Amazon Ad Types in Spain: An Analysis of Performance Metrics

Digital retail media advertising is the promotion of products and brands through eCommerce platforms. It leverages consumer behavioral, demographic, and psychographic data to create customized ads that resonate with the intended audience. As a leader in retail and marketplaces, Amazon operates the largest retail media network in the Western world. This allows the company to provide clients with a comprehensive analysis of their ads’ performance, considering KPIs such as Advertising Cost of Sale (ACoS), Cost-Per-Click (CPC), and Click-Through Rate (CTR). 

Consequently, this article focuses on analyzing the median KPIs for Amazon’s three retail media ad categories in Spain, evaluating their effectiveness in terms of cost and relevance in the Spanish market.

Sponsored Brands Most Efficient Ad Type, While Sponsored Products and Sponsored Display Lag Behind

Spain is the 16th largest eCommerce market with an expected revenue of US$37.6 billion by 2023. Amazon is the most dominant player in the country, far outpacing the other ranks. Amazon.es generated revenues of US$5.3 billion in 2022, which is followed by Elcorteingles.es with US$2.3 billion and SHEIN.com with US$858.2 million.

Amazon offers three advertising options: Sponsored Brands, Sponsored Display, and Sponsored Products. Sponsored Brands ads are designed to promote Amazon storefronts with individual layouts and product assortments to foster customer recognition and loyalty. Sponsored Display targets audiences on Amazon’s external networks to promote products that match their previous searches and purchases. Finally, Sponsored Products are Amazon ads that offer products based on search queries. They blend seamlessly into regular search results, with the addition of a small “Sponsored” tag in the top left corner.

The first KPI we consider when evaluating the efficiency of these ad types in Spain is the ACoS, a metric that indicates the ratio of total ad revenue to ad costs. A high ACoS indicates lower profitability because it means higher relative costs.

In Spain, the data shows that Sponsored Display ads are the least profitable, with median ad costs accounting for 43.7% of ad revenue. Sponsored Products is further behind, at an ACoS of 28.8%. However, Sponsored Brands is the most cost-effective ad type overall, with the median ad costing only 26.5% of the revenue generated.

In terms of CPC for Amazon ad types in Spain, Sponsored Products is the most expensive, with a median CPC of US$0.37. Sponsored Brands follows at US$0.32, while Sponsored Display indicates the lowest cost at just US$0.18 per click. The high cost of Sponsored Products indicates high demand among Spanish advertisers, which could be due to the ease of creating this ad type, which doesn’t require prior experience or a storefront on Amazon. However, as Sponsored Brands have a lower ACoS, their comparatively lower cost translates into greater profitability in the Spanish market.

Consequently, we examine the CTRs to determine whether consumer response to each ad type supports its profitability and cost. CTR measures the percentage of user click rates on an ad. It is used as a metric to measure an ad’s relevance, which means that a low CTR either suggests an ad is targeted at the wrong audience, or the product is simply not of interest to those who see it.

Notably, Sponsored Brands has the highest median CTR in Spain, outperforming the other two ad types with a rate of 0.5%. Sponsored Products comes in second with a lower CTR of 0.29%, despite being the ad type with the highest CPC. As the least profitable and cheapest ad type, Sponsored Display also ranks last in terms of consumer relevance.

With Medium Cost, High Relevance and Profitability, Sponsored Brands Outperforms the Other Two Ad Types

An examination of the three KPIs - ACoS, CPC, and CTR - shows that Sponsored Brands are the most relevant to consumers in Spain with a CTR of 0.5%, which is considerably higher than the other two ad types. Concurrently, Sponsored Brands have a relatively low CPC of US$0.32, which translates into the highest profitability with a low ACoS of 26.5%. This means that a median Sponsored Brands ad in Spain can generate a solid revenue for its low costs, making it the most beneficial of the ad types studied in this article. 

Despite the relatively high cost of Sponsored Products, with a CPC of US$0.37, its profitability as measured by the ACoS is still fair at a rate of 28.8%, confirmed by a median CTR of 0.29%, which is however significantly lower than that of Sponsored Brands.

Sponsored Display ads appear to be the least relevant, with a CTR of 0.25%. While being less expensive than Sponsored Brands, they are the least effective of the ad types examined. As such, Sponsored Display ads have the highest and therefore least profitable ACoS of 43.7%.

Sources

Amazon 1 2 3

Statista