to the fact that products in Health and Household tend to be repeat purchase products, meaning more shoppers in this category are visiting Amazon with a specific purchase intent.
In comparison, customers looking for products in Electronics or Clothing might be shopping more often for entertainment or distraction, or they might research more expensive products before buying them, resulting in more clicks with fewer purchases (and therefore a lower CVR).
CPCs Are Lowest for Sponsored Brands and Clothing
Cost per click (CPC) is the amount Amazon charges you when a customer clicks on your ad. The CPC generally indicates the level of competition in a category.
If your CPC is much higher than in your peer group, this may indicate that you are overpaying and therefore should reduce your costs. If your CPC is much lower than your peer group then you might miss impressions, clicks, and sales because your bids are not competitive.
However, your optimal CPC is also highly dependent on your product portfolio. You have to ask yourself what you can afford to pay (depending on your profit margin) and what you are willing to pay (depending on your advertising goals).
Our Amazon advertising benchmarks show that across all categories CPCs tend to be lower for Sponsored Brands than for Sponsored Products. This trend is also observable for our three selected categories.
Comparing CPC levels, we see that CPCs for Health & Household were the highest for both ad formats. As your CPC varies depending on how competitive a category is, this indicates high competition in the Health and Household category, followed by Electronics, then Clothing.
However, in our Amazon benchmarks CPCs also correlate with conversion rate (CVR) and Average Selling Price (ASP). We see that the average CPC for Electronics is higher than for Clothing, and that the ASP for Electronics products is also higher than for Clothing. Revisiting the data for CVR, we see that the CVR for Health and Household is highest, also corresponding to the highest CPC value.
Amazon ACoS Benchmark: Large Differences between Industries, Ad Types and Marketplaces
Advertising Cost of Sales (ACoS) measures how efficient your Amazon PPC campaigns are. It shows the ratio of your ad spend to ad revenue. For example, the Sponsored Products ACoS of 29% for the Clothing category indicates that for every dollar made through Sponsored Products ads, 29 cents have been spent on the ads themselves.
Benchmarking your Amazon ACoS against your peer group allows you to see if there is potential to increase the efficiency of your campaigns—e.g., by optimizing your bids or by adding more negative keywords.
When asking yourself questions like, “What’s a realistic ACoS?” or “What’s a good ACoS?”, it’s important to remember that ACoS depends significantly on individual factors for each advertiser. Similar to CPCs, in order to define a realistic or good ACoS you have to ask yourself what you can afford to pay (depending on your profit margin) and what you are willing to pay (depending on your advertising goals).
Comparing ACoS between different ad formats, categories, and marketplaces, the results are very mixed. This is because ACoS depends on a range of different KPIs—mainly cost per click (CPC), conversion rate (CvR), and average selling price (ASP). The unique mix of these KPIs in a certain segment determines the average ACoS.
Another reason for different ACoS levels are different advertising goals across ad formats, categories, and marketplaces. Segments that put less focus on direct sales and more focus on customer lifetime value, branding and brand halo effects, customer loyalty, and repeat purchases tend to accept a higher ACoS because they expect this investment to pay off in terms of achieving these longer term goals.
For both reasons—a unique mix of KPIs and different advertising goals in each segment—it’s very important to benchmark your Amazon ACoS against others in your specific marketplace, subcategory, and ad format. This is the only way to see how well you are doing compared to your competitors.
Get Access to the Sellics Benchmarker [Beta] for your Individual Amazon Advertising Benchmarks
In our article we have shown how you can use some of the results of our Amazon benchmarking analysis to understand how well your PPC campaigns are doing and to identify optimization potential for improvement.
However, the analysis also highlights that results often vary a lot between different ad types, industries, and marketplaces. In order to really understand how well (or poorly) you are doing, you need to compare your performance with the right peer group.
Amazon Benchmarking FAQ
Here we have summarized some of the most frequently asked questions on the topic of benchmarking in Amazon advertising.
What is a benchmarking analysis?
A benchmarking analysis is a statistical analysis that creates standards (benchmarks) by which businesses can measure their performance. For Amazon sellers, this means calculating performance standards for the four most important advertising KPIs: cost per click (CPC), click-through rate (CTR), conversion rate (CVR), and advertising cost of sales (ACoS). Amazon advertisers can get these benchmarks for free with the Sellics Benchmarker [Beta].
What are benchmarks in advertising?
Benchmarks in advertising are performance standards that companies use to determine how well they are doing. Four of the most common benchmarks in Amazon advertising are:
– CPC (cost per click): an indicator of overall competitiveness in the ad market and whether or not an advertiser is paying too much or too little for their ads;
– CTR (click-through rate): an indicator of the quality of ad targeting and of the quality of the ads themselves.
– CVR (conversion rate): an indicator of the persuasiveness of the ads and the fit between the ads and landing pages in terms of expectation management and customer journey design.
– ACOS (advertising cost of sales): an overall indicator of the efficiency of ads.
What is a good CTR for Amazon?
CTRs (click-through rates) vary widely depending on the marketplace, product subcategory, and ad type. Nevertheless, here are some high-level CTR benchmarks for Sponsored Products ads: Health and Household (0.45%), Electronics (0.35%), Clothing (0.41%). And here are some high-level Sponsored Brands CTR benchmarks—Health and Household (0.45%), Electronics (0.47%), Clothing (0.35%).
What is a good Amazon PPC conversion rate (CVR)?
Amazon PPC conversion rates vary significantly depending on the marketplace, product subcategory, and ad type. Here are some high-level CVR benchmarks for Sponsored Products ads: Health and Household (14.6%), Electronics (6.4%), Clothing (5.5%). And here are some high-level Sponsored Brands CTR benchmarks—Health and Household (10.1%), Electronics (5.8%), Clothing (6.4%).