The Real Cost Of Paid Ads For Amazon Sellers External Traffic For Amazon Sellers

Today I'll be talking about the cost of paid advertising for eCommerce businesses and how they might translate for Amazon only eCommerce businesses.







Quite often when trying to establish a strategy the most difficult thing can be estimating performance especially in terms of cost







So it’s really useful when somebody like Andrew Youderian from e-commerce fuel publishes his yearly report of data collected from hundreds of of high performance e-commerce entrepreneurs and businesses - The State Of The Merchant Report 2019







































Return On Ad Spend RoAS Statistics From The Report















Looking at Return on Ad Spend - which is Ad spend divided by revenue (not profit).So if you paid $50 in advertising and generated $100 in revenue, that would be a 2 x return on ad spend as you generated 2 times as much revenue as you spent on Ads. (this doesn’t account for profit in any way)







So Facebook was surveyed at an average of 3.4 x RoASAnd a median of 3.0x RoAS - so there were some outliers in that data that skewed the average towards a higher RoAS - the median is a better demonstration of performance of the data set







Google came in at an average of 5.1 X RoAS - now we’re talkingBut again, there must have been some serious high performing outliers in the surveyed companies as the median was at 4.0 x RoAS still better than Facebook







Then finally on to Amazon Ads at 4.6X RoAS averageAnd a 4.0 x median RoAS - once again, showing the presence of some high performing outliers skewing the average upwards.















Facebook and Google Ads Return On Ad Spend







So let’s talk about the Facebook Ads and Google Ads numbers for a secondThese return on ad spend numbers are based primarily on e-commerce businesses with the three pillars of profitability being used - they have their own stores that their driving cold traffic to, retargeting warm traffic and then up-selling hot traffic in the loyalty pillar







So those numbers take into account high profitability campaigns and retargeting campaigns and low profitability if not loss making awareness and acquisition campaigns







If you've already listened to the Ezra Firestone three pillars of profitability for Amazon sellers episode you'll know that as an Amazon Seller you don't have access to the higher profitability pillars in the same way as e-commerce store owners and as a result can't achieve the same levels of return on ad spend.















Where do Google and Facebook Ads actually appear?







If you’ve not done a tremendous amount of work with Facebook Advertising or Google Advertising, I might be doing you a disservice here in not going into more detail about the types of Ads I’m talking about.When I say Facebook, I of course also mean Instagram - as Instagram Advertising is controlled under the Facebook platform.But more than that, this will include Facebook messenger ads, in Facebook and Instagram stories, in mid-stream of videos, Facebook search, Ads on the Facebook Audience network - that’s right, you’ll get little display Ads when you’re on certain apps and websites that monetise their traffic with Facebook display ads - you’re seeing Facebook Ads when you’re not even on Facebook.







It’s less surprising to know it’s the same for Google.