Amazon brands: sponsored product ads account for 81 percent of ad spend

Sponsored campaigns among Amazon US marketplace brands rely heavily on product ads as new report reveals benchmarks for performance

Amazon’s US marketplace brands spent the majority of their advertising budgets on sponsored product ads throughout 2021, research from e-commerce analytics platform DataHawk has found.

With a total of $169m spent on sponsored advertising last year by DataHawk users, Amazon brands allocated 81 percent of their advertising budget on sponsored product ads on average. This made it the most popular ad type week on week throughout last year according to DataHawk's analysis. However, there was evidence of brands diversifying their ad spend – with 8 percent of spend allocated for both sponsored brand ads or brand videos.

The report, which examined 297 DataHawk user accounts with average weekly spends of between $630 and $8,579, also found that campaign efficacy correlates with higher priced products. 

High priced products (those costing $38.24 or more) had a median weekly average Advertising Cost of Sales (ACoS) of 23.83 percent compared to the 37.08 percent for products costing $20.51 or less.

Monthly ad metrics

DataHawk’s analysis also reveals average monthly performance metrics by quartiles for sponsored ad types used by Amazon brands. 

It found that sponsored product ads generated by far the highest average monthly sales of just over $180,500 across its account holders, against a cost per click (CPC) of $1.21, compared to display advertising which at an average monthly CPC of $1.04 generated monthly sales of almost $6,000 on average.

 

Meanwhile conversion rates for sponsored product ads and sponsored brand videos hit a monthly average of 13.91 percent and 12.74 percent compared to below 10 percent for sponsored brand ads and display.

CMO at DataHawk Raphaël Menesclou said: “With the growing popularity of Amazon ads, brands are increasingly concerned with the performance of their ads in comparison to their competitors. Therefore, it’s paramount that brands understand the ways in which each ad type reaches prospective customers.”

Holiday season peaks 

DataHawk recommends that brands should increase their ad spend during peak holiday periods “and significant Amazon shopping events as these are the times when there are considerable spikes in conversion rates”.

Weekly breakdowns revealed that sponsored product ads were the most efficient throughout most of 2021, but sponsored brand videos offered the highest return on advertising spend (RoAS) across all ad types during the peak holiday season (22 November to 19 December 2021).

Across the board, campaigns launched in March were the most effective but at the end of June and start of July, overall return fell by 28 percent.

The average Amazon’s seller’s ACoS was between 25.3 percent and 31.6 percent through 2021, but advertising was most expensive during the December holidays and in mid-April. Through the year display ads were significantly more expensive than other campaign types. Meanwhile conversion rates for all ad types apart from display peaked in mid December, 

The report highlights that comparing flat ACoS trends week-on-week through 2021 with an increasing trend line in CPC can mean “that although clicks become more expensive throughout the year, advertising does not”.


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