Amazon DSP: Explanation, Opportunities & Best Practices

Far-reaching display advertising is now done programmatically. For this, a Demand Side Platform, or DSP in short, is necessary. Various DSP providers are active in the market, Amazon DSP is one variation. This contribution from guest author Sarah Timm vividly and practically shows the advantages, peculiarities and usage options that Amazon DSP offers.

A Demand Side Platform automatically brings together providers and buyers of digital advertising slots. The DSP collects advertising slots from a variety of sources, which we refer to as inventory. Using a complex algorithm and RTB (Real-Time-Bidding), the available advertising slots are sold to advertisers.

Various providers for DSPs are established, including search engine giant Google with Display and Video 360, and also Adform, MediaMath TerminalOne Marketing OS or Simpli.fi are among the common providers. The Amazon DSP is therefore one option among many. When, how and why you should use the Amazon DSP, or when not to, we will now highlight.

What is the Amazon DSP?

Internet giant Amazon offers a DSP with which audio, video and display advertising can be switched both on Amazon and outside the marketplace. So it's not just, as many suspect, about ads on the marketplace itself. The software takes over the automated, centralized purchase of media from various sources.

According to the guidelines of the advertiser and linked with a powerful algorithm in the background, the advertising materials are booked as best as possible according to the individual objectives.

With a very high budget, usually this has to be over $50,000, the managed service can be booked at Amazon, which includes consulting and control of the campaigns. For most companies, the managed service from Amazon is not an option because of the high minimum budget.

With self-service, both the campaign setup and ongoing optimizations are in the hands of the advertisers. A very complex task that requires a lot of experience and also a high minimum budget. If you have enough skills to use the complex tool independently, you can use the self-service option independently and have full control over your own campaigns.

However, the solution for most advertisers will be to put the campaign control in the hands of certified service providers. Only certified agencies, who have proven skills, staff and experience, are allowed to offer this service. Certified agencies have full access to the Amazon DSP inventory and take over the campaign management from consulting to control to analysis and optimization. No minimum budget is required for this type of use.

Who is Amazon DSP suitable for?

Basically, the use of Amazon DSP is interesting for all advertisers, whether they sell products on Amazon or not. Advertisers have full control over the campaigns so that even smaller budgets can design meaningful campaigns.

Goals associated with the use of Amazon DSP range from attention and brand building to performance-oriented metrics such as clicks or conversions. The ads can promote individual products, with the associated link can refer to any page, into their own online shop just like on a product detail page at Amazon. Branding ads are also possible and of course services can also be advertised. Thus, Amazon DSP is also useful in the B2B environment and can address the desired target group individually.

How does the Amazon Demand Side Platform work?

Display ads with the Amazon DSP combine automation and artificial intelligence (AI) with an immense treasure trove of data. Nevertheless, they give advertisers enough leeway for optimizations to achieve the individual advertising goals as best as possible.

The basic principle is the programmatic display advertising. When a website is called up, a competition for the available advertising slots takes place in the background, which takes place in milliseconds. The algorithm compares the offers of the bidders, i.e. the advertisers, and weighs up the suitability of the individual visitor. In the end, the highest bidder gets the bid with equal suitability.

The basis for the bidders' offers are their targeting specifications and campaign settings. Combined with the data that Amazon holds about users, the Amazon DSP unfolds its full potential.

What models and targeting options are there in the Amazon DSP?

Basically, there are three ad formats available in the Amazon DSP:

1. Standard Display Ad: Display ads with individual design

The static image banners are own display creations that are freely created. A special feature of these advertisements is that the advertised products do not have to be listed on Amazon. This opens the door for nearly all products and services, with the associated link referring to any website. The ads are posted on websites or in apps. The optimal formats of these ads are individual, depending on the desired placement.

A disadvantage of these ads is that they are inflexible and time-consuming to create. Each advertised product and additionally each possible format must be created separately. If changes are pending, for example to the slogan, product name or other mentioned characteristics, then all ad formats must be adjusted anew.

2. Video Ads

Video ads are also played out across all channels. There is a distinction between three types. In-Stream Video Ads are usually played before other videos, kind of like an intro, while Out-Stream Video Ads are placed separately as their own video. In-App Interstitial Video Ads are inserts at transition points of mobile apps.

3. Responsive E-Commerce Ads

The automatically generated ads significantly simplify the ad creation process. Based on explicitly named ASINs, the contents of the ad are largely automated. The titles, texts, prices and other data as well as the images for the ad are automatically read from the product detail page. Optionally, a logo and a short headline or a custom picture can be created. The latter can cause not only a product image, but also a background that matches the CI to be displayed and the ad stands out in particular.

Not only the ad itself is automated here. If multiple ASINs are stored, the Amazon algorithm independently decides which product from the stored ASINs is used. Here, the available data about the searching persons come into play, the treasure trove of data from Amazon.

Up to 20 ASINs can be included in these so-called Responsive E-Commerce Creatives (RECs) in one ad. If there is not enough stock available for one or more ASINs, these products are automatically temporarily excluded by the OOS detection (Out-of-Stock).

The selection of suitable ad formats must correspond to the individual objectives of the advertiser. We recommend a combination of static and automated ads so that all reach of the Amazon DSP is exploited. The goals of the advertiser range from increasing awareness, increased interest or very specifically in higher product turnover.

With the help of the Amazon DSP, all goals can be pursued. On the one hand, the ads are predestined for awareness goals and high reach. Additionally, very promising remarketing goals that clearly focus on performance can also be pursued with the DSP. Users who have been interested in a product on Amazon or in your own online shop, for example, are contacted inside and outside the platform with remarketing ads in this case.

It is important to be clear about the respective goal, and to set up different campaigns for the individual goals. On the one hand, this helps the AI to function better, and on the other hand, it enables a meaningful success measurement.

Which target groups are reached with the Amazon DSP?

When defining the target groups, Amazon's large volume of data comes fully into play. Amazon knows from its users which products were bought or which brands and categories were recently viewed. From this, user profiles are created that also come into play outside the platform. As soon as a person has bought a corresponding product and therefore no longer counts as a potential buyer, she is excluded from the ad broadcast.

For example, groups with certain interests or in certain life situations can be addressed. Particularly strong in conversion are retargeting target groups, because most online shoppers do not buy a product at the first contact with a product page. For example, if a person has seen your product, they can next receive an ad from you when they are checking the weather for the weekend in the weather portal. Along the purchasing decision process, this person is therefore contacted several times and the likelihood of a purchase completion by you increases.

Targeting options that primarily increase reach and boost awareness are “In-Market” or “Lifestyle”. The current interest of users is picked up at In-Market by having the ads appear in a superordinate category. Simply put: If someone is interested in cups, you can also offer them plates, as these are overlapping segments. The underlying observation period is the last 30 days. The Lifestyle option is more general in nature, it refers to an observation period of the last 365 days and defines groups of certain life stages or interest areas.

A very promising option for both reach and conversion is the formation of your own audiences. These are groups of users who behave similarly to a group you have selected. The basis can be your buyers, as well as the customer base of a competitor.

What is the difference between Sponsored Ads and DSP from Amazon?

Unlike the Sponsored Ads on Amazon, which also include the variant of Sponsored Display Ads, the link of the DSP ad can lead to any destination page, inside or outside Amazon. The advertisers therefore do not have to appear as sellers on Amazon.

A seller of televisions can use display ads as part of Amazon Advertising to advertise within the marketplace and link to a specific product detail page or an Amazon Brandshop. With the use of the Amazon DSP, the seller has the option to also advertise on external sites such as spiegel.de or tagesschau.de and additionally the link could lead to his own online shop. While an ad within Amazon reaches such users who are mentally in possible buying situations, people see the DSP ads in any situation, for example when searching for vacation accommodations, when checking the sports results or when booking a concert ticket.

Furthermore, the DSP ads offer far-reaching automation options. Targeting for Amazon Ads is primarily based on ASIN, category or keyword. The Demand Side Platform offers many more options, such as target groups or retargeting.

With Amazon Ads, billing is success-based by click (CPC). This means that costs are only incurred when a user clicks on the ad, regardless of how often the ad was displayed. Typically, Amazon PPC Tools are used for success measurement, like Adspert or ADFERENCE. The billing of the Amazon DSP, however, is impression-based according to the frequency of the displays, we speak here of Cost-Per-Mille (CPM).

What are the advantages of the Amazon Demand Side Platform?

Amazon has a multitude of exclusive information about buyers on the Amazon marketplace that no other DSP provider has access to. In Germany alone, this amounts to more than 46 million customer accounts, or in other words: if you buy online, you also shop at Amazon. Amazon customers generate data with every purchase, from which valuable conclusions can be drawn for advertisers. Especially in times of disappearing tracking options, Amazon has a very valuable commodity in hand here.

How much control is required for the use of Amazon DSP?

As advantageous as the automation with which Amazon DSP may be, without your own control your campaigns will not run perfectly. It is essential to check the results in detail and continuously adjust the screws. For the static image banners, three formats each for desktop and mobile should be sufficient for the start and simplify the overview.

In order for E-Commerce Ads to unfold their potential, but also courage to try out and test is necessary. In the context of individual goal achievement, A/B tests provide helpful insights into which formats, designs, texts and ASIN combinations work best. Pay particular attention to a sufficient time span for the test so that the used AI has space and time to unfold. Because the algorithm is also constantly learning.

Conclusion on Amazon DSP

The Amazon DSP is a good way to benefit from the wealth of data of the marketplace giant and to play out ads both targeted and with great reach. In no case should you be deterred by the complexity of the Amazon DSP campaigns and the high minimum budgets. There are enough ways to bypass these cliffs by involving a certified agency.

Connected to the large data trove of Amazon, the platform offers unique options for targeting different stages of the buying process. Used correctly, the Amazon DSP can optimally serve full-funnel strategies that generate value at all stages of the customer journey.