The Complete Guide to Understanding Amazon Advertising for E-commerce Businesses

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Amazon is one of the biggest, if not the biggest, e-commerce platforms worldwide. Business owners everywhere get excited to list their creations and products here, expecting them to fly off the virtual shelves.

However, these entrepreneurs soon find themselves lost amidst the sea of competitors. They struggle to generate sales. Then they realized the importance of understanding the platform and the significance of marketing.

Their products probably did not reach the right people. Understanding the nuances of the marketplace can make all the difference in achieving success.

Amazon advertising has become increasingly important for e-commerce businesses looking to boost their sales. The platform receives a vast amount of visits daily.

In May 2022 alone, Amazon reached approximately 2.4 billion visits from desktops and mobile devices, indicating its significant prominence in the online marketplace. However, the platform also has nearly 10 million sellers competing for attention.

As such, you must know how to maximize the platform’s features to get ahead of the competition. Advertising on this platform can help your business reach a wider audience and drive better conversions. Read below to know how to sell more on Amazon through an effective ad campaign on this platform.

How Amazon Advertising Works

Amazon’s ad platform has become more popular than ever before. It’s a powerful tool that allows advertisers to promote their products and services to millions of customers visiting Amazon’s website and mobile app daily. Businesses can choose from various ad formats to help them effectively reach their target audience.

However, how does Amazon Advertising work?

How Amazon’s Algorithm Chooses Ads to Display

Amazon’s algorithm considers many factors to determine which ads to show to a specific group of customers. For example, the platform primarily considers relevancy.

Its algorithm filters content to display ads somewhat connected to the customer’s search query or browsing history—this is where keyword targeting comes in.

Advertisers can choose keywords they want to target and tell Amazon’s algorithm how compatible their ads are with customers’ search queries and corresponding product pages.

Aside from keywords, you can also choose from other targeting options based on demographics, interests, and customer behavior. This way, marketers can refine their audience criteria and deliver more relevant ads.

Amazon also considers bid prices when displaying ads. The platform typically holds auctions to display ads for a particular search query or product page that marketers compete for in real-time.

How to Set Up Compelling Amazon Advertising Campaigns

Step 1: Determine your campaign goals and target audience

Before setting up your Amazon ad campaign, identify what you want to achieve and the audience you’re aiming for. For example, you want to increase sales, drive traffic to your website, or boost brand awareness.

Once you’ve got your goals down pat, you’ll need to know more about your audience, such as their interests and behaviors.

Clearly defining these pieces of information can help you create relevant ads that resonate with your customers, increasing your chances of showing up at the top of the search results.

Step 2: Choose the right campaign type

Crafting content that effectively captivates your target audience hinges on the presentation of your ads.

It’s best to go with the campaign type that pairs well with your ad ideas and accounts for your specific goals and audience. Luckily, Amazon offers three main campaign types to help you, each with its advantages.

  • Sponsored Products
    This campaign type enables advertisers to promote individual products within the Amazon search results and product detail pages. With this, advertisers can increase product visibility and drive sales.
    These ads only charge you per click, helping you control the costs of your marketing campaign. They are particularly effective for targeting shoppers actively using targeted keywords.
  • Sponsored Brands
    Formerly known as Headline Search Ads, Sponsored Brands appear at the top of the search results with multiple products and a custom headline. You can exhibit your product line and brand in a visually rich ad unit as a business owner. By design, it helps advertisers build brand awareness and drive customer consideration.
  • Sponsored Display
    With this campaign type, advertisers can reach customers on and off the Amazon platform. The ads can appear on several pages, like product details, customer reviews, and marketplace search results. Moreover, it can increase the likelihood of a sale since it targets audiences that have previously viewed or interacted with a product.
  • Sponsored Video Ads
    Amazon leverages the growing popularity of video ads by allowing companies to showcase their products in a unique format. These ads autoplay in relevant search results and product detail pages.
  • Amazon Demand-Side Platform (DSP)
    Amazon DSP allows you to reach audiences programmatically across various websites and apps, both on and off Amazon, with advanced targeting options, such as behavioral targeting and audience segments. Amazon DSP provides a comprehensive advertising solution for expanding your reach and driving brand awareness.

Step 3: Select the products you want to promote

The product you’ll showcase is essential in encouraging potential customers to click on your ad. Choose products you want to promote that align with your target audience and goals.

You can select your products individually or by group, depending on your needs—you can even choose all your items in a specific category.

Step 4: Choose your targeting options

As mentioned, Amazon offers several targeting options, such as keywords, product categories, and customer interests.

These options can help you cast a net that will capture the attention of the people most likely to purchase your product, which is helpful, especially since Amazon’s campaign types are cost-per-click.

You can also choose between automatic and manual targeting. For automatic targeting, you can let Amazon choose keywords and products to target based on your product information.

Meanwhile, its manual counterpart enables you to select the keywords and products to target. Remember to choose the appropriate keywords, as it can increase your chances of hitting the right target.

Step 5: Create engaging content

Choosing the campaign type may not be enough. You should also create engaging content to encourage customers to click on your ad.

Highlight your product’s benefits and unique selling points to capture your audience’s attention. You can also make your ad stand out using eye-catching formats like a GIF with high-quality images and a clear call-to-action.

Step 6: Set your bid

Amazon uses a bidding system to determine which ads they’ll display to customers. As such, setting a competitive amount is essential. However, ensure you allot a budget for your bid, as it’ll be the maximum amount you’re willing to pay for every click on your ad.

Step 7: Choose the best metrics to track

Determine the metrics you must track to ensure your campaign’s success. These metrics will ensure you stay aligned with your goals, give insights into your campaign’s performance, and help you make data-driven adjustments to optimize your results.

Some commonly used metrics include:

  • Impressions: the number of times the platform displays your ad to customers
  • Clicks: the number of clicks on your ad
  • Click-through rate (CTR): the percentage of customers who clicked on your ad after seeing it
  • Cost-per-click (CPC): the average amount you pay each time someone clicks your ad
  • Advertising cost of sales (ACoS): the ratio of advertising spend to your ad-generated sales

Step 8: Integrate with other marketing channels

When running an ad campaign, use other marketing channels to expand your reach and create a cohesive brand message.

For example, if you’re running a successful Google Ads campaign, you can do the same on Amazon to increase visibility and drive sales.

Moreover, leverage social media platforms like Facebook and Instagram to drive organic traffic to your Amazon product pages. In effect, you can increase the likelihood of a sale even further.

Advanced Strategies for Amazon Advertising Success

Once you have set up your Amazon advertising campaigns and are receiving consumer data, optimizing your advertising efforts for improved performance on succeeding campaigns is essential.

Take note of the following best practices tailored to your situation:

1. Utilize existing market data

Leverage your marketing data to gain insights into your target audience’s preferences and behaviors. Analyze the data to identify relevant keywords to resonate with your audience. The consumers’ search patterns and interests should signal which keywords and ad formats to invest in future efforts.

2. Enhance ad copy and creatives

Your newfound market data can help you craft compelling, persuasive ad copy that resonates with consumer preferences.

Highlight the unique selling point of your products while incorporating keywords and “hot” terms to attract the highest number of prospects.

Additionally, use high-quality product images and videos that performed well in previous campaigns to tap into similar-minded clients.

3. Refine campaign structure and organization

It would be best to build upon your existing market data by optimizing your campaign structure and organization.

Group similar products together based on your data’s insights to ensure better management and control over your advertising efforts.

You should base your ad targeting and bidding strategies on the performance and relevance of different product categories from your marketing data.

4. Conduct strategic A/B testing

You can use A/B testing to experiment with ad variations to identify further what works and doesn’t. The impact of your advertising copy, targeting options, and bidding strategies can significantly vary with minor variations. This problem is where your historical data can inform your testing.

Compare the results of the tests to identify practical approaches for your products and fine-tune your campaigns accordingly. Data-driven A/B testing can optimize your campaign to the finest details.

Boost Your Business with Amazon Advertising

Undoubtedly, Amazon presents many benefits for businesses. As such, recognizing the potential reach and profits generated from Amazon advertising can help them optimize their marketing efforts. Otherwise, they may miss out on opportunities to expand their businesses.

That said, consider leveraging the power of Amazon Advertising in your marketing efforts. Knowing how it works and tips for creating an effective Amazon ad campaign can help you boost sales and drive business growth.

About the Author!

Denny, a software engineer turned beauty product entrepreneur, is the CEO & Founder of beBOLD Digital. He started selling various beauty brands on Amazon in 2009 until he created his brand of beauty products, which was sold through Sally Beauty, HSN, Amazon, D2C, and wholesale.

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