Amazon was quick to follow in Google’s footsteps with the sponsored product ads business model. Merchants were always able to use Product Ads, which run on Amazon’s Website and direct users to the merchant’s main Website. But now merchants have another option to help their products stand out from the pack in the standard Amazon product listings: Sponsored Product Ads.
Amazon Sponsored Product Ads are based on the PPC model; merchants only pay when an ad is clicked. And instead of sending traffic back to your main Website, it’s directed to your product listing on Amazon.com. If you run an e-commerce store, you know that it can be tough to compete with mass-market e-commerce sites like Amazon because of the vast array of products available and the ability to browse an entire category of products while comparing prices and vendors within the same browser window.
Amazon Sponsored Product Ads Early Success
eCommerceBytes.com talked about the early success of Amazon’s Sponsored Product Ads program with Moshe Melamed, co-founder of LexMod.com, a modern-furniture retailer. LexMod was one of the first users of Amazon Sponsored Product Ads. So far they’re reporting a lower cost-per-click of about 40 percent less than comparable advertising channels, such as Google AdWords.
Conversion rates are also higher, which Melamed attributes to users being further along in the buying process; instead of simply searching for information about a product, most users who visit Amazon.com are ready to make a purchase or at least decide on a brand and model.
Sponsored Product Ads Give New Products a Boost
Sponsored Product Ads is a useful tactic if you’re introducing a new product that fits into a popular category. They’re also useful for drawing attention to a product on which you’re offering a special discount or promotion. Even fancy new products at great prices will struggle to gain attention in the vast recesses of Amazon’s product listings.
But with Sponsored Product Ads, you can place those products on the first page of Amazon’s search results to earn those first few customers and start working your way up the sales rank ladder. Melamed points out that by using Sponsored Product Ads to generate some sales, you improve the sales ranking of your product which in turn improves its placement in the product results.
Breaking into Amazon is Tough
It’s a difficult cycle to beat at first. If you’re introducing brand new products, or you’re a brand new merchant on Amazon.com, you have no customer feedback or sales history. That data is what Amazon uses to determine which products appear first in its product search results. But if your products are buried on page 35 among thousands of similar products, how will you ever get those first few sales and start earning positive feedback?
This is precisely where Sponsored Product Ads come in. Sure, you’ll spend a little CPC money upfront, but you’ll gain some much-needed attention for your products. Boosting those initial sales with sponsored ads can pay off handsomely in the long run; should your product become a bestseller on Amazon.com, you’ll benefit from premier placement in relevant product searches and stand to earn substantial residual income as a result.
Even if you allocate some initial funds to these ads and you don’t achieve a ROI, it could still pay off in the long-term. Even just a few sales, even if it leaves you in the red, are better than nothing and push you higher in Amazon’s organic rankings.
How to Use Amazon Sponsored Product Ads
If you’re already selling on Amazon.com, you already have a list of products that you have imported. You can select the products you wish to promote in Seller Central and assign keywords to those products, much like Google AdWords operates. When users click on a Sponsored Product Ad, you pay the agreed-upon bid price for each click. Like AdWords, you can set a daily budget amount so your ad campaign won’t exceed your daily limit.
If you don’t enter a competitive bid, your ad won’t run, and only products listed in the Buy Box in Seller Central are eligible for display. Products that are not eligible for these type of ads are flagged under the Advertising tab in Seller Central’s Campaign Manager. Sponsored Product Ads aren’t available in every product category yet, but the company plans to roll out the option across all categories over time.
Amazon Ads is a promising program for merchants who use PPC advertising. It brings the convenience of Google AdWords within the Amazon marketplace, offering vendors an advantage to get started on the platform and a way to start moving inventory quickly. Merchants who play this ads game well stand to reap the benefits for months after a campaign has ended.