Is the Cost of CPC Advertising on Amazon Sustainable?
Whether you’re an Amazon Seller or Brand Owner, you know that CPC advertising is a great way to drive traffic and increase sales. But, with the cost of CPC advertising on Amazon rapidly increasing, one has to wonder: Is this sustainable long term? Let's dive in and take a closer look.
What’s Behind the Increase in Costs?
CPC costs have been steadily climbing for years. And there are several reasons for this. First off, Amazon’s marketplace is increasingly competitive with more and more brands vying for consumer attention. This means higher bids as companies strive to stay ahead of the competition. Another factor contributing to increased CPB costs is the massive amount of data available through Amazon’s platform. Companies can now access data that helps them better target customers based on their preferences and purchase history, allowing them to optimize campaigns and increase their ROI—which means they can afford to pay more for ads. Finally, Amazon has also been actively encouraging sellers to invest more in sponsored ads by offering incentives such as Enhanced Brand Content (EBC), which allows sellers to create richer product detail pages that increase their organic visibility in search results.
Will Prices Continue to Rise?
It’s difficult to say for sure whether prices will continue to rise indefinitely or if we’ve already reached our peak—only time will tell. However, it does seem likely that CPC costs will stay high since there are so many factors driving up demand for ad space. As mentioned earlier, marketplaces like Amazon are becoming increasingly crowded with new brands entering every day while established brands fight even harder to maintain their positions at the top of search results pages. That said, there are plenty of strategies you can use to help lower your costs without sacrificing quality or reach. For instance, using negative keywords can help eliminate irrelevant search terms from your campaigns and save money in the process; optimizing your creative content can also help ensure you’re competing effectively; and testing different bidding strategies can help you find one that fits your budget while still delivering results—to name just a few examples!
What are My Alternatives?
Well, you have a few options as a brand owner and seller on Amazon. You could build up your social media accounts and try to drive traffic back into Amazon from external sources such as Facebook, Instagram, Snapchat, TikTok, and others in order to increase the efficiency of your Amazon ads or as a replacement for those ads (if there is enough traffic). The external traffic can be coupled with a two-step URL such as a GEM from helium 10 to help drive search relevance at the same time. This could in theory lower your tACOS (total advertising cost of sale), which is your total ad spend vs your total sales (not just ad attributed) if executed properly.
You could also lean heavier into discounts and coupons, this could help stimulate sales if the coupons or sale became popular enough to reach the Amazon category landing page as a popular deal.
Another method of compensating for the rising cost of keyword CPC on Amazon is to do a simple price increase in your ASIN(s). Ideally you want your total advertising cost of sale to be between 5-10% of goods. If you are over this you could test small increases to the selling price to see what impacts, if any, it has on the BSR (best seller rank).
Conclusion
The bottom line is that yes, CPC costs have been on the rise lately and it doesn't look like they're going anywhere anytime soon. But don't despair! There are plenty of ways you can minimize your spending without sacrificing quality or reach—you just have to get creative! With some strategic planning and thoughtful execution, you'll be able to make the most out of your CPC campaigns without breaking the bank. Good luck! And remember, utilizing Amazon Seller Consulting Services can offer valuable insights and optimizations to further enhance your advertising efforts.