Running advertising campaigns on Amazon involves multiple factors that influence the cost-per-click (CPC) and overall performance. This guide explains how search volume, competition, inventory levels, customer reviews, pricing, and unique selling points (USPs) can impact your product’s advertising outcomes. By using real-world trends and examples, we’ll help you make informed decisions for 2025 and beyond.
CPC and Search Volume
CPC depends on the search volume for a given period, determining how brands compete for clicks in Amazon’s auction-based advertising system. Please see search data example from Helium 10 below:
When Search Volume is High:
- Opportunity: Brands have more visibility as customer interest rises.
- Example: For “youth football gloves,” search volume peaks in late summer, aligning with the back-to-school and sports season. During this time, brands enjoy steady CPCs while benefiting from increased demand. There are more ad placements for these sorts of products and lower bids can still provide good placement.
When Search Volume is Low:
- Challenge: During the off-season, fewer searches force brands to compete for limited impressions, driving up CPC.
- Example: In winter and spring, search volume for “youth football gloves” drops significantly, resulting in higher CPCs and reduced sales opportunities. This is because we have the same amount of brands from the sports season (and likely more entering the category as well) all competing for less placements. Lower bids result in poor placement with less visibility and clicks.
📦 Example Data: Search Volume and CPC for Youth Football Gloves
Helium10’s search volume history shows the following trends over a year:
| Period | Search Volume | CPC Trend |
|---|---|---|
| Late Summer (Peak) | ~45,000 | More ad space, lower CPC |
| Winter (Low) | ~7,000 | Increased competition for ad space, higher CPC |
Additionally, brands advertising “youth football gloves” might experience the following campaign results during high and low search periods:
| Metric | High Search Volume (Late Summer) | Low Search Volume (Winter) |
|---|---|---|
| Bid | $1.20 | $1.40 |
| CPC | $1.10 | $1.30 |
| Clicks | 500 | 500 |
| Conversion Rate | 20% (100 sales) | 15% (75 sales) |
| ACOS | 25% | 43.3% |
| ROAS | 4.0x | 2.3x |
Adjusting Bids to Counteract Seasonal Fluctuations
Bid adjustments are crucial for navigating seasonal fluctuations in search volume. By regularly analyzing performance data and adjusting bids, you ensure that your ad spend is allocated efficiently. For example, increasing bids during high-volume periods helps maximize visibility and take advantage of heightened demand, while lowering bids in slower periods minimizes wasteful spending.
💡 Tip: Combine bid adjustments with search term isolation, a strategy that optimizes performance by isolating high-converting keywords in manual campaigns while excluding them from automatic ones. This approach ensures your campaigns remain efficient across varying search volumes.
Conversion Rate and Visual Star Ratings
Conversion rates on Amazon depend heavily on product perception. Star ratings and reviews are some of the most influential factors.
Impact of Star Ratings:
Products with a 4.5-star rating are far more appealing to shoppers than those rated at 4.0. Even a small drop in rating can lead to reduced trust, making it harder to attract clicks and convert them into sales.
💡 Practical Implications for Advertisers:
The average conversion rate on Amazon is currently 9.96%, but products with higher ratings often exceed this benchmark. Maintaining a strong rating through effective review management is critical for success.
📦 Example: Star Ratings and Conversion Rate
A kitchen tools brand advertising a salad bowl set might experience the following outcomes based on its star rating:
| Metric | At 4.5 Stars | At 4.0 Stars |
|---|---|---|
| Bid | $1.50 | $1.80 |
| CPC | $1.30 | $1.50 |
| Clicks | 400 | 400 |
| Conversion Rate | 20% (80 sales) | 15% (60 sales) |
| ACOS | 30% | 50% |
| ROAS | 3.4x | 2.0x |
When the product maintains a 4.5-star rating, it performs well with higher conversions and lower costs. A drop to 4.0 stars reduces conversion rates, requiring more clicks to achieve the same sales volume.
💡 Actionable Tip: Use Amazon’s “Request a Review” feature to encourage satisfied customers to leave positive feedback. Address any issues raised in reviews promptly to prevent further rating declines.
Inventory Levels and Their Effect on Advertising
Inventory availability has a direct impact on ad performance and organic rankings. Low inventory or stockouts often result in reduced visibility and missed opportunities.
- Ad Placement Drops: Amazon limits exposure for products with low stock to avoid frustrating customers.
- Risk to Buy Box Ownership: When inventory is low, competitors with higher stock levels may take the Buy Box.
- Organic Sales Decline: Stockouts negatively affect rankings, as Amazon prioritizes reliable products that meet demand consistently.
💡 Practical Implications for Advertisers:
Even a well-optimized campaign cannot overcome the disadvantages of low inventory. Planning ahead for high-demand periods is essential.
📦 Example: Inventory Levels
A toy brand advertising during the holiday season might observe the following:
| Metric | Optimal Inventory | Low Inventory |
|---|---|---|
| Bid | $2.00 | $2.00 |
| CPC | $1.80 | $1.80 |
| Clicks | 600 | 300 |
| Conversion Rate | 25% (150 sales) | 20% (60 sales) |
| ACOS | 20% | 45% |
| ROAS | 5.0x | 2.2x |
With full inventory, the product maintains visibility and converts well. Low stock reduces ad effectiveness and overall profitability, as fewer sales are achieved at a higher cost.
💡 Actionable Tip: Use tools like Amazon’s inventory planning dashboard to avoid stockouts during peak demand periods.
Pricing and Unique Selling Points (USPs): Their Impact on Advertising
Pricing plays a significant role in the success of Amazon campaigns, influencing conversion rates and ad profitability. However, a strong unique selling point (USP) can minimize the effects of price changes, allowing advertisers to maintain competitiveness even with higher prices. A Unique Selling Proposition (USP) is a specific feature, benefit, or characteristic that sets a product or service apart from its competitors. It answers the question, “Why should a customer choose this product over others?” by highlighting what makes it distinctive, valuable, or uniquely suited to their needs.
The Role of Pricing:
- Click-Through Rate (CTR): Competitive pricing improves CTR by attracting shoppers who perceive value.
- Conversion Rate (CR): A well-priced product paired with strong reviews and an optimized listing often leads to better CR.
- ACOS and ROAS: Lower prices can make it harder to achieve favorable ACOS and ROAS. Strategic pricing ensures ad profitability.
📦 Example: Pricing and Metrics
A skincare brand advertising a moisturizer might observe the following:
| Metric | Competitive Price ($29.99) | Higher Price ($34.99) |
|---|---|---|
| CTR | 8% | 5% |
| CR | 25% | 15% |
| ACOS | 20% | 40% |
| ROAS | 5.0x | 2.5x |
The Power of a USP to Reduce Price Sensitivity:
A well-communicated Unique Selling Proposition can offset higher prices by highlighting the unique benefits customers receive.
- Differentiation: Products with a strong USP stand out, reducing the importance of price comparisons.
- Enhanced Value Perception: A clear USP ensures customers understand the value they’re receiving, making them more willing to pay a premium.
💡 Actionable Tip: Use your listing to emphasize what makes your product unique, such as innovative features, quality, or design, to justify pricing and boost conversion rates.
Prime Day, Black Friday, and Seasonal Sales: Maximizing Amazon Advertising Performance
Special shopping events like Prime Day, Black Friday, and Cyber Monday represent significant opportunities for advertisers on Amazon. During these periods, Amazon actively favors listings running promotional deals, while customers specifically search for and prioritize products they perceive as “deals.”
How Amazon Favors Sale Listings:
- Increased Visibility: Amazon’s algorithms promote discounted products during major sales events, making them more likely to appear in search results and curated deal pages.
- Buy Box Advantage: Products with active discounts or coupons are more likely to win the Buy Box, increasing conversions from ad clicks.
- Higher Click-Through Rates: Shoppers are drawn to sale badges, lightning deals, and coupon markers, making these products more competitive.
Customer Behavior During Sales Events:
- Focus on Deals: Customers actively look for products with discounts and may skip over listings without visible savings.
- Sense of Urgency: Limited-time offers (e.g., “Deal ends in 6 hours”) drive faster purchase decisions, boosting conversion rates for sale items.
- Comparison Shopping: Even with strong advertising, products without discounts may lose to competitors offering perceived savings.
📦 Example: Impact of Sales Events on Campaign Metrics
A brand advertising “youth football gloves” during Prime Day might observe the following metrics:
| Metric | With a Sale | Without a Sale |
|---|---|---|
| Click-Through Rate | 10% | 5% |
| Conversion Rate | 25% (125 sales) | 12% (60 sales) |
| ACOS | 20% | 50% |
| ROAS | 5.0x | 2.0x |
The Cost of Not Participating in Sales Events:
- Lower Conversion Rates: Without discounts, your listing will likely convert fewer shoppers compared to competitors with deals.
- Higher ACOS: Reduced conversions mean you pay more for clicks without achieving strong sales volume.
- Missed Opportunities: Sales events bring surges in traffic and purchase intent—if your listing isn’t competitive, it misses out on this increased demand.
💡 Tip:
If you can’t run discounts during these events, consider strategies like:
- Adding limited-time coupons to your listing.
- Highlighting unique selling points (USPs) in your A+ Content.
- Using Sponsored Brand Ads to emphasize quality or exclusivity over price.
The Role of the Marketplace in Shaping ACoS
It’s important to recognize that in Amazon’s competitive and ever-changing environment, results cannot be guaranteed. Many factors are beyond your control, and sometimes the marketplace itself determines your Advertising Cost of Sales (ACoS). Understanding how these external forces shape ACoS is critical for setting realistic expectations and building a strategy that’s adaptable and resilient.
The marketplace operates as a complex ecosystem influenced by multiple variables, including:
- Consumer Behavior: Shifting preferences and purchase patterns can dramatically affect campaign outcomes.
- Competitor Strategies: Changes in bidding tactics, pricing, and promotions by competitors directly impact your performance.
- Seasonal Trends: Periods like holidays or back-to-school seasons create fluctuations in demand and competition.
- Broader Economic Conditions: Inflation, consumer spending habits, or macroeconomic shifts can influence buyer behavior and ad performance.
Marketplace-Determined ACoS
In Amazon’s ecosystem, certain keywords or product categories often have a “floor” bid required to remain visible and competitive. For instance, if the minimum competitive bid for a keyword is $1.50 per click, and the resulting ACoS is 75%, bidding below this threshold might reduce visibility and clicks. This essentially sets a market-determined ACoS for that keyword, particularly in highly competitive niches.
💡 Example: Minimum Bids and ACoS in Action
| Keyword | Bid | CPC | Visibility | ACoS |
|---|---|---|---|---|
| “Resistance Bands” | $1.50 | $1.45 | High | 75% |
| “Resistance Bands” (Lower Bid) | $1.20 | $1.15 | Reduced | ACOS is irrelevant due to minimal visibility |
In this example, bidding under the competitive rate results in significantly lower visibility, highlighting how the marketplace dictates ACoS. This scenario often applies in saturated niches where staying competitive requires meeting certain CPC benchmarks.
Strategies for Addressing Marketplace-Driven ACoS
When your ACoS is heavily influenced by market conditions, the path to improvement lies beyond simply adjusting bids or budgets. Refining your strategy to enhance conversion rates and maximize returns becomes critical. Here’s how:
- Optimize Product Listings:
- Improve titles, images, and bullet points to make listings more compelling and increase purchase likelihood.
- Leverage enhanced content (A+ Content) to build trust and better communicate product value.
- Enhance Keyword Relevance:
- Focus on high-performing, long-tail keywords with better conversion potential.
- Reduce reliance on overly competitive terms that drive up CPCs but yield low returns.
- Boost Conversion Rates:
- Use targeted discounts, coupons, or promotions to attract more buyers.
- Improve customer experience through better shipping options and post-purchase follow-ups.
- Adapt to Seasonal Trends:
- Shift budgets and bids toward keywords with higher seasonal relevance.
- Plan ahead for holiday spikes or back-to-school shopping periods to capture demand effectively.
Final Thoughts
Running advertising campaigns on Amazon is not as simple as setting a fixed budget and expecting consistent results. Success depends on ongoing ad management, including frequent bid adjustments, search term isolation, and adapting to variables like search volume, customer behavior, and seasonal trends. These strategies ensure your ad spend is allocated efficiently and your campaigns remain competitive and profitable.
HoHowever, it’s equally important to understand how external marketplace factors influence your performance. Many of these variables are beyond your control but have a significant impact on your Advertising Cost of Sales (ACoS) and overall results. For example:
- Marketplace-Determined ACoS: Some keywords or categories have a “floor” bid needed to remain competitive. If the prevailing rate for a keyword is $1.50 per click with an ACoS of 75%, bidding below this threshold reduces visibility and clicks. This highlights how the marketplace can dictate terms, especially in competitive niches.
- Low Inventory: Even with optimized bids, low inventory decreases ad visibility, conversions, and overall performance, limiting your ability to compete effectively.
- Uncompetitive Pricing: Pricing that doesn’t align with market expectations deters clicks, lowering conversion rates and return on ad spend (ROAS).
- Poor Star Ratings and Reviews: A decline in star ratings or negative reviews increases ad costs and reduces conversions, making it harder to maintain profitability.
- Seasonal Trends: Surges in demand during Prime Day, Black Friday, or other peak periods require adjusted budgets and higher bids to capitalize on opportunities.
Navigating a Complex Ecosystem
Amazon’s advertising marketplace operates as a dynamic ecosystem influenced by factors such as consumer behavior, competitor strategies, and broader economic conditions. These variables collectively create a “pulse” that dictates ACoS and ad performance. For advertisers, success lies in understanding this pulse and crafting strategies that are both resilient and adaptable.
To address marketplace-driven ACoS and improve your overall results:
- Refine Product Listings: Optimize titles, bullet points, and images, and use A+ Content to communicate value and build trust.
- Enhance Keyword Relevance: Focus on long-tail keywords with strong conversion potential and reduce reliance on overly competitive terms.
- Boost Conversion Rates: Use promotions, coupons, and improved customer experiences to drive higher purchase likelihood.
- Adapt to Seasonal Trends: Prepare for peak shopping periods by adjusting budgets and bids to meet demand effectively.
Aligning Strategy with Marketplace Realities
PPC management goes far beyond optimizing bids. It’s about aligning every element of your campaign—keywords, product listings, pricing, inventory, and customer reviews—with the realities of the marketplace. Recognizing how external factors shape performance metrics like ACoS allows you to set realistic expectations and refine your approach to maximize returns.
With the right combination of ad management, strategic listing improvements, and an understanding of marketplace dynamics, your campaigns can adapt to challenges, seize opportunities, and remain profitable in the long run.
Glossary of Acronyms in the Amazon Ecosystem
- CPC (Cost-Per-Click)
- Meaning: The amount an advertiser pays each time someone clicks on their ad.
- ACOS (Advertising Cost of Sales)
- Meaning: The percentage of ad spend relative to the revenue generated from the ads. Calculated as
(Ad Spend ÷ Sales) x 100.
- Meaning: The percentage of ad spend relative to the revenue generated from the ads. Calculated as
- ROAS (Return on Ad Spend)
- Meaning: The revenue generated for every dollar spent on advertising. Calculated as
(Revenue ÷ Ad Spend).
- Meaning: The revenue generated for every dollar spent on advertising. Calculated as
- CTR (Click-Through Rate)
- Meaning: The percentage of ad impressions that result in a click. Calculated as
(Clicks ÷ Impressions) x 100.
- Meaning: The percentage of ad impressions that result in a click. Calculated as
- CR (Conversion Rate)
- Meaning: The percentage of ad clicks that result in a sale. Calculated as
(Sales ÷ Clicks) x 100.
- Meaning: The percentage of ad clicks that result in a sale. Calculated as
- USP (Unique Selling Point)
- Meaning: The distinct feature or benefit of a product that sets it apart from competitors.
- PPC (Pay-Per-Click)
- Meaning: An advertising model where advertisers pay a fee each time their ad is clicked.
- SKU (Stock Keeping Unit)
- Meaning: A unique identifier for a specific product in inventory management.
- ASIN (Amazon Standard Identification Number)
- Meaning: A unique identifier assigned by Amazon to each product listed on its platform.
- FBA (Fulfillment by Amazon)
- Meaning: A service where Amazon handles storage, packaging, and shipping for sellers.