Amazon’s Sponsored Display ads are the “new kid on the block” when it comes to Amazon advertising. We often talk of Sponsored Products and Sponsored Brands, but a new piece of data concerning Sponsored Display ads had us scratching our heads and was worth figuring out.
If you haven’t experimented with Amazon’s Sponsored Display ads before, they are essentially a different way for advertisers to target their audience. Where Sponsored Products and Sponsored Brands rely on keywords, Sponsored Display ads use demographics to find the right audience.
Sponsored Display Ad Performance
When Amazon launched Sponsored Display ads in 2019, we looked into the ad type and found some disappointing results for Sponsored Display ads. Conversion rates hovered around 1% and sometimes were even lower. Not exactly a shining star in the arsenal available to an Amazon marketer.
Sponsored Display Ad performance in 2019
- Low conversion rate
- High ACOS
- Ineffective advertising platform
In April of 2020, we saw a big change in the performance of Sponsored Display ads. A big change doesn’t really do it justice. We’re talking off the charts growth. Conversion rates rose from 1% to over 100%. How is that even possible?
Sponsored Display Ad performance in 2020
- High conversion rates
- Low ACOS
- One of the most effective ways to advertise?
How Can Sponsored Display Ads Have High Conversion Rates?
Since April, we’ve seen a huge increase in conversion rates and an amazing drop in ACOS for Sponsored Display ads. Is such a turnaround even possible in such a short period of time? We investigated this phenomenon, and it seems this change has stemmed from a change made by Amazon.
First off, let’s break down how Amazon is defining “conversions.” Traditionally, conversion rates have measured how many website visitors become paying customers or people who opt-in to something. To put it simply, conversion rate can be calculated by dividing orders over total clicks.
For Sponsored Display ads, this equation has changed. Sponsored Display ads offer three targeting types:
- Audiences that have viewed your product or similar products
- Audiences that have searched for products that are similar to your product
- Audiences that have purchased your product before
If you are retargeting for audiences that have purchased your product or searched for similar products, you are using a cost per thousand impressions advertising model (CPM). For audiences that have viewed your product, a cost per click (CPC) model is used.
Normally for Sponsored Products, there are multiple dynamic bidding options. For Sponsored Display ads, there is no fixed bidding option. CPM audiences only have down-only options and CPC audiences have dynamic up and down options.
The Reason Conversion Rates are So High
When looking at the skyrocketing conversion rates for Sponsored Display ads, the reason for the increase lies in the change to Amazon’s attribution window. Conversions are no longer derived from clicks but also views.
According to Amazon, “Orders from advertised products and all products within your brand sold by Amazon and third-party sellers within 14 days of impressions or clicks on your ad. The exception is ad groups using the “Views” audience, which only include sales within 14 days of clicks on your ad.”
That means whether you’re using Seller Central, Vendor Central, or someone else is selling your product, those sales and impressions are being attributed to your display campaign.
Let’s say someone views your product because they are a previous customer and decide to order three items from you a few weeks later. These purchases will factor into the conversion rate for your Sponsored Display Ad.
For the view audiences, Amazon only attributes sales if someone clicks on the display ad. For the search and previous customer audience, Amazon attributes sales to impressions.
How Amazon Sponsored Display Ad Data Affects You
Clearly the way Amazon defines conversions has changed. The lack of delineation between click-through conversions and view-through conversions makes for incredibly misleading conversion rates.
It’s safe to say that the effectiveness of Amazon’s Sponsored Display ads hasn’t drastically improved since 2019. The reporting system has made it easier for Amazon to show sellers high conversion rates and lower ACOS numbers, but the foundation of the advertising platform remains unchanged.
We also lack clarity on some important issues that arise when a lack of separation between view-through conversions and click through conversions exists.
Let’s say someone sees a Sponsored Display Ad on a third-party site and doesn’t even notice it. Amazon still counts this as a view. If that person then purchases that product two weeks later from a Sponsored Product listing, where is the sale attributed to? We don’t know. Amazon hasn’t made it clear and it’s possible that the sale would count for both.
We’ve seen similar scenarios play out on other platforms such as Google where sellers look at their revenue generated by ads and it vastly exceeds their actual revenue.
Amazon has changed their method for calculating conversion rates derived from Sponsored Display ads. View-through conversions and click-through conversions are now being combined to show incredibly high conversion rates and very low ACOS.
All in all, Sponsored Display ads can still be effective, but don’t expect it to be the secret formula that the numbers portray it as. Sponsored Display ads are relatively new and we’d love to see more features when it comes to dynamic bidding and more transparency with the data, especially conversion rates.
Discover Us on our PPC Den Podcast
If you enjoy supplementing your long reads with audio, we cover this topic on our podcast as well.
Listen to it in the episode below or find us on your favorite streaming platform, like Apple, Google, Spotify, and more!
- 1:10 Intro
- 5:10 A recent trend with Sponsored Display ads
- 7:00 How conversion rates work
- 11:20 Targeting types for Sponsored Display ads
- 15:30 Sponsored Display conversions
- 17:30 The big problem with conversions in Sponsored Display ads
- 30:40 What we’d like to see and closing thoughts
- New Launch Strategy for New Products: Skip the Auto?
- Amazon PPC Data Trends to Shape Your 2020 Strategy
- How Does Amazon PPC Work With Misspellings?
- Following Amazon’s Suggestions? The Mysterious “Suggested Bid”
- Negative ASIN in Amazon PPC Auto Campaigns: Is it Possible (Part 2)
- Negative ASIN in Amazon PPC Auto Campaigns: Is it Possible (Part 1)
- When You Should DIY Your PPC (and When You Shouldn’t)
- An Introduction to Targeting Options on the Amazon DSP
- Optimizing on a Hunch
- 5 Things You Don’t Know About Product Targeting
- Amazon PPC Stats During COVID-19| April 2020
- Sponsored Brand Ads Update: Now You Can Edit Creatives
- Amazon PPC Stats During COVID-19
- Seller Central Campaign Manager is Moving to Amazon Ad Console in 2020
- Taking Your Amazon Products & Campaigns Global: A Primer
- Best Practices for Selling on Amazon During COVID-19
- Principles and Mindset for Amazon Marketers During Coronavirus
- Coronavirus (Covid-19) and Your Amazon PPC Campaigns
- Incorporate “Adjust Bids by Placement” into Your Keyword Bids (Part 2): Multi-Keyword Campaigns
- Incorporate “Adjust Bids by Placement” into Your Keyword Bids (Part 1): Single Keyword Campaigns
- Grow Your Amazon Campaigns with Demographics Data
- What Consumer Behavior Says About You: Amazon Brand Analytics
- How to Raise Lifetime Value with Market Basket Report
- Search Frequency Rank: How to Identify Most Important Keywords
- Long Tail Search Terms: Amazon PPC Silent Killer
- 7 Tips to Get More Clicks on Amazon Ads
- LIVE Amazon PPC Campaign Audit
- Amazon PPC Keyword Research in 2020: RPSB Revisited
- Our Top Predictions for Amazon PPC in 2020
- 7 Bad PPC Habits to Kick in 2020 (And 3 Good Ones to Start)
- The PPC Tasks We Put on Our Project Management Tools
- A Data- Oriented Approach to Advertising in December
- The Wait is Over… Search Term Reports for Sponsored Brand Ads are Here
- What to Do When It’s Time to Sell Your Amazon Business with Coran Woodmass
- Ramping Up for Cyber Monday and Black Friday with Data-Driven PPC Strategies
- Amazon PPC Campaign Structure: 6 Layers of Complexity
- Amazon PPC Today vs. Yesterday: What’s Changed, What Hasn’t
- Make Your Best Keywords Better with Single Keyword Campaigns
- 6 Levels of Amazon PPC Mastery
- How to Advertise Commodity and Unique Products with Lukas Matthews
- Amazon SEO – Bridging the Gap with PPC
- Amazon’s New Sponsored Display Ads (Beta)
- Listener Q&A: Optimizing Placement Settings
- The Problem With Optimizing Low-Converting Products (And How to Solve It)
- 4 Reasons Why Lowering Your Bids Won’t Always Lower your ACOS
- What to Expect From 30 Days of Running Amazon Ads
- Should You Segment Your Branded Keywords in Amazon Ads?
- Promoting your Products with Amazon Coupons
- Three Effective Ways to Optimize Amazon PPC Bids
- 4 Things Amazon Does Better than Google and Facebook
- Amazon DSP with Kiri Masters
- Increase Conversion Rates for Sponsored Brand Ads
- Clickfraud, Who to Hire, and More Common Amazon PPC Questions
- A Data-Driven Approach to Prime Day PPC
- Improving Your Account With Amazon Reports
- The Complete Guide to Self-Auditing Your Campaigns
- A Round-Table Discussion About Placement Settings
- My 5 Predictions for the Future of Amazon PPC
- The Importance of Indexation for Amazon PPC
- Click Through Rate (CTR) Rundown
- An Introduction To Bulk File Operations
- The Latest Sponsored Brand Ad Updates
- Defining Your PPC Goals & Setting ACOS Targets
- Making Sense of New to Brand Metrics
- Should You Bid on Competitors’ Branded Keywords
- Our Gripes About Amazon Sponsored Brand Ads
- Amazon Advertising Launch Strategy for New Products
- The Ultimate Amazon PPC Roadmap
- How to Scale Using PPC – A Case Study
- The Star-Crossed Lovers (Organic & Paid Traffic)
- Cranking Up Conversion Rates
- All Things Negative Keywords
- The Dreaded Amazon Data Reporting Delay
- What We Love About Amazon PPC
- First Look on New Bid Options in Amazon
- Dissenting Thoughts on PPC Budgets
- The Strangest, Most Popular PPC Strategy: The Keyword Dump
- Product Targeting – Into the Great Unknown
- Campaign Naming Systems
- Hitchhiker’s Guide to Sponsored Products (Part 2)
- Hitchhiker’s Guide to Sponsored Products (Part 1)
- Amazon PPC Advertising Stats
- The Advanced Basics of Amazon PPC
- Amazon’s New Product Targeting Features
- The Bid+ Conundrum
- Why We’re Living In The Golden Age of Amazon PPC
Watch Mike & Stephen on YouTube
If you enjoy supplementing your long reads with video, well, hot diggity dog, you’re in luck! We cover this topic on our YouTube channel too.
Watch it below and please don’t forget to ‘like’ and subscribe.