Consumer product marketers should stop viewing Amazon as a competitor and embrace it as a channel. Like the more established digital channels, Amazon Advertising can be extremely effective at reaching consumers. And with all its data about what and how consumers buy, Amazon’s potential to deliver high conversion rates is even greater.
A relative newcomer to the digital marketplace, Amazon Advertising is still a distant No. 3, behind Google and Facebook. But it’s growing fast while the other two are standing still or slipping. Yet a recent study found that 28% of marketers surveyed avoided using Amazon because they didn’t feel they knew enough about it (though this could also point to a more general lack of knowledge about digital advertising.)
One factor that could be making marketers stay away is that the platform’s functionality, especially in terms of reporting and performance metrics, also lags behind Google and Facebook. But Amazon Advertising continues to simplify, broaden its reach and improve functionality, reinforcing its position as a must-consider option.
To make the most of it, there are some fundamentals that marketers need to understand.
Amazon Advertising offers two tools that are the most accessible for performance marketing, Sponsored Ads and Amazon DSP (demand-side platform.)
Sponsored Ads is a self-serve marketing platform available to companies that sell products on Amazon.com, either as vendors (Amazon buys your products and resells them) or as sellers (brands that sell directly to consumers through Amazon.com). These companies can buy ad units in a variety of formats on Amazon.com. Marketers are able to target ads to reach new customers, increase discoverability and awareness, and drive more sales.
Amazon DSP is a programmatic platform available to those who sell products on Amazon and those who don’t. It allows marketers to buy display and video ads that target specific audiences across both Amazon-owned sites such as Amazon.com and IMDb, and external sites and apps as well as other third-party exchanges. It’s available as a self-serve platform or a managed service.
Within Sponsored Ads, there are currently three different options.
This is a keyword-targeted, pay-per-click ad that promotes a product. It shows up on the first page of Amazon.com search results as well as on other brands’ product pages. The ads look like native organic placements except for a subtle sponsored tag. They’re best used as a lower-funnel tactic since marketers can control the keywords they bid on and how much they want to spend on bids. These ads are very targeted, because they show up in relevant searches, and usually deliver a higher return on ad spend.
These ads are also pay-per-click and appear on search result pages, but are designed to help grow brand awareness. They feature a logo, custom headline and an assortment of products. These ads reach customers when they’re actively looking to buy. Depending on how shoppers interact with the ad, they can be taken to a brand’s “store” on Amazon or a custom landing page. This ad type typically drives more top-of-funnel traffic and has a lower return compared to Sponsored Products.
In September, Amazon revamped and rebranded its Product Display Ads format as Sponsored Display. The big change is that Sponsored Display ads now can be placed not only on Amazon.com but also off Amazon via its programmatic exchange network. When people click on the ad they can be taken to a product page, “store” or custom landing page on Amazon, or to an external website. This ad type has widened its scope so it can focus on the bottom of the funnel with product detail page retargeting-like capabilities, while also being used for upper-funnel activities like audience targeting.
Strategy is the key
Because Amazon Advertising is evolving so rapidly, it’s important to have a clear strategy going in. To shape that, keep these three points top-of-mind.
1. Focus on the right products
Identify core products that drive profitability – the 20% that deliver 80% of revenue. Testing ad copy, images and the mix of products featured in each ad will help optimize placements between Sponsored Products, Sponsored Brands, and Sponsored Display along with maintaining product-focused metrics such as out of stock (OOS), reviews and ratings. Once advertisers have optimized placements for core products, it’s easier to then scale out into additional products.
2. Find opportunities to scale via testing
Unlike traditional search engine ad platforms such as Google and Bing, Sponsored Ads do not yet offer impression volume metrics. Without these, it’s more challenging for marketers to understand exactly how many potential search opportunities emerge. To determine if it’s worthwhile to push more spend on a given product, advertisers should start by testing higher bids. In this way, they may find they’re able to drive more impressions, clicks and revenue at an acceptable efficiency. Testing with different bids and budgets across the different Sponsored Ads categories will demonstrate whether certain ad types can drive incremental revenue with incremental bid increases.
3. Remember to retarget
Customers who are actively searching might not be ready to convert at that exact moment. Just as advertisers use banner ads to retarget website visitors with specific messaging and products, brands can apply the same strategy by using Amazon DSP. Before Amazon DSP, marketers only had a line-of-sight into their customers’ activities when those customers were on the brand’s website. With Amazon DSP, marketers can reach new, highly engaged Amazon shoppers and push them toward purchase.
To learn more about how best build your digital strategy, contact Quad today.