Organic Sales vs. Ad Sales on Amazon: What’s the Difference?

As an Amazon seller, understanding the difference between organic sales and ad sales is crucial for building a successful business strategy. Both play a vital role in growing your Amazon presence, but they operate in different ways and have unique benefits. In this blog post, I will break down what organic sales and ad sales are, how they differ, and why both are essential for maximizing your success on Amazon.

What Are Organic Sales on Amazon?

Organic sales refer to the purchases made by customers who discover your product naturally—without clicking on a sponsored ads post. These sales come from users who search for keywords related to your product, find it among the search results, and decide to buy it based on its appeal (like reviews, product descriptions, or pricing).

Organic sales are driven by Amazon’s search algorithm, which considers factors such as:

• Keyword Relevance: How well your product listing matches the search terms customers are using.
• Sales History: Products with a strong sales history rank higher in search results.
• Customer Reviews: Products with positive reviews tend to perform better organically.
• Click-Through and Conversion Rates: Higher engagement on your product listing (e.g., clicks and conversions) can improve your ranking.

Since organic sales don’t incur advertising costs, they are more profitable over the long term. However, getting to a point where you generate significant organic sales requires time and effort to optimize your listings and build trust with customers.

To calculate organic sales, simply deduct ad sales from the total sales.

What Are Ad Sales on Amazon?

Ad sales, on the other hand, refer to sales generated through Amazon’s advertising platform, specifically through Sponsored Products, Sponsored Brands, or Sponsored Display ads. These ads appear at the top or within search results, or in various other placements throughout Amazon’s website. When a customer clicks on one of your ads and makes a purchase, that is considered an ad sale.

Ad sales are driven by factors such as:

• Bid Amount: Amazon uses a bidding system for ads. The higher your bid, the more likely your ad is to appear in a prominent position.
• Ad Relevance: Just like organic listings, ads are more effective when they match the keywords customers are using.
• Ad Performance: Ads with high click-through rates (CTR) and conversion rates often perform better in Amazon’s algorithm.

While ad sales require an investment in advertising spend, they offer immediate visibility and can help boost sales quickly, especially for new or less established products.

Key Differences Between Organic Sales and Ad Sales

1. Cost:
   • Organic Sales: No direct cost, but achieving a high ranking organically requires effort in listing optimization, reviews, and consistent sales.
   • Ad Sales: Incur advertising costs based on clicks (pay-per-click model), meaning you pay for every customer who clicks on your ad, whether they make a purchase or not.
2. Visibility:
   • Organic Sales: Listings appear based on Amazon’s search algorithm, so it may take time to rank highly, especially in competitive categories.
   • Ad Sales: Ads allow you to appear at the top of search results almost immediately, offering quick visibility and the potential for fast sales.
3. Sustainability:
   • Organic Sales: Once you achieve a strong organic ranking, it can lead to consistent, long-term sales without additional costs.
   • Ad Sales: Ad sales provide short-term boosts, but they require ongoing ad spend. If you stop running ads, your visibility and sales may decrease.
4. Profitability:
   • Organic Sales: More profitable in the long run since there’s no cost per sale.
   • Ad Sales: Less profitable per sale due to the cost of ads, but they can significantly increase your overall sales volume.

Why You Need Both Organic and Ad Sales

Relying on just one type of sales isn’t ideal for sustainable growth. Here’s why both are important:

• Ad Sales can jumpstart your product’s visibility, especially when launching new products. They help you generate initial sales and reviews, which in turn improve your product’s organic ranking over time.
• Organic Sales are crucial for long-term profitability. Once your product has established itself, organic sales become the backbone of your business by driving consistent, cost-free sales.

What’s a good ratio between organic and ad sales? Some would say that it should be 70-30 but that’s if your product has been around for more than a year with ranking continuously improving. For new products, expect the ratio to be reversed–70% ad sales and 30% organic sales–because the products need to kickstart or increase sales velocity through paid advertising, accumulate positive reviews and feedback, and boost conversion rates to be able to show up on search results organically.

In summary, organic sales and ad sales are both essential components of a successful Amazon strategy. Organic sales drive long-term profitability and stability, while ad sales offer immediate visibility and sales boosts. By balancing both approaches—using ads to build initial momentum and optimizing your listings for organic growth—you can maximize your sales potential and thrive on Amazon.

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