Inflation is high, interest rates are rising and consumers are starting to slow spending. In this environment, it’s imperative for marketers to spend their ad budgets wisely — and they’re increasingly turning to Amazon Ads to maximize ROI.
Reach alone makes Amazon Ads a compelling choice:
- Over 60 percent of online shoppers in the U.S. begin their product search on Amazon.
- During Prime Day this year, over 300 million items were purchased worldwide — or approximately 100,000 items per minute over two days.
- Analysts estimate that Amazon’s 2022 sales will reach $7.8 billion, up from $6.7 billion in 2021.
To get the most out of the platform, however, you need to use it strategically, leveraging data to ensure that you’re optimizing your campaigns. We’ll discuss that in depth, but we need to start with the types of ad formats available and the importance of targeting.
Types of ad formats
There are many types of Amazon Ads, but there are two categories we will explore here: pay-per-click (PPC) ads and demand-side platform (DSP) ads.
Pay-per-click (PPC) ads
Nearly every Amazon seller uses PPC ads, which include product, brand and display ads. Of these three types of ads, sponsored product ads are the most utilized.
Sponsored product ads
Sponsored product ads promote individual product listings on Amazon. They appear on search results pages and product detail pages. If you’re using Amazon Ads for the first time, sponsored ads are probably the best place for you to start.
Sponsored product ads have a high conversion rate — nearly 10 percent. They are also a straightforward form of PPC advertising that can be launched within a few minutes. Because sponsored ads appear nearly everywhere on Amazon, they also give you an opportunity to target a specific audience and gain significant exposure.
Sponsored brand ads
While similar to product ads, sponsored brand ads are only available to brand-registered sellers. One of the goals of sponsored brand ads is to get customers to your Amazon Store page. These types of ads are growing in popularity not only because they help you achieve that goal, but because there are no competitor listings on your Store page, allowing you to create a brand-specific shopping experience.
There are three types of sponsored brand ads you can use:
- Product collection: This format is great for featuring multiple products across a variety of categories, such as small kitchen appliances, cookware and bakeware. It allows you to send buyers to your Store or a landing page that exhibits the featured products.
- Spotlight: This format showcases Store sub-pages and is great for a top-of-funnel approach. It can also give buyers a more streamlined experience by directing them to the sub-page they want to browse.
- Video ads: These are 20-second clips that provide an opportunity to help buyers understand how your product works or what differentiates it from similar products.
Demand-side platform ads
The Amazon demand-side platform (DSP) allows brands to programmatically buy display, video and audio ads that appear across Amazon’s vast media network. The big benefit of Amazon DSP is that you don’t need to sell on Amazon to use it. Another advantage of using the DSP is that it allows you to direct potential customers to your own website — and away from the competition.
Amazon DSP ads appear on Amazon, Amazon-owned websites, Amazon apps, Amazon devices and affiliated websites and apps. However, DSP ads are quite expensive. As a ballpark figure, a budget of $30,000 to $35,000 is typically required to get started.
Ad targeting strategies
Keyword targeting is one of the most popular ad targeting strategies. It allows you to use keywords that are relevant to your product to improve your return on ad spend (ROAS) by having your ad appear to relevant audiences.
A second form of ad targeting is product targeting. Instead of targeting keywords, you’re targeting competitors’ listings.
Finally, there is negative targeting, which limits targeting to ensure ads only show up for relevant searches. This is a way to ensure you’re not wasting your marketing budget.
There are two methods to set up targeting in Amazon Ads:
Automatic targeting is the easiest method, as Amazon recommends which keywords you should target based on your product and product description. It’s a great way to start running ads, especially if you’re unsure which keywords to target. After running the campaign for a couple of weeks, you can see which keywords lead to the highest conversions.
With manual targeting, you must figure out which keywords to target. You can begin by using the search bar to find related keywords. Another method is combining data from Amazon and third-party tools to get a good sense of what keywords to bid on.
Improving your campaigns with data
You can track a number of metrics to evaluate your campaign performance, but typically the three most important ones are:
- Click-through rate (CTR): This metric measures how many people clicked on an ad in relation to how many people saw the ad. It can help you identify whether you’re using the right targeting to get in front of the right audience.
- Attributed sales: This metric helps you identify which ad is driving the conversion, which is important because you are likely running multiple campaigns or ads simultaneously.
- Return on ad spend (ROAS): One of the most critical metrics, this allows you to measure how many dollars you earn for each dollar you spend on advertising.
Use data to fuel your Amazon Ads campaigns success
Amazon Ads offers an incredible opportunity to get your products in front of millions of potential buyers. But to effectively increase conversions and use your marketing budget as wisely as possible, you need a smart targeting strategy based on data-driven insights.
While we’ve focused on Amazon Ads so far, it is only one of many ad platforms. As a marketer, you’re likely using multiple ad platforms to connect with your customers through diversified channels. With digital marketing, one of the most data-driven things you can do is understand your campaign performance across channels.
Make your ad campaigns data-driven
You need to unify your advertising data to compare how different ad platforms are performing. This is often quite challenging, but a modern data stack (MDS) can help solve the problem. An MDS consists of a fully managed ELT data pipeline such as Fivetran, a cloud-based data warehouse or data lake as a destination, and a business intelligence (BI) platform.
With Fivetran, you can centralize and normalize all of your customer and ad data in your cloud-based destination. This makes the data query-ready for your team to conduct analysis.
By automating your data integration and transformation processes, your team can focus on driving insights. You’ll be able to analyze ad performance across platforms, campaigns and even types of ads, so you can determine where your team should be allocating budget to maximize ROAS.