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.
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.”
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.
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.
However, it’s equally important to realize and understand how other variables—like inventory levels, product pricing, star ratings, and seasonal demand—can majorly impact your performance. For instance:
- Low Inventory reduces your visibility and conversions, even with optimized bids.
- Uncompetitive Pricing can deter clicks and harm your return on ad spend (ROAS).
- Poor Star Ratings or reviews can lead to higher ad costs with fewer sales.
- Seasonal Trends like Prime Day or Black Friday create surges in demand that require higher budgets and adjusted bids to capture opportunities.
By addressing these factors alongside your ad strategy, you can create a holistic approach to maximize campaign efficiency. PPC management is not just about optimizing bids—it’s about aligning every aspect of your product and strategy to succeed in Amazon’s complex, ever-changing marketplace.
With the right balance of ad management, bid optimization, and variable awareness, your campaigns can adapt to challenges, seize opportunities, and remain profitable in 2025 and beyond.
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.