With many different ad formats to choose from, each with their own purpose, mechanics, and their individual set of KPIs to optimise for as well as a very dynamic environment – advertising on Amazon has only gotten more complex.
That’s why more and more advertisers wonder: How am I doing?
One important and powerful way to gauge the success of your current Amazon advertising strategies and campaigns, is benchmarking, i.e. comparing your performance with that of your competitors.
However it’s not only hard to impossible to get those numbers. To get meaningful insights you also need to compare your performance with the right group of peers in your marketplace and industry and differentiated by ad type, because every segment has very unique conditions.
That’s why, based on advertising data of over $2.5b+ in Amazon ad spend data worldwide, Sellics has created the brand new Sellics Benchmarker Tool [Beta] that gives you benchmarks for the most important advertising KPIs tailored to your industry and marketplace.
With this tool 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 Sellics Benchmarker [Beta] data, we take a look at benchmarks for key advertising KPIs for the most important ad types on Amazon: Sponsored Products and Sponsored Brands, focusing on 3 top categories on Amazon.com: Electronics, Health & Household, and Clothing.
Sponsored Products vs. Sponsored Brands – What’s the difference?
Sponsored Products are a lower funnel ad type that reaches shoppers with a specific purchase intent and that appears directly among organic search results and on product detail pages.
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 appear at the prime real estate spot above search results but also on other placements on search and product pages.
Sponsored Brands ads exist in different designs, including Video and Store Spotlight Ads, and they can be customized in terms of creative and landing page. In particular they can also be linked to an individual brand store on Amazon to create a brand experience for shoppers.
Please note that in the analysis below, we excluded Sponsored Brands video ads as it follows very different dynamics as Store Spotlight and Product Collection.
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 top product categories, we first of all see that Sponsored Products revenue is still 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 result suggests that advertisers in the Electronics category who decide to dedicate budget to Sponsored Brands not only have a high focus on standing out from the competition via branding activities but also that they find a favourable environment for running effective Sponsored Brands ads.
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 as compared to when 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 the top categories.
Sponsored Brands Ads in Electronics Have the Best CTR
The click-through-rate (CTR) shows you the percentage of customers that click on your ad after seeing it.
Looking at your CTR in comparison with your peer group, you can gauge if there is potential to make your product ads more appealing to your customers and if your ads are able to stand out from the crowd to convince customers to learn more out more about your product.
It can also help you to understand if you are targeting a rather narrow or broad audience compared to your peer group.
In comparison across all Amazon categories, CTRs are generally higher for Sponsored Products across the different categories. This suggests that customers might perceive Sponsored Products ads less often as actual ads as they blend in with organic search results or as more streamlined with their usual purchasing process of looking for specific products.
Vice versa for Sponsored Brands CTRs are generally lower because they might be more clearly perceived as (banner) ads. However as the performance in Electronics shows this isn’t necessarily a disadvantage in terms of CTR.
As argued before, shoppers in Electronics and similar categories that have a higher brand affinity value the curated and branded shopping experience of a brand store. For more complex products as is true for many Electronics products, shoppers might also be more likely to click on Sponsored Brands Video Ads that explain and showcase a product in detail.
Health & Household Has the Best PPC Conversion Rate (14.6%)
The 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 design.
Across all Amazon categories 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.
Sponsored Products are designed to specifically spark interest for a certain product. I.e. there will be less clicks of shoppers that are not actually interested in the products being presented on the landing page.
Sponsored Brands ads generally have the goal of generating brand awareness and consideration (high and mid funnel) vs direct purchases (low funnel), i.e. they are designed to prepare purchases that happen at a later stage in the funnel not being attributed directly to the Sponsored Brands ad.
In fact, research by Amazon suggests that using Sponsored Products and Sponsored Brands together increases overall CVR by 50% and ROAS by 24%.
Comparing CVRs across categories we see that Health & Household has a much higher CVR than Electronic and Clothing. This might be due to the fact that products in Health and Household tend to be more functional and repeat purchase products, so that more shoppers are visiting Amazon with a specific purchase intent.
Customers looking for products in Electronics or Clothing in comparison might be shopping more often for entertainment or distraction or might research more expensive products before buying them.
CPCs are lowest for Sponsored Brands and Clothing
Cost per click (CPC) is the amount Amazon charges you when a customer clicks 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 might be indicating that you are overpaying and therefore should reduce your costs. If your CPC is much lower than in your peer group than you might miss impressions, clicks and sales because your bids are not competitive.
However, what an optimal CPC is also highly depends on your individual products. 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).
Across all Amazon categories CPCs tend to be lower for Sponsored Brands than for Sponsored Products. This trend is also observable for the 3 top categories.
Comparing CPC levels across the 3 categories 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, 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 because the ASP for Electronics products are higher than for Clothing. Revisiting the data for CVR, we see that the CVR for Health and Household is highest, corresponding to the highest CPC value.
ACoS: 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 revenue. For example, the Sponsored Products ACoS of 29% for the Clothing category indicates that for every dollar made, 29 cents have been spent on Sponsored Products ads.
Comparing your ACoS to 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.
However, which ACoS values are realistic to achieve and what a good ACoS is also depends significantly on individual factors for each advertiser. Similar to CPCs, for defining 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 the different ad formats and categories and marketplaces, 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 (CLV), branding and brand halo effects, customer loyalty and repeat purchases tend to accept a higher ACoS (representing short term direct sales) because they expect that this pays 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 ACoS against others in your specific industry and marketplace and for a certain 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 Benchmarks
In our article we have shown how you can use the presented Amazon PPC benchmarks to understand how well your PPC campaigns are doing and to identify optimization potential for improvement.
However, the analysis also highlights that results are varying a lot between different ad types, industries and marketplaces. In order to really understand how good (or bad) you are doing, you need to compare your performance with the right peer set.