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The Guide to Starting Amazon Ads
Produced by the Hanapin Marketing Team
Amazon accounted for 43% of all U.S. e-commerce sales in 2016 and it is predicted to account for 50% or more of the market by 2021. Just the marketing platform alone accounts for $3 billion of North America’s advertising market, and is expected to hold $20 billion of the global market by 2020. It shouldn’t be a question of “why Amazon”, but a question of when. Now is the time to get on the platform and to begin testing. You will have a leg up as competitors begin to enter the market and if competitors are already in the market, then you are losing sales by not advertising as well. We have put together this playbook as a how-to on getting up and running as an Amazon advertiser and your initial advertising strategy. We will break down the buy box, the Amazon advertising platforms, and your options as a Vendor or Seller central merchant.
The Buy Box Impact
To advertise on Amazon, you have to be in the buy box. Quite simply, if your products are not in the buy box, then you cannot advertise those products on Amazon. The Buy Box is the outlined rectangle on the right side of an Amazon product detail page that contains the “Add to Cart” button.
How can you attain this buy box, you ask? To be eligible for the Buy Box, you need to meet a few requirements and then to “win” the buy box, you also need to beat out competition as well.
Buy Box Eligibility:
Have a Professional Seller Account
Before anything else, you must be a Professional Seller on Amazon. Also called a Pro-Merchant in the EU market, this is a purchased plan through Amazon. If you have not set up a professional seller account, you cannot advertise on the platform, so put that as your first priority.
Make Sure You’re Selling New, In-Stock Items
The items you are selling must be new and in-stock. There is a separate buy box for used items, but it does not allow for advertising. If your items are not in stock, they will also not be available to show in the buy box.
Positive Account Performance
Your account should have a history of good performance. To show in the buy box, Amazon analyzes your account performance metrics, including shipping method, price, delivery speed, feedback score, available inventory and many others. Having a sound account will lead to being in the buy box and being able to advertise on Amazon.
Once you are regularly in the buy box and want to increase the awareness and sales of your items, it is then time to choose how you are going to advertise. There are a few different options with different strategies of approach.
AMS VS AAP
There are two main platforms for advertising. Amazon Marketing Services (AMS), which encompasses Vendor and Seller Central advertising, and the Amazon Advertising Platform (AAP), which is Amazon’s programmatic marketing option.
An AAP campaign is run through an Amazon representative, but our team can assist with optimizations and reporting. The advertising can direct consumers to an Amazon landing page or to your website. This is the only advertising option currently available to take consumers off of Amazon but in order to use it, you must have a minimum spend of $15K per month. The AAP is great for mid-to-large scale brands wanting to increase brand awareness, as it is a programmatic advertising solution.
On the other side, AMS serves as a more traditional PPC advertising fit for brands from SMB to enterprise level. There are search and display advertising options with keyword, product, and interest targeting. The advertising opportunities available to you depend on whether you are a Vendor Central merchant or Seller Central merchant. Each merchant account has different advertising options.
VENDOR VS. SELLER
Vendor Central is the first-party, invite-only merchant marketplace. This is geared toward manufacturers and distributors selling products at a wholesale level. In Vendor Central, you’re essentially a supplier selling your products in bulk to Amazon. You will be considered a ‘first-party seller’ should you sell products via Vendor Central. If you notice the phrase “Ships from and sold by Amazon.com”, this is an indicator that a company is selling their product through Vendor Central.
“Having your products sold as a first-party seller through Vendor Central means that, as far as the shoppers are concerned, your products are being “sold by Amazon”. That seal of approval can provide a boost in consumer confidence that you don’t have as a third-party merchant.” –content26.com
In Vendor Central, as a supplier, you have less product control but more advertising freedom. Amazon is the one setting the retail price for your products, giving you less control over your sales. However with that being said, Amazon will mostly adhere to the Minimum Advertising Pricing (MAP) guidelines set by you as the supplier/manufacturer. The positive side to this ‘trade-off’ is that Vendor Central has access to AMS (Amazon Marketing Services), which has an expanded tool set for getting products in front of customers. The AMS gives vendors the opportunity to drive demand with keyword-targeted campaigns designed to increase traffic to their product pages.
Doing business through the Vendor Central is considered a simplified approach to selling on Amazon. As a supplier, you’ll focus on filling purchase orders, billing, and avoiding chargebacks. Speaking of chargebacks, one downside to the Vendor Central is the fact that Amazon has strict logistical requirements. Vendors that have difficulties maintaining stock and/or quickly fulfilling orders put themselves at risk for significant chargebacks.
Seller Central is quite different from Vendor Central, in that on Seller Central you are a third-party merchant taking advantage of Amazon’s platform (think of this as a type of symbiotic relationship). Unlike Vendor Central, you are setting the retail prices yourself, rather than Amazon. Additionally, you have access to Sponsored Product Ads and Headline Search Ads (which Vendor Central also has access to, but with much less control over their retail pricing). Something unique to the Seller Central is the Sponsored Products Dashboard. This is available in your Sponsored Products campaigns. The dashboard enables you to visually plot two KPIs over time for additional insights into your account.
Speaking of dashboards and analytics, the Seller Central gives you substantial amounts of customer data at no additional charge. As a seller you have access to Amazon consumer data that can be used for a variety of purposes.
One distinct downside to Seller Central is, as stated by content26.com,
“Studies have shown that items saying ‘Ships from and sold by Amazon.com’ consistently outsell products offered via FBA or ‘Shipped and sold by 3P Seller’. Also, if other 3P sellers were to list and sell against you via FBA, a significant percentage of total sales would be lost to those sellers. This is especially critical if you are attempting to use Amazon’s Sponsored Product Ad tool.”
On top of that, Seller Central also does not have as many advertising options as in Vendor Central. This can lead to a disadvantage for Seller Central merchants as they do not have as many advertising resources to raise brand awareness and sell products.
Once you know which merchant type you are, you can then begin your advertising strategy. There are three main ad types in Amazon. Vendor Central has access to all three, while Seller Central only has access to two of the three options.
Sponsored Product Ads
Here’s where we recommend beginning your Amazon advertising strategy – with Sponsored Product Ads. This ad type allows you to advertise individual products using keyword targeting, and they show above or below organic product search results and alongside product detail pages.
In order to set up a sponsored product ad, we recommend running an auto-targeted campaign for the first two weeks to a month, depending on account traffic. With automated targeting, you are allowing Amazon to show your ads where they believe they will get the most conversions. After you have let the campaign run for a couple weeks, you can pull a Search Term report and find specific keywords that are converting and find a theme amongst those keywords to begin manual targeting.
As an example, say you are a towel merchant selling plush towels. You believe your target audience be searching keywords around luxury, soft, plush themes. You run an automated targeting report and find that your towels convert well with keywords containing beach, pool, lake themes. This is a market you might not have tapped otherwise.
Another use of sponsored product ads is for brand defense. When you search for your brand, if you are seeing other brands are showing up, you can set up sponsored product ads to counter those brand’s ads. For sponsored product ads there is not a guarantee you will show above their ads, but the competition will at a minimum, ensure your products are showing under branded searches. You can take it a step further and target the competition’s brands as well to “take back” any potential lost sales or to reach other new customers.
Product Display Ads
Product Display Ads are exclusive to first-party Vendor Central merchants. If you are a Seller Central merchant, we still recommend reading this section to learn the strategy behind Product Display ads, however you can also scroll down to check out the other main Amazon ad type that is available to you. Product Display ads can be used for targeting specific products or interests. They are bottom-funnel ads, with great setup for complimentary advertising or for offensive advertising. The ads can show on product details pages, at the bottom of organic search results, on the customer reviews and read all reviews pages, at the top of the offer listing page and in Amazon-generated marketing emails. However, from our understanding the ads will most likely show on the product details pages, and your strategy can be centered around those placements.
The main strategy we recommend is complementary advertising. In this case, you would advertise your product alongside products that are frequently bought together. To keep with the plush towel merchant, after finding out that their products sell well with beach related keywords they target their ads to sunscreen, beach balls, and other beach-related items. If people are already purchasing items for the beach, it is likely they would then purchase a plush beach towel as well. These ads are especially effective on mobile where the ad shows directly beneath the buy box, making it easy for the customer to add the item to their order.
Another great strategy is using the ads to target other brands selling similar products. If you have competition that has lower review ratings or higher prices, you can target those products and when people are on the product detail pages they will see your better reviewed or better priced item. If someone is on a product details page it means they are close to converting and it is a great time to try and grab that extra sale you would not have gained otherwise.
The interest-based targeting is also an opportunity to test on a larger market at a lower cost. Consider them akin to Google Display Ads. With the interest targeting, the idea is to reach as many eyes as possible. It might not lead to many conversions through the advertisement, but has the chance to raise awareness and bring people down the funnel.
Headline Search ads are top-of-funnel ads best used for brand awareness and brand defense. These ads show at the top of the first page on Amazon search results. The ads are keyword targeted and can show up to three of your products at once. When people click through the ads they can be sent to a brand page or to a landing page that showcases the products from the ads.
These ads are great for expanding brand awareness and ensuring your products show at the top of the page for branded search results. For expanding brand awareness, you can target the converting keywords mined from your sponsored product ads. Based on the historical data from the sponsored product campaign these will be the keywords most likely to convert.
The headline search ads are also great for brand defense, as they are guaranteed to show at the top of search results on the first page of traffic. Even if competitors are bidding on your keywords, when the headline search ads trigger they will be above any other advertising. Having these ads in conjunction with sponsored product ads also targeting branded keywords should ensure your products are always showing for branded search results.
Amazon might just be your pathway to some newfound success, as the platform is blowing up and competition is relatively light. Take advantage of these odds being in your favor, and take the plunge into Amazon advertising. We’ll keep you updated on changes, new features, and tips that you can use as you begin on your Amazon journey.
Want to take your Amazon research to the next level? Check out our webinar, Amazon Advertising: How to Conquer This New Frontier happening this Thursday at 1:00 pm EST. Can’t make it live? We’ll send you the slides and recording, so go ahead and sign up anyway! Need help with Amazon? We have experts. Learn how we can help with Amazon advertising.