This is the fourth in a 10-part series that examines Amazon’s booming advertising business: The people driving it, the ripple effects on other companies, and what’s next.
With Amazon pulling in $31 billion in ad revenue in 2021, marketers have found there is growing competition to stand out among an increasing number of advertisers vying for consumer attention while Amazon’s ad prices have skyrocketed.
The growth of Amazon’s ad business has spawned a cottage industry of former Amazon execs launching consultancy firms to help brands navigate e-commerce advertising. These e-commerce experts help brands use all of Amazon’s ad products to build brand awareness, drive sales, and measure ad performance.
Insider spoke to four ex-Amazon advertising sales managers to understand how advertisers can use Amazon’s ad tools to stand out in this crowded marketplace.
How to get people to buy from search ads
Search ads that target specific items people are looking for make up the bulk of Amazon’s ad business.
Matt Hytinen, the vice president of advertising at e-commerce agency The Stable, said the products that brands advertise in Amazon searches have to resonate with at least a niche consumer group to keep their ratings high. If they don’t, they risk being pushed out of coveted advertising spots by Amazon’s algorithm. The algorithm favors products with high customer ratings because they indicate the quality of the items.
Using niche keywords like “natural energy drink” in targeting is a way to keep costs down, because fewer advertisers are bidding for super-specific terms, said Hytinen.
It is also important for advertisers to use sales-driving keywords in the text displayed on product pages, said Laurent Crastes de Paulet, head of advertising Europe at Amazon seller Pattern. An energy-drink brand like Red Bull, for example, could promote itself as a strong or as a diet energy drink.
Running promotions will likely improve a product’s conversion rate, which would also improve an advertising campaign’s performance, de Paulet said.
Amazon offers promotional tools like Lightning Deals, which are hours-long flash sales that Amazon often features on its Deals page, and 7-Day Deals, which advertisers can use to drive traffic to an entire catalog and create product awareness across one or more brands.
For the purchase stage, advertisers can leverage tools like dynamic ad templates that change how ads look based on the user’s shopping behavior. “If you’re an impulsive shopper, you’ll typically get an ‘add to cart’ or ‘buy now’ call to action. If you like to read customer reviews before you make a purchase, there’s the customer review variation that you’ll see,” said Jessica Gordon, the senior director at e-commerce agency Ideoclick.
Gordon said Amazon’s reporting tools use last-touch attribution – a system that gives all of the conversion credit to the last thing a customer clicked on before buying an item. This makes it hard for advertisers to determine precisely which ad persuaded someone to buy a product.
Creating a proper attribution model can be challenging due to Amazon’s datasets being in SQL, or structured query language, the coding language used to access and manage databases. But brands that tackle this challenge will get a clearer picture of how their ads are working, Gordon said.
When it comes to performance metrics, David Jennison, the CEO of e-commerce agency Expert Edge, sees ROAS – or return on ad spend – as a good metric to optimize for when targeting people who search for specific products or brands.
However, ROAS isn’t a good metric to measure brand awareness or the effectiveness of ads served on competitors’ products because those customers might not be in the market for those products or are shopping for something else, Jennison said.
Gordon also advised brands to avoid spending too much of their ad budgets on targeting existing customers, because this practice won’t drive much sales lift.
For example, advertisers selling consumable products like shampoo that customers normally purchase every month could set up custom audiences to target those who haven’t purchased the item in two or three months.
Amazon also offers new-to-brand metrics, which track purchases, purchase rate, and cost per acquisition for new versus existing customers.
Advertisers looking to encourage a purchase after a consumer sees a brand-awareness ad should consider using Amazon’s ad-tech suite, including its DSP, or demand-side platform, that retargets people on other publishers’ websites, experts said.
Jennison said these tools help advertisers use Amazon’s shopping data to target groups of people with specific interests. For example, an advertiser can target ads to males in their mid-30s who live in North London and have searched for mobile-phone accessories in the past, said Jennison.
Gordon said she’s seen higher conversion rates when people see both DSP and search ads compared to when they’re only exposed to one of them. DSP also lets brands advertise the exact products people are most likely to be interested in.
“We think about DSP as being a proactive approach to getting customers to initiate search,” Gordon said.
Amazon has recently been vying for big, brand-building ad budgets that are typically spent on TV advertisements.
“It’s the best place to influence shoppers higher in the purchase funnel at a time where they’re open to being influenced,” said Jennison.
Video and other Amazon ad products can help brands break out of its search ads, which have gotten more crowded and expensive, said Gordon.
“A lot of advertisers, even from my time at Amazon, do not truly recognize Amazon as a marketing engine for branding — they still view Amazon as an e-retailer,” said Gordon. “But there’s so much more that can be done with Amazon ads that a lot of haven’t fully maxed out.”