This blog was updated on February 27, 2024.
Amazon DSP is making waves in the digital advertising arena. For the first time, brands that don’t sell on Amazon can target its massive base of customers at scale. Amazon DSP enables businesses to programmatically buy ads that appear all over the internet. Compared to ad types like Sponsored Products, Amazon DSP might initially seem confusing. After all, you can’t even access it in the Amazon Ads console. This article simplifies Amazon DSP by providing a basic overview of how it works and why it matters.
What is the Amazon DSP Program?
Amazon DSP, short for Demand-Side Platform, is programmatic advertising. Unlike direct advertising, programmatic advertising uses computer software to automate the buying and selling of digital ads. Programmatic advertising allows advertisers to serve impressions to the right audience at the right time, reducing ad waste and improving efficiency.
Advertisers new to DSPs sometimes get confused by the “demand-side” terminology. In short, DSP means advertisers have a demand for showing their ad creative to customers across different websites. Instead of contacting each publisher individually to place an ad, DSPs automate the process into a single transaction.
By contrast, Supply-Side Platforms (also referred to as direct advertising) are individual publishers who have a supply of ad inventory to sell. For example, Google Ad Manager is an SSP. Ads placed through this platform will appear only on Google search sites and Google partner sites.
The following are a few more key differences between direct advertising and programmatic advertising:
Direct Advertising
- Advertising relies on manual insertion orders and requests for proposals (RFPs)
- Ads are bought and sold by ad buyers and sales teams
- Supply is guaranteed
- Prices are negotiated and based on a fixed CPM; no auctions are involved
Programmatic Advertising
- The buying process is automated
- Supply is generally not guaranteed
- Ads can be purchased using a CPM or dCPM model
- Advertisers can either bid on impressions through real-time auctions, or buy guaranteed ad impressions direct from publishers
It’s important to note that Amazon DSP is not the only Demand-Side Platform available. A few competing DSPs include Google Marketing Platform, Adobe Advertising Cloud DSP, MediaMath, and AdRoll. The most important difference between these platforms and Amazon DSP is that they don’t offer access to Amazon’s vast trove of customer data.
Unlike Google (and most websites), Amazon doesn’t rely on third-party cookies for information about visitors. Amazon has the benefit of first-party customer data. It knows everything about its shoppers. This data is more valuable than other DSP data because Amazon visitors are deeper in the buying journey. Think about it – people visit Google to search, but shoppers visit Amazon to buy products.
By offering access to its customer data, Amazon DSP provides brands with a unique and powerful way to reach Amazon shoppers at scale. The following are three high-level advantages that Amazon DSP has over other demand-side platforms:
- Amazon DSP offers access to supply that you cannot access via other DSPs
- Advertisers can access comprehensive and unique inventory from Amazon owned-and-operated (O&O), third-party exchanges, Amazon Publisher Services (APS), and private marketplaces to boost the targeted reach of Amazon shoppers whenever and wherever they shop or consume content
- Advertisers can achieve marketing goals by reaching Amazon shoppers at scale wherever they are: whether they are on or off Amazon
Below are just some of the places where Amazon DSP ads can appear:
Benefits of Amazon Demand Side Platform
One of the best ways to understand Amazon DSP is to contrast it with Amazon Sponsored Ads. As mentioned earlier, Amazon DSP is not available in the Amazon Ads console. You either need to pay Amazon for their managed DSP service or partner with a third party with its own Amazon DSP seat (like Channel Key). This is because Amazon DSP is an entirely different advertising entity than those available in the Amazon Ads console.
Sponsored Products, Sponsored Brands, and Sponsored Display (until recently) are all cost-per-click (CPC) advertising solutions. You bid on keywords and pay every time a customer clicks on your ad. With Amazon DSP, you pay based on how many times your ad is shown. This is particularly helpful when reaching audiences at scale.
Another major difference between Amazon DSP and Sponsored Ads is the ability to target customers on a granular level. Amazon DSP is much more powerful. For example, Amazon DSP allows you to reach shoppers who have already visited your product pages but have not yet made a purchase. If your goal is to promote brand awareness, you can target new customers offsite with a video that introduces your brand and best-selling products.
Amazon DSP enables advertisers to segment audiences through six unique targeting options:
- Behavioral Targeting reaches customers who have shown behaviors such as browsing around your category over the past 30 days
- Contextual Targeting shows ads in real-time that are relevant to the web content they are currently browsing
- Lifestyle Targeting shows ads relevant to people who repeatedly shop in specific categories, such as auto supplies or health and wellness
- Remarketing shows ads to people who have previously searched for, purchased, or viewed your products online
- Audience Lookalike shows ads to people who share various similarities with your current customers
- Advertiser Audiences leverage information from a brand’s data, such as CRM data, a hashed email list, or a web page with a tracking pixel
Amazon DSP also offers much more in-depth reporting and analytics than Sponsored Products. They include full-funnel insights to compare activity before, during, and after your campaigns. The following are some of the analytic reports available in Amazon DSP:
Awareness
- Reach & Frequency
- Branded Searches*
- New-to-Brand Rate*
- Brand Metrics*
- Brand Lift
Consideration
- Detail Page View
- Clicks
- Clickthrough Rate
- Add to Cart
- Better Together Analysis*
- Brand Metrics*
Conversion
- Purchase Rate
- Return on Ad Spend
- Subscribe and Save*
- Brand Halo Purchases*
- Promoted Purchases
- Sales Lift Studies
*Endemic Brands Only (meaning brands that sell physical products on Amazon)
How Amazon DSP Supports Non-Endemic Advertisers
When learning about Amazon DSP, you will inevitably come across the term non-endemic. In the context of DSP, non-endemic refers to brands that do not sell physical products on Amazon. Alas, we have arrived at the single most powerful benefit of Amazon DSP: it’s available to any brand in any industry. You don’t need to have products listed on Amazon. You don’t even have to be in retail.
Non-endemic advertising targets customers on platforms where the product is not directly sold. For example, a pharmaceutical company might place Amazon DSP ads on websites geared toward older adults. They can’t sell their product on Amazon, but they can leverage Amazon’s vast collection of customer data to locate customers off Amazon who have been identified as potentially in the market for their product.
This is the power of Amazon DSP. The platform knows a lot about shoppers. Amazon creates incredibly detailed profiles of its customers based on what products they browse and purchase. It knows whether you might be interested in a new auto insurance policy or obtaining your master’s degree and uses this information to display relevant DSP campaigns on the websites you visit.
At this point, you might be asking, “What’s the difference between Amazon DSP and Sponsored Display?” After all, Amazon made Sponsored Display available to brands that don’t sell on Amazon in 2022. While this is true, Sponsored Display is a much more limited advertising solution. Think of Sponsored Display as a calculator and Amazon DSP as a super-computer. Sponsored Display has fewer retargeting options, no way to add negative audiences, only one bid
Creating Amazon DSP Ad Campaigns
Since Amazon DSP is programmatic, creating DSP ad campaigns differs from creating Sponsored Ads campaigns. Instead of using the Amazon Ads console, advertisers must choose between enterprise self-service DSP and managed-service DSP. Self-service advertisers run their campaigns themselves or, more commonly, through an Amazon agency. The managed-service option is fully automated and controlled by Amazon and typically requires a minimum spend of $35,000 to get started.
Unlike most Sponsored Ads campaigns, Amazon DSP ads can be purchased on a fixed or dynamic CPM (dCPM) model. A fixed CPM is a static rate to pay for every 1,000 impressions. This model can be utilized to purchase private marketplace (PMP) or direct deals. A dCPM allows advertisers to set a price range for any single impression. The rate paid for an impression may differ depending on its value and campaign optimizations. This technology allows advertisers to optimize their campaign budgets effectively and easily.
Amazon DSP offers two options for creating and optimizing campaigns:
- Automatic Optimizations: The system will adjust bids to serve through the best formats and the best supply sources and sites. Additionally, the Amazon DSP optimization engine analyzes every impression against your goal in real-time. This can apply up to 500,000 predictors, which gives you Amazon first-party insights based on observed shopping patterns. Amazon’s DSP also has an automated optimization feature which dynamically updates budgets according to a campaign goal.
- Manual Optimizations: Advertisers can manually optimize various campaign levers, including budgets, audiences, bids, frequency caps, and supply. Advertisers can leverage display, video, and mobile ad types, as well as creative types such as:
-
- display ads with ecommerce creative
- image ads
- video ads
- video creative builder ad units
- third-party served ads
As a DSP advertiser, you have the flexibility to use your own custom ads, Amazon’s ecommerce templates, or its video creative builder. Creatives can include an image you provide or a product image found on your product detail page. Various elements are automatically generated to drive the best performance for your creative and the end customer. Amazon’s video creative builder allows you to create an engaging video free of cost by selecting one of the existing templates.
How Amazon DSP is Changing Digital Marketing
Just as it has done to many industries, Amazon is disrupting the digital advertising market. It’s no secret that Amazon is the most powerful ecommerce marketplace in the West. Over two billion shoppers visit the marketplace each month. Amazon DSP is powerful because it enables brands in any industry to reach these customers. Since Amazon DSP ads appear all over the internet, they can help brands reach their target audience in any market.
Here are a few more ways in which Amazon DSP is changing the landscape of digital marketing:
- Data-Driven Targeting and Personalization: Amazon DSP leverages Amazon’s extensive data about customer behavior, shopping history, and product views. Advertisers can tap into this rich data to target audiences with a high degree of precision. This hyper-targeted approach improves ad effectiveness, enhances user experience, and increases the chances of conversion.
- Increased Competition and Innovation: Amazon’s entry into the DSP market has increased competition among advertising platforms. This drives innovation as other DSPs and advertising platforms work to provide unique features and capabilities to remain competitive. Advertisers now have a wider range of options and solutions available to them, fostering innovation in ad targeting, optimization, creative formats, and reporting across the digital marketing landscape.
- Cross-Channel Advertising Opportunities: Amazon DSP capabilities are not limited to Amazon-owned properties. Advertisers can also utilize the platform to reach audiences across external websites and apps within Amazon’s advertising network. This cross-channel approach enables advertisers to extend their reach and connect with their target audience through various touchpoints, including display ads, video ads, and audio ads.
- Integration of Offline and Online Marketing: Amazon’s expansion into physical retail through its acquisition of Whole Foods and the launch of Amazon Go stores presents opportunities for integrating offline and online marketing efforts. Advertisers can leverage Amazon’s data and DSP capabilities to bridge the gap between offline and online customer experiences, creating cohesive and personalized marketing campaigns that span both realms.
- Evolution of Ad Measurement and Attribution: Amazon DSP, coupled with Amazon’s retail infrastructure, provides opportunities for advanced ad measurement and attribution. Advertisers can gain insights into the entire customer journey, from ad impression to purchase, allowing for more accurate measurement of campaign performance and attribution of conversions. This level of measurement and attribution precision helps advertisers optimize their strategies, allocate budgets effectively, and drive better results.
Channel Key Takeaway
Programmatic advertising is the most advanced and powerful form of digital advertising to date. While the learning curve for DSPs may be steeper than simple PPC advertising, the ability to advertise on 100s of popular publisher sites via a single interface revolutionizes how brands can reach customers. Each DSP offers unique benefits and advantages. However, only one enables brands in any industry to reach Amazon’s massive collection of first-party customer data. This alone makes Amazon DSP an unrelenting force in the digital advertising arena.
