Understanding whether your organization is taking full advantage of advertising opportunities on Amazon is a big challenge. Amazon only reports a limited amount of historical data, so how can you determine campaign performance over time? Are you setting reasonable targets for return on ad spend (ROAS) and cost per click (CPC)? Is your Amazon ad performance competitive with Google Ads and Facebook Advertising?
These are some of the key questions Sidecar wanted to answer in its 2021 Benchmarks Report, which is the only in-depth marketing performance report for the retail industry. We explored top KPIs across channels to understand how advertising on Amazon, as well as Google, Facebook, and Instagram evolved over the last year and what new opportunities are emerging for retail marketers. We analyzed thousands of active campaigns managed by our technology, and calculated the average performance benchmarks for U.S. retailers by ad platform, industry segment, and spend.
With our database of historical Amazon campaign data, Sidecar was able to break down full-year Amazon ad performance data for our customers and analyze trends across key KPIs.
Amazon Boasts Lowest Acquisition Costs
Amazon stood out for its low costs. CPCs averaged just $0.39 last year, while cost per acquisition (CPA) averaged $6.44 in 2020, the lowest of any advertising platform we studied. It’s important to remember, though, that there are costs to selling on Amazon that you won’t encounter on other platforms, such as subscription fees, commissions, and fulfilment fees. These costs should be taken into account when budgeting for the platform.
Retailers Averaged High Returns on Amazon
Still, additional fees may be worth it, given Amazon’s strong returns. Last year, retailers averaged 7.95 ROAS on Amazon with an average conversion rate of 6.03%. That conversion rate is competitive with social media platforms like Facebook and Instagram, and outstrips the average conversion rate on Google Shopping.
In addition, the volume of traffic retailers can capture is a huge benefit, said Mission Boat Gear e-commerce manager Garrett Wilson on an episode of Retail Uncharted. “There’s so much traffic going through Amazon. We saw it as an opportunity to get our products in front of the eyes of all of those consumers. It’s such a massive machine.”
Single-Brand Retailers Thrive on Amazon
Single-brand retailers in particular experienced high conversion rates on Amazon at 7.79%, compared to multi-brand retailers at 2.99%. This may suggest that there is greater customer loyalty for single-brand retailers on Amazon.
Learn how your Amazon ad performance stacks up against your competitors by downloading the complete 2021 Benchmarks Report. You’ll find in-depth looks at monthly performance on the channel as well as performance based on ad spend and retail category. Plus, you’ll have access to these same competitive metrics across Google Ads, Facebook, and Instagram.