What is Amazon DSP Advertising?

You may have heard of Amazon’s demand side platform (DSP) advertising platform. Maybe you've even been contacted by an account executive from Amazon (we’ve seen quite a bit of outreach the past couple months).

But what is it? Should you invest in DSP advertising? If so, how and where should you spend your advertising budget? I’ll answer these questions and shed some light on this fast-growing opportunity for Amazon sellers.

What is Amazon DSP?

First off, DSP is a tool that allows an advertiser to buy digital ad space across a network of ad publishers. (If you want to get into the nitty-gritty of how it works, check out this article by Digiday.) As an advertiser, you bid on a cost per thousand impressions. Ads are placed on sites around the web based on the audience targeting you set up. Amazon is just one of many DSP platforms you can use to buy ad space across the internet.

The primary difference between Amazon and other DSP providers is that you get access to Amazon data to create your target audience.

Amazon’s DSP operates much the same as other DSP platforms, in that you create an ad that can be shown across thousands of different websites (not just Amazon). The primary difference between Amazon and other DSP providers is that you get access to Amazon data to create your target audience. This includes shopping history, browsing habits, and so on.

Using shopping data from the largest eCommerce platform in the US can be very powerful and create better returns than you would have from simple demographic data. Historically DSP has been limited to larger brands with equally large budgets, but now that Amazon has allowed third-party agencies to start managing campaigns and rolled out more targeting options it is more accessible for small to midsize brands.

Should I Invest in DSP?

When working with brands selling on Amazon who want to use DSP, we recommend that they first focus on building out their on-Amazon PPC using Sponsored Products and Brand ads. Since these ads are shown to shoppers currently browsing on Amazon, these ads will provide you with the highest ROAS (return on ad spend). Marketing dollars should be maximized there first in highly optimized campaigns that are targeting as many keywords as will give you a return.

As you build these out and optimize them, over time you’ll notice that it becomes harder and harder to increase ad sales at the same rate as you did when you started. As you max out the opportunity for PPC ads, a logical next step will be to start using Amazon DSP to extend your reach.

Brands cannot access Amazon’s DSP platform directly. You need to go through an advertising agency with access to the platform (like Buy Box Experts) or through Amazon’s managed services. You will find different service providers will have a different minimum spend requirements and strategies, so definitely shop around. I’ll share the basic strategy we use in our agency.

Basic Amazon DSP Strategy

When working with DSP ads you need to think about your entire marketing and sales funnel, understand where and who your customers are, and make sure you are working from the bottom up. There are several variations on the sales funnel. The basic principle is that you start with making a customer aware of your brand, encourage them to consider your product as they shop, get the sale, then encourage repeat purchases. Ads shown to customers at the bottom of the funnel will have higher conversion rates and return rates than ads shown to customers at the top of the funnel.

Since Sponsored Products and Brand ads are on Amazon where customers are already shopping, so they are considered bottom- to mid-funnel ads. They are shown to the customer as they are making purchase decisions. It’s critical that you are maximizing this opportunity before moving up the funnel with DSP ads.

When first stepping into DSP, brands should start with retargeting ads which target customers considering a purchase. These ads allow you to send ads to anyone who has viewed your product page and not purchased the product within a certain time frame. This is a good way to keep your brand top of mind and bring the customer back to Amazon to buy. ROAS is typically between $3-$5 for these ads.

You can also use Amazon’s shopping data to target in-market customers who are browsing in your product category, in similar product categories, or even lifestyle segments.

If you are looking to get more aggressive, the next step is to go further up the funnel and start a brand awareness campaign. You can do this by targeting your competitors' product pages. Any shopper who has viewed their product pages and has not purchased from you can be served an ad in an effort to win their business. You can also use Amazon’s shopping data to target in-market customers who are browsing in your product category, in similar product categories, or even lifestyle segments like healthy lifestyle, beauty, moms, etc. Because these ads are further up the marketing funnel they will have a lower ROAS, you should expect around $1-$2 depending on the creative, ad placement, and exact targeting.

Get Started

Amazon DSP is a great tool for brands who want to expand their presence and capture more traffic off of Amazon. It will allow you to market to the full sales funnel and increase your overall brand awareness. It’s also a great time for brands to jump in as not many sellers are brands are engaging with DSP. Getting in now can help you get that edge you are looking for over your competition.