The e-commerce advertising world was rocked in October 2021 when updates to Amazon Sponsored Display Ads were released, changing the capabilities of the ad type from previous versions. What were these changes? Are advertisers seeing a positive or negligible difference?
It’s time to set the record straight! Step into the new world of Amazon Advertising to understand the changes and analyze the results.
Amazon Sponsored Display Ads Before the Update
Originally known as Product Display Ads, Sponsored Display Ads are one of many types of Amazon ads. Seller Central and Vendor Central offered 3 ad types:
· Sponsored Product — Resembles organic product listings throughout Amazon. The bread and butter of every amazon advertiser
· Sponsored Brand — Banners and videos that highlight the brand as a whole
· Sponsored Display — Ads designed to defend ad space on your brand’s listings and to become visible in the ad space of competitors
This era of Sponsored Display Ads had the following features:
· Cost-per-click (CPC) model, charging for each time ads are clicked
· Ads appear only internally on Amazon.com
· Primarily used for offensive and defensive ad placement
· No access first party (1P) consumer data or audience segmentation
· No custom creative capabilities
DSP Before the Update
In addition to options in SC and VC, brands that had the budget to invest at scale were able to use Demand-Service Platform (DSP). A significant investment in DSP would gain you access to 1P information for ad placement, both on Amazon and their extensive network of Amazon-owned websites and applications. DSP is where a marketer could get:
· Cost-per-mille (CPM) model, charging for each thousand impressions
· Ads shown on and off Amazon.com
· Amazon 1P consumer data can be utilized for targeting
· Options include audience and pixel targeting
· Programmatic advertising, utilizing an ad exchange for automatic real-time biding on for ad placement
· Ability to add high quality creative content, including lifestyle images
· Minimum ad spend required was $35,000
With $35,000 minimum ad spend, the DSP threshold was very costly and therefore prohibited many brands from accessing these valuable insights. The greatest advantage of Sponsored Display Ads is they had a much lower entry threshold with no spend minimum.
Features of the New Amazon Sponsored Display Ads
Amazon’s updates released in October 2021 have completely changed the landscape of advertising on Amazon and beyond. Sponsored Display Ads have stolen some of the most powerful tools previously only available behind the DSP curtain and brought them forward into the widely accessible self-service format. This reinvented ad type boasts the following game-changing features.
Programmatic Advertising
Spending an arm and a leg is no longer required to advertise your products beyond Amazon! As our Search Marketing Lead, Matt Brady, explains, “Programmatic advertising is a form of media buying. Amazon communicates with an ad exchange, thru real-time bidding auctions (CPM), and places display ads into ad inventory slots. It is all about targeting the right shopper, at the right time, and at the right price. Whenever you hear the words ‘programmatic’, it means we are targeting shoppers based off their shopping behaviors.”
VCPM Cost Model
The costing model switch has been one of the biggest changes to Sponsored Display Ads. CPC is reactive advertising. Cost per thousand viewable impressions, also known as VCPM or CPM, is proactive advertising. CPC bids are cheaper than CPM bids, but CPM campaigns can drive far more orders, making Sponsored Display the newest tool in your journey to reach new-to-brand shoppers.
The New-to-Brand Sales Metric
Now that you’re capturing the attention of new shoppers, wouldn’t it be nice to understand how many of your sales are from your existing customer base versus first-time shoppers? That is exactly what the New-to-Brand Sales metric offers you! A new-to-brand customer is someone who hasn’t purchased from your brand in the last 365 days. You can now identify if your ad spend is cannibalized by your existing brand halo customers or if they are in fact new to your brand.
Audience Segmentation and Lifestyle Targeting
Amazon collects data about consumers that marketers can use to place ads in front of the right people at the right time. Amazon holds their 1P data close to their chest and previously only allowed DSP users to utilize this powerful information in their ad targeting. The changes to Sponsored Display Ads mean you can target audiences similar to your existing customers, as well as people who might not be actively shopping in your aisle but have shown high intent outside of your aisle within the last 365 days.
Retarget and Reengage
Customers who have started their journey through your marketing funnel but fallen out along the way are an important segment to target. Retargeting customers that have looked at your products, looked at similar products, or have already made purchases allows you to keep them interested and engaged.
Custom Creative Capabilities
Seller Central and Vendor Central have very strict guidelines as to what images can be set as your main product image. These are in place to ensure a consistent shopping experience for customers browsing Amazon, but they don’t always make the most compelling ads. Before the update, DSP was the only way to utilize compelling lifestyle images and brand logos. Now, custom creative can be used within Sponsored Display Advertising.
Multiple Formatting Options
Similar to Google Dynamic Ads, you now have the ability to submit an image, a logo, and a headline. Amazon uses 15+ formats to piece together compelling ads for each ad slot. The combination of a logo and headline has proven to be a powerful tool for brand awareness.
No Minimum Spend
The most exciting part about these changes is that they don’t come with DSP price tag. In fact, there is still no minimum spend on display ads. That means whether your budget is $100 or $100,000 per month, you now have everything you need to expand your brand’s reach to customers ready to pull the trigger.
Results From Sponsored Display Ads
In our on-demand webinar on Sponsored Display,[AD1] [HE2] Brady and Search Marketing Coordinator, Jordan Davis, outline several amazing results that Kaspien has been able to deliver to our partners with this revised ad type. The scale of these results goes well beyond a single stat, but here are a few highlights from the impacts they achieved.
· Pet Supply Brand — +55% in ad revenue change YoY by introducing brand halo shoppers to new and seasonal products, resulting in 9.21% ACoS
· Camera Brand — +131% in ad revenue change YoY. ACoS was only 10.8%, with New-to-Brand sales attributing for over 67% of sales.
· Toy Brand — ACoS skyrocketed to 200% with attempts at using Sponsored Display Ads before update After updates. The new update dropped ACoS down to 13.58% with over 87% of sales coming from New-to-Brand sources
· Computer Brand — +312% in ad revenue change YoY with a staggeringly low ACoS of 1.73% at a VCPM cost of $3.92
· Grocery Brand — Through remarketing and product targeting, achieved an ACoS of 6.25% with over 60% New-to-Brand sales
· Chew Toy Brand — Using a full funnel marketing plan, starting from the bottom. Resulted in +327% ad revenue change YoY at only 10.24% ACoS
Sponsored Display Ad Best Practices
Strategy is key to every advertising campaign. These are the practices we implemented that delivered the aforementioned amazing results for our partners.
Launch Remarketing Campaigns
Start at the bottom of the funnel and work your way up. These consumers are the easiest to convert because they’re already so far along in their buyers journey. Start with launching View Remarketing and Purchases Remarketing campaigns.
Views Remarketing are responsible for a staggering percentage of sales, beyond just New-to-Brand, accounting for upwards of 70% of sales. Within Views Remarketing, “Similar to Advertised Audience” campaigns target customers who haven’t seen your product yet, but[HE3] [GU4] [HE5] have looked at similar products. These drive the majority of ad revenue and >50% New-to-Brand sales.
With Purchases Remarketing you are reengaging brand halo shoppers and introducing new products to existing audiences.
Deploy Defensive and Offensive Product Targeting
Every product page contains ad space. Committing ad spend to place ads on your own product pages makes the placements unavailable for competitors[HE6] [GU7] [HE8] and provides the opportunity to upsell or cross sell throughout your portfolio of products, thus defending your listings.
If your competitors did not have the foresight to defend their ad space, you can take a more offensive approach and place ads for your offerings on the product pages of these competitors. This presents your products for consideration as buyers peruse similar products in your aisle.
Use Custom Creative
The ability to use lifestyle imagery and to AB test creative options in Sponsored Display Ads is a game-changer. Lifestyle images increases visibility and CTR because they take up 30% of a mobile screen, making it disruptive and engaging, and showing off the unique selling proposition of your product. We have seen an average of 2–3x improved results from using lifestyle imagery.
The Future of DSP
There has been no official announcement about the future of DSP, but there are still valuable features contained in that program that have not been transferred to Sponsored Display. If you have a website, DSP allows pixel targeting, which targets customers who view or shop your website and serves them with ads directed to your Amazon listings or Brand Store. DSP also offers a little bit more flexibility with creative and allows video ads.
That said, all signs point towards a phasing out of the DSP program, moving more towards self- service options, and freeing up Amazon’s need for direct account managers. Since the update in October 2021, Amazon has increased the minimum cost of DSP to $50,000, making it even more cost-prohibitive and causing many brands to shift the money they had been spending each month in DSP to Sponsored Display Ads and other ad types within Seller and Vendor Central.
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