We’ve pulled the data and found some big surprises for sellers focusing on Amazon. Competitive platforms like Walmart and TikTok grew, pulling customers and sellers alike away to their marketplaces. However, this portends huge opportunities for Amazon. We break everything down in our free Amazon 2024 Benchmark Report — here’s a sneak preview below:
Lower CPCs Across Amazon
Amazon maintained its reign as the leading ecommerce platform in 2023. While other platforms like Walmart and TikTok improved their offerings and grew in their own right, Amazon became an even more powerful resource for sellers.
Decreasing CPCs (Cost-Per-Clicks) can indicate that advertising campaigns are becoming more efficient and cost-effective. CPCs represent the cost of each click on an ad. The lower, the less you pay, and therefore, the further you can stretch your budget and the higher your ROAS can be.
When CPCs decrease, advertisers can get more clicks for the same amount of ad spend — generally a positive sign for sellers. A decreasing CPC could occur due to decreased competition, changes in the ad auction, or improved targeting and ad relevancy. A lower CPC can help increase the ROI of an advertising campaign and drive more traffic to a product listing.
Now, why have we seen these trends on Amazon? We believe this is likely due to a combination of Amazon’s brand and the sellers who are actively on the marketplace. In this case, as brands like Walmart and TikTok have upped their game and drawn sellers — and their budgets — away from Amazon. With fewer seller dollars spent, increasing the competition, the remaining sellers could see a lower overall CPC.
Key Statistics You Need to Know
Looking at Amazon’s 2023 quarter by quarter, we see some noteworthy trends. While CPCs and overall functioning costs decreased when compared to 2022, rates went up quarter by quarter in 2023. Both CPC and ACOS ended 2023 higher than they began, while ROAS dropped over time. This means that ads cost more as time went on, leading to higher costs to complete a sale for sellers. This, in turn, relates to lower ROI, making for unsuccessful experiences for sellers who did not innovate.
When looking at the yearly trend as well as the YoY comparison, we start to learn a little more about Amazon’s potential in 2024. While competition being spread across multiple marketplaces is advantageous for sellers’ wallets, it appears that consumer bases are migrating off-platform, as well. That means while CPCs may be more affordable, customers are being more selective on what and where they purchase. Therefore, sellers need to have more touches or reach a wider demographic to secure more sales.
For sellers looking to succeed on Amazon in 2024, we expect that brands that focus on clear, attention-grabbing, and informative ads will be able to break through the increasing noise and better compel your desired audience to buy.
What Next?
These benchmarks underscore how focusing on constantly measuring meaningful performance data, with the capability to make changes to your tactics and strategy as that data indicates, is the bottom line for success on both Amazon and Walmart. Use the data from our full Amazon Benchmark Report to measure your performance against competitors, against the market as a whole, and as a primary foundation for educating your strategy in the year ahead and expanding into new marketplaces.
