Amazon’s CPC advertising has experienced unseen increases over the last few years. As a seller, you must know: the competition in the marketplace has been heating up, so visibility is all the more important for brands and sellers alike.
A combination of factors has caused CPC advertising to climb by nearly 50% in most categories, and it is not stopping anytime soon.
No one wants to be squeezed dry by rising costs that are not under one’s control. No. Sellers must focus on what they can control: optimizing ad spend, refining campaigns, and enhancing product visibility through smarter strategies.
This article will show you how to do precisely that while exploring the root causes of the problem.
Why is Amazon’s CPC Increasing?
The average CPC increased from $0.89 in 2020 to $1.11 in 2022. And in 2023, it reached an increase of 11.6%.
The rise in Amazon’s CPC can be attributed to several factors that reflect the platform’s unbelievable growth and the changing behavior of sellers and buyers that come with it.
Here’s a closer look:
Established Brands Increase Competition
Amazon’s appeal as a cost-effective advertising platform has led many big brands to shift their budgets away from platforms like Google and Facebook. These brands have larger advertising budgets and are willing to bid aggressively to dominate keyword spaces, driving up CPC for everyone.
Limited Ad Space
While Amazon’s seller base has expanded dramatically, with millions of active sellers competing globally, the available ad space has not grown to match this demand. The scarcity intensifies competition for high-visibility placements, especially for Sponsored Product ads in search results.
Aggressive Strategies from Smaller Sellers
In an effort to remain visible against the competition, a new trend has come: Smaller sellers bidding higher than what is sustainable for their profit margins. Backed by short-term growth objectives, they prioritize visibility over profitability. And the cost of CPC inflates further
Mobile-First Shopping Behavior
The rise in mobile shopping has added another layer of complexity. On mobile devices, limited screen space means fewer ads are visible at a time, which again increases competition for the top spots. Since most customers engage with the first few results, brands want to bid higher to secure those positions.
Keep up with the latest Amazon and Walmart news updates and subscribe to our BellaVix newsletter 👇👇👇
How to Combat Rising CPC and Optimize Ad Spend
There are ways to manage CPC and maintain profit margins by implementing smart strategies. Here’s how:
Prioritize High-Performing Products
Focus your ad budget on your best-selling or highest-margin ASINs.
Go for the details. Identify the size or color variation of your products that generate the most sales and run targeted campaigns for them. Of course, this approach also minimizes wasted ad spend on low-performing items.
Optimize Keyword Strategy
It depends on the algorithm and each situation, but Long-Tail keywords usually perform better. Target specific phrases that are less competitive but more likely to convert. From there, move high-performing keywords from automated campaigns to manual ones to have more control. You’ll be able to refine match types and improve your targeting.
There’s something else. Usually, some keywords lead to clicks but don’t convert. Exclude them from your campaign to save some ad spend.
Leverage Budget Rules
Set up schedule-based rules to allocate higher budgets during peak shopping times and reduce spending during low-conversion periods. Budgets can be increased during holidays or environmentally themed campaigns like Earth Day.
Advanced Tactics
Here are a few tips to gain an edge against the competition:
Focus on Retargeting and Brand Keywords
Use Sponsored Display Ads to retarget shoppers who viewed your product but didn’t buy. Combine this with campaigns targeting your own brand keywords, which often have lower CPC and attract high-conversion customers.
Experiment with Product and Category Targeting
Place ads on competitor product detail pages or within relevant categories. For instance, if you sell reusable straws, target listings for products like smoothie tumblers or environmentally friendly kitchen supplies.
Monitor Organic Rankings
Track the organic performance of high-performing keywords. As your product’s organic rank improves, gradually reduce ad spend on those keywords to cut costs without sacrificing visibility.
Additional tip: Ads displayed during peak shopping hours may be more expensive, but they’ll probably have a better performance. On the other hand, you’ll have less competition during low activity hours, so you can also take advantage of that scenario.
Conclusion
Amazon’s growth has a big effect on sellers’ and buyers’ behavior. The cost of CPC Ads is a consequence of it. And as long as Amazon keeps standing over all other marketplaces, gaining visibility and reaching high conversions will only get more challenging. But don’t worry. If your plans go south, you always have the choice to get help. Contact the BellaVix Team for efficient assistance provided by professionals on the matter!
Struggling with Rising CPC Costs on Amazon? Let’s Fix That.
Amazon’s ad costs are climbing, but that doesn’t mean your profitability has to take a hit. The key to staying ahead isn’t just bidding higher—it’s about bidding smarter.
At BellaVix, we help brands like yours optimize their ad spend, refine targeting strategies, and maximize ROI. Whether you need to adjust your keyword approach, leverage retargeting, or identify the best-performing ASINs to invest in, our team of experts will build a data-driven strategy tailored to your goals.
Don’t let rising CPCs eat into your margins. Fill out the form below, and let’s craft a game plan to keep your Amazon advertising profitable and effective.