In the past year, Amazon's ad revenue grew by 44% and did so at very little cost, since Amazon earns most of their ad income through self-service tools. If this trajectory continues, Amazon's $10B advertising business could soon exceed AWS as the company's biggest profit driver. To help make this a reality, in September Amazon launched Sponsored Display (SD).
Sponsored Display is Amazon's newest paid search ad unit, a self-service tool designed to make it easier than ever for brands and agencies to build and execute display ad campaigns. This unit replaces and expands on Product Display Ads, whose audience and targeting features are now accessible from within Sponsored Display (all legacy Product Display Ad campaigns were automatically converted into Sponsored Display campaigns in late 2019). The new ad unit also represents the first display media product on Amazon which is purchased on a Cost-Per-Click (CPC) basis instead of the traditional Cost-Per-Mille (CPM) basis that many brands and media agencies are accustomed to.
The key difference between Sponsored Display and the Sponsored Product/Brand ad units (which are likely more familiar to most advertisers) is that Sponsored Display responds to a broad range of shopping signals in order to strategically display your ads across numerous online channels including websites and apps outside of Amazon. To make sure you fully appreciate the value of this tool, we'd like to take this opportunity to explain how it works and why it's important.
The Shopper's Journey
People shop around. This decision-making process, which is often referred to as the ‘path to purchase’ or the ‘shopper's journey’, is complicated. Reaching audiences at the right step on their journey can mean the difference between conversion and abandonment.
Figure 1 - The Shopper's Journey
Every stage of the journey, from awareness through consideration to conversion and evaluation, is an opportunity for advertisers to communicate to consumers. In eCommerce, this journey is not linear and a majority of consumers will go through multiple online channels before completing a purchase. Therefore, the challenges for brands and agencies become:
- Understanding where a consumer stands based on their shopping behavior; and
- Maintaining awareness and relevancy throughout the shopper's journey.
Display advertising has the power to engage shoppers at multiple stages of their journey, driving brand awareness and encouraging conversion along the way. Unlike paid search ads, Amazon's Sponsored Display responds to shopping signals beyond simple keyword searches, to better measure and quantify consumer behavior and display your ads in strategically-targeted locations both on and off Amazon owned and operated websites.
How it Works
With sophisticated data inputs and broad reach, Amazon's new Sponsored Display Ads can help brands and agencies boost awareness and interact with potential customers across numerous touchpoints. The tool incorporates much of Amazon's existing ad technology, allowing you to set up automated campaigns in a matter of minutes. You are also free to spend a little more time creating a manual campaign which incorporates your unique insights into your target audience and is tailored to specific business goals.
The Display Ad unit takes in four key shopping signals: views, interests, product and categories. When creating a campaign, you first select which of these signals will be used to inform the audience targeting for your ads:
- Interests: Consumers whose interests align with your target audience. Drive awareness by increasing the number of people exposed to your brand.
- Views: Consumers that have visited product detail pages similar to yours or have visited your PDP but not completed a purchase. Encourage purchase intent by keeping your brand in consideration.
- Product: Consumers that are actively comparing products. Be present and visible when shoppers are ready to make a decision.
- Categories: Consumers browsing categories that are similar or complementary to your products. Maintain points of contact before and after purchase to drive trust and repeat purchases.
Having chosen your audience strategy, it's just a matter of choosing the products you'd like to advertise and setting your bid and daily budget:
- Choosing products – For your inaugural campaign, we suggest promoting your entire catalog. Amazon's newest ad unit takes in a range of different shopper behavior signals and promotes your products in a variety of new locations across the web, so it would be a mistake to only promote top sellers or a limited assortment. By activating your full catalog, you can gain valuable insights about which products are driving conversion, where and at what stage of the shopper's journey.
- Setting budgets – It’s crucial to allocate enough budget to keep your campaigns active through the full duration of the day. The key is to maintain points of contact through the entire shopper's journey – customers are always online, and you should be too.
Figure 2 - The Sponsored Display Interface
Once your parameters have been set, the initial ad is auto-generated. It can then be customized with a unique logo and header and will automatically adjust to fit various placements on and off Amazon, optimized for both mobile and desktop. Clicking the ad links directly to your product detail page and if you update it Amazon will automatically update the ad to match.
Sponsored Display utilizes Amazon's algorithmic automation to perform real-time optimizations on ad campaigns. This includes automatically adjusting bids to maximize conversion and promoting the products that are most likely to convert. But don't worry – all of these parameters are also fully customizable.
The Benefits of Sponsored Display
How does Amazon's newest ad unit help agencies and brands achieve their business goals?
Sponsored Display has been designed to expand the reach of advertisers with campaigns that target relevant audiences, both on and off Amazon throughout the purchase journey. It's a key tool in driving awareness and demand, such as during new product launches and tentpole events like Prime Day or The Cyber Five, and encouraging consideration and conversion of products with higher price points and longer paths to purchase. For example, your goals may be to:
- Re-engage high-intent audiences – Sponsored Display can be leveraged to increase consideration and conversion by automatically targeting audiences who have visited your or similar product detail pages on Amazon but have not yet made a purchase. SD ads can be used to engage with these shoppers even after they've left Amazon.com in order to re-engage them and invite them back to your product pages.
- Attract new audiences to Amazon – With this new ad unit, for the first time agencies and brands can use Amazon's advertising suite to engage audiences across the web using a cost-per-click model. Reach potential customers with numerous desktop, mobile and app ad placements and drive them to your Amazon product detail pages.
- Measure impact and optimize ads – While currently reporting for Sponsored Display campaigns is only available at the campaign-level view and in the account-level console, we do expect Amazon to release more robust measurement and reporting capabilities for Sponsored Display as they continue to refine the product.
Because Sponsored Display ads drive shoppers back to your product detail pages, the KPIs best suited to measure reach and efficacy are click-through rates, PDP views and total impressions (on and off Amazon). However, Sponsored Display ads will provide a range of other metrics, allowing you to gain a better understanding of shopper behavior and refine your marketing strategy based on the unique goals and circumstances of your business. In addition to those listed above, these metrics include:
- Clicks – Total number of ad clicks.
- CPC – Average amount paid per click.
- Spend – Total spend on clicks.
- Orders – Total number of units sold.
- Sales – Total value of products sold attributed to ad clicks.
- ACOS – Percent of attributed sales spent on advertising (total spend / attributed sales).
Sponsored Display, currently available in beta, empowers brands and agencies advertising on Amazon to engage with audiences and increase awareness both on and off Amazon, driving demand among your target customers. Amazon's newest ad unit makes it easy to set up tailored campaigns to promote your entire catalog and both automatically and manually optimize those campaigns over time. Learn more about Sponsored Display here or contact us today to set up a free demo and learn how sponsored display ads can help you achieve your business goals.