eCommerce: ACoS, CPC & CTR

Amazon Retail Media Advertising: Key Insights

• Advertising Performance in Western Europe: There are three ad types on Amazon: Sponsored Brands, Sponsored Products, Sponsored Display. Ad type effectiveness varies among countries.

• Sponsored Products Ads Tend to Be Most Profitable: Overall, Sponsored Products ads are most effective in terms of revenue generated per ad at lowest cost.

• Sponsored Display Ads Less Effective: With consistently low CTRs, Sponsored Display ads are the least lucrative ad type. Sponsored Brands and Sponsored Products vary in effectiveness from country to country, but Sponsored Display ads tend to be high in cost and low in revenue.

Retail media advertising is the promotion of products and brands on eCommerce platforms. A feature of online advertising is the analysis of customer behavior and demographics to provide more personalized relevance.

To assess the effectiveness of advertising, businesses look at KPIs like ACoS (Advertising Cost of Sale), CPC (Cost-per-Click), and CTR (Click-Through Rate). 

Market leader Amazon generates a significant portion of its revenue through retail media advertising. ECDB discusses its ad type effectiveness in Western Europe.

Amazon: Sponsored Brands Effectiveness

There are three categories of advertising on Amazon: Sponsored Brands, Sponsored Products, and Sponsored Display.

We begin by looking at Sponsored Brands, which are ads that promote Amazon storefronts. Storefronts allow businesses to manage their Amazon presence, build customer awareness and loyalty, and introduce a curated selection of products.

Sponsored Brands Most Profitable in Italy

Sponsored Brands has the highest median ACoS of 32.3% in the UK, which means it is the least effective there compared to the other five countries. Because ACoS measures advertising spend as a percentage of revenue, a higher ACoS indicates lower profitability.

In Germany, the median ACoS is 31.2%. France follows with 28.8% and Spain’s median is lower at 26.5%. Italy is the country with the lowest and therefore most profitable cost-to-revenue ratio for Sponsored Brands, at 21.4%.

Italy, Spain and France Are Most Affordable per Click

CPC, denominated in US$, measures how much sellers pay Amazon per click on each of their Sponsored Brands advertisements. 

Sponsored Brands ads are most expensive in the UK at US$0.63 per click, followed by Germany with US$0.56 per click.

In France, Sponsored Brands ad spend is notably lower at US$0.35, while Spain (US$0.32) and Italy (US$0.28) are the cheapest markets to promote Amazon storefronts.

Sponsored Brands: Highest CTR in Spain and Italy

Click-Through Rates calculate advertisement relevance to shoppers. Low CTRs mean that your Sponsored Brands page does not match what shoppers are looking for, or that the ad is not engaging enough for them to click through to the page. 

Sponsored Brands are least relevant in the UK and Germany, which have the lowest median CTRs at 0.3% and 0.28% respectively, while Spain and Italy have much higher CTRs. Spain and Italy also have the lowest cost for Sponsored Brands ads, which plays into their effectiveness.

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Amazon: Sponsored Products Effectiveness

Sponsored Products advertisements are linked to keywords that consumers type into the Amazon search bar. Sponsored Products ads are the most common because they are the easiest to set up and do not require any prior affiliation with Amazon. In addition, Sponsored Products are the most difficult to distinguish as advertising, as they appear alongside regular search results, marked with a “Sponsored” tag in the upper left corner. 

Sponsored Products Are Most Profitable in Germany

In Western Europe, the largest and least profitable ACoS of Sponsored Products is in the UK (29.8%). Spain is the second least profitable market (28.8%), followed by Italy (27.2%), France (26.2%), and Germany as most profitable with 25.8% of advertising revenues accounting for ad spend.

The difference between the highest (UK) and lowest (Germany) percentages is smaller compared to the median for Sponsored Brands. Overall, Sponsored Products tend to be more profitable than Sponsored Brands, with the exception of Italy and Spain.

Sponsored Products CPC Lowest in Italy and Spain

CPCs for Sponsored Products follow a similar pattern to Sponsored Brands ads. Again, the UK and Germany are the most expensive, with France in the middle. Once more, Spain and Italy have the lowest CPCs at US$0.38 and US$0.37, respectively.

The data shows that Sponsored Products tend to be more expensive than Sponsored Brands, which is likely due to their wide reach and easy set-up.

Sponsored Products Are Most Relevant to Shoppers in Germany

According to the CTR, which measures ad relevance, Sponsored Products appear to be most efficient in Germany, where the CTR is at least 0.06 percentage points higher than the median of the other countries.

Italy, France and Spain have the lowest median CTRs for Sponsored Products. Keep in mind that these countries ranked highest for Sponsored Brands. 

Amazon: Sponsored Display Effectiveness

Sponsored Display ads, formerly known as Product Display ads, are remarketing mechanisms that target customers based on their demographics, psychographics, and shopping behavior. This includes recent searches, product purchases, and relevant categories for future purchases. Sponsored Display is different from other Amazon advertising because ads are also shown outside of Amazon’s marketplace, on streaming networks such as Twitch, or on third-party sites and marketplaces.

Sponsored Display Most Profitable in France, Italy, and Germany

The UK indicates the lowest profitability of Sponsored Display ads with an ACoS of 44.8%, the highest for this country across all ad types. This is followed by Spain (43.7%) and then France (35.3%). Sponsored Display is most profitable in Italy (34.5%) and Germany (32.4%). 

Sponsored Display CPC Lowest in Italy and Spain

The Cost-per-Click of Sponsored Display is highest in the UK (US$0.54) and Germany (US$0.5). France is less expensive at US$0.38 per click, and Italy and Spain are the least expensive at US$0.27 and US$0.18, respectively. 

Across all types of Amazon retail media, advertisers in the UK pay the most per click, ranging from US$0.7 for Selected Products to US$0.54 for Selected Display.

One of the reasons for the high costs in the UK is the competitive nature of the digital retail market. Other factors, such as high consumer demand for online shopping and higher relevance of more costly ads, are also expected to play a role.

Sponsored Display Most Relevant in Italy and Spain

For CTRs, a similar pattern to Sponsored Brands prevails, with Italy and Spain having the highest rates at around 0.25%, followed by France, Germany and the UK, although this time the UK is at the bottom with a rate of 0.2%.

Compared to the other ad types, Sponsored Display tends to have the lowest relevance. Its highest rates do not exceed the lowest rates for both Sponsored Brands and Sponsored Products in any of the countries observed.

Amazon Retail Media: Wrap-Up

A country-based depiction of retail media ad performance shows that there are market-specific differences to be considered when advertising products on Amazon.

High traffic on Amazon's UK domain likely accounts for consistently high costs and relatively low revenues due to the competitive nature of this market. In comparison, Germany tends to have higher costs but ad types are more effective on average.

While France tends to have medium values, ad costs are lowest in Italy and Spain at overall lower effectiveness.

Sources: Amazon: 1 2 3 - Data Hawk - Nozzle - Statista