Advertising costs have soared! Amazon sellers: Should you change careers?

Amazon advertising costs continue to rise, but conversions are not satisfactory, sellers' costs are rising, and profit margins are further squeezed. Recently, many Amazon sellers have said: "Advertising costs have risen several times, and we can't afford it at all!"

While sellers are troubled by the pain point of traffic diversion, Stone Technology, which has many top-ranked best-selling products on Amazon, has been able to successfully break through. It has further enhanced its brand awareness and sales performance through efficient marketing methods .

Amazon advertising costs surge

Recently, many Amazon sellers reported that the recommended bids for advertisements in multiple categories of products on the platform have been raised. One seller said that the highest bid in his category suddenly increased from more than 2 points to more than 6 points, and the advertising costs increased significantly. Many peers are in a similar situation . Compared with before, the recommended bids for many products have directly tripled .

The increasingly high bidding prices for advertisements have irritated the sellers. Most of them said that they get anxious when they see the advertising fees every day. CPC (cost per click) is too high and they cannot continue to sell. One seller said helplessly: "Is this a money grab? If it continues like this, I am afraid that a lot of people will quit . "

Seller M, who runs a kitchen category , said that he initially selected kitchen products, but the internal competition became more and more serious, the product prices kept falling, and the advertising costs continued to rise, so he later changed his career. Regarding his topic, a colleague replied: "When I see the advertising costs, I think about changing my career every day."

Bernie, a foreign seller, started selling computer accessories on Amazon in 2014. According to him, the CPC cost of advertising was about 14 cents at that time, but it rose to $1.60 in February this year . In the past eight years, this cost has increased more than 10 times.

"In recent years, Amazon's advertising costs have been rising , which has enriched the platform and hurt sellers. Especially since this year, the increase has been significant. The specific increase depends on the corresponding category of the product. The 3C, home, kitchen and other categories on the US site are highly competitive, and the advertising costs are relatively high. " said an industry insider.

According to data from Sellics, globally, Amazon's CPC is 75 cents per click. From 2021 to 2022, the CPC of Amazon's US website increased by 22% year-on-year to 87 cents, the highest in the world, which may be related to the fierce competition in the US market. The CPC of the German site is relatively cheap at $0.47; the CPC cost of the French site is only $0.38.

Amazon's CPC has been increasing. Looking at each category specifically, the CPC of product promotion ads in the sports, pet supplies and book categories increased by more than 20% year-on-year, while the CPC of health and personal care and baby products categories decreased year-on-year.

High advertising fees but no orders, sellers are stuck in traffic diversion pain point

With the increase in CPC costs , Amazon 's advertising revenue has also increased significantly in recent years , contributing a lot to its overall revenue. Currently, Amazon's advertising business has become the most profitable business unit outside of AWS.

According to the advertising revenue data released by Amazon, Amazon's advertising revenue in 2021 reached 32.6 billion US dollars, a year-on-year increase of 55% , of which the advertising revenue in the fourth quarter accounted for nearly one-third of the annual advertising revenue. In the past three years, the revenue of Amazon's advertising services was 11 billion US dollars, 10.9 billion US dollars and 16.9 billion US dollars respectively, increasing year by year.

Perhaps it is the advertising bids of third-party sellers that have pushed up Amazon's advertising revenue. During this year's Prime Day promotion and the fourth quarter holiday season promotion, sellers may invest more in advertising, and advertising costs may continue to rise. However , with the increase in new sellers and the intensification of platform competition, it seems that the high advertising fees invested by many sellers do not match the proportion of their orders.

At a time when advertising costs have risen sharply, some sellers have used previously common bidding points to run ads , only to find that it is almost impossible to obtain traffic, which has impacted store orders and sales.

Some sellers also increased their budgets, but the advertising expenses increased by 2 times, the traffic only increased by 0.5 times, and the conversion rate was reduced by half. One operator said that he tried to increase the advertising budget by more than 100 US dollars a day, but after a few days, there was no effect.

Many sellers are stuck in traffic diversion difficulties, and some peers have raised questions: "Have advertising orders become the main source of Amazon's orders? Does the platform rely on sellers' advertising fees to make money?"

As traffic becomes increasingly expensive, sellers are facing tremendous cost pressures. They are urgently looking for more effective and accurate ways to drive traffic, spend money wisely , and improve advertising effectiveness.

How can sellers accurately attract traffic and spend money wisely?

Among the team of precise traffic diversion, some "dark horse sellers" have stood out, among which Beijing Stone Technology is an "excellent student" . Relying on efficient marketing, it has further improved its sales performance and brand awareness.

Founded in 2014 , Roborock Technology is mainly engaged in the design, research and development, production and sales of smart hardware such as smart cleaning robots. It has several top-ranked best-selling items on Amazon. The total sales of its smart sweeping robots in 2021 exceeded 2.81 million units, a year-on-year increase of 18.25%.

The financial report shows that in 2021 , Stone Technology's operating income reached 5.837 billion yuan, a year-on-year increase of 28.84%, and the total profit reached 1.598 billion yuan, a year-on-year increase of 2.67%. The net profit attributable to the parent company's owners was 1.402 billion yuan, a year-on-year increase of 2.41%. Last year, when many cross-border sellers increased their revenue but not their profits, or even suffered losses, Stone Technology's advantages were highlighted.

One of the factors that boosted Stone Technology's performance growth is precise traffic generation and efficient marketing.

In terms of traffic channels, the cooperation between Stone Technology and Taboola has achieved amazing results. It has reached users on a large scale through Taboola video ads, obtained 18.04 million exposures and 4.23 million full views. In addition, the CPM has dropped by 25% since 2020, which is more effective than other video platforms.

Founded in 2007, Taboola has 500 million high-quality daily active users worldwide. It is the world's leading native advertising platform, working with more than 9,000 high-quality media and content publishers, and specializes in placing "content recommendation" links and advertisements on thousands of websites.

In addition to the video ads used by Stone Technology , Taboola also has Connexity and independent single-page e-commerce to help sellers grow their performance. Since the outbreak of the epidemic in 2020 , e-commerce sellers have seized the opportunity and taken advantage of the dissemination of native advertising . The sales performance of sellers of epidemic prevention products such as masks has exploded, with a daily peak of more than 100k+; in the following two years , the direct customer e-commerce vertical category continued to ferment and grow steadily , and the platform's KA customers invested more than 10 million US dollars.

More specifically, Taboola's advertising formats include native image/text recommendation slots, homepage, video and high-impact native advertising slots, as well as news recommendation slots in cooperation with Android phone manufacturers, supporting static images, dynamic short films, short videos, title descriptions, CTA buttons, etc. Currently, Taboola advertising has helped different e-commerce companies acquire high-quality users and improve advertising effectiveness.

Recently, MediaGo, the global AI integrated marketing platform under Baidu International, was awarded as Taboola's advertising agency, and will work together to provide creative marketing solutions for overseas companies.

On the afternoon of May 26, Baidu International MediaGo and Taboola will jointly host an event to reveal new overseas traffic, which aims to help brands grow their business with the help of Taboola 's personalized marketing. Highlights of the event include: unlocking new traffic on native advertising platforms; understanding new ideas for making advertising more accurate and monetization growth faster; and revealing new ways to play with content pages suitable for cross-border e-commerce.

Cross-border sellers who want to acquire customers more accurately and further improve advertising effectiveness can also click on the entrance to participate in this event and learn more details.

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