Why is Amazon Advertising important for your business?

Updated: Mar 31



Do you consider Amazon as only an online store to shop from? Think again.


Amazon Advertising Platform is the third digital ad platform after Google and Facebook.


Surprised?


At a time when forecasters thought Amazon could generate only $3 or $ 4 billion, it ranked in a staggering $10 billion in revenue in 2018.


The second quarter of 2019 saw a 37% increase compared to the previous year.

Though 10 billion dollars may seem small when compared to Google’s $136 billion and Facebook’s $55 billion in annual ad revenue, it is estimated that it will reach $23–$25 billion over the next 2-3 years.


Another reason to consider Amazon Advertisements is the shift in consumer behavior. Previously, Google saw more product searches than any other website. However, today, only about 30% of the product searches occur on search engines and 52% on Amazon. Interestingly, people in the age group of 18-29 start their product searches on Amazon.



What are the Ad Options Available on Amazon?

There are two traditional ad options for retailers-

  1. Sponsored Products and

  2. Sponsored Brands.

Both are effective for driving sales and delivering high returns on products sold through Amazon. They work great because of the ads that pop-up when users are either to start their shopping journey or ready to purchase the products being promoted.


Most advertisers prefer to spend on sponsored products. These ads run on a cost-per-click (CPC) basis in which advertisers pay only when a user clicks on the ads.


1. Sponsored Products

These products are returned as results of product searches done either through the website or the Amazon app.


Though the sponsored products ads appear like organic listings, they are marked as sponsored ads and are similar to Google shopping ads.

2. Sponsored Brands

Sponsored brands ads run on a CPC basis and help your products and services to be visible on Amazon.


If a user runs a product search query on Amazon, the results will show a banner on the top of the page that features three products from a brand. With just a headline or a logo, each unit can be made to look like an organic Amazon listing. You can then direct the users to go to a particular page on clicking on the products.


For instance, you can choose a link to a page that looks like a normal Amazon search results page but shows products of your brand. Additionally, sponsored traffic can be directed to your Amazon page and create a mini-website to showcase all your products and features of your brand.

Where Do The Amazon Display Ads Appear?

Amazon display ads usually appear the next time when a user is on the category page searching for something else.


It triggers a reminder that they were looking for a particular product earlier. Ads for related products appear along the bottom or top of the specific product pages.


Additionally, Amazon display ads may also appear on CNN, ESPN.com or other sites that are part of the Google display network. Google AdX is a part of Amazon DSP offering and there are seven open ad exchanges that you can target using Amazon DSP.


What is Amazon DSP?

Amazon DSP (Demand-side-platform) allows you to leverage Amazon’s buyer and shopper data and apply it to open ad exchanges.


This enables you to run highly targeted display ads based on the consumers’ shopping behavior on Amazon. The data includes product searches, visit product pages without buying, purchase history, likely next purchases, etc.


You can also use Amazon DSP ads to divert the traffic away from Amazon to your own website which can help customers learn more about your products and make a purchase. However, this does not apply to certain restricted products that are prohibited from being sold anywhere on Amazon.


The links are tracked using Google UTM code or Amazon pixel which works similar to the Facebook pixel for website re-targeting.


Amazon DSP is a much-overlooked opportunity. However, this is the perfect time for you to start running ads for your products on Amazon.


What is The Amazon Advertising Cost

Regardless of where the ads appear, they are all priced based either on cost-per-mile (CPM) or cost-per-impression model.


While you pay for the impressions, Amazon calculates the CPC and return on ad spend based on the conversion value divided by the cost.


Some CPMs (depending on the targeted audience) can be as low as $2–$4. Re-targeting audiences on Amazon.com yields CPM of $10–$15 and can go up to $30. However, the click-through rates and conversion rates are as high on re-targeting ads on Amazon.com.


Watch out for new products and options on Amazon!


Why Brands Are Started Amazon Advertising?


Amazon is more advanced than other platforms, especially with competitor targeting.

Currently, in the beta stage, Amazon is developing a unique ad product known as video in search.


This format is available on the Amazon mobile app and appears in product search results. Similar to Instagram, the videos autoplay in the new format.


Amazon is also trying to expand into AI and machine learning to offer bid adjustments.


However, it isn’t close to Google and Facebook when it comes to setting a target CPC or return on ad spend.


Conclusion

Amazon is growing rapidly and will only continue to grow beyond expectations. It will add more options and make them available to advertisers. Do keep an eye on the Amazon platform as it will have some impact on all marketers in the coming years.


If you are not sure how will you run Amazon Ads, you can always connect with us to know more from here.

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