The CPC has increased 10 times. Amazon sellers: Advertising is too expensive

When you think of advertising, what do you think of?

I believe that what comes to most people's minds are elevator banner ads, subway and bus ads, TV ads, web ads, etc. But if you talk about advertising with Amazon sellers, what they think of is definitely the sadness of losing a lot of money.

Bernie started selling computer accessories on Amazon in 2014. He said the cost per click was about 14 cents at the time. Now, he said the cost per click has risen to $1.60. Over the past eight years, the cost per click has risen more than 10 times, and sellers have called advertising too expensive.

For some small businesses, the cost of advertising on Amazon can quickly exceed $100,000 per year . But these sellers have no choice but to continue spending money if they want to compete on Amazon.

Amazon spokesman Patrick Graham said that the cost per click on Amazon ads has indeed increased over time , but he also mentioned that ads are completely optional for sellers and sellers can choose whether to pay.

That being said, Amazon determines the price of advertising on the platform through an auction model , where sellers can bid for search terms such as "toilet paper" or "cotton t-shirts." As more and more businesses spend heavily on advertising to get in front of customers , this has led to increased competition and rising advertising costs .

According to research data from the U.S. antitrust nonprofit organization Local Self-reliance Association in December last year , on average , Amazon sellers spent 4.6% of their sales revenue on Amazon advertising in 2021 , up from 1.1% in 2016.

Amazon also announced this month that its advertising revenue in 2021 was $31.2 billion, about $2 billion more than YouTube and almost eight times Snap's total revenue. Its advertising business grew 32% in the fourth quarter of 2021 , becoming one of the company's fastest-growing revenue sources.

“ It’s a way for Amazon to extract more revenue from sellers and keep more of their hard-earned money in its own pocket . ”

Amazon investigator Chris McCabe said that advertising investment is very important for Amazon sellers . If sellers spend too little on advertising and fail to comply with the rules of the Amazon ecosystem , there will be few exposure opportunities and no conversion rate . Many companies have no choice but to accept the rising advertising costs.

In fact, it is not just Amazon. Sellers on platforms like Wish, eBay, and Shopify are more or less facing the same advertising cost problem. Many sellers are worried that advertising is too expensive, but if they don’t advertise, they will not be exposed, converted, or receive orders.

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