The key to successfully growing and scaling your business is the ability to reach the right audience. There are multiple methods by which this can be accomplished, but as more merchants enter the market, fighting for the attention of prospective clients becomes challenging. This is especially true on Amazon where a product competes with countless others, and without reaching a target audience it becomes just a needle in a mountain of needles, leaving the chances of it being purchased very low.
However, more surgical, precise advertising methods can be achieved on the platform through programmatic advertising. A programmatic advertising methodology centers around the purchasing and sales of digital advertisements. Using pricing based on a dynamic CPM (cost per thousand) model, advertisers can adjust the price of their ad-based bids based on its value and worth of their campaign. This gives advertisers an edge in optimizing their campaign budgets. The biggest benefit is that it boosts efficiency by giving advertisers control over where and to whom their ads display, cutting down throwing ads to those customers who will have no interest in their product.
Amazon played their cards right by being early entrants into the ‘big data’ adoption methodology. Since 2003 they have crafted, refined, and fine-tuned their methods and continue to do so, evolving with the times. By keeping an analytical grip on customer data, Amazon can garner predictive prowess of customer behavior, identifying a nearly exact match for the exact customer a seller might be seeking. PPC advertisements work, but it is more of a dartboard in the dark approach. Throwing ads all over the place just for the chance to maybe land an interested buyer here or it is not cost-efficient or time well spent, certainly not anymore. Amazon DSP, on the other hand, presents a whole new level of powerfully targeted advertisement.
What is Amazon DSP?
By targeting the ads to where existing demand is, advertisers, boost their chances of getting impressions and conversions. For Amazon, this now exists in the form of Amazon DSP (Demand Side Platform), a means of purchasing display and video ads that is unique in that the ad purchases are automatic and the target audience is based on Amazon customer data.
If you have ever noticed that after browsing for a product on the Amazon platform, that product begins to manifest itself in ads on other websites you frequent, you have likely seen Amazon DSP in action. Amazon DSP has the edge over some other platforms that utilize a similar idea in that it is designed for a longer-term strategy and operates on a larger scale by utilizing historical data of user purchases or interests to further target those users with ads that could turn into future sales. In some respects, this could be considered a form of data intelligence.
The Power of Amazon DSP
As the largest e-commerce platform in the world, Amazon generates 50% of all US online retail sales and 5% of all retail in the United States overall. Being the biggest also implies that Amazon has the largest database of online shoppers spanning all customer journey stages and hundreds of retail categories. Between those two massive advantages, Amazon is operating with a gigantic shopping history, tracking buyer behavior through all stages of the funnel, unlike Google and Facebook which rely on social metrics (shares and likes).
The difference between DSP and any other display ads system is vast. Where sponsored ad campaigns are a more blunt approach, requiring a low entry barrier, no minimum, and are typically self-serviced. It is basically like trying to sell an item to 1000 people, with potentially only 100 of them being interested, and only 3 of them noticing the ads for it.
DSP makes it easier to decide where and when advertisers want ads to display. That means that the audience who will see the ad will be only the relevant kind, ones who can nearly be guaranteed to have interest in the product, mainly based on the fact that their historical purchase of browsing data has indicated that they have had an interest in that product type in that past.
More pertinently, Amazon DSP permits advertisers to reach their surgically targeted audience away from Amazon. While shoppers spend significant time on the platform, they don’t just frequent Amazon. To be able to reach the audience in other places, Amazon DSP reaches out past the confines of just Amazon, into Amazon-owned properties. More places are reached with fewer assumptions made about which customers are interested. Essentially it’s like trying to sell a printer to a crowd of 100 people all interested in printers. The only difference now is to sell them on your particular brand of printer.
Who Can Amazon DSP Reach?
We have established the Amazon DSP is far-reaching, but how exactly does it evaluate who to reach out to. The truth is, DSP breaks down the audience based on pertinent information, with multiple targeting type factors.
- Behavioral: Customer groups who have browsed or previously purchased a particular product.
- Lifestyle: Customers who, when their shopping behavior is analyzed and contextualized, it points to purchases fitting a particular lifestyle.
- Contextual: Groups of consumers who are likely interested in a particular product based on their visitation to websites thematically relevant to your product.
- Remarketing: Consumer groups who have been far down the customer journey funny for either your product or a competitor’s product, but have not quite pulled the trigger on the purchase yet.
- Audience Lookalike: Customer groups whose behavior is similar to other customers that fit into selected groups, such as brand loyal ones.
- Advertiser Audiences: Specific visitors to a particular website according to the brand can be used to target the sales of that specific brand.
How Much Is Amazon DSP?
Budgeting for DSP campaigns tend to be higher than PPC sponsored advertisements, but of course, they do more for your sales. Whether you manage the campaigns on your own or task Amazon with doing so also influences the budgeting price. If you want Amazon to perform the managed services, there is a minimum budget of €10,000 monthly that you would need to consider. If your budget is significantly lower than that, sponsored advertising might be more fitting for your available cash.
Where To Show DSP Ads
In the DSP platform, you can define a line item listing of where you want the ads to be displayed for customers. You can choose to have them be visible on the Amazon app, mobile devices, browsers, desktops, etc. This will also be where you will place your ad bids to work on securing a display place on the particular site. These can include Amazon itself, or any of the connected links like IMDB, Goodreads, or even ‘third part exchanges’ like spiegel.de and weather.com. The line item definition will also allow you to define the audience you intend to target. The vastness of the audience cannot be overstated.
Harnessing Amazon’s power is imperative to any seller who wants to enter the e-commerce market. While Amazon DSP is not an inexpensive venture, the ability to target a particular audience and end up with more conversions is in essence its own reward, from a sales and financial perspective.
Amazon will surely continue to refine its methods, assuring that audience targeting models will not cease, but only grow better with time. Sales and conversion optimization is at your fingertips with the vast, deep, historical treasure trove of the Amazon database, and Amazon DSP is your roadmap to get started on the journey of optimizing your advertisement strategy.