Amazon Retail Media Ads in Germany: ACoS, CPC & CTR

Amazon Retail Media: Key Insights

• Amazon Ad Types: Sponsored Products appear as results to specific search keywords, Sponsored Brands are promoted storefronts, and Sponsored Display target consumers on external networks.

• Ad Effectiveness KPI: The three KPIs (key performance indicators) in this analysis are ACoS (measuring ad profitability), CPC (denoting ad cost), and CTR (gauging ad relevance).

• Sponsored Products Wins in Germany: As the most expensive ad type, Sponsored Products also tends to generate most revenue and highest click-through rates.

Retail media advertising in eCommerce means that brand and product promotion uses information on consumer behavior and demographics. In this way, ads become more personally relevant.

As the largest retailer and marketplace in Germany, Amazon also operates the biggest retail media network in Europe. The company is therefore able to provide clients with a comprehensive evaluation of the success and cost-effectiveness of their ad placements. It does so by taking into account KPIs such as Advertising Cost of Sale (ACoS), Cost-Per-Click (CPC), and Click-Through Rate (CTR). 

Here are three Amazon retail media ad types in Germany. With the help of KPIs we evaluate which ad types are most relevant and efficient.

Amazon Retail Media: Types of Retail Advertising

Germany ranks as the 5th largest eCommerce market worldwide. Amazon holds a dominant position in the market with its German domain, with which it towers over other competitors in most categories.

While there are challenges to Amazon advertising, it is also the most visited eCommerce site in Germany. Especially smaller retailers therefore have the largest chance for visibility when placing an ad on Amazon.

To evaluate the effectiveness of these ad types in Germany, there are three commonly used KPIs: ACoS, CPC and CTR.

ACoS: Sponsored Display Ads Are Least Profitable

ACoS represents the percentage of total ad revenue that is spent on ad costs. A high ACoS indicates lower profitability: It shows that the ad was more expensive in terms of the revenue it generated.

• Sponsored Display ads have the lowest productivity in Germany. The median ad cost accounts for 32.4% of ad revenue.

• Sponsored Brands falls close behind, with ad costs accounting for 31.2% of revenue.

• Sponsored Products tends to be the most efficient ad type: Its costs represent 25.8% of ad revenue.

CPC: Sponsored Products and Brands Most Costly

CPC means cost-per-click. Its interpretation is pretty straightforward: Denoted in US$, it shows how much advertisers pay for each click on the advertisement. Let's say, if the CPC is 60 cents, advertisers pay Amazon 60 cents for each time a user clicks on the ad.

An ad should therefore be preferably low in cost, but that usually means its effectiveness is not incredibly high.

• Sponsored Products stands out as the most expensive Amazon ad type in Germany, with a median CPC of US$0.57.

• Sponsored Brands costs US$0.56 per click.

• Sponsored Display is the cheapest ad type at US$0.5.

The higher cost of Sponsored Products means that it is highly in-demand on Amazon in Germany. This is due to the relatively easy setup of this ad type: Merchants don't need prior experience with Amazon or an own storefront.

Given that Sponsored Products also exhibits the lowest ACoS, this further emphasizes its high profitability in the German market.

In comparison, Sponsored Brands is quite expensive (US$0.56), but also indicates a high ACoS: That means it does not yield much revenue relative to its cost.

CTR: German Consumers Most Interested in Sponsored Products

CTR measures the share of users who respond to an ad by clicking through to the promoted product or store page. A high CTR is a good indicator to see whether ads are relevant to users. Someone disinterested will not click through.

• Sponsored Products tends to be most relevant: It has by far the highest median CTR in Germany with a rate of 0.4%.

• Sponsored Brands is ranked second with a lower relevance (0.3%) to consumers.

• Sponsored Display is least relevant and profitable on Amazon in Germany.

In this case it becomes clear that German online shoppers tend to click on Sponsored Products most. It has the highest median CTR at 0.4%.

Sponsored Brands is lower in relevance (0.3%) but relatively high in cost, which accounts for its high ACoS. It is thus not the most efficient Amazon ad type in Germany.

Sponsored Display is the least relevant ad type to consumers, but it also tends to have the lowest costs.

Amazon Retail Media in Germany: Closing Remarks

Judging by the three KPIs of our analysis – ACoS, CPC, and CTR – Sponsored Products is the most relevant and effective Amazon ad type in Germany: Consumers tend to click on it most. While it is also the most expensive ad type, its generated revenue tends to balance out the costs most profitably.

The reason why Sponsored Products advertising stands out so much: It is barely distinguishable as an ad, because it is mixed with the regular search results consumers look for when typing their search keywords.

However, each case is different and you may prefer the other ad types because they fit your marketing strategy and overall brand identity more. To assess whether your ad type fits the market average, refer back to these numbers any time.

Sources: Amazon 1 2 3 - Statista

FAQ

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