The Growth Of Amazon Sponsored Listings And Everything You Need To Know

Last Updated
August 29, 2020

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As a whole, Amazon’s ecommerce market share grew to 52.4% in 2019 making them the biggest name in online retail. Growth has continued into 2020 with Amazon’s global revenue up 26.4% in Q1 year-on-year. When considering the huge reach possible through Amazon, conversion rates around 3 times higher than through Google Ads and the fact that 47% of US advertisers achieve a ROAS over 700%, it is clear to see why ad spend through the platform is increasing each quarter. If you are looking to get off on the right foot, or simply looking to supercharge your current activity – here’s everything you need to know about advertising through this channel.

Seller Central Vs. Vendor Central 

When you decide to sell on Amazon the first choice you have to make is which platform you want to sign up through. The main options are Seller Central and Vendor Central – each with their advantages. 

Seller Central is the most easily accessible and most commonly used platform, with anyone eligible to sign up the setup process much easier,  and you will receive your payments more quickly with higher margins made from the products you sell. When selling through Seller Central you are responsible for customer service, order fulfillment uless using ‘fulfilled by Amazon’ etc. This route allows you to determine the price that the product is sold for through Amazon and the full range of products that you want to sell. There is a commission that Amazon charges (typically around 15%) on sales through this platform. 

Vendor Central is an invitation only platform, where you are essentially selling stock to Amazon. They will determine which range of products to purchase and how often to restock as well as the sale price on the Amazon site. All order fulfillment and customer service is fulfilled by Amazon and Amazon is the official seller. The price at which you sell stock and the payment terms are negotiated with Amazon. You will have to build out the product listings in the back end of Amazon.

You can run paid advertising on Amazon with either option, but where the margins are typically higher for the Seller Central model, this is likely to be the more profitable option. 

Campaign Types

Amazon’s search results page has a very consistent structure, with one larger banner ad at the top and then the product listings beneath, some sponsored and some organic. Aside from the small sponsored tag it isn’t too obvious that some of the product listings are ads.

There are 3 campaign types that you can run on Amazon, Sponsored Products, Sponsored Brands, and Sponsored Display each with different benefits and placements across the Amazon site.

Sponsored product campaigns are usually the best place to start with Amazon Ads allowing for product tiles to be promoted across the search results page and product detail pages. Most importantly, sponsored product ads allow your product to be the first in the search results page making them a very useful tool for product merchandising. The ads look and work exactly the same way as the organic listings on the search results page In order to be eligible to serve sponsored product ads you must be the seller in the buy box for the advertised product – if at any time you drop out of the buy box your ads will stop serving. 

When setting up Sponsored Product campaigns you can set a daily budget, Amazon can spend up to 10% over your daily budget although will not exceed our daily budget when averaged over the month. You have the option to set up automatic or manual targeting. Automatic targeting allows Amazon to use the details in your product listing to determine which keywords and products to serve your ads on. This setup can be great for keyword mining and understanding the ways consumers are searching for your products. Alternatively you can provide Amazon with the list of keywords you wish to bid on, and you can set a bid for each individual keyword.

Sponsored Brand ads can be more complex than product ads, featuring brand images, text, and product images and info. While the initial functionality was fairly limited (formerly known as headline search ads), Amazon have made several key updates over the past 2 years – improving the creative editing and adding new placements. Ad spend and sales through this format are growing rapidly. In order to run sponsored brand ads you must be enrolled in Amazon’s brand registry which requires a trademark. 

Sponsored Display is the newest format from Amazon, allowing for registered brands to serve auto generated ads on Amazon and third party sites. The spend for this format was relatively low at the end of 2019. They are especially useful for brand awareness, with targeting options based on the audience which is not possible across the other campaign types. 

6 things you need to know / consider when running paid campaigns

The performance of your paid campaigns will directly have an impact on the organic ranking for your products. For example, the performance of your paid listings will influence your best seller rank, product rank and can contribute towards best seller and Amazon Choice badges. There are many thoughts around the ideal mix between organic and paid Amazon revenue, although if you are driving less than 35% revenue through paid listings then you are likely missing out on new customer acquisition and the above boosts to organic rankings. 

Automatic Vs manual 

When setting up campaigns in Amazon you have the option to run manual or automatic targeting. For a quick and easy set up, automatic targeting uses your product listing information to determine which search terms and products to serve your ads on. This can give you a good insight into the way users are searching for your products. Manual targeting allows you to bid on keywords directly with a bid assigned to each one individually.

Focus on manual – search terms – testing SKUs per keyword 

As manual campaigns can be directly optimised towards performance, you would ideally want to move as many keywords as possible from Automatic to Manual where you see strong performance. Manual campaigns will allow you to directly manage which SKUs are served for each search term.

Additionally – campaigns should be focused on exact match keywords which allow you to fully understand performance and optimise bids for the specific searches. Broad and phrase match keywords are again good for mining keywords but you will end up paying the same bid for multiple searches which trigger the one broad keyword. Ideally your Amazon account will reflect a PPC account – with highly granular ad groups and very targeted exact match keywords. Budget can be pushed with the expansion of broad and phrase match keywords as well as automatic targeting. 

Keyword research

By combining both methods of targeting you can split your budget between keyword mining and data collection in automatic campaigns and the more efficient performance driven through manual campaigns. By regularly running search query reports you will have plenty of data to expand your manual campaign coverage. While keyword planners such as the one in the Google Ads interface can give some initial insight into the ways users are searching for your products it’s important to consider the difference in intent behind a search on Google and a search on Amazon. If you are running on a slightly limited budget or wish to really drive a strong ROI, it might be worth just running with manual targeting initially, focusing on really specific keywords relevant to your product. 

Bidding and understanding ACoS

While the suggested bids and dynamic bidding make getting started quick and simple, you’re going to want to start optimising your bids towards keyword performance data. Currently within the interface you can either optimise your keyword bids ad group by ad group or download the bulk sheet editor. This will export the full account build where you can filter for keywords and optimise bids to then upload back into the interface. This will allow you to quickly filter for specific performance e.g. ACoS is more efficient than average, so then upweight. Outside of keyword bidding you will want to monitor placement performance and product performance to further tweak your campaigns. 

One thing to note when optimising campaigns is that Amazon doesn’t use ROI / ROAS as the indicator of account efficiency. ACoS (average cost of sales) is calculated by dividing your ad spend by your revenue.

Reporting flaws things to know

The Campaign Manager interface will give you some detailed insight into which campaigns and keywords are driving performance, although segmenting data within the data isn’t too intuitive. It’s really useful to keep a naming convention in place to make things easier when exporting data etc. 

It’s also important to note that there is a delay in the reporting especially with new campaigns up to 48 hours, although it’s recommended to review data that is over 7 days old for full accuracy.

Tom Wilson works as a Senior Paid Media Consultant for eCommerce consultancy, Vervaunt. Vervaunt specialise in working on replatforming projects and managing all paid media channels for eCommerce businesses.