Online retailers are preparing now for the upcoming holiday shopping season, and may be considering whether to buy advertising to boost their sales on Amazon. To help shed some light on what to expect in 2016, we took a look at how ads performed for our advertisers during last year’s holiday rush.
For this study, we looked at Amazon’s Sponsored Products, which is a pay-per-click ad program for sellers that shows sponsored product listings on search results pages.
How did ads convert?
Over the holiday season, the percentage of US shoppers who clicked on a Sponsored Products ad and then purchased the advertised product on Amazon (conversion rate) increased as the season progressed. Compared to pre-holidays, Black Friday’s ad conversion rates were 16% higher, Cyber Monday was 27% higher, and mid-December reached a 42% higher ad conversion rate, on average.1
But what about revenue?
Higher conversion rates are great, but only if those conversions deliver the right amount of revenue for the cost. So we looked at the average return on ad spend (ROAS) during the holidays as well.
Overall, we found that ROAS was best on Cyber Monday, with an average $13 generated in sales revenue for every dollar a seller spent on Sponsored Products ads. We broke down the ROAS by product category, and we found that all categories saw an improvement over the holidays, however the peak ROAS varied in both amount and timing for each category. For example, console video games reached their peak in mid-December, whereas apparel and home décor reached their peaks on Cyber Monday.
These metrics are only for sales on Amazon.com resulting from ad clicks, and do not take into account any offline sales that may be influenced by online behavior.
Average return on ad spend (ROAS)
(Sales revenue on Amazon.com for every $1 spent on Sponsored Products ads)
1 Source: Study conducted by Amazon. (Average across all Amazon Seller Central accounts with at least $0.05 in ad spend on the following dates: Pre-holidays: 10/12/2015; Black Friday: 11/27/2015; Cyber Monday: 11/30/2015; Mid-December: 12/7/2015).