Advertising on Amazon: A Complete Guide For D2C Brands

Complete guide on Advertising on Amazon

With more shoppers heading to Amazon to find & purchase products, it is not surprising to see many D2C brands expanding their budget to advertise on Amazon. But only increasing the budget will not help you get more sales; instead, you might end up spending more with little results.

What you need is a comprehensive Amazon advertising strategy with proven tips and tricks that can help you get results while keeping your Advertising Cost of Sales (ACoS) under control. It is precisely what this handy guide has to offer; it covers everything from types of Amazon Ads to how to draft a foolproof Amazon advertising campaign. Read on!

What are Amazon Ads?

Apart from letting you list your product on their platform, Amazon also allows you to advertise your product. Sellers who want to gain visibility and attract customers for their product on Amazon pay for the Ads position by bidding on specific keywords. They are then charged every time the shopper clicks on their ad.

You can identify the Amazon ads by “sponsored” text written with the product details; here is how they look,

Amazon ads appearing on the search results
Amazon ads appearing on the search results, Credit: Amazon

You must have also seen Amazon ads on the product page like this,

How does Amazon Ads look
Credit: Amazon

Here are the other ways that Amazon Ads appear on their platform,

sponsored product ads on Amazon
Credit: Amazon

Types of Amazon Ads and Best Practices

As a brand selling on Amazon, you can run different types of Amazon Ads based on your overall campaign strategy, these are,

  1. Sponsored product ads 
  2. Sponsored brands ads 
  3. Sponsored display ads 
  4. Amazon native ads (lead your customers to your product listing page for purchase)

Amazon Sponsored Product Ads

Amazon sponsored product ads are visible on the search result page and product detail pages. Once clicked, the visitors are directed to the product detail page to purchase. These types of ads are one of the most profitable ad formats as it appears along with the other organic search results, promoting a high click-through rate.

Amazon sponsored product ads
Amazon Sponsored Product Ads, Credit: Amazon

Sponsored product campaigns give you an option of manual or automatic targeting, each having its own pros and cons. In automatic targeting Amazon algorithm will determine the target and most relevant keywords for your ads. Generally speaking, automatic targeting is good for the top-funnel approach, where getting maximum impression is your goal. It is also good when you are launching products for the first time on Amazon. You can analyze automatic campaign performance to narrow down on what keywords to target and what products to promote on ads. 

In contrast, manual targeting allows you to target specific keywords (exact, phrase or broad match keywords). With these ads, you can choose your daily budget and have the flexibility to stop the ads at any time if your ads have been running for at least 24 hours.

Best practices for Amazon sponsored product ads:

  • When advertising the product for the first time, start with automatic targeting for 2-3 weeks to find high-value keywords
  • Identify keywords with low conversion rates and mark them negative 
  • Leverage Bid+ to boost your chances of appearing at the top of search results, but keep in mind that Amazon will automatically increase your bid by 50%. Do the math before using Bid+

Amazon Sponsored Brands Ads

Previously known as “headline search ads”, these are the banner ads that appear on top of the search result page. These ads include the company’s logo, message or a tagline and three products.

Amazon sponsored brand ads
Amazon Sponsored Brand Ads, Credit: Amazon

With sponsored brands ads, you can direct the visitors to your Amazon store, a new Amazon landing page or directly to the product listing page. If you own more than one product and want to create awareness about your brand, these ads are best for you. Like sponsored product ads, you can use keywords and products to target these ads and set your budget to control costs.

Below are the types of keywords you can target with sponsored brands ads,

  1. Branded product keyword is a combination of your brand and the product you are selling on Amazon. For example, “Rewy Wireless Bluetooth Speaker”
  2. Competitor branded keywords include the keyword of your competitor brands and product, e.g., “Portronics Sounddrum”
  3. Complementary product keywords include products that are different from yours but are often sold together like “aux cable and speaker”

Best practices for Amazon sponsored brands ads:

  • Use your top-performing products in the banner creative 
  • Use the benefits of the product in the headline itself but stay away from using No. 1 or bestseller in the text as Amazon will not approve such ads
  • Use at least 30-40 keywords to reach a wider audience
  • Start A/B testing your store page, experiment with different headlines, images as well as combinations of products
  • Don’t forget to include call-to-action in your heading like, ‘shop now’ and ‘save 30%’

Amazon Sponsored Display Ads

Sponsored display ads are also pay per click ads that appear on the customer review pages, product detail pages, and below the search results page.

Amazon Sponsored Display Ads
Amazon Sponsored Display Ads, Credit: Amazon

Sponsored display ads don’t target keywords; instead, these ads use interest-based and product-based targeting. Meaning Amazon will show these ads to the shoppers who they think might be interested in your product based on their shopping behaviour and interest.

These ads are great for retargeting campaigns to cross-sell and upsell your products and are fairly easy to make. The platform automatically generates ad creative using product image, price, and star rating. All you have to do is select your audience, keep an enticing CTA and set a daily budget.

Best practices for Amazon sponsored display ads:

  • While using product targeting, use a combination of competitors page, complementary products and your own product detail page to widen your target groups
  • Avoid claims like “No. 1” or “Bestseller”, which can get your ads rejected. Instead, you can use phrases like, “New”, “Save Now”, or “Buy Now” 
  • Use vendor powered coupons (VPC) to get extra attention from your customers
  • Keep a healthy combination of product-based and interest-based ad targeting 

Amazon Native Ads

Amazon native ads let you place Amazon Ads right on your website. With these ads, you can direct your website traffic to your Amazon product page, where they can make the purchase. As Amazon prioritises products with good sales history while ranking, you can use native ads to get the sales and ultimately grow your organic ranking on Amazon (along with other SEO best practices, of course!). Here is a blog on ranking higher on Amazon with SEO best practices.

There are three types of Amazon native ads, 

  • Recommendation ads – where Amazon will automatically suggest the best-suited products based on your website content and visitors like this:
Amazon native ads - Recommendation ads
Credit: Amazon
  • Search ads – where the ads are shown based on the keywords your website visitors are searching for, like this:
How does Amazon native ads look
Credit: Amazon
  • Custom ads – let you select particular products on Amazon you want to promote on your website, like this:
Amazon native ads can be seen outside Amazon
Credit: Amazon

Best practices for Amazon native ads:

  • Make sure that your ads are relevant to what your audiences are consuming on the site so that the chances of conversion are high

Amazon Advertising Strategy

Now that we know the basics of Amazon ads let’s get started with organising your Amazon ad strategy for maximum sales with a step by step process,

Step 1: Start with determining your goal

As the name suggests, this step is all about understanding your purpose for running Amazon Ads. Is it to drive sales or to boost product/ brand awareness? If your end goal is to increase sales, sponsored product ads are good for you, whereas sponsored brands ads are beneficial if you are launching a new product and want to gain that extra attention.

Step 2: Do your research 

The first step in your research before starting your Amazon ad campaign should be identifying and compiling a list of potential keywords. Start with the brand keywords – the phrases you want your brand to represent and then narrow down your listing with more specific keywords. 

The second step would be to analyse your competitors’ ad strategy. You can ask yourself what keywords they are aggressively targeting, what type of ad placements they are using, and how their communication looks like. 

Lastly, determine where you want your ads to appear. Make sure you are using complementary products and your product detail page as key targets for advertising. Before starting any advertising, create a complete and detailed product listing page that converts the visitors you are getting from your ads. Here is how you can create a top-notch product listing page on Amazon

Step 3: Differentiate branded Vs non branded searches

Match keyword intent with the landing page where you are driving the traffic to, especially when you are planning to run Amazon brands ads. 

For example, if someone is searching “Apple products” in the search results, they know they are searching for Apple but do not have any specific thing to purchase at the top of their head. In such cases, leading them to the store page makes sense, but if someone is searching for “Apple Laptop”, it is always a good idea to take them to a landing page where they can see all the laptops from Apple.

Step 4: Create separate campaign strategies based on your goals

Having different ad campaigns will help you achieve the various goals you have for your products on Amazon. 

For example, if you are launching a new product, you should start with a brand awareness campaign. The objective here is to target shoppers who have not heard of you, intrigue them about your product and successfully convert them into your paid customers. Moreover, Amazon tracks page traffic, conversion rates, and customer reviews while ranking products for the specific search term. Running ads on newly launched products helps you get sales and boost your product page ranking. 

Here are the ways you can run this brand awareness campaign, 

  • Run sponsored product ads with automatically targeted keywords. In this case, the Amazon algorithm will identify the most relevant queries and show your ads to the visitors.
  • Identify complementary products that you think your customers are searching for which complement your product. For example, if you are selling garden decor, a plant pot is a complementary product that you can target. Add these products as a keyword in your ad campaign and start running manually targeted ads for higher conversion.

ProTip: Start your Ad campaign with auto sponsored product ads, let it run for a few weeks and then use the winner keywords (which gave you the most conversions/ sales) to run manual sponsored product ads and brands ads

Step 5: Optimize your ads for better results

Now that you have done your research, built a campaign, and are running ads on Amazon, it’s time to optimize your ads for maximum conversions. Here are the basic principles to follow:

  • Get rid of the junk, identify the keywords and targets that are not converting despite spending money. 
  • Identify the ads that are working and getting you conversions, and then work towards making them better
  • Adjust your bids regularly based on the Advertising Cost of Sales (ACoS) and profit margin of your product. For example, if you are more performance-focused, bid down on high ACoS keywords and vice versa
  • Identify top-performing keywords from automatic campaigns and add them to your manual campaigns

Step 6: Measure what matters – Important key performance metrics (KPI) you should track 

Leverage the Amazon reporting data to measure the effectiveness of your ads. Some of the important metrics to look for while analyzing your Amazon ads performance are:

Key Performance IndicatorMeaning & Importance Average Value
Advertising Cost of Sales (ACoS)It is total ad spend divided by total sales. For e.g., if your ACoS is 20%, you are spending 20 cents on ads to make $1 in sales.
It shows the effectiveness and profitability of your ads
27.17%
Click-Through Rate (CTR)It is the total number of clicks divided by the total impressions of the ads. It represents how appealing your ads are to your customers.0.41%
Cost Per Click (CPC)The amount you pay to Amazon for the clicks you get. The higher CPC usually indicates high competition in your ad category$0.89
Conversion Rate (CVR)It is the percentage of clicks that converts to successful sales. The higher the CVR, the higher is your profit.9.87%
Daily ClicksIt is the number of clicks your ads receive on a daily basis. If you have more impressions but low clicks, start optimizing your ad image, text, CTA and other ad listing attributes.382

Apart from these, also look for impressions, keywords, page rank, and overall business metrics for your Amazon store to get the complete picture of your ad performance. Here are the other Amazon metrics every D2C founder should track. Once you have tracked all these metrics, you will be in a good position to measure and optimise your ad campaigns. In our next section, we will explore Amazon ads best practices you should be following.

We understand you might be running ads on multiple platforms and may find it challenging to keep a close eye on how your ads are performing on each one of these platforms. So, we launched Velocity Insights – a one-stop solution to track all your metrics from various online platforms, including Amazon. Connect your online selling platforms with Velocity Insights in just a few minutes and get a daily business snapshot delivered on your WhatsApp every morning.

Velocity Insights
Velocity Insights : Get your business numbers directly on WhatsApp

ABOUT VELOCITY

Being India’s largest revenue-based financier, Velocity provides founder-friendly revenue-based financing to growing DTC businesses. If you are a D2C brand looking for funding to manage your inventory and marketing needs, apply here, and get funded within 7 days.

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