What if I pitched you a $98 CPM for a small ad placement showing your product?
This is the actual cost of Amazon Top of Search ads on a CPM basis.
We looked at our Amazon Sponsored Ads data over the last 6 months and analyzed the ads on a cost per thousand impressions (CPM) basis instead of a cost per click (CPC) basis.
Those who buy ads based on CPM are probably used to much lower ad costs. So why in the world would anyone pay this much per impression?
Because not all impressions are created equal!
For Sponsored Products Top of Search ads, these ads have incredible interaction metrics leading to business results. Over this period, the average click through rate was over 5.5% and for those who clicked, one out of four proceeded to place an order (over 25% conversion rate).
The high performance and business results the ad generates justifies the cost we pay per click. If we had to bid on these ads based on a cost per thousand impressions, ad performance would justify that $98 CPM bid.
Key message: When optimizing ads, shooting for the lowest cost (CPM or CPC) should not be the key goal. Instead, we should be focused on the business results those ads deliver compared to the costs to determine where we should put our budget.