We Analyzed Over 500 Million Sponsored Product Ads During COVID-19… Here’s What We Found

April 29, 2020
By The Badger

Without knowing your numbers you can’t possibly understand your business. We’ve been tracking key metrics that lead to success when it comes to Amazon PPC, and since the start of 2020 the charts have shown amazing insight into the “new normal” for Amazon sellers.

COVID-19 has turned every industry on its head, and Amazon has been the outlier when it comes to showing poor performance. Amazon has changed, and we’ll dive into how it is different now, but the company seems to be stronger than ever.

The Big Picture

We’ve been living in tumultuous times with the ramifications of coronavirus affecting almost every aspect of our daily lives. Shelter-in-place and stay-at-home orders have forced consumers to shop online at rates only seen during the holiday season.

In Australia, a relatively small market for Amazon, sales have been reaching record highs. This has piqued interest in the Amazon advertising community and has shown that Australia may be a good candidate for American sellers to expand into.

To find out more about selling in global markets, check out our guide.

In the United States, Amazon has been hiring hundreds of thousands of additional workers to keep up with demand, and Amazon’s stock price has continued climbing while virtually every other company has taken a hit during 2020.

While Amazon as a company is doing well on a macro-level, when looking at consumer habits during March and April, it seems unlikely that the recent surge in online sales will slow anytime soon. Amazon has already been growing at a rapid pace, and this turn to online shopping by many Americans seems to have only accelerated that growth.

Challenges for Sellers in 2020

While the big picture for Amazon looks good, for individual sellers the COVID-19 crisis has presented many obstacles. During January and February of 2020, suppliers in China and other Asian markets came to a standstill as coronavirus made working virtually impossible.

With a shortage of viable suppliers, sellers were forced to quickly find new suppliers or suspend their campaigns and pause their business. Some sellers had prepared for an externality by diversifying their supply chains to numerous factories around the globe. However, almost every seller who sourced products from Asia lost money during these months.

March 2020 Amazon Advertising Stats

It’s no surprise that these unprecedented times have produced statistics for Amazon sellers that have also never been seen. The increase in online shopping coinciding with global supply chain issues has given rise to a market that is ripe for aggressive marketers.

CPC (Cost per Click)

For the uninitiated, cost-per-click (CPC) is the amount you pay when a customer clicks your ad.

Normally, the average CPC hovers around $0.90 to $1.00, but this is no normal time. In March, the average CPC was $0.76 which is great for sellers, but the average doesn’t tell the whole story.

As you can see in this graph, CPCs at the start of March were around $0.80, but going into April there were consecutive days where the average CPC was under $0.70. Hopefully this trend continues.

Why has the average CPC gone down? The answer lies in how the Amazon advertising auction is structured. Amazon PPC is an auction, so the price you pay is just a penny more than what the next highest bidder is willing to pay for that keyword.

When sellers drop out of the game (pause their campaigns), it makes advertising on Amazon cheaper for their competitors. This is why it’s imperative to stay in the game!

There are ebbs and flows in every business. The important thing is how you deal with the tough time when sales are low and you’re dealing with a variety of issues. Don’t fold up your tent and move on. Instead, see the downturn as a turn and accelerate out of the turn.

Chances are, if you’re experiencing issues caused by COVID-19 your competition is too. Accelerate and leave them in the dust when things pick back up.

Conversion Rate

Your conversion rate is the percentage of clicks on your ad that convert into sales.

The average conversion rate prior to March 2020 was 9.47%. Like all metrics, this average can vary widely based on a seller’s niche.

During the first half of March, conversion rates stayed on par with the usual average. However, on March 15th the average conversion rate grew to over 10% and stayed there for the rest of the month. On five days in the end of March, the average conversion rate eclipsed 11%.

With the increase in Amazon traffic and the necessity for many Americans to do their shopping online, we’ve seen a trend where consumers are more likely to pull the trigger and purchase an item.

While more businesses are expected to open and the policies advising consumers to stay at home are getting less stringent, the average conversion rate may dip slightly. The good news for sellers is that these buying behaviors won’t change overnight, so expect higher conversion rates for the foreseeable future.

ACOS (Advertising Cost over Sales)

With higher conversion rates and lower CPCs, lower average ACOS is sure to follow.

Your ACOS is your total ad spend divided by your total sales. For example, if your ACOS is 25%, you’re spending $0.25 on ads to make $1.00 in sales.

The average ACOS in a normal situation is usually between 30%-40%.

In March of 2020, the average ACOS was between 25%-26% which is great for sellers. As long as some sellers stay out of the game and lower CPCs and the average conversion rate stays around 10%, expect lower ACOS than normal.

CTR (Click Through Rate)

Your click-through-rate (CTR) is the total number of clicks your ad gets divided by the total number of impressions. For example, if you get 1 click on your ad per 100 impressions, you’ll have a 1% CTR.

Normally, sellers see an average CTR of 0.36%.

Due to the changes in buying habits brought on by the COVID-19 crisis, the average CTR has increased 24% from February to March.

While the average increase in CTR is great, the average CTR has been all over the map during individual weeks of March. The first week of March was average, and the second week was actually below average. The downturn didn’t last long as the average CTR rebounded and was above 0.50% on March 21st and stayed above that mark for the remainder of the month.

Key Takeaways

All of these metrics show that Amazon sellers are primed for success in the months to follow. Amazon seems to be strengthening their position and other online retailers are trying to catch up, unsuccessfully.

If there is anything you take away from this post, hopefully you see the importance of staying in the game. March and April were fantastic for Amazon sellers, from a statistical standpoint. While COVID-19 had raised a multitude of obstacles, sellers who stayed the course and didn’t suspend their campaigns reaped the benefits.

Moving forward, expect consumer behavior to stay consistent. Even as more brick and mortar businesses open their doors, it’s unlikely that consumers will go back to their “normal” buying habits. Over the course of the last decade, shoppers have grown to love the convenience of Amazon. Now that more people have been exposed to buying on Amazon, many will use the platform as their primary source of shopping.

Good luck and stay in the game!