How Amazon Ads Work


Ever wonder how Amazon ads work, and if they might be a good bet for your business? Here’s some info to help you decide.

When it comes to online retail, Amazon remains the most popular marketplace for online shopping in the Western World, and especially in the United States. While AliExpress and other marketplace competitors like Google Shopping Actions and Jet.com are certainly making inroads to this space, it remains a fact that 44% of shoppers start their online shopping sessions on Amazon. By contrast, only 33% begin a product search with Google. A staggering 40% of Americans buy products on Amazon at least once a month.

The breakdown of how Amazon ads work

There are three major types of Amazon ads, each with its own set of sub-strategies for targeting product searches on Amazon’s main site: Sponsored Product Ads, Sponsored Brands, and Product Display ads.

Amazon Sponsored Product Ads

Image credit: Amazon Advertising

Amazon Sponsored Product Ads are pay-per-click, keyword-targeted display ads for individual products that appear on search results pages. How Amazon ads work is similar to your average pay-per-click (PPC) ads. They operate on a cost-per-click pricing model, and you only pay when a customer clicks on your ad. Similar to Google Ads, Amazon uses keyword-based targeting in a bidding system. The more popular the keyword, the higher the cost for the ad.

If you decide to go with Sponsored Product Ads, you will be doing manual targeting. There are three types of keywords you can bid on: Broad, Phrase, and Exact.

Sponsored product ads also offer an option for automatic keyword targeting through an algorithm that applies relevant keywords from your product listings.

Amazon makes it easy to monitor your ads’ performance with a reporting tool displaying the number of clicks, ad spend, total sales, and your average cost of sales.

Maximizing results and minimizing costs for Sponsored Product Ads

Flagging negative keywords

Keywords with low conversion rates are a liability. You can flag these as “negative” so that Amazon will stop showing those negative keyword ads. With PPC, low conversion rates quickly erode your profitability because they are reaching only vaguely curious, but noncommital, shoppers.

Adjust Bids By Placement

‘Adjust bids by placement’ is the new version of what used to be Bid+. Formerly more limited, you can now ‘adjust bids by placement’ and set up to a 900% increase for top of search (first page) as well as for product detail placements.

Amazon Sponsored Brands

Image Credit: Amazon Advertising

Sponsored Brands lets you pair a collection of your products with your logo and a creative headline. You also have the chance to promote your brand’s Store, because you can link directly to it. The main difference between Sponsored Ads and Sponsored Brands is that the latter allows you to promote keyword-targeted ads of multiple products above, below, and alongside search results.

With Sponsored Brands, you can target three types of keywords: Branded product keywords, Complementary product keywords, and Sponsored products automatic targeting keywords.

With Sponsored Brand Campaigns you can feature up to three unique products in your ads. Images, headlines and landing pages can all be customized. You can also test performance on these.

With their auction-based pricing model, you’ll never pay more than you bid per click. In addition to manual bidding, you can choose automated bidding, which will optimize your ads for conversion.

As with Sponsored Product Ads, you can also monitor their performance. Sponsored Brand Campaigns reporting features include

  • number and rate of clicks,
  • your ad spend,
  • total sales,
  • the estimated win rate for keywords, and
  • ACoS (Advertising Cost of Sales).

Amazon Product Display Ads

Product display ads are pay-per-click ads that appear on product detail pages, customer review pages, on top of the offer listing page, and below search results. Place them on abandoned cart emails, follow-up emails, and Recommendations emails, as a strategy for cross-selling and upselling.

Using product display ads, you can target your campaigns in two ways, either by product, or by interest.

You can select which category detail pages will display your ads, and you can customize your ad creative. There’s also a reporting tool.

Plenty of opportunities – just be smart about it.

These are the basics on how Amazon ads work. There are plenty of opportunities to spend your advertising dollars with Amazon. In addition to the programs described above, there are also Amazon Native Ads (those you place on your own website), as well as AmazonVideo Ads. Those will be covered in a future article.

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