From the advertising column to the digital age – How you benefit from Amazon DSP
In the digital age, we have a multitude of data. Advertisers also benefit from this. Gone are the days when advertising was posted on the good old advertising column. What did marketers know about the purchasing behavior of those who saw the ads? Little. Certainly, location played a role, but a variety of characters likely passed by the column: parents with children, executives of large corporations, fans of AC/DC as well as fans of Johnny Cash.
Today, things look a bit different. Certainly, all of the aforementioned groups also shop on Amazon. However, they are shown different advertisements based on their interests. If customers buy the new album by Iron Maiden, they might also be recommended AC/DC. This is made possible by the vast amount of customer data that Amazon collects daily about its customers.
You as an advertiser can benefit from this by relying on Programmatic Advertising. The Demand Side Platform, or simply Amazon DSP, is exactly what you need.
What is Amazon DSP?
With Amazon DSP, targeting becomes child’s play. The platform offers space for programmatic advertising opportunities.
Programmatic Advertising refers to the automatic buying and selling of advertising space in real-time in online marketing. The ads are displayed based on user data, thereby reaching a precisely tailored target audience.
With DSP, Amazon enables you to reach your exact target audience – not only on the marketplace itself but also outside of it. By the way, outsiders can also use Amazon DSP.
What is targeting?
You probably know this: You are looking for a specific item, such as Adidas sneakers. And suddenly, you see ads for various sneakers all over the web. That is targeting.
A target audience is precisely defined. This includes both demographic data as well as interests, search, and purchasing behavior.
Amazon itself collects a vast amount of data about its customers. The online giant has the advantage of not only knowing what is liked or clicked on, but it also knows what is actually purchased.
Based on this data, Amazon then displays ads that the company believes align with the shopper’s previous purchasing behavior. This targeted advertising is much more likely to be viewed than ads that have nothing to do with the user’s interests.
Retargeting
Retargeting is also part of targeting. If a shopper clicks on a listing but does not make a purchase, you as a seller want to encourage these customers to buy. Since the product detail page has already been clicked, there is obviously interest in your product.
With Amazon DSP, you can reach these undecided customers again on other sites, such as while they are browsing social media. This way, your product keeps coming back into the shoppers’ focus and can still encourage them to make a purchase with the right ads.
The Demand Side Platform allocates advertising space to marketers. The ads that are then displayed are perfectly tailored to the customers, significantly increasing the likelihood that the advertising will be viewed rather than ignored.
These advertising spaces are not only on the marketplace itself but also on other pages of the company, such as FireTV. DSP ads can even be displayed on the sites of authorized third parties.
That brings us to the next question:
Who can use Amazon DSP?
In principle, all advertisers can use Amazon DSP as an advertising form. However, you should note that this tool is not free.
You need the necessary funds
In our expert talk about the future of Amazon, Ronny Marx, Managing Director at Intomarkets, mentions at least €3,000 monthly if you use the self-service or reach out to an Amazon DSP partner agency like intomarkets. However, he also recommends approaching it with a significantly higher budget.
Alternatively, you can also use the managed service of the online giant. Then, a dedicated account manager will be provided to assist you with your campaign management specifically for Amazon DSP. Here, you need to dig a little deeper into your pockets, starting with a minimum budget of €10,000 per month for the Amazon DSP service in Germany. However, these costs vary by country.
Your products must be ready!
It is clear that no advertising in the world will help you if your products are not properly optimized. Amazon DSP is no exception to this. The best advertising campaign will do you little good if potential customers are directed to a product page with poor photos, spelling mistakes, and zero reviews. Keyword: Retail Readiness.
You can learn how to optimize your listings on Amazon in our corresponding blog post.
It is also recommended that the products cost around €25 to €30 and achieve a decent margin. Having experience with PPC campaigns for these products is also beneficial if you want to start with DSP. Amazon partners have found that products that performed well with PPC campaigns are likely to perform well with DSP as well.
Your target audience must be defined and targetable
It is no great surprise that targeted advertising can only work if it is shown to the right audience. However, it is necessary to define this audience. What are your customers’ interests, and what demographic characteristics define them? The more you know, the better for your success with Amazon DSP.
With the Demand Side Platform, cross-device targeting is also possible. This way, you can reach potential customers through various channels.
Especially when selling more expensive items like coffee machines, the purchasing decision can take some time. If a shopper has already viewed your offer on their computer but did not click the purchase button, they are likely still undecided. It is now important to reach out to them again (i.e., retarget). This could be possible if they are currently searching for a new e-book on their Kindle. This way, you ensure that your offer is not forgotten and encourage the shopper to complete the purchase with the right ads.
Your products do not belong to a prohibited category
The rule also applies to DSP that certain products cannot be advertised. These include, for example, medical products, tobacco products, and alcohol.
So much for the requirements. But what about the benefits?
Why should you use Amazon DSP?
You may now be wondering why it should be Amazon DSP and not just Sponsored Ads. Let’s start with the fact that PPC campaigns are only displayed on the marketplace, whereas an Amazon DSP campaign is also displayed on third-party sites. This allows you to reach significantly more potential customers and increases awareness for your products. More information on the differences between DSP and PPC will follow below.
There is a kind of DSP-lite in the form of Sponsored Display Ads. However, this program is still partially in beta version.
Many users of Amazon DSP have good experiences with the excellent targeting that the online giant enables. Unlike Google, users on Amazon are often browsing with a specific purchase intent. While Google knows which pages a user visits, Amazon knows which products users buy.
If diapers are ordered on Amazon, it is likely that there is also an interest in wet wipes – perhaps even from the same brand, as the diapers were obviously exactly what the shopper wanted.
Another advantage of Amazon DSP is that sellers who do not sell on the marketplace themselves can also use this service.
Here are the advantages summarized briefly:
But what does the other side of the coin look like?
What are the drawbacks of using Amazon DSP?
First of all, it should be noted that it is relatively difficult to become a new user or partner of Amazon DSP, as the online giant only grants access with the appropriate expertise and budget.
Alternatively, you can use DSP with an Amazon partner, that is, an agency. There are about four agencies in Germany that have exclusive access to the system.
Another factor you should consider is the relatively high costs. While you can achieve good results with smaller amounts using PPC, as mentioned earlier, you need to invest a larger sum for Amazon DSP. That is why even Amazon recommends the tool primarily for larger companies.
Here are the disadvantages at a glance:
We briefly touched on the differences between Amazon PPC and Amazon DSP earlier. However, we want to go into more detail on that now:
How do PPC and DSP differ?
Both PPC and DSP are part of the Amazon Advertising offering of the online giant. Both formats aim to bring your products to the attention of shoppers. Nevertheless, there are a few differences that influence advertisers’ decision-making:
#1 The billing
Formats like Sponsored Ads are billed per click, which is why they are also referred to as PPC campaigns. So, Pay Per Click.
Amazon DSP, on the other hand, is billed as Cost per Mille, meaning per 1,000 units. Here, you do not pay for clicks, but for impressions/ad displays. This is the key difference. You do not pay for someone clicking on your ad, but for your ads being displayed.
#2 Displaying Your Ads
When PPC ads are run, they are displayed exclusively on the marketplace. Depending on the campaign goal, they are either placed subtly in the search results to closely resemble an organic result or presented as banner ads above the search results.
Amazon DSP campaigns, on the other hand, can also be displayed on authorized third-party sites, allowing you to reach a significantly larger audience than with Amazon PPC campaigns. This enables you to engage potential customers in various situations: while watching TV on FireTV, searching for a new audiobook on Audible, or on a third-party site where they are planning their next vacation.
#3 Who is allowed to use the format
While Amazon PPC is exclusively reserved for advertisers who actively sell on the marketplace, DSP can also be used by those outside of Amazon.
What types of campaigns can you use with Amazon DSP?
The focus is definitely on display and multimedia ads. Given that the ads are also displayed on third-party sites, this makes sense, as this type of ad can attract more attention in such an environment.
How you want to design your ads is entirely up to you, if you wish. If you prefer to be supported in this, you can also reach out to a DSP manager at Amazon.
What goals are Amazon DSP campaigns suitable for?
This type of Amazon advertising is particularly suitable when you are trying to reach potential shoppers outside of the marketplace. This way, you can not only increase product and brand awareness but also conduct effective retargeting with Amazon DSP thanks to the vast amount of data.
Conclusion
With Amazon’s Demand Side Platform, you have the opportunity to advertise programmatically and precisely target your customers across various sites. Whether on Amazon itself, on other sites operated by the online giant (e.g., Audible), or on authorized third-party sites. This allows you to reach many more potential shoppers than just on the marketplace alone.
However, keep in mind that this tool also presents challenges for you. For instance, you must go through a formal application process to use Amazon DSP, and the online giant decides whether you will be granted access to the service. Additionally, you need to have a relatively high minimum budget available. Therefore, it is also necessary that your listings are optimized when you start with DSP.
As is often the case, we cannot answer the question of whether you should use the Demand Side Platform with a clear yes or no. In our opinion, Amazon DSP has the potential to increase your sales, but only if your products and your budget are ready for it.
If you want to start your Amazon DSP journey now, you can use this cheat sheet as a guide. It contains the key information summarized once again.
Simply click on the thumbnail to open the cheat sheet in full size.
DSP stands for Demand Side Platform. This allows Amazon to enable programmatic advertising. This means that advertising space is automatically bought and sold. The ads that are then displayed are targeted to the audience. This way, your advertising reaches exactly your target audience.
In principle, any advertiser can use DSP. However, access is granted very limitedly. Therefore, it may be worthwhile to hire an agency or reach out to an account manager at Amazon.
It depends on whether you want to use Amazon’s self-service or managed service. In the first case, you handle your DSP management alone or with an agency. For this, you need at least €3,000 per month. For the managed service, where you are supported by Amazon itself, you need at least €10,000 monthly.
On one hand, PPC ads are only displayed on the marketplace, whereas DSP ads are also displayed on other Amazon pages and authorized third-party sites. Additionally, with PPC, you pay for clicks, while with DSP, you pay for impressions. Another difference is that DSP uses a variety of user data to display ads to the right audience. This option is not available with PPC.
Image credits in the order of the images: © zapp2photo – stock.adobe.com / © naum– stock.adobe.com / ©Andrey Yalansky – stock.adobe.com/ © Visual Generation – stock.adobe.com
