Digital advertising on popular online marketplaces like eBay or Amazon is progressively getting more expensive.
The latest statistics reveal a sharp increase in digital retail media advertising spending worldwide. In 2022, advertisers had spent $679.7 billion on ads, and in the same year, Amazon alone generated $38 billion in revenue from ad sales.
The growth trend is expected to continue as ad spending in the digital advertising market reached $740.3 billion in 2024, and it should exceed the $965 billion mark in the next five years.
Consequently, the cost of advertising on eBay has increased in the last few years, forcing sellers to spend more to secure clicks on ads.
Utilizing the Promoted Listings on eBay to reach potential shoppers is also getting pricier, affecting the advertising cost of sales metric and the profit margins sellers can expect to make.
This article will take you through the latest changes and essential concepts of Promoted Listings Priority and provide the information you’ll need to estimate your ACoS. So, let’s get started.
Key takeaways
- Promoted Listings with a priority campaign strategy can increase product sales by 50%.
- The cost of Promoted Listings Priority varies and is determined by the seller. Even though there’s no limit, 1% to 20% of the product’s final sale price is the result most sellers should target.
- ACoS metric measures the cost-effectiveness of PPC campaigns and shows sellers how much they’ve earned from an ad as a percentage. ACoS only indicates the percentage of the final sale spent on an ad, and it doesn’t include other applicable fees or the seller’s earnings.
- The campaign’s maximum Cost-per-Click limits the daily ad spend to the amount specified by the seller.
- The cumulative cost of clicks on Promoted Listings with a priority campaign strategy cannot exceed the seller’s weekly budget.
- On November 6, 2024, eBay is moving on from a fixed daily ad budget model to a target daily budget that dynamically adjusts to the number of clicks within a day. Webinterpret’s eBay solution has featured the Target ACoS option since the product’s launch.
The overview of the changes to eBay’s Priority Campaign Strategy
The advertising tools available to eBay sellers are constantly evolving.
In 2021, the platform introduced Promoted Listings Advanced, its first Cost-per-Click solution, which enabled sellers to set their daily ad budgets.
A few years later, the Smart Targeting option that automatically updates the Promoted Listings Advanced campaign’s setting was added to the platform’s advertising toolset. The feature allowed sellers to choose their daily budget and entrust the bidding and targeting to eBay.
The platform recently announced that Promoted Listings Advanced and Standard will be renamed to Promoted Listings Priority and General.
Sellers can now choose between General, Priority, and Offsite promoted listings campaigns. More importantly, starting November 6, 2024, their daily ad budgets will switch from the fixed to the target model.
eBay sellers who use Webinterpret have had access to the target ACoS model since its introduction during product development.
The transition is automatic, so sellers won’t have to change the settings of their priority strategy campaigns to start using the new option.
The target daily budget provides sellers more flexibility by matching their spending to daily demand. Hence, on days with high ad traffic, sellers can spend up to 50% more than their daily budget or go under the daily ad spend limit on days with low traffic.
The feature allows sellers to spend up to seven times the daily budget on a weekly level and maximize their sales opportunities. It’s worth noting that sellers have complete control over their weekly budgets and can increase or decrease their ad spending at any moment.
Moreover, the weekly ad budget will be limited to seven times the daily budget, so sellers don’t have to worry about spending more on their campaigns than they initially planned.
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Managing Promoted Listings Priority Strategy and setting the daily ad spend budgets
Despite the robust changes to the eBay advertising tools available to sellers, the process of creating campaigns with a priority strategy and setting daily or weekly budgets remains the same.
Depending on their needs, sellers can choose between Smart and Manual Targeting strategy options.
Smart Targeting
This strategy enables sellers to bid on relevant keywords automatically. To set up a campaign with a Smart Targeting strategy, you just need to
- Select the products you want to promote
- Define the maximum cost-per-click
- Choose the campaign name
- Set a campaign’s start and end date.
Once you launch the campaign, eBay will automatically start dynamically bidding on keywords to secure the top ad placements. Previously, the dynamic bidding option was only available for Manual Targeting strategy campaigns, but it will also become available for Smart Targeting campaigns starting on November 6.
The maximum cost-per-click value depends on various factors, from the product’s category to the seller’s advertising budget.
Generally speaking, setting a higher maximum CPC for a campaign increases the ad’s chances of winning a bid and appearing in a position where potential buyers can easily spot it.
Conversely, ads with low maximum CPC aren’t frequently shown to buyers, so they’re unlikely to attract a high volume of clicks, which in turn can affect the sales numbers.
Even though Smart Targeting campaigns are more straightforward to run and maintain than Manual Targeting campaigns, they don’t provide the same sales uplift as Manual ones and usually have higher ACoS.
Manual Targeting
Opting for a Manual instead of a Smart Targeting strategy gives you access to a broader range of ad optimization options you can use to promote your listings.
Aside from having the flexibility to choose between dynamic and fixed bidding strategies, sellers using Manual Targeting can also benefit from the Ad Groups feature. This option, available in the Advertising Dashboard, lets sellers organize listings and keywords into categories or cluster them based on a common goal.
A campaign can have up to 500 ad groups and contain up to 1000 listings and targeted keywords.
Hence, sellers who want to utilize the Manual Targeting strategy must conduct thorough keyword research to discover queries shoppers on eBay commonly use to search for specific products.
This strategy also enables sellers to choose between dynamic and fixed bidding options that determine how bids on selected keywords are handled.
The dynamic strategy automatically adjusts the keyword bids to the recommended bid, while the fixed bidding approach remains constant throughout the campaign. Each bidding strategy has advantages, so which one you should choose depends on a wide range of factors.
Most importantly, you should understand how priority ad fees work in order to choose the bidding strategy that best suits your campaign’s needs and secure great ad placement.
Ad fee is determined by the following parameters:
- Seller’s maximum bid value
- The number of clicks an ad gets
- The competitiveness of the queries in which the ad appears
As noted earlier, the amount eBay charges for priority ad fees can exceed a seller’s daily budget, but it cannot go over the weekly ad spend budget a seller allocated to a campaign.
The amount you’ll pay per click depends on the outcome of the second-price auction, so the higher the level of competition for the keyword you’re bidding on, the higher the amount you’ll be charged for each click your ad receives.
The ACoS and the latest marketing trends
Monitoring campaign performance and adjusting the strategy is vital for its success.
Besides advanced targeting controls, eBay offers extensive report metrics that provide sellers with insight into their campaign’s performance and allow them to tweak their strategies if a campaign isn’t reaching its target.
So, you can easily keep track of impressions, clicks, CTR, CPC, Ad fees, sold quantity, sales conversion rate, Return on Ad Spend (ROAS), and various other metrics for all Promoted Listing Priority campaigns you launch.
However, sellers often overlook ACoS, or the average cost of sales metric, even though it offers an easy way to determine a campaign’s cost-efficiency.
Although it’s nearly identical to the ROAS metric, ACoS shows sellers the percentage of increase in their ad spending and revenue.
The ACoS is calculated by dividing the ad spend by ad revenue and multiplying the result by 100. On the other hand, you can calculate the ROAS by dividing the ad revenue by ad spend.
Each brand has different ACoS targets that depend on its broader advertising strategy, campaign goals, and other factors.
Broadly speaking, sellers looking to increase their traffic and visibility should aim at a 20% ACoS target, while the recommended ACoS target for brands that want to engage with high-intent shoppers is 30% or higher.
Still, reaching the break-even ACoS should be your top priority when launching a campaign. Once you get to this milestone, you can compare ACoS to your profit margin and adjust the ACoS value to reflect your campaign’s needs.
The wider ad spending trends suggest that businesses are progressively investing more in the promotion of their ads on popular e-commerce platforms like Amazon or the world’s largest search engine.
In 2024, Google advertisers will spend between $0.11 and $0.50 per click on an ad in the display network. In addition, the average ad spend on Google per 1000 impressions ranges from $0.51 to $1000.
These numbers show that the average cost of an ad click on Google has slightly increased in the last few years. The average CPC on Amazon is also rising. In 2024, advertisers are paying $0.91 per click, almost $0.30 more than just a few years ago.
Adjusting ACoS to keep up with competitors on eBay
The ACoS needs to be lower than the profit margin for a campaign to be profitable. However, reaching this goal isn’t always simple, and you may have to tweak your targeting and bidding strategy to find out why a campaign is underperforming.
Increasing the ad spend won’t automatically reduce the ACoS percentage, which is why you may have to review the keywords you’re targeting, consider using negative keywords, improve the quality of the listing’s content, or change the bidding strategy.
Adjusting the campaign’s maximum CPC value might also be necessary to remain competitive on eBay. Doing so enables you to win more keyword bids and ultimately boost other metrics like CTR or sales conversion rates.
Moreover, monitoring the campaign’s ROAS and ACoS metrics allows you to estimate its profitability and can help ensure that you earn more than what you’re spending on your advertising campaigns.
Increasing the eBay advertising budget to maximize sales
Staying ahead of the competition on eBay is becoming more difficult as the number of active sellers on the platform increases.
As a result, the costs of running successful Promoted Listings Strategy campaigns are growing, making it more challenging for sellers to win daily keyword bidding battles and ensure great placement for their ads.
Keeping track of ROAS and ACoS metrics makes evaluating a campaign’s cost-effectiveness and estimating the profit margin easier.
Still, these aren’t the only metrics that can indicate a campaign’s performance or whether you need to increase your maximum CPC limit.
Low CTR, Clicks, or Sales Conversion Rates can also suggest that the listing you’re promoting is unattractive to buyers due to the item’s price, content quality, and various other reasons or that the keyword you’ve selected doesn’t fit buyer preferences.
Webinterpret can help you set up high-converting Promoted Listing Strategy campaigns in case you’re struggling to keep up with the competition on eBay. Contact us to find out more about our eBay solution for sellers and how it can boost your sales numbers.
About Webinterpret
Webinterpret supports merchants selling on big, international ecommerce platforms, such as eBay and Amazon.
Our AI-based solution enables more effective selling through automated listing localization, advertising, and logistics (shipping and returns).
By giving your international customers a full, end-to-end local shopping experience, Webinterpret improves your conversion and helps establish your business globally.
