What Are Sponsored Products on Amazon?

John LeBaron

August 23, 2018

What Are Sponsored Products on Amazon
Please note, any references to MAP pricing, price control or similar do not apply in countries outside of the U.S. and should therefore be disregarded by readers outside of the U.S. Please contact us with any questions.

There are now more than 560 million products available on Amazon. This makes it increasingly difficult for sellers to get their products in front of potential customers.

At the same time, marketers are spending more than ever on sponsored products on Amazon. In Q2 of 2018, spending was up 165%, encompassing 88% of spend share on Amazon.

It’s easy to see why: Sponsored products result in the highest sales per click out of all search formats on Amazon. Sponsored products are the image ads which appear in a few different places on Amazon. Sponsored products have a subtle “ad” or “sponsored” text next to them.

All Results Luggage

Part of their power comes from the fact that they look so similar to the organic search results. CPC Strategy’s 2018 Amazon Shopper Behavior Study showed that “65% of your customers don’t notice you’re serving them an ad and another 25% of your customers actually like the ads you’re serving up.” These ads can be found on both the side and top of the search results page, and sponsored listings are also found on specific product pages.

Sponsored Headphones

These ads work with keyword targeting similar to the algorithms in advertising on Google and Bing. You can either choose the keywords yourself (based on a broad match, phrase, or exact match), or Amazon can find your keywords for you automatically.

Just like Google Adwords, sponsored products are pay-per-click. You’ll only pay when someone clicks on your ad, and you can set both your campaign duration and your daily budget. This is an auction-based model, and the more competitive your maximum price is, the more likely it is that your ads will be displayed. Amazon will then automatically target your ads to the right people.

Why use sponsored products?

Even if you’ve been selling your products on Amazon for some time, it may be worth using sponsored products.

These ads will boost brand awareness for your product line while increasing sales. You should choose the products that don’t have much natural visibility or are brand new. This is because you have an uphill battle to get new products found on Amazon since high-selling products have the top spots at the beginning of the results.

Since new products have fewer clicks and therefore fewer sales, it’s difficult for them to climb to the top of the results naturally. By using PPC and turning these products into sponsored products, you’ll generate clicks, increase your conversion rate, and gradually increase their organic ranking.

Amazon considers sales history in its algorithm when determining the ranking of each product. By using PPC ads, you’ll increase sales- sending a signal to Amazon to place the product higher in the search results.

Getting the most out of sponsored products

When using sponsored products, there are a few things you can do to make sure you get the best results possible.

It can be tempting to focus on your ad spend and the sales generated through your ads when you’re considering how well your PPC campaigns have performed. This is a great metric for measuring profitability. But your conversion rates and click-through rates are often better for evaluating a campaign’s success- particularly if you’re launching new products.

Consider using automatic campaigns which will allow Amazon to find the most relevant keywords. You can do this by setting up two campaigns- one automatic and one manual, and then evaluating which search terms are performing the best. Then, use the best search terms from both campaigns in your manual campaigns going forward.

WATCH OUR WEBINAR to learn how to increase Amazon conversions via effective content and storytelling.

If you’re new to sponsored products, we can help get you started. Fill out the form below to get in touch and let’s chat.

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