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What Are the Costs of Amazon Sponsored Product Ads?
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If you are considering advertising on Amazon and are doing your preliminary research (or are working to optimize an existing campaign), chances are you will want to know the costs of Sponsored Product advertisements so you can properly allocate ad spend and factor it into your overall Amazon selling costs. These ads — Amazon’s most popular workhorse ad type that are seen in organic search results and on product detail pages — promote individual product listings and when clicked on, a consumer is brought to the product detail page for a specific item.
To begin, there is no upfront or monthly fee associated with advertising on Amazon. Sponsored Products use a cost-per-click (CPC), auction-based pricing model. You set the maximum amount that you are willing to pay when a shopper clicks on your ad and you will never be charged more than your bid amount. The more competitive your bid is, the more likely it is that your ad will be displayed. Take advantage of real-time algorithmic bidding optimization by using an AI-first solution for Amazon Advertising.
How Sponsored Products Daily Budgets Work
You set, or allow Amazon to suggest, a maximum daily amount that you are willing to spend on your campaigns. With Sponsored Products, the amount you enter is the average daily amount you are willing to spend over a calendar month. For example, if you set your daily budget at $100, you may receive up to $3,100 worth of clicks in that calendar month (assuming a 31-day month).
Although the minimum daily budget is $1, Amazon recommends a minimum of $10 to ensure your ads do not stop showing in the middle of the day. The company notes that you will typically see performance results — such as impressions, clicks, and sales — with a beginner budget of just $10 a day. Avoid setting a budget that you are not completely comfortable with. You can start small and invest more as you scale and test what ad types work best for your business.
Paying for Sponsored Product Ads
When you are managing Sponsored Product campaigns, Amazon charges you for the number of clicks you receive on each ad. Your advertising fees on Amazon are deducted from your selling account balance during an invoice period. If your seller account does not have enough funding to cover the costs of your ads, the remaining balance will be charged to the credit card you have on file with Amazon.
If you decide to switch your payment method to permanently deduct from a credit card, you have that option. When your credit card is charged, you will receive an invoice. The invoice date is your monthly invoice date, or the date when your credit level changes. Your credit card will be charged when you accumulate your first $1 worth of clicks, when you accumulate additional clicks that meet or exceed your credit limit, or when you have a balance due for the previous month, regardless of your credit limit.
With regard to budget allocation, Sponsored Products are designed to work in tandem with your designated budget. Be sure to identify a budget that is high enough to help you achieve your business goals, but know that the budget will vary from advertiser to advertiser depending on variables such as revenue, product category, and direct competition.
Being able to balance ad spend and incorporate advertising into your overall Amazon budget will prove to be immensely important when it comes to monitoring your inbound and outbound cash flow and measuring the return on your ad spend.
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