Amazon Advertising and Global Digital Advertising Costs Soar
01 — Amazon
According to Perpetua, the CPC of Amazon advertising will increase by 14% year-on-year in 2021. The average CPC for Amazon Sponsored Products ads increased to $1.15 in the fourth quarter of 2021, up from $1.01 in the same period last year.
The statistics for the fourth quarter are as follows:
1. In the fourth quarter of 2021, the number of SBV (brand promotion video) sellers has increased significantly. The sales contribution of the entire SB advertising increased 33% sequentially in the fourth quarter;
2. The CPC of SD (display advertising) increased by 20% month-on-month, which is the most cost-increasing of all advertising types;
On the Amazon DSP side, the CPM (cost of previous impression) increased by 40% month-on-month!
In different categories of ring comparisons:
1. Sales of toys and children’s categories increased by 324% in the fourth quarter; sales of books increased by 254%;
2. The average CVR (conversion rate) and CTR (click-through rate) of the beauty category reached 43% and 0.72% respectively;
3. Electronics sales fell by 2%;
On the advertising platform, the data for the major markets in January 2022 are published as follows:
US market
CTR (click-through rate) was 0.43%, a month-on-month increase of 5.22%;
CPC was US$0.58, down 11% month-on-month;
CVR (conversion rate) was 7.08%, a month-on-month decrease of 8.81%;
Sales per order in January was $31;
ACOS was 26%, up 1.37% month-on-month;
Japanese market
CTR (click-through rate) was 0.37%, a month-on-month increase of 6.06%;
CPC was 41 yen, down 21% month-on-month;
CVR (conversion rate) was 5.93%, down 10% month-on-month;
The sales per order in January was 4,157 yen;
ACOS was 16%, down 20% month-on-month;
UK market
CTR (click-through rate) was 0.30%, a month-on-month increase of 4.27%;
CPC was £0.4, down 8.9% month-on-month;
CVR (conversion rate) 7.75%, down 12% month-on-month;
January sales of £19 per order;
ACOS was 17%, up 11% month-on-month;
German market
CTR (click-through rate) 0.33%, down 16% month-on-month;
CPC was 0.44 euros, up 15% month-on-month;
CVR (conversion rate) 7.77%, up 11% month-on-month;
20 euros per order in January;
ACOS was 29%, up 21% month-on-month;
In general, Chinese sellers’ advertising investment in January is conservative, which is also a normal phenomenon after the promotional season.
Amazon Advertising and Global Digital Advertising Costs Soar
02 — Facebook
Apple’s ad-tracking policy change has significantly raised the price of Meta ads, as advertisers have to pay more to reach audiences. In its fourth-quarter earnings report, Meta blamed Apple’s tracking policy for an expected $10 billion loss in 2022.
According to Measured, the average CPM in 2021 is $15.30, up from $9.50 in 2020, and the chain CPM (cost per thousand impressions) in 2021 has increased by 61%!
In the second half of 2021, average CPMs soared to $17.60.
This spike does occur around the holidays, a critical period when advertising drives sales. Luxury marketing agency Belardi Wong estimates that from October to January 2021, ad prices will soar 30% to 50% year-on-year, with a CPM of $23. From Thanksgiving to Cyber Monday, CPMs soared to $29, a 48% year-over-year increase.
Amazon Advertising and Global Digital Advertising Costs Soar
03 — Google
According to the agency Merkle, the cost-per-click of Google search ads increased by 14% year-on-year. CPM cost per thousand impressions increased by 75% year-on-year. Most of the growth occurred in the first three quarters, with a slowdown in the fourth quarter, where CPC fell 6% quarter-over-quarter to an average of $1.1.
Google, which gets the bulk of its advertising business from search and YouTube, is largely immune to changes in Apple’s tracking because they don’t rely heavily on Apple’s IDFA identifier. In fact, Meta CFO Dave Wehner claimed during the company’s fourth-quarter earnings call that Google’s search advertising business would actually benefit from Apple’s privacy restrictions, as Apple “earns billions of dollars a year from Google search ads.”
YouTube, Google’s big bet on the connected TV budget, will see its CPM rise 53% in 2021 to an average of $11.60, according to Measured. The increase is due to increased demand as more advertisers shift their advertising budgets to connected TVs.
Finally, Google maintains a programmatic display ad business. The average CPM for these ads jumped 75% year over year from 80 cents to $1.40, according to Measured.
Amazon Advertising and Global Digital Advertising Costs Soar
04 — TikTok
According to Measured data, TikTok’s CPM price per thousand impressions will increase by 185% year-on-year in 2021. The increase is mainly due to the fact that advertisers are just starting to get exposure to TikTok ads, leading to a huge increase in ad prices.
While TikTok’s peak CPMs are based on a smaller base, Measured found TikTok’s CPMs climbed from $2.60 last year to an average of $7.40 in 2021. Ad prices skyrocketed in the second half of 2021, with an average CPM of $9.40.
Interestingly, TikTok’s 2021 CPM price is more than double Snap’s average CPM of $3.40, according to Measured, suggesting that more advertisers are competing for TikTok’s post-90s-00s audience.
Amazon Advertising and Global Digital Advertising Costs Soar
05 — How to deal with rising advertising costs?
For Amazon sellers, advertising costs are the largest cost of sales operations, and with the increase in the number of advertising formats launched on the Amazon platform and the influx of new sellers, this part of the cost will further increase. Therefore, sellers need to consider the following suggestions to minimize the waste of advertising expenses and improve the order conversion rate brought by advertising investment:
1. Optimize product structure
Try to choose a product with a wider audience as the main product, and drive Niche products with a small audience through the traffic of the main product. If you blindly pursue the uniqueness of the niche market and strongly promote Niche products, the biggest problem is that the advertising cost of the product is too high. For example, most of the clicks on keyword advertisements are wasted by mass consumers.
2. Continuously optimize delivery
Through the analysis of user search terms, we continuously optimize the delivery, and try our best to change the advertising form from automatic advertising, broad matching advertising to phrase matching advertising and precise matching advertising. Unless the necessary exposure is pursued to get more users’ attention when promoting new products, in general, the focus of advertising operations should be on improving the click-through rate (CTR) and conversion rate (CVR).
3. Optimize Listing
Under the condition that the advertisement exposure is relatively stable, the listing is continuously optimized through A/B testing. Optimizing your listing is the most fundamental way to improve conversions.
4. Centralized delivery rather than decentralized delivery
Put limited advertising costs on the main product instead of putting all the variants in the ad, because this will only spread the advertising budget and reduce the CVR conversion chance of each product. At the same time, it is also necessary to consider increasing the delivery in the selected time period, rather than the average delivery of the whole period of 24 hours. The number of advertisements needs to be controlled within the range that a single advertisement target has sufficient advertising expenses. For example, many sellers have a daily budget of only 20 US dollars for an advertising campaign, but the number of keywords to be placed is more than 50. This kind of unfocused approach is neither effective. It is conducive to improving the efficiency of a single delivery, and is not conducive to analysis and optimization.
5. Dare to deny and avoid the waste of invalid search
Dare to deny the search terms that ACOS is too high or that there is no single order. Boldly denying invalid searches when continuously optimizing delivery is an important means to avoid wasting advertising costs.
