Amazon Demand Side Platform (DSP): Into The Great Unknown

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A Background on Amazon Advertising

Oftentimes on this blog when we reference Amazon Advertising, we usually just mean facets of Amazon that aren’t PPC. In reality, Amazon Advertising is very intricate and has changed quite a bit recently.

In September of last year, Amazon consolidated Amazon Media Group (AMG), Amazon Marketing Services (AMS), and Amazon Advertising Platform (AAP) into one branch: Amazon Advertising.

Today, Amazon has taken parts from two of those branches (AAP and AMG) and created Amazon DSP (Demand-Side Platform).

What is Amazon DSP (Demand-Side Platform)?

It’s no secret that Amazon Advertising is booming, and it’s revenue continues to grow. Obviously, the vast majority of this revenue comes from PPC advertising, but today’s post is about the other side of the advertising coin: Amazon DSP.

Amazon DSP is a “Demand-Side Platform” that enables advertisers to programmatically buy display and video ads. The platform let’s sellers reach audiences across both Amazon-owned sites and apps, like IMDb, and leading publishers’ sites through direct inventory from Amazon Publisher Services and third-party exchanges.

Huh, kinda feels like we’ve seen this before….

Anyway, DSP is unlike other ads on Amazon in that is not Pay-Per-Click! Instead, DSP is an impression-based model that is CPM (“Cost Per Thousand Impressions”). That means your bidding strategies will be based on awareness/reach and not sales.

Speaking of starting DSP, you may not be able to. Amazon is only letting companies with over $35,000 in ad spend use the platform.

Why is DSP Guarded?

So why is DSP so exclusive? The impression-based model has a lot to do with Amazon only letting large companies use the platform. 

With this model comes a unique set of challenges:

  • DSP can’t be scaled in the same way as paid search.
  • With sponsored products you set bids, keywords, and your budget. DSP has an entirely different system, and a more restrictive one. DSP requires a relationship with Amazon, and doesn’t give a seller 100% control of the DSP account.

There’s also a spend requirement for agencies and individuals to use DSP, hence our earlier statement about needing $35,000 in ad spend to gain access. The exact spend requirement for agencies isn’t published by Amazon.

DSP and Your Funnel

So, let’s say you can afford DSP and are invited, where would it fit into your funnel

DSP is a top of funnel and middle of funnel tool. You won’t see anywhere close to the same conversion rates and ROAS as Sponsored Products. 

That being said, Amazon DSP has a lot more information about households and customers than Seller Central. The platform is extremely effective for top of funnel brand awareness.

For example, let’s say you make kitchen appliances and you want to use demographic and psychographic information to target your ads, DSP allows you to dig deep into targeting.

Another key feature of DSP’s targeting is consideration

For example, if you’re looking for a coffee maker on Amazon and browsed through a couple listings, Amazon DSP might tag you as someone who’s considering buying a coffee maker. This can be incredibly effective for a company who sells coffee makers because after you leave, you can be served an ad on another site.

Data and DSP

One thing we hear a lot from sellers who start running DSP is a frustration with the data they get back. There might be different classifications of retargeting groups, but you can’t see the pages that got clicks and led to conversions. Even with psychographic information, you can’t see the performance of each audience.

Amazon makes it so you have to be totally invested in the platform (seller/vendor account, premium analytics purchase, DSP) to get the most data possible and that’s still very limited.

Silver Lining of DSP

There must be an upside to this platform, right? Absolutely.

If a seller has the right goals and expectations, DSP can work for them. Sellers can target customers who are researching competitors’ products or are very likely to be in the market for a certain product. 

In addition, DSP and PPC can be very effective when used together. According to Amazon, 10X more high intense shoppers can be reached with the combination rather than PPC Alone.

If a seller has done all they can with PPC, and they’re in a position where spending more on PPC won’t really help them, then they should explore DSP.

How should a company approach that decision making process?

Keep in mind that DSP and Paid Search couldn’t be more different, and it’s imperative to know that if you decide to put money into DSP.

When DSP first launched, companies expected the same returns they’d gotten on paid search and sponsored products. They were disappointed. However, you can learn from their mistakes.

DSP is top of funnel brand marketing. It serves a different purpose than solely pushing product on Amazon. Take Mitsubishi, for example, who uses Amazon DSP even though they don’t sell cars on Amazon. Why? Because DSP provides the best targeting tools on the market for increasing brand awareness.

Savvy sellers, who are in a position to get started with DSP, can find quite a few ways to optimize their top of funnel, brand awareness efforts with these display ads.

Key Takeaways

All in all, DSP most certainly has its place in the universe that is Amazon Advertising. However, if you can’t meet the minimum ad spend or have room to improve PPC-wise, it’s almost certainly not for you

For the select few that do qualify, and the ones who will qualify soon (requirements get more loose all the time),  make sure your PPC strategy is optimized before starting DSP. Paid search has a much better ROI, and no one wants to leave money on the table.

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