This article explores the mysterious world of the Amazon click through rate and how it can help you in increasing sales as an Amazon seller.
With the help of this simple yet comprehensive guide, you can “crack the code” and understand better what Amazon CTR really is, the factors that affect it, how to improve your click through rate, and how it could grow your Amazon selling business.
Ready to become an Amazon selling star through CTR? If you are, let’s jump right in and get started.
But first, let’s start with the basics and learn more about Amazon PPC.
Amazon PPC 101
An amazing advantage of selling on Amazon is that, for a reasonable price, you can either enable the platform to create ads for you or make a customized ad yourself.
Amazon makes its ads service available to third party sellers on an advertising platform known as Amazon PPC (which stands for “pay per click,” which we will explain later).
Whether you let Amazon extract the images and descriptions from your product listing to make an ad or create one yourself, your ad might look something like this:
An Amazon ad, from the point of view of an average Internet user, is smaller than the one depicted above.
However, what makes Amazon ads great is that they appear in various strategic places on Amazon.com. As Hubspot discusses, these places include:
1 – Search results page – The page that churns out a variety of products that users search for. For example, if you search for basketballs, the page that comes up which has a list of different available basketballs is the search results page.
2 – Product page – The page containing information about a specific product. For example, if you click on a particular Spalding basketball while on the search results page for basketballs, you will be led to the product page of that particular ball.
The beauty of investing in Amazon ads is that you as a seller can go beyond appearing merely on search results pages.
For instance, if you sell Nike sports shoes while activating Amazon ads, there is a chance your product might appear as a recommendation advertisement on the product page of, say, a particular brand of basketball. And you might even get a few clicks on your product ad!
This recommendation mechanism is based on the tendency of Amazon’s algorithm to group related products, like basketballs and sports shoes, together.
Now just like advertising in the real world, Amazon ads can either be successful or not. Generally, an advertisement is successful if it helps increase sales or awareness about your product.
How do you know if your Amazon ads contribute to increased sales or awareness? Measuring the click through rate (CTR) of a product ad is one way to go about doing this.
Now that you understand the basics of advertising on Amazon, let’s explore further the concept of Amazon PPC CTR.
What Is Amazon Click Through Rate
If you sell stuff in a brick-and-mortar store, how do you know if your advertisements will lead to successful sales? Usually, it’s through conducting surveys of customers who walk into your store.
On Amazon, however, it’s an entirely different story.
Amazon sellers have the opportunity to leverage ads on Amazon PPC and get data from the said advertising service.
One of the most crucial datasets you can gain access to if you invest in Amazon PPC is what is called the click through rate (CTR).
But what is click through rate, in its most basic definition?
According to search engine giant Google, CTR is “a ratio showing how often people who see your ad…end up clicking it.”
Ratio simply means a number is divided by another number. If you’re numbers shy, don’t worry. We now live in an age where we can use calculators to make understanding concepts like CTR easier.
Speaking of which, let’s now proceed to the next section to learn the simple math behind CTR.
How Is Click Through Rate Calculated?
Though Amazon does the heavy lifting of calculating CTRs, it is good to know a little bit about how CTR rate is derived. The formula below simplifies CTR.
Math is all well and good. But how does this mathematical formula work in the real world?
Let’s use one example to help shed light on this. If 100 people saw your Amazon ad (100 impressions) and only 5 people clicked the ad (5 clicks), dividing 5 by 100 will give a CTR of 0.05. Multiply 0.05 by 10 and you will get 5%. In this particular case, your ad has a CTR rate of 5%.
Now that you know it’s a breeze to calculate CTRs, you may be wondering what is a good CTR on Amazon ads.
If you’re curious about this, wonder no more and read on.
What Is A Good CTR On Amazon
The 5% figure in the sample computation above may be pretty good, but is way above the average.
Many e-commerce experts agree that the average CTR on Amazon is about 0.4%! To put this figure into perspective, 0.4% means that for every 1,000 people who view your ads, only 4 are going to click it!
Now, for the good and the bad (CTR, that is).
A good CTR, according to highly-rated Amazon solutions provider eComEngine, tends to be around 0.5% or higher. Anything below 0.3% is considered a not so good number.
To put this into perspective, if 5 or more people out of every 1,000 who see your ad click it, that is a good figure. If only 3 or less clicked for every thousand Amazon impressions, it’s not that good.
In general, a higher CTR is a good thing. But there are exceptions, as you will find out later in the article.
From the world of theoretical CTR figures, let’s now move to the practical side of click through rates.
In the next section, we’ll tackle why CTRs are important in growing your overall business.
Why Does Click Through Rate Matter?
CTR is important because it gives you an idea on how your Amazon ads are performing. In other words, CTR helps give you an idea how your investment in ads is making a direct impact on profits (or not).
Another reason why CTR is important is it has some connection with what is called the Amazon sell through rate. This rate basically measures how fast the products of Fulfillment by Amazon (FBA) sellers are sold.
In general, a higher CTR means more brand awareness and more traffic, which could potentially lead to higher sales for FBA sellers.
However, click through rate is only a piece of the puzzle, so to speak.
To make best use of CTR statistics in determining the return on your ad investment, it is best to compare it with other figures. These measurements are called Conversion Rate (CVR), Advertising Cost of Sale (ACoS), and Return on Advertising Spend (RoAS).
Just in case you’re wondering, Amazon ad campaigns provide reports of these measurements, along with CTR. Check out the FAQ section below to learn more.
Again, if numbers are not your thing, no need to sweat. Computing these three figures is as easy as computing CTRs.
What is Conversion Rate (CVR)?
Conversion rates and click through rates’ are like best friends. They usually go together and separating them could cause trouble.
Helium 10 explains simply how CVR is measured. According to the highly-acclaimed Amazon software provider, “conversion rate is calculated by dividing the total number of sales by the number of times people visited your product page, including return visitors.”
For example, if people visited your product pages 100 times during a week, and you were able to earn money from 10 sales transactions during that same time period, you have a conversion rate of 10% (10 divided by 100 is equal to 0.10 or 10%).
This 10% figure is actually a good benchmark, according to Helium 10. This means a CVR that is higher than 10% is ideal while a lower figure should be avoided.
Now that you’ve discovered what CVR is all about, it’s time to learn how you can use CVR together with CTR to determine the success of your ad campaign.
How to Interpret CVR Side-by-Side With CTR
Are your Amazon ads effectively contributing to your selling business?
To answer this question, it is good to place conversion rate side-by-side with click through rate.
For instance, if you have a high CTR but low CVR, this could mean that a lot of people may be clicking your ads and seeing your product page, but they somehow lose interest and not buy your product in the end.
That interpretation, however, is not set in stone.
Remember that when comparing CVR with CTR, the numbers are merely signposts that help you point your ad campaign to the right direction.
Speaking of signposts, another useful one in this case is called the Advertising Cost of Sale (ACoS), which we are going to learn about right now.
What is Advertising Cost of Sale (ACoS)?
The mighty oak started as a small acorn.
Likewise, a small ACoS is generally a good starting point for your Amazon business to grow like a mighty oak.
But what exactly is ACoS? How is it measured?
Digital marketing agency Search Nurture has the following formula for Advertising Cost of Sale:
Dividing the total amount of dollars spent on advertising by your total sales for the most recent 7-day period will produce an answer, which is counted in percent.
For example, if you earned $100 in sales for this week and spent a total of $50 for the same time period on Amazon advertising, you get an ACoS of 0.50 or 50%.
Some ecommerce experts believe that keeping ACoS below 40% is a good rule of thumb.
Now that you know how to compute the ACoS, it’s time to know how to determine the total amount spent on advertising.
I mentioned earlier that Amazon ads are reasonably priced. This is because Amazon charges you for advertisements on a pay per click basis.
What does “pay per click basis” mean?
Unlike in advertising placements on, say billboards along a highway, Amazon does not charge a fixed rate for your Amazon ad spend. Pay per click means that Amazon will only charge you advertising fees every time a user clicks on an ad linked to your product page.
In short, Amazon determines your total ad spend (which is used in the ACoS formula) based mostly on the number of clicks on your ad.
Now that you are more familiar with ACoS, it’s time to see how this statistic connects with click through rates.
How to Interpret ACoS Side-by-Side With CTR
If you find that you have a high CTR and an ACoS which is above 40% (for example 60% and beyond), it could be a bad sign.
For instance, it could mean that even if many users click to see your product page, only a few of them buy your product. In other words, you’re not getting more sales bang from your Amazon ad buck.
Generally, the ideal scenario is to aim for a high CTR and a low ACoS. But then again, these are just signposts to indicate whether or not you’re conducting a successful Amazon ad campaign.
ACoS has a close relative which you also might want to consider side-by-side with CTR. This relative is called Return on Advertising Spend (RoAS).
What is Return on Advertising Spend (RoAS)?
If ACoS is stated in percent, RoAS is stated as a simple figure.
Choosing between ACoS and RoAS is simply a matter of which figures you’re more comfortable with.
For example, an ACoS of 50% (in the example mentioned earlier) is equal to a RoAS of 2 ($100 in sales divided by $50 in ad spend is equal to two).
This figure means that you earned in sales twice the amount that you spent for ads. For many, RoAS seems like a more intuitive figure to compute for.
Now that you know the function of RoAS, you may be wondering, “What is a good RoAS on Amazon?”
Many experts agree that a RoAS value of 3 to 6 is a good range to shoot for as an Amazon seller.
How to Interpret RoAS Side-by-Side With CTR
A high CTR and high RoAS is generally a good sign that your Amazon ad campaign is bringing in a good return on advertising investment.
Now that you have a good idea how click through rates (CTRs) and other related measurements help put your ad campaign into perspective, it’s time to learn more about the importance of CTRs.
Why Does Click Through Rate Matter?
Click Through Rates (CTRs) are vital for you as an Amazon seller because they:
1 – Indicate how many people (called “traffic”) go to your product listings through Amazon ads.
2 – Serve as a signal whether or not customers know about or are interested in your product/s, and if ever there is an increase in said interest or awareness.
3 – Gauge whether or not there is a connection between improvement in sales and Amazon ad investment.
In short, CTRs help you as a seller determine how aware people in general are of your products and whether or not the money you spend for Amazon PPC ads is worth it.
Now that you know what click through rates are, how to use them, and why they’re important, it’s time to discover the factors which affect CTRs.
Factors That Impact Click Through Rate
Many factors in life are outside our control.
The good news, however, is that the factors affecting click through rates are mostly within your control.
The factors discussed below mainly involve setting up your Amazon ad campaigns effectively, as you will learn in the succeeding subsections.
Relevancy
Modern life in general is a struggle for relevance.
In the case of click through rates, it’s a struggle for keyword relevance.
What do I mean by this?
Anyone who searches for products on Amazon uses keywords to find what they want. The key is to make sure that your Amazon ads have keywords that are a broad match to the keywords used by many customers.
For example, if you’re selling basketball shoes, make sure your ads are configured to show up in the right keywords and search terms for basketball shoes, and not soccer shoes.
To more clearly understand relevancy, check out the picture below. The search keywords used by the customer is “buy burger.” This is just a hypothetical example since cooked burgers are not sold on Amazon.
More on making your ads keyword relevant later in the article.
Quality Listing
Your product listing can make or break the success of your Amazon ad campaign in terms of increasing click through rates.
According to the Amazon Seller Central guidelines for America-based sellers, “high-quality listings help [make it easier] for customers to find, evaluate, and purchase products.” The same guidelines highlight the importance of quality information in the product listing, also known as the product page.
Aside from serving customers well, a good listing also increases the likelihood they will click on your Amazon ad.
A product listing has two main parts: images and text describing a certain product. Later on in this guide, we’ll discuss what images and text are ideal for a CTR-optimized listing.
Images
The product’s main image should help a customer see and evaluate your product in one glance and convince him or her to buy your merchandise. More on quality images later on in this guide.
Text
The text part of the product listing is composed of facts, dimensions, specifications, descriptions, etc. The title, on the other hand, summarizes the product and its key features. More on this later.
Match Type
There are three match types for Amazon ad campaigns. They are Exact, Phrase, and Broad. Choosing one setting over the other can influence when your ad will appear once a customer types his or her search keywords.
For the Exact match type, your ad will only appear if a customer types keywords that exactly match the keyword you configured on your Amazon ad campaign settings.
For example, if you’re selling red Nike basketball shoes, and you put in your campaign settings “red Nike shoes for basketball,” only the customers who use that phrase or specified keywords on Amazon’s search box will find your ad.
Though the Exact match type lessens the number of people who view your ads, the number of qualified traffic and quality clicks could increase. That’s because this match type tends to minimize irrelevant traffic.
Another match type is called “Phrase.” This match type will show your ad to a customer as long as your keywords are in the phrase he or she types in the Amazon search box.
For example, you put in your settings “Nike shoes.” If a customer types on Amazon “red Nike shoes” or “Nike shoes for basketball,” your ad will most likely pop up since the most relevant keywords “Nike shoes” are in the search phrases.
The last match type is called “Broad.” This setting “casts the widest net” among all Amazon keyword match types. Though your ads get more traffic through this setting, a broad match can also increase your ad expense by failing to minimize irrelevant traffic.
Ad Type
There are three Amazon ad types according to trusted tech content creator Search Engine Journal. They are:
1 – Sponsored Products – The most popular type. The ad graphic used is derived by Amazon from your product listing. Only applicable to sellers marketing a single item.
2 – Sponsored Brands – The second most popular ad type. These are banner ads seen on top of the Amazon search results page. The option to customize your own ad makes this type slightly more exclusive and more likely to reach more relevant shoppers. Applicable for merchants who are selling more than one product with the same brand.
3 – Sponsored Display – The most exclusive type of ad. Investing in a Sponsored Display package enables you to show your ads on Amazon and select third-party websites and apps.
Generally, the more exclusive the ad type, the more likely you’ll reach a high conversion rate (CVR) since exclusive ads minimize irrelevant traffic. However, the exclusivity of the ad type might decrease your average click through rate (CTR). But this is made up for by a higher potential for increased sales.
The Sponsored Display type, everything being equal, may lead to both higher CTRs and higher CVRs. After all, this ad type enables sellers to post ads even outside Amazon (only in select sites or platforms), leading to a broader market.
Ad Placement
Sometimes, even in cyberspace, it’s all about location, location, location.
Ad placements are all about the location of the Amazon ad in question. In general, the nearer your ad is to the top of the Amazon search results page, the more likely it would be clicked.
That is why there are sellers who invest in the Sponsored Brands ad type, which enjoys “top-of-page privileges.” Take note, however, that sponsored brands campaigns are only for those who are enrolled in certain Amazon seller programs.
The images below show the ad placements of different types of Amazon ads.
Badges
As people who win trophies generally get more attention from the public, so do sellers who earn one of Amazon’s many badges.
These badges are prestigious symbols placed by Amazon on product pages and ads. They serve as a sign of a seller or brand’s quality products/service or good sales performance. On average, Amazon ads which feature products with badges are more likely to produce higher CTRs.
Amazon, however, shows only one badge per product listing, depending on which is most appropriate for a certain product.
The types of badges an Amazon seller could get include:
- #1 Best Seller – Based on the sales of a product. The badge is updated hourly. It is the most coveted yet difficult to obtain.
- Amazon’s Choice – Awarded to Fulfillment by Amazon (FBA) sellers who sell high-quality products and who have relevant keywords for their Amazon ads settings.
- New Release – For products that achieve high sales velocity during the first 90 days of being listed.
Now that we’ve finished a rundown of factors that enhance (or hinder) click through rates (CTRs), let us take a deeper dive into what leads to better CTRs on Amazon.
How To Improve CTR On Amazon
Generally, a high CTR means good news for your Amazon business (later on, however, I’ll show cases when a higher CTR is not exactly a good thing).
Based on the thinking that a high CTR rate is good, here are some tips that could shed light on how to increase click through rate on Amazon.
Use Relevant Keywords
As mentioned earlier, the keywords you use in your Amazon ad campaign settings affect the visibility of your ad and its CTR.
Take note, however, that you have to set the keyword setting to “manual,” instead of “automatic”. Otherwise, Amazon will choose the keywords for you.
The screenshot below shows the menu on Amazon Seller Central where you can start on your journey towards successful manual campaigns.
Choosing the “manual targeting” option above enables you to customize your keywords for maximum ad exposure and higher CTRs. This will help you run successful manual campaigns.
You can use keyword research tools to determine which search terms and keywords receive high impressions. Knowing the shopper’s search query will help you improve the chances of your ad being seen by more customers.
Listing Optimization
Product listings that are optimized increase the chance that customers will click your Amazon ad. This is true especially if you choose the ad option where Amazon will extract information from your product page to create an ad.
To optimize product listings, you can do the following in your product page:
1 – Ensure that the uploaded images effectively familiarize your customers with your product in one glance. For instance, if you’re selling a dog leash, put the leash itself as the main image and not the picture of the packaging box with the leash inside.
You can also follow other guidelines for product images as discussed by Search Engine Journal.
2 – Make sure that the title is as precise as possible and contains the right keywords that match your manual ad campaigns. The title below “Texas Instruments TI-30X….” is an example of a precise title that doesn’t sound too long.
3 – Provide as much descriptive information as you can about the product you’re selling. In general, the more quality information (as shown in the screenshot above), the better. Aside from this, take note that quality information means that it is complete, updated, and accurate.
If you’re not very good with words or describing your merchandise, don’t worry. You always have the option of hiring an Amazon copywriter. Read our article to learn about the advantages of hiring a copywriter for your Amazon product pages and other store sections.
Use Coupons & Discount Offers
Amazon Seller Central guidelines for America-based sellers indicate that promotional badges can be made to appear on an Amazon ad. If Amazon approves incorporating your coupons to your ad campaign for a certain product, customers can save money on that item.
If customers see your ad, they will more likely click it simply out of curiosity for the coupon badge on the ad.
Likewise, discount offers used together with your ad campaigns could generally increase interest in your ads and might lead to higher CTRs.
Create a Highly-Engaging Storefront
Your product page is the online version of a storefront, or even a store itself.
If you came into a store with bland color schemes and boring design elements, would you be interested to look at the stuff sold in it?
As much as a beautiful brick-and-mortar store tends to attract foot traffic, a well-designed product page could lead to higher click through rates and have a direct impact on both sales and overall business.
A higher CTR is more probable if customers viewed your ads before and got to see how beautiful your online storefront is. Good product listing or storefront design could create a virtuous cycle of attracting new click throughs and exponentially increasing them over time.
Customers are also more likely to engage with an aesthetically-pleasing online storefront, which may lead to positive reviews that also tend to increase CTRs.
If you want, to get a better idea on storefront designs, you can read our article on some examples of attractive Amazon storefronts. You may also check out our blog post on unique content ideas for your storefront.
Increase Rating & Positive Feedback
Each Amazon ad contains a star-rating system that shows how well your product is regarded by past customers. In general, the more stars you have, the higher the chance of getting a good CTR.
Unlike optimizing the text and images of your product pages, getting positive feedback can’t be done in a few minutes.
That is why it’s vital that over the course of your Amazon selling, you should exert every effort to provide quality products and competent customer service for your buyers. In this case, a good deed won’t go unrewarded.
Now that you’ve learned some tips to increase your CTRs, it’s time to discuss the cautionary tale of having too high of a CTR. Yes, that is a possibility.
How? Read on to find out.
When High CTR Is Bad
A high CTR is bad, particularly if your ad keywords don’t match what customers are actually looking for.
For example, you’re selling an Italian-made handbag. However, the keyword you used in your ad campaign settings is merely “handbag.” Also, let’s assume your match type settings range from “Phrase” to “Broad.”
The ad settings mentioned tend to increase the chances that a customer who is looking for French-made handbags will click on your ad. This is because your ad will appear in his search query due to the lack of precision in your keyword and match type settings.
In short, even though more clicks lead to higher CTRs, you have to make sure that many, if not all, clicks lead to sales.
How? By using the most relevant keywords and making sure your ads match customer searches. This will bring more qualified traffic that can lead to sales and minimize irrelevant traffic that’s costing you more money for your ads.
Now that we’ve examined all the angles of click through rates, it’s time to move on to the Frequently Asked Questions portion of our guide.
FAQ
Why Do We Need A Good CTR?
A good CTR, at the very least, shows that there is interest in or increased curiosity for the products you’re selling. CTRs serve as a starting point to analyze how cost-effective your Amazon ad campaigns are.
A good CTR, however, should be taken in the context of other statistics, like CVR, CTR, ACoS, and RoAS. Analysis of other available data from your Amazon PPC control panel is also vital.
What Can Be Considered As A Good Or High CTR?
A good CTR is around 0.5%, with anything below 0.3% generally considered poor. To put things into perspective, a CTR of 0.5% means that for every 1,000 times customers saw an ad, there are 5 clicks for that ad. A CTR of 0.3%, on the other hand, means 3 clicks for every 1,000 impressions.
What Is The Average CTR On Amazon?
Many sources indicate that the average CTR on Amazon is around0.4%
What Is The Difference Between Clicks And Click-Through Rate?
Click through rates are the number of clicks divided by the number of times an Amazon ad was seen for the most recent 7-day period. This means as time goes by, the CTR may vary either because there were fewer clicks in the most recent week or there were fewer times customers saw a certain ad for the same time period.
The number of clicks, on the other hand, is merely the frequency of clicks that is neither time bound nor calculated in the context of number of impressions (times customers saw an ad or the number of customers who saw the ad).
Do Amazon Ads Enable Sellers to Track CTR, CVR, ACoS, and RoAS ?
Different ad types on Amazon provide different sets of statistics.
The Sponsored Products ad type, for example, features a search term report. This report in spreadsheet format shows statistics like CTR, ACoS, and RoAS. This ad type also furnishes what is called the advertised product report. This report contains CVR statistics.
The Sponsored Brands ad type, on the other hand, only features the search term report.
Sponsored Display, on the other hand, only churns out the advertised product report.
Conclusion
We’ve covered everything that you need to know about Amazon click through rates, their relationship with Amazon’s advertising package, why they are important, how they can be improved, and the ways by which you can use them along with other data to grow your Amazon business.
Click through rates are probably a mystery to many Amazon sellers. Now that you’ve learned more about these rates, you can start your journey of leveraging Amazon ads to your advantage and teaching other sellers how to do it.
