How to Start Advertising and Selling on Amazon
Written by Will Larcom, Account Manager
Amazon is rewriting the ground rules in nearly every retail industry. From the initial research process, to the eventual delivery, this significant impact has forced countless companies to adapt or die. In this same sense, Amazon is making a major push to monetize advertising efforts on its platform. For those that invest with a comprehensive strategy, the returns are substantial both on and off the website.
Between sheer audience size and unique user shopping behavior, Amazon provides some of the most high value traffic on the market. While somewhat obvious, it’s worth establishing that Amazon is indeed a search platform. With 500 million unique visitors, Amazon offers incredible opportunity to tap into a low-funnel, ready-to-buy audience. Recent analysis shows as much as 55% of consumers begin their online shopping journey with Amazon. Furthermore, Amazon’s audience is loyal and active. A study by Radial shows that 80% of Amazon’s US shoppers make multiple purchases in a given month.
Knowing all these factors, there is an understandable wave of advertising within Amazon. Admittedly audience features that are commonplace elsewhere in the digital advertising sphere are lacking. That said, there is still plenty to do from a strategic standpoint which will allow early innovators to cash in big time.
Key Differences to Consider Before Launch
Before launching into strategic considerations, it’s important to understand the inherent differences within Amazon’s audience. Keep in mind that many users run to Amazon for purposes beyond just direct purchases. The extensive catalog of customer reviews make Amazon one of the most prolific sources on the web for product comparisons. I’ve often found myself in brick & mortar stores about to buy a product, but first confirming the quality of the purchase online.
Such an anecdote reflects accurately back on to Amazon’s site visitors. They are a unique blend of knowledgeable and spontaneous. For advertisers with the right offering, they are the optimal customer. Because much of the audience will effectively be “in-market”, it’s important to approach the platform with an higher return-on-ad-spend goal than normal. Couple this with the fact that Amazon’s default (and only) attribution is a two-week post click window, and you’re likely to see some deceptively high yields.
Seller Central vs. Vendor Central
There are two separate platforms on Amazon for sellers: Vendor Central and Seller Central. The platform which you have access to will decide what kind of advertising you can perform.
Seller Central is for marketplace or third-party retailers. In this scenario, you own the inventory until a customer receives it. You can opt to have Amazon conduct fulfillment and customer service or do it yourself. For most, this is the easiest and least expensive way to start selling on Amazon.
Vendor Central is designed for the first-party sellers. In this scenario, you become an Amazon vendor who sells wholesale directly to Amazon. Registration to Vendor Central is by invitation only. What lacks in margin and control here is offset by volume and ability to focus resources elsewhere.
Before we go too much further, it is also important to note that to advertise on either Amazon platform your products must be in the buy box.
The Buy Box
For those who aren’t aware of the buy box, it is the portion of product detail page where customers add an item to their cart. For some products, there will be multiple sellers with similar offerings. If multiple sellers meet eligibility requirements, Amazon further evaluates the sellers to choose the winner. Factors include pricing, availability, fulfillment options, and customer service ratings. Once you are in the buy box you can begin to explore your advertising options.
Ad Description: Sponsored product campaigns are the primary driver of Amazon advertising volume. For these ads, you’ll choose the product you want to promote and if you’d prefer manual keywords or automatic targeting. For keyword targeting, keyword options include the traditional array of broad, phrase, and exact. Additionally, negative exact and negative phrase are available to weed out irrelevant traffic. Sponsored product ads will display both above and below organic results in addition to product detail pages. These placements have an organic feel which blend in seamlessly with non-paid options.
Best Practices: Once a product is selected, Amazon will provide keyword suggestions if you choose to go the manual targeting route. I highly recommend starting here. For the most part, campaigns should be segmented in product categories. Feel free to select more than one potential offering, as Amazon’s algorithm will begin to deliver the top performer from an engagement and sales perspective.
If you’re active in AdWords, analyze your search query data for top converting keywords and queries. No need to create another keyword list if you’ve already done the dirty work elsewhere and have data to support the top value terms.
For best performance, it’s helpful to have both a manual targeted keyword campaign and an automatic targeting campaign. Set the automatic campaign with a lower CPC and limited budget. Effectively this will operate as your prospecting campaign to tap into an audience outside of your current coverage. Expect the manual option to yield a higher return thanks to a more customizable bidding approach.
Ad Description: Headline search ads offer the most prominent placement on an Amazon results page. Additionally, they provide more customization options than a Sponsored Product campaign. Up to three product display listings will show in addition to a single image. This can be either a logo or another product image and will display to the far left of the placement. There is also a chance to provide ad copy messaging that will further customize the ad.
The audience will be directed to either the product detail pages of your selected products or through the linked ad copy. During setup you will create a predefined page of relevant listings.
Best Practices: Targeting for Headline Search ads can only be done with manual keyword additions. Again, reference success in other platforms to generate your list. Keep in mind that only phrase and exact match keywords are options. There is no ability to add in negatives.
Since you’re able to display three products and link a separate landing page, campaigns can be designed with a more general application. The landing page offers an excellent chance to be selective in which products you promote. We recommend keeping a healthy balance between individual conversion rates and profit margins.
Product Display Ads
Ad Description: Product display ads are the high funnel opportunity within Amazon. Essentially a short listing is created, then targeted through related categories or specific products. These will appear on the right hand side of product detail pages. An advertiser can effectively cross-sell products, protect their brand, cherry-pick competitor traffic, or even prospect for higher funnel traffic in related interest categories.
Best Practices: I’ve found tremendous success in both category and specific product targeting. I’d recommend testing both, but starting with specific products.
For category testing, the options are limited and broad. Tap into product categories or interest level options which will target the users themselves. Unlike a display ad elsewhere on the web, this posting feels much more organic. The audience receives an ad on a platform they are comfortable purchasing on and likely already in a “ready to spend money” sort of mood. Such a combination yields profitable results despite the targeting criterion being undeniably imperfect.
For specific products, there are a variety of ways to best leverage this. To begin, more and more brands are starting to see competition on their product detail page. Additionally, consumers on Amazon are research oriented. They often navigate through a handful of offerings before landing on their final purchase. Targeting your own products is the perfect chance to both protect your brand and potentially increase average order value through cross selling. In this scenario, you’ll choose specific products to display on. Make sure not to select the option that allows Amazon to expand targeting to similar products. This certainly will limit volume, but also ensure your brand protection campaign is achieving its stated goal. Alternatively, you’ll likely want to opt into this expansion option when targeting competitor’s products. Without it, volume will likely be too low to be impactful unless you intend to upload countless ASINs into the campaign.
Final Bidding Recommendation
Humans are funny. We love familiar patterns and round numbers. Within bidding, this leads to many advertisers kicking off efforts on Amazon with either the default bid of $0.50 or nice clean options like $1.00. Oddly enough, I’ve seen huge changes in impressions simply by bumping those bids up a penny or two.
Although still fairly early in its progression. Amazon advertising is growing quickly. Due to the massive audience and the shopping habits inherent within, strategic promotions on Amazon are integral to a comprehensive digital retail strategy. Many brands have already made the mistake of underestimating Amazon’s impact on their vertical. Quite frankly, it is safe bet that smart advertisers will jump ahead of the curve and embrace the mantra of “adapt or die”.