How to Properly Compare Amazon Advertising Share?

What is the appropriate proportion of Amazon advertising?

In today's e-commerce landscape, as one of the largest online retail platforms in the world, Amazon's advertising business is rapidly becoming an important revenue source for brands and merchants. For sellers looking to promote their products on Amazon, how to reasonably allocate advertising budgets and set suitable advertising proportions is a question worth exploring.

According to recent market research data, the proportion of Amazon advertising revenue to total revenue is rising year by year. For example, in the first quarter of 2025, Amazon's advertising revenue increased by about 20% year-on-year, reaching nearly $10 billion. This growth not only reflects the increase in advertising demand on the Amazon platform but also indicates that more and more brands are beginning to attach importance to precise marketing through Amazon. However, for each brand or merchant, exactly what proportion of resources should be invested in advertising activities depends on a comprehensive consideration of various factors.

Firstly, the key to determining the advertising proportion lies in your business objectives. If your goal is to enhance brand awareness or expose new products, you can appropriately increase advertising spending because, in the initial stage, higher visibility may be needed to attract potential customers. Data shows that many successful Amazon sellers will keep their advertising budget within 5%-10% of sales in the first year after launching a product to quickly obtain user feedback and optimize product pages. But as brand maturity increases and market share stabilizes, this ratio usually drops to around 3%-7%.

Secondly, different categories of goods have varying demands for advertising. Some highly competitive categories like electronics and home goods require greater advertising support to stand out due to buyer diversity and high price sensitivity. Conversely, some niche market products may achieve good sales performance without excessive reliance on advertising thanks to unique selling points. When formulating advertising strategies, it is necessary to adjust according to the characteristics of your own industry.

It is also necessary to pay attention to advertising effectiveness evaluation indicators. Besides basic click-through rate CTR and conversion rate, other important parameters such as cost per click CPC and average order value AOV can help you determine whether current advertising expenditures are efficient. If a particular activity brings back less than expected, relevant expenses should be reduced promptly; conversely, the same applies.

It is worth noting that although Amazon itself provides rich advertising tools and services, over-reliance on the platform may also bring risks. In recent years, there have been reports that some small and medium-sized enterprises have incurred severe losses and even exited the market due to ineffective management of advertising costs. While planning advertising budgets, a sound internal control mechanism must also be established to ensure maximum efficiency of fund utilization.

In summary, there is no fixed standard that can apply to all situations regarding the optimal advertising proportion. Ideally, merchants should flexibly adjust based on their actual circumstances and continuously experiment with and learn new methodologies to adapt to ever-changing market demands. At the same time, closely monitoring industry trends and technological advancements is also essential for maintaining competitive advantages. In short, finding the best balance point suitable for your business model is the key to success.