Everything You Need to Know About Advertising on Amazon

• One aspect of marketing that’s relatively unheard of and definitely underutilized by digital marketers is Amazon Advertising. 
• Amazon Advertising works how you’d expect it to: they give your products more visibility either at the top, the side or in between organic product search listings and charge you for it.
• Advertisers have two main routes to go down for their ads on Amazon: Sponsored Products and Sponsored Brands.
• There are pros and cons, which we’ll explore in-depth below. 

Amazon is huge and, unlike its rainforest namesake, is only getting bigger. In 2018 it captured nearly 50% of the US e-commerce market, which was a 10% increase from 2017. Such growth at the top of retail is basically unheard of since… well, since Amazon. 

One aspect of its business is actually relatively unheard of and definitely underutilized by digital marketers: Amazon Advertising. This is very likely to change in the near future however, with Amazon Advertising set to be worth around $14 billion a year. 

This is still a long way behind Google and Facebook, which come in at around $100 billion and $67 billion, respectively, but the signs of future growth and potential ad-spend dominance are already here. 

Truly outrageous Amazon facts 

• As Amazon pretty much owns e-commerce, stuffing their results page with ads will leave sellers with little option other than to pay-for-display. It’s just like how Google slowly shifted their results pages to crank up the pressure in the war for Number 1 so that now every marketing campaign pretty much has to include paid search. 
• Amazon is generally much closer to the point of purchase than Facebook or Google, so ad-viewers are already further along the funnel. If a user goes on Amazon it’s mostly going to be product or purchase related, which compares favorably to the multitude of reasons people go on Google or Facebook.
• In 2014, 55% of product searches began on search engines and 38% on Amazon. In just a few years, that dynamic has flipped and now just 30% begin on search engines and 52% on Amazon.
• Stats show that as well as more product searches starting on Amazon, the people who make those searches have a much shorter “search-to-purchase” lead in time.

In essence, get ready for the future, as Amazon Ads are about to take over (or at least become a lot more important). So, what do you need to know about Amazon Advertising and how to make it work for you? Let’s take a closer look.

How do Amazon Ads work?

The basic Amazon Advertising setup works pretty much how you’d expect it to: they give your products more visibility either at the top, the side or in between organic product search listings and charge you for it. The ads work on a cost-per-click (CPC) model, i.e., the advertiser only pays for each ad that is actually clicked on by a user. 

Advertisers have two main routes to go down for their ads on Amazon: Sponsored Products and Sponsored Brands. A third,(Sponsored Display, is currently at the Beta stage and on limited release.

Sponsored Products 

• Ads are for individual products
• They may appear above, beside or between other listings in search results
• Pay through Cost Per Click
• Control over keywords and bidding
• Only available for listings within eligible categories 

Sponsored Brands 

• Full banner ad featuring three products
• Ads contain branding and custom headline
• Clicking on the brand delivers users to storefront or custom landing page
• They may appear above, beside or between other listings in search results
• Pay through Cost Per Click
• Control over keywords and bidding
• Advanced metrics show performance of ads and ad-spend vs. profits over time

There are several other features which advertisers can use to improve their sales and brand awareness, even outside of Amazon, such as display advertising and video advertising. It also offers Amazon DSP which allows users to programmatically buy video and display advertising across the web and not just solely on Amazon property or affiliates.

The pros and cons of Amazon Advertising

While it might seem relatively new (the new rebranding as Amazon Advertising only happened in 2018) Amazon has a huge reach and even greater potential. For companies and agencies wondering where to focus their ad-spend, it adds another variable to the mix. 

To help you make a more informed decision, let’s look at the good and the bad of Amazon Advertising.

Pros: 

• It’s Amazon! As mentioned before, 52% of all product searches begin on Amazon and it gets over 200 million unique visitors a month. It’s hard to beat that kind of reach.
• The metrics available to advertisers are excellent, this is both from the platform side (i.e,  details on Amazon users such as number of monthly searches, product popularity etc.) and the advertiser’s side, such as advertising cost of sales (ACOS) and return on ad spend (ROAS) as well as product and keyword level reports. This helps retailers to understand where to focus their advertising and how to target leads better.
• You can make use of its Amazon DSP (Demand-Side Platform) service offering programmatic advertising across the web without having to be an Amazon retailer. It can be used to promote goods and services anywhere that’s affiliated with Amazon or Google AdX exchange and, crucially, uses Amazon’s customer data, such as purchase and search history and page visits to improve targeting.
• According to Brett Curry, a specialist in Amazon ads, the service offers the greatest possibilities for directly targeting your competitors’ customers. This allows users to identify sales-qualified leads who are looking for the same or similar products to what they are offering and get their ads in front of them.

Cons: 

• There are restrictions on who can advertise on the platform which can complicate things for those without prior Amazon engagement. For Sponsored Brands these are professional sellers enrolled in the Amazon Brand Registry, vendors, book vendors, and agencies while for Sponsored Products Kindle Direct Publishing (KDP) authors can also apply.
• For the time being, Amazon is focusing its efforts on relatively established and at least medium-level users. Another restriction on using its advertising is that a product needs 5,000 unique monthly visitors to be able to be included in either the Product or Brand Advertising. This reduces flexibility for a big spending push for new products and serves to exclude low-level or new entrants to the marketplace.
• While Amazon’s DSP service is open to anyone, its managed-service option (a necessity unless you’re used to working with programmatic advertising) requires a minimum ad-spend of $35,000 a month. For users without that kind of budget or programmatic knowledge, going through an agency is the only option.
• Amazon’s search algorithms, and therefore its advertiser options, are not as advanced as Google’s. This will probably change in the future but for the moment this means that its targeting is not as powerful and its CPC and budget setting is not as accurate.

How to do Amazon Advertising right 

If you’re just starting out with Amazon Advertising or want to up your game, here are some tips for getting the most out of the service: 

1. Retarget those who know you 

Retargeting in advertising is where you send follow-up ads to those who’ve already shown an interest in your product. On Amazon Advertising this could be anyone who’s clicked onto your product pages or even those who’ve clicked one of your products on a competitor’s page. By focusing on retargeting (to begin with at least) you’ll be focusing on leads who are already further along the sales funnel.

2. Keyword research still matters 

Amazon’s product search is still using a search algorithm so your products need to be using the right keywords to actually be found in the first place, even when using Amazon Ads. The platform itself provides an automatic source of keywords but these should be honed to make sure they are targeting the right audience to avoid ad-spend leakage. For example, if you’re selling hand-crafted and personally customized cat toys, it’s probably better to aim for the top end of the market, even if searches for “cat stuff” and “things for cats” have more searches, most likely someone seeking your product will have a clearer idea of what they want (and are willing to pay for it). 

3. High-quality images 

Consumers are highly attracted by quality visuals and this is especially so on Amazon, where your images can truly be the difference between success and failure. Take the time to invest in top-class photography or image rendering and make sure your ads are always showing your products in their best light, both figuratively and literally.

4. Be aware of how profits affect your advertising strategy

If you’re going to be pushing something, be aware of its individual margins and make the marketing decision whether to push your most profitable items to immediately boost your bottom line or to build loyalty and a customer base through less profitable good deals or loss leaders. This is one of the key differences between the Sponsored Product and Sponsored Brand options.

5. Use the data you create 

Like the other major advertisers, Amazon is fully intent on wooing potential clients by making a full array of usage data and metrics available, allowing granularity in targeting and creating product ads. This is an incredibly powerful tool for understanding your audience and refining your marketing efforts according to what’s actually converting and making you money, don’t let it just sit on the shelf gathering dust.

Need help? 

Navigating the world of Amazon Advertising can be confusing, but we’re here to help. Contact us today for more info.