What Are Amazon Sponsored Products and Why Should You Use Them?

Ron Dodby Ron Dod

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Amazon Sponsored Products are an immensely popular means of advertising merchandise on the platform. In fact, as is reported by Ad Age, “Sponsored Products accounts for the majority of ad revenue, 88 percent, that Amazon makes from search-based advertising.”

Sponsored Products

For this reason, learning to master Sponsored Products is of prime importance for successfully selling on Amazon. Therefore, learning all the leading best practices for optimizing Amazon ad campaigns is a key factor in building a lasting brand off the back of Amazon.

However, as exponentially more sellers continue to enter the Amazon marketplace, the competition grows increasingly stiff. Learning the nuances and subtleties of the format now will give retailers the edge over eCommerce newcomers and those who have yet to employ Sponsored Products.

To help provide merchants with that much-needed edge, here is how Amazon sellers can use Sponsored Products to the fullest.

What Are Sponsored Products?

Amazon Sponsored Products are keyword and product-driven PPC ads that enable marketplace sellers to earn added visibility for their item listings. There are various targeting options retailers can use for this ad type (which will be explored later), thereby providing a level of flexibility not present with other types of Amazon adverts.

Given that Amazon advertising statistics show that the average click-through rate for all Amazon ads is 0.36 percent (on par with Google Ads) and the average conversion rate is 9.47 percent (about three times search network ad rates), Sponsored Products are great for driving traffic to Amazon product listings and earning sales.

Moreover, Sponsored Products are indispensable to the buyer’s journey as they surface on nearly every page on Amazon, including the top, right and bottom of the organic SERPs, as well as on product details pages.

While these adverts can be massively important to both buyers and sellers, there is one considerable drawback to Sponsored Products.

Given how competitive this ad type is, a merchant will only see their ads run if they own the buy box. While winning the buy box is an entire subject in itself, some of the key components that Amazon will analyze when rewarding this coveted territory include:

  • If the merchant has a professional seller account
  • The product is in stock
  • The item condition is new
  • The price is competitive
  • How sellers fulfill orders (FBA is helpful)
  • All seller account metrics are satisfactory

Therefore, before initiating a Sponsored Products campaign, retailers should ensure that all their performance metrics are up to snuff. Failing to do so is one of the more common Amazon pitfalls that retailers encounter.

However, there are some other necessary considerations to contemplate before launching one of these ad campaigns.

Sponsored Products Campaign Considerations

Before diving into the nitty-gritty of campaign building and targeting, it is essential that sellers have a clear understanding of the following factors:

Product Selection

Depending on the size of the seller, it may be necessary to decide to promote specific products or the entirety of a retailer’s catalog. However, for those who can only promote some of their items, it is vital to objectively determine which will sell best, as opposed to going on a hunch. Past sales figures and advertising performance can help to point the way.

That said, if merchants have the means, using Sponsored Products for all of a seller’s listings should be a core component of their eCommerce marketing strategy.

Establish Goals

Establish Objectives

No matter the number of products that a seller is promoting, it is imperative that they set clear business objectives for each item that is advertised. Moreover, establishing goals will enable merchants to group products together, thereby enabling a greater degree of campaign clarity and performance.

Some of the aims that retailers might pursue include:

  • Product Awareness: Earn exposure and drive traffic to new items
  • Clear Inventory: Promote older products to eliminate remaining supply
  • Drive Profitability: Achieve maximum sales for product listings that sell well

Classify Products by Category and Goal

To help create a clear campaign structure that enables sellers to drive the most relevant traffic to their listings, it is necessary to group products by their category and established objectives.

To successfully manage this task, break down products by their commonalities first. For instance, if a merchant sells footwear, classify products by sneakers, boots, oxfords, sandals, flats and the like. From there, separate the groups based on the previously formed goals.

By segregating merchandise in this manner, sellers enable themselves to establish a more refined bidding strategy for each grouping.

Sponsored Products Targeting Options

Sponsored Products have come a long way since their origination. Previously, sellers were only able to target campaigns automatically and manually.

With automatic, keywords and products similar to the item promoted would be targeting how Amazon saw fit. Manual, on the other hand, required retailers to conduct keyword research for Amazon PPC campaigns and enter in the desired phrases.

However, things have since changed. Amazon now enables merchants to target Sponsored Products ads by product and category as well. However, this method is not keyword-based and works much like Product Display ads.

Targeting screenshot
Product targeting

With product targeting, sellers can choose to target individual products and categories that are similar or closely related to those that are being promoted. Using this method, Amazon will provide a list of suggested products, or merchants can manually enter specific ASINs or categories and also apply parameters around product brands, prices or star ratings.

In addition to these alterations, retailers also have the option to form a negative list, thereby excluding specific brands and products from manual targeting campaigns.

Negative Product targeting

On the automatic campaign side of things, Amazon has implemented enhancements that enable sellers to refine their ad performance by displaying ads for only search terms or details pages.

For instance, these new Sponsored Products targeting options allow merchants to toggle on and off rules linked to closely and loosely related search terms and complementary and substitute products. As Amazon explains:

With close match and loose match, your ad will be eligible to be shown in the search results if your product matches shoppers’ search terms closely or loosely, respectively. With substitutes and complements, your ad will be shown to shoppers who view the detail pages of products that are similar to or that complement your products, respectively.”

Sponsored Products bidding options

In addition to these implementations, Amazon has also introduced new Sponsored Products bidding options, which enable sellers to maximize their bidding efficiency in a variety of ways.

With this information covered, let’s get into the basics of how to establish a Sponsored Products effort.

Setting Up a Sponsored Products Campaign

As previously mentioned, there are two overarching types of Sponsored Products campaigns that can be developed: automatic and manual. Naturally, there are benefits and drawbacks to each tactic.

Choose your campaign type

With automatic targeting, retailers are not required to conduct keyword research and can instead rely on Amazon to serve ads to the most appropriate locations or target specific products. However, this approach largely hands over the reins to automation and removes much of the control advertisers gain through manual targeting.

Alternatively, manual targeting enables retailers to employ specific keywords. However, if merchants do not conduct their due diligence, it is feasible that they could miss out on a variety of profitable keywords. Moreover, this method is far more time-intensive.

In reality, the best approach is to utilize both types of campaigns to maximize PPC performance. Therefore, the most fruitful Sponsored Products strategy is as follows:

Begin with Automatic Campaigns

The first step for Sponsored Products newbies is to figure out which products will perform best. Running an automatic campaign will allow retailers to harvest the necessary information to pinpoint which products will be most profitable to advertise.

Automatic Campaigns

Start this process by following the previously mentioned procedure of categorizing items and then go to Seller Central and navigate to Advertising > Campaign Manager> Create Campaigns.

With an automatic campaign, Amazon will automatically target ads toward relevant customers based on their searches. The reason for running these campaigns is to harvest keyword data to utilize in manual campaigns later. By figuring out which search terms are most profitable, sellers will be able to better optimize their manual efforts.

This information can be gathered from the newly dubbed Targeting report.

Analyze Keyword Information

In the past, Amazon provided sellers with far more information as to how specific keywords performed concerning a given SKU. However, the company has since limited the information available and no longer shows which products are associated with search terms.

For instance, sellers can see that terms like “brown cowboy boots” convert well, but they can no longer see which product that phrase is linked to, thereby leaving sellers to establish workarounds for implementing the right keywords on the right ads.

Create Single SKU Ad Groups

When just starting with Sponsored Products, it is advisable to include only a single SKU within an ad group. The reason for this is that the more segmented products are, the more precise advertisers can be in their bidding and keyword collection strategies. Moreover, by implementing only one SKU per ad group, retailers can get around many of the reporting limitations put in place by Amazon.

While this may have been a tedious task in the past for sellers with extensive product catalogs, the “Bulk Operations for Sponsored Products” feature enables sellers to manage ad campaigns through Excel documents, greatly simplifying the process.

Add products
Bulk Operations for Sponsored Products

Pinpoint Profitable Keywords

After allowing ads to run long enough to collect an appropriate amount of data, analyze the targeting report to establish which search terms are most valuable for targeting purposes. The most useful information is:

Advertising Reports
  • Clicks: The number of clicks generated per keyword per SKU
  • Order Numbers: The number of conversions per keyword per SKU
  • Product Sales: The number of product sales per keyword per SKU

Create a Manual Campaign

After digging through the targeting report to find the most profitable keywords and search terms, it is time to take efforts to the next level by building a manual campaign and bidding on various keywords associated with each SKU.

Once again, if retailers wish, instead of targeting keywords, they can now target campaigns based on products or categories. This is certainly a worthwhile pursuit, but since that feature is also available for Product Display campaigns, this outline will continue to lay out a manual keyword targeting strategy, which is not possible for Product Display advertisers.

Manual Campaign

Choose Keyword Match Types

When adding keywords to a manual campaign, merchants must select a match type for each term.

Keyword Match Types

Using different keyword match types enables sellers to optimize campaigns by more closely managing how ads surface in relation to a given search. Retailers can select from four different match types:

  • Broad Match: If a search contains the keyword or one of its equivalents in any order, the ad is likely to surface. This type provides exposure to the widest possible audience.
  • Phrase Match: A search must contain the exact phrase or a combination of the keywords entered. While this will reduce exposure, those who see the ad are likely more relevant consumers.
  • Exact Match: A search must match the search term in the exact order entered for the ad to show. This type will also match close variants to the exact phrase. Again, this will limit exposure to a greater degree but reach the most relevant audience.
  • Negative Match: These terms will make an ad ineligible. Use these for words that are related but not relevant to the product or do not convert.

Again, thanks to the new targeting features, sellers can also decide if they wish to turn on close and loose match keyword targeting. 

Sponsored Products are Amazon’s most popular ad type for a reason: They work. Because these ads proliferate the platform, there is a good chance that retailers will see positive results with this format.

That said, knowing how to set up campaigns properly is vital to succeeding with Sponsored Products. By taking the time to segregate products and establish a proper campaign structure, sellers can obtain the most useful information possible for optimizing campaign performance.

However, running Sponsored Products ads on Amazon is no walk in the park as there is a considerable amount of work that goes into ensuring campaign optimization. If your brand needs some assistance to make sure that its ad budget does not go to waste, reach out to Visiture’s eCommerce paid advertising professionals and we can employ industry-leading tactics to help make your Sponsored Products campaign one that produces an exceptional ROAS.

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