Your 3-Step Guide to Building an Effective Amazon Ads Strategy

Amazon is the industry disruptor of all industry disruptors. What started as an online bookstore in 1994 has since blossomed into the world’s go-to retailer for everything imaginable. The online marketplace is single-handedly disrupting the tech industry, the food industry, the home goods industry, the health and wellness industry, the fashion and beauty industries, and more. With a seemingly bottomless inventory of products, Amazon is essentially a search engine for online shopping—one that approximately 300 million Americans use.

So, it comes as no surprise that the e-commerce giant launched their own version of Facebook and Google ads to leverage their massive audience and cash in on advertising spend. As Digiday reports, Amazon advertising was worth roughly $2.5 billion in the third quarter of 2018—a 123 percent increase in the company’s total revenue share.

“Amazon advertising’s growth has turned the company into a soon-to-be-rival of the duopoly, Google and Facebook,” writes the publication. In fact, advertisers are forecasted to spend $4.6 billion on Amazon’s advertising platform in 2019, which equates to seven percent of market share.

While that’s minimal compared to Google and Facebook, which dominate 37 percent and 20 percent of the market, respectively, Amazon advertising is “growing at a much faster rate,” than both platforms, explains Digiday. “In the third quarter of 2018, brands’ ad spend on Amazon increased by 250 percent over the third quarter of 2017.”

If your business is considering advertising on Amazon, we can’t say we’re surprised. At Marketing Supply Company, we’ve seen a piqued interest in Amazon ads in the last 6 months, with a wide array of our partners moving ad spend to the online marketplace.

Considering this growing popularity, we tapped our social ads team for their insight on Amazon advertising. Below, find three general tips for building a successful Amazon advertising strategy for your business.

Step one: Identify your goal

It’s crucial to be able to measure the success of your advertising efforts, and that starts with goal setting. Your goals will be dependent on the size of your business, the products and services offered, your budget, and the types of ads available to you based on your seller status (see step two).

Since Amazon is an e-commerce site, their advertising platform was created primarily for products and brands, but you can also advertise a service. For example, our client Fuzzy Pet Health advertises their in-home vet services on Amazon.

It’s easiest to split Amazon advertising goals into two general buckets: driving sales and improving brand awareness. If your goal is to increase sales, use the advertising cost of sales (ACoS) metric to track the amount of sales generated relative to your advertising spend. For brand or product awareness, you care more about how many people see your ads as opposed to how much revenue you earn from them. Pay attention to the impressions metric. 

Step two: Consider the ad types available to you

Some ads are better-suited to advertising specific products or product collections, while others are built for brand awareness and/or services. But, the ad types available to you depends on your Amazon seller status.

Here’s how it works: 1P vendors are in a wholesale relationship with Amazon. These sellers send their inventory to Amazon, and Amazon controls their pricing. 1P listings will say, “ships from and sold by Amazon.com.” 1P vendors have access to all of the ad types listed below.

3P vendors, on the other hand, sell their products on Amazon’s marketplace. They can fulfill orders from their own warehouses or third party warehouses, or have Amazon fulfill orders from their fulfillment centers. These listings will say “sold by [Insert Company Name], fulfilled by Amazon.” Only sponsored product ads are available to 3P sellers, but becoming a brand-registered 3P seller grants you access to sponsored brand campaign ads, in addition to sponsored product ads.

Native ads are only available to Amazon affiliate program members, or “Amazon associates.” You need to apply for an Amazon associates account before you can get started. Finally, video ads are available to use whether you advertise on Amazon or not.

Below, find the five main types of Amazon ads:

Sponsored product ads

These keyword-targeted display ads help customers find and purchase the products that you sell on Amazon. These ads appear on Amazon search results pages and product detail pages. They feature individual products. Sponsored product ads are a part of the Pay Per Click division of Amazon Advertising.

Sponsored brand campaigns

These keyword-targeted ads include your brand logo, a custom headline, and up to three products. These ads populate above, below, and alongside search results. Brand campaign ads are less competitive than product ads. Sponsored brand campaign ads are also a part of the Pay Per Click division of Amazon advertising.

Product display ads

The main point of these ads is to cross-sell or upsell customers. These pay-per-click ads appear on and off Amazon—you can find them on product detail pages, customer review pages, competitor pages, below the search results, in abandoned cart emails, follow-up emails, and recommendation emails. Product display ads are also a part of the Pay Per Click division of Amazon Advertising.

Native ads 

You can place native ads at the end of related content or within related content on your company website. There are three main types of native ads: recommendation ads, search ads, and custom ads.

Video ads

These ads include a video snippet and can be placed on Amazon-owned sites or devices like IMDb and Fire TV. You can direct users to your website, Amazon product page, or any other page on the internet.

Step three: Build ads and evaluate performance

Because Amazon advertising is so technical and time-consuming, businesses typically outsource ad creation, optimization, and management to agencies.

Not only do ad experts have to abide by specific image and copy requirements when creating each type of ad, they also have to identify and bid on the right keywords, manage budget, test different images and ad copy, optimize top-performing ads and turn off low-performers, track ad sets against core KPIs, and essentially monitor the ads day-in and day-out.

To remain competitive, Amazon ads require constant upkeep and optimization; it’s not a set-it-and-forget-it platform. Because Amazon advertising is only getting more competitive, ad experts must find the best keyword opportunities, bid smarter, and manage budgets efficiently.

If you’re interested in running Amazon ads for your business, MSC can help you with that. Fill out this form to get started.