Amazon is quickly becoming a must-have performance marketing channel, capturing ad spend that may soon rival Facebook and Google. The difference between the channels is that, unlike Facebook and Google, consumers make their final purchase decision on Amazon. According to Internet Retailer, nearly half of online sales in the U.S. occur on the platform.
Another key distinction is that the channel is relatively nascent as an advertising platform. Amazon first launched ads in 2012 and is still testing new ad formats. As a result, the platform is less saturated than Facebook and Google and CPCs tend to be lower.
All of this adds up to one thing: Retailers need to seriously consider making Amazon a part of their revenue mix. But before diving headfirst into Amazon advertising, retailers must consider the three key ad formats that define the platform – sponsored products, sponsored brands, and display ads. Each ad type can help retailers achieve unique goals, whether those goals focus on revenue, brand awareness, or retargeting. Retailers need to understand the value of each format and the role they play in different strategies.
Sponsored products operate similarly to Google Shopping ads and are often used to drive revenue. They promote individual products and direct shoppers to product pages on Amazon. These ad types appear in two places, on the search results page and on product pages. When listed on the search results page, ads are integrated alongside other products. On product pages, Amazon lists sponsored ads toward the bottom of the page.
Retailers only pay for sponsored product ads when they are clicked. Unlike Google Shopping, marketers can bid on specific keywords in Amazon, using exact, phrase, or broad match terms. Alternatively, they can create automated campaigns where Amazon matches products to certain search queries, similar to Google Shopping.
Marketers must set an average daily budget to ensure that their product ads appear throughout the day. If the budget runs out, ads will stop appearing. Ad spend may exceed the daily budget, but it will average out over the course of a month. So, if a retailer sets a $10 daily budget, ad spend will not exceed $310 over the course of 31-day month.
Sponsored brands, formerly known as headline search ads, are banner ads that appear at the top of the search results. They feature the retailer’s brand logo alongside three products and are often used to build brand awareness. Retailers can also target these ads to appear above competitors’ products, making them a powerful way to capture new revenue.
Sponsored brands can direct shoppers to a product page, a customized landing page, or an Amazon Store – a multi-page, branded storefront. In order to advertise using sponsored brands, the retailer’s brand must be verified on Amazon.
This ad format is CPC-based, and marketers bid on exact, phrase, or broad match keywords. In addition to an average daily budget, marketers have the option of setting a campaign budget for these ads.
Sponsored brand ads are subject to review, which takes three business days. Ads can be disapproved if the headline doesn’t match the products featured or the targeted keywords, if the ad provides inaccurate claims like “best” or “top-selling,” or if there are spelling or punctuation errors.
Product display ads are in beta and are not yet available to all Amazon advertisers. They operate differently than the sponsored ad formats in that they are not keyword-targeted. The ads appear on product detail pages and are targeted to individual products, product categories, or shopper interests. A display ad campaign can only include one of these target types. Display ads can also appear on external sites that are part of Amazon’s advertising network.
Typically, retailers use these ads to build brand awareness or retarget shoppers who searched for similar products.
Like sponsored brands, retail marketers can set a daily budget or an overall campaign budget to manage display ads.
For retailers primarily focused on driving revenue from their Amazon ads, Sidecar recommends building out sponsored product campaigns first, and learning which products and keywords drive the greatest performance. As certain products stand out in terms of revenue, consider breaking out those product types into separate campaigns, or exploring sponsored brand ads if your brand is verified in order to set more granular bids.
Amazon is still a relatively new advertising platform, but it is growing fast. It will benefit retailers to enter this platform early, learn what tactics drive the greatest results, and prepare for when this channel evolves into a major revenue driver.