Is Amazon PPC Worth It? (2023 Pros & Cons)

So, you’re selling on Amazon and wondering: is Amazon PPC worth it?

You see the costs, you run the numbers, and realize your bottom line would just be magical without that pesky advertising spend.

But could you achieve anywhere near the same numbers without Amazon ads?

Or are they actually one of the major drivers behind the success of any Amazon business?

In this article, we’ll analyze all this and more.

We’ll cover both the pros and cons of running Amazon PPC ads, and give a verdict on whether serious Amazon sellers have any option but to use them.

Let’s dig in!

The Pay-To-Win-Era

Amazon PPC hasn’t always been such a prominent aspect of selling on the platform.

When I started selling on Amazon in 2017, running Amazon PPC ads was a ‘cherry on top’ of the organic traffic a half-decent listing would generate.

Back then, to launch a new product you could give away free products, or hand out 99% discount codes to drive early sales and quickly establish organic ranking.

However, as Amazon began to feel regulatory pressure around the authenticity of its review system and also saw an opportunity to grow advertising income, things changed.

Incentivized reviews, banned.

Heavily discounted launch sales, ineffective.

In what shareholders would call a stroke of genius, Amazon tweaked and evolved its algorithm to ensure money spent on giveaways and launch services was gradually re-routed to PPC ads.

But despite Amazon’s desire for sellers to spend, spend, spend… when all is said and done, can you operate without PPC ads?

Amazon PPC: The Pros

The first step in determining whether Amazon ad campaigns are worthwhile for your business is understanding the benefits.

There are lots of them, but here are the most important.

#1: The Ranking Factor

The primary benefit of Amazon PPC – by a clear margin – is the impact that it has on a product’s organic ranking.

Amazon’s search results algorithm understandably promotes products that perform well.

However, when you first launch a new product it has zero sales history and minimal visibility in order to be able to generate those all-important sales.

This is where Amazon PPC becomes vital.

The ability to appear on page one in search results pages from day one cannot be understated.

With a well-differentiated product, competitive launch pricing, and a well-optimized listing this instant visibility can drive early sales that will push your product higher in keyword search rankings.

Yes, you could also use other strategies to launch products such as driving external traffic to your listings, but Amazon ads will move the needle quicker than any other strategy.

It’s also not just at launch that Amazon PPC will help you drive organic ranking.

By continually running ad campaigns targeting a growing list of relevant keywords you can take advantage of a ‘halo effect’ whereby your organic reach gets wider and wider over time.

Your PPC spend can then be seen as an investment in greater visibility which will in turn produce growing profits.

#2: Strong ROAS

Despite rising costs (oh, we’ll get to that…), Amazon advertising still delivers a strong return on ad spend when compared to other advertising channels.

The average Amazon seller achieves a 4.5x ROAS meaning that for every dollar put into paid ads on Amazon, you get $4.50 in revenue back.

When stacking this up against Google Ads, Facebook Ads, or influencer marketing, the numbers are strong.

Many eCommerce advertisers are having to target a break-even ROAS on other channels in order to acquire customers and generate profit on repeat sales.

Whereas most Amazon sellers are able to achieve first-sale profitability due to the strong ROAS Amazon PPC ads can offer.

#3: Unique Visibility

Amazon PPC campaigns allow you to promote your products in locations otherwise unreachable with organic placements.

For instance, the very top row gets a significant portion of the clicks on the first page of search results:

Additionally, there are a number of placements on product detail pages dedicated to sponsored ads including the first row of related products:

Sponsored Brand Ads also allow you to run video ads and headline search ads with custom lifestyle imagery:

And Sponsored Display Ads give even more unique, eye-catching placements on competitor’s product detail pages:

The reality is simple: if you aren’t running Amazon PPC ads, you miss out on these placements and miss out on sales.

#4: Depth Of Data

While there are definitely limitations with Amazon Ads (stay tuned), the amount of data points available to sellers continues to grow.

New sellers will typically only focus on ACOS – Advertising Cost of Sales – but there is far more data beneath the surface.

Amazon has always reported on foundational metrics like impressions, cost per click, and average conversion rate as standard.

But more comprehensive data points like top-of-search impression share and new-to-brand metrics continue to be added giving advanced sellers more data to work with and more opportunity to optimize.

#5: Pay-Per-Click Efficiency

The very nature of pay-per-click ads is that you only, wait for it… pay when someone clicks. Rocket science, I know!

But in comparison to a CPM (cost-per-mille, or cost-per-thousand impressions) model used by Facebook Ads, for example, the Amazon PPC model is very efficient.

It means that Amazon sellers can quickly see what ad campaigns and keyword targeting options are working and adjust accordingly to improve performance.

Amazon PPC: The Cons

Like any marketing channel, Amazon PPC also has its share of drawbacks.

#1: Rising Costs

The data doesn’t lie. Over recent years Amazon PPC campaigns have become more expensive.

Amazon PPC advertising works on an auction system meaning sellers bid for their ads to be shown against certain keywords or products.

As more sellers have joined the platform, more have invested in PPC resulting in a more competitive landscape and higher cost-per-click levels.

In 2020, the average cost-per-click was $0.85, rising to $1.06 by the end of 2022.

However, the good news is that this is down from a high of $1.32 in 2021 when many feared a spiraling of ad costs following an influx of Amazon aggregator investment.

Thankfully this doesn’t seem to have materialized and there remains to be a lot of opportunity for sellers.

#2: Increasing Complexity

As the Amazon advertising platform has evolved it has become more complex.

Much of this complexity is actually a good thing as it is a sign of maturity with which comes more data, more insight, and more opportunities to grow sales for those that embrace it.

However, for new sellers, the learning curve has definitely gotten steeper in recent years.

Getting started with Amazon PPC used to be very quick, and very easy.

In today’s market though there are more ad types, placements, and targeting options than ever.

As such, sellers should take the time to study best practices, implement good campaign structures, and carry out regular optimization to ensure success.

#3: Platform Limitations

While more data points are continually being added to the Amazon Ads platform, it still has some limitations.

For example, in order to retarget shoppers who have previously visited your listing you’ll have to dive into the (even more) complex waters of Sponsored Display Ads.

And if you want to run traffic to a custom landing page, use ad targeting to hone in on certain demographics, or collect email addresses like you can with Facebook Ads, you’re mostly out of luck.

Considering the use case of Amazon ads, these certainly aren’t deal-breaking limitations.

Plus, Sponsored Brand and Display ads can help bridge this gap, and brand owners are slowly getting more control over features like their own Amazon store page.

Frequently Asked Questions

So, is Amazon PPC worth it?

In short, yes.

Running PPC ads effectively is a huge factor in the success of any business selling on Amazon as they come with a number of key benefits.

A good Amazon PPC campaign will drive organic ranking at a strong ROAS whilst also offering unique visibility in prominent placements that can’t be achieved organically.

This gives your brand maximum reach, increased awareness, and the best possibility for success on Amazon.

Of course, there are some downsides to Amazon PPC such as increasing complexity and costs.

But these costs have stabilized in recent times, and those that are willing to grapple with the gradual increase in complexity can use insightful data points to drive more efficient results than ever.

On the basis of the evidence we’re seeing across our own businesses and within our community it has to be said that overall, Amazon PPC is a must-use option for serious Amazon sellers