Business Bootcamp for Amazon Advertising: Understanding the basics
In May of 2021, Amazon.com claimed the majority share of the U.S. retail eCommerce market, with 51.2% of digital retail sales flowing through the site.
Given this decisive grip over the eCommerce landscape, businesses large and small have grown to recognize the opportunity – and increasingly, the necessity – of establishing and developing a strong commercial presence on Amazon. Naturally, this means using Amazon as a sales outlet, but it also means taking advantage of the enormous site traffic through another avenue: advertising.
In this guide, we will discuss the basics of advertising on Amazon and using Amazon Ads, including what they are, how they work, and why you might find them useful for enhancing your marketing strategy and growing your business.
What are sponsored ads and how do they work?
Sponsored ads are advertisements that engage customers who demonstrate an interest in a certain type of product (e.g. sunglasses), a specific product (e.g. a sunglass brand or model), or related products (e.g. sunglasses cleaner).
Here’s what this looks like on Amazon.
Amazon vendors bid on keywords associated with their products or related products. When potential shoppers use those keywords to search for items, Amazon will then display sponsored ads from these vendors according to their relative bids (and also the type of sponsored ad chosen – see more below).
Amazon’s sponsored ads appear in highly visible locations on the Amazon website. These areas may include the first results page for a given product search, the side of an individual product page, or the bottom of an individual product page.
Should you advertise on Amazon?
If you were setting up a storefront for your goods in real life, you’d likely want to choose the location where the most potential customers gather. The same is true for online sales, only we already know where that place is – Amazon.com. So long as you sell a tangible product, Amazon is the site to get the most consumer eyes on your items in the digital world.
That said, Amazon provides a multitude of advertising benefits beyond the volume of site traffic.
Their ads services offer flexible pricing options, allowing you to determine how much to bid for each advertisement click. Plus, you only pay when a shopper actually clicks your ad. This flexibility enables businesses with all sizes of budgets to afford advertisements with Amazon.
Amazon ads are also intuitive and user-friendly, even for first-time advertisers. Typically, it only takes about five minutes to launch a Sponsored Products campaign, which you can easily update. The “Campaign Manager” feature lets you track advertisement performance to help you determine what works and what doesn’t.
No other platform today offers these advertisement features with such a huge market of potential buyers.
Types of Amazon Ads
One of the most prominent benefits of advertising through Amazon is choice. Amazon offers a variety of advertisement options that support a range of marketing goals.
Sponsored Products
Sponsored Products ads function to increase traffic and sales for a specific product. When a customer clicks on this ad, Amazon directs them to the product page where they can make a purchase or save the item to their shopping cart.
Sponsored Brands
Sponsored Brands ads generate brand awareness by allowing vendors to feature multiple products under a logo and headline. These ads funnel interested shoppers to a selection of products on the Amazon platform, or to the brand site directly.
Sponsored Display
Sponsored Display ads target audiences who viewed a product display page without making a purchase, or those viewing a complementary or similar product page. As such, they help to remind customers about a certain product or stimulate interest around related items.
Stores
Amazon Stores offers businesses the ability to create brand landing pages that feature best-selling products, seasonal collections, product videos, and other interactive promotions within the greater Amazon site. Thanks to customizable features, brands can choose the style and presentation of these pages.
Amazon DSP
Amazon DSP, or demand-side platform, automates the process of buying and selling advertisements on the Amazon website for both Amazon vendors and vendors who do not sell on the platform.
Common terms used in Amazon advertising
The Amazon advertising platform contains an array of vocabulary terms perhaps unfamiliar to new users. Reviewing the terms listed below can help novice advertisers to navigate the service and understand the performance of their ads.
Advertising Cost of Sales (ACOS) – An indicator used to measure the performance of Sponsored Products and Sponsored Brands campaigns; calculated as the total money spent on advertising divided by the resulting sales; the lower the number, the better the performance
Brand Lift – A measure of the influence advertisements have on a consumer’s perception and action towards a brand
New-to-Brand Metrics – Indicators that describe the characteristics of customers purchasing a brand/product for the first time; useful for determining how to engage new customers going forward
Return on Ad Spend (ROAS) – A metric that tells how many dollars earned for every dollar spent on advertising; calculated as total ad sales divided by total ad spend
Return on Investment (ROI) – The measure of how much net profit was earned for every dollar spent; calculated as (revenue – cost) / (cost)
Five tips for optimizing ads on Amazon
No matter how easy-to-use Amazon’s ads maybe, new advertisers and even veterans may feel like they still need guidance. To that end, we’ve provided some pointers below to help orient Amazon advertisers towards building the strongest marketing campaign possible.
1. Structure Campaigns by Category
Amazon ads let you sort advertisements by group, which will help you stay organized and build a cohesive campaign for each of the different types of products you may sell. For instance, if you sell hats, first divide by product type:
Casual Hats
Luxury Hats
From here, you should make sub-groups for each category – perhaps ball caps and beanies under Casual Hats. Once you have sub-groups made, create a list of relevant keywords from which you will craft specific ads.
2. Attract Shoppers with Compelling Ad Copy
There are near-countless options for constructing the content and tone of your advertisements, from humor to urgency to storytelling. Whatever you choose, find what moves your customers to action with your products, and consider building a brand voice around that style.
3. Get to the Point
Every advertisement is competing with dozens of other distractions over very short attention spans. You’ll want your copywriting to excite customers but also get to the point before they lose interest. Try to include as much relevant and intriguing information without making your copy too long.
4. Bid on Competitor Keywords
Bidding on keywords used to find competitor products can reroute consumer traffic to your products. You can discover these words by searching terms related to your product and noting which brands or products appear most in the search results.
5. Experiment
Amazon offers a variety of ad services and types, so try them all to find which works best for your products. Remember to use the metrics Amazon provides as a means to help determine the most effective methods of advertising on the site.
Start Campaigning
Whether or not you enjoy Amazon and its services, chances are that the majority of your potential customers do. Online shopping statistics would certainly agree. With that in mind, Amazon ads offer a promising avenue to boosting the effectiveness of your marketing efforts by reaching new consumers, driving sales, and generating brand awareness.
Want to grow your sales on Amazon? We can help. At Cymax Group, get dedicated marketing manager support with best-in-class ACOS/ROAS/CPA. The results are shared with you down to the SKU level – a unique level of transparency that sets us apart from our competitors. Get in touch with us today to know more!