Complete Guide on How Amazon DSP Works

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How does Amazon Demand-Side Platform work?

The number of marketplace sellers on Amazon has exploded in the previous decade. As more people resort to online buying, it's getting tough for companies to be distinct with over 5 million merchants. Before a consumer clicks on an ad, let alone converts, it can take anywhere from 5 to 9 impressions. The question is, how are you going to re-engage potential clients in the face of all the noise and greater competition? Advertising to the audiences available on Amazon Demand-Side Platform (DSP) can help you raise brand awareness both on and off the platform. You can keep your brand messaging consistent with a full-funnel plan. This helps you grow your sales using Amazon-DSP program. We want to give you a beginner's guide if you are new to Amazon demand side platform advertising. Here is a complete guide to answer; what is Amazon DSP, and how does Amazon DSP work.

Before we begin, consider your own search habits and the number of ads you view on a daily basis; hundreds, if not thousands. Whether you're a well-known brand or a start-up, brand awareness needs its own strategy and is an essential component of your marketing mix. You should approach this plan as a long game, and that's the mindset you should take as you consider using Amazon DSP.

What is Amazon DSP?

Amazon DSP is an acronym for Demand-Side Platform. A demand-side platform (DSP) is a piece of software that automates the purchasing of advertising. It allows you to buy displays, videos, and other sorts of advertisements on a variety of websites.

Amazon's DSP is only one of many Demand side platform options available. It has its own distinct characteristics, but the most essential feature is access to Amazon's vast first-party consumer data for targeting purposes. Brands can use this information to target customers with well-defined purchasing habits.

Brands may use Amazon demand side platform advertising to reach Amazon shoppers with tailored ads both on and off the Amazon site. Advertisements can direct people to your brand's Amazon store, particular PDP (product description pages), or other websites (including your D2C site). It allows for programmatic ad buying across thousands of websites. This has a wide range of targeting choices based on Amazon's first-party shopper data.

Because it is audience-based rather than search term/keyword-based, this DSP is unique. Amazon's search is responsive to search phrases (organic, Sponsored Products, and Sponsored Brands). Demand-Side Platform, on the other hand, is a proactive audience-based targeting strategy that makes use of Amazon's data to understand user behavior.

We can track consumer activity from the beginning to the completion of a transaction on A-DSP. This means we know how individuals search, study, and buy the precise product they want. It also goes back a year to study this search behavior and categorizes people into distinct audiences because one size does not suit all.

Amazon Demand-Side Platform: Important Terminologies

  • Audience-based targeting – this targets advertisements based on shopper behavior (not on search terms entered)
  • CPM (cost per mile) – Brands use these ads where they pay a cost per thousand impressions. It applies to Amazon demand side platform advertising.
  • DSP (demand-side platform) – This software automates ad purchasing across the web and different devices.
  • In-market targeting (Interest Category Marketing) - This drives consideration among shoppers who are "in-market" to buy a certain product or service.
  • PDP (product detail page) – Amazon page contains images, title, bullet points, and product description. It shows the uses and information of the product for sale.
  • PPC (pay-per-click) – advertisers pay only when a customer clicks on the ad. On Amazon, PPC options include Sponsored Products and Sponsored Brands.
  • Retargeting – advertising that targets shoppers who have already viewed or bought a product

How Does Amazon DSP Work?

DSP should be a component of an Amazon seller's full-funnel strategy. Sponsored Products and Sponsored Brands are at the bottom of the advertising funnel. This attracts customers late in the buying process. DSP is at the top, focusing on brand awareness rather than high conversion rates.

When a brand's PPC returns have reached a point of diminishing returns, Amazon DSP is a great way to expand. If a company is paying more than $10k on search ads and meeting its objectives, it's time to try a DSP. This is in part because Amazon requires a $35k minimum (over two months) to use DSP.

Demand-Side Platform Retargeting

When it comes to repeated targeting, we recommend using an always-on strategy. Customers who have abandoned a cart or spent time on the PDP but did not make a purchase will be nudged by your ads. It also targets past customers whom you can offer a new product, upsell, or cross-sell.

Consider the role that brand awareness plays. When evaluating the effectiveness of these advertising, keep in mind their place in the marketing funnel. Ads that are intended to create brand awareness should result in higher detail page view rates. But if they appear outside of Amazon, buyers are more likely to make a purchase when they return to Amazon.

Programmatic Ads

The programmatic buying and selling of digital advertising placements are programmatic advertising. Pricing is determined by a dynamic Cost per Thousand (CPM). Dynamic CPM allows advertisers to alter the price of their bids as the value of the impression relates to the campaign's goal. Advertisers can gain savings by using this technology to optimize their advertising expenses.

The following are some of the distinguishing characteristics of programmatic advertising:

  • The purchasing procedure is fully automated.
  • In most cases, supply is not guaranteed (competition affects pricing)
  • Advertisers place real-time bids on impressions to target a specific audience.
  • A dynamic pricing methodology is used to determine the price.

It allows marketers to serve impressions at the correct time to the right audience, reducing ad waste.

What are the Targeting Options with Amazon?

With Amazon Demand Side Platform advertising, you can contact customers at any stage of the marketing funnel. This includes those who have expressed an interest in your products but have yet to make a purchase.

Advertisers can divide audiences using Amazon DSP's targeting options:

  1. The behavioral segments include audiences who have demonstrated certain behaviors, such as buying intent for a specific Amazon sub-category in the past 30 days.
  2. Lifestyle segments consist of audiences who engage in search and purchase behaviors associated with a particular lifestyle. Some examples are Paleo Dieters, Outdoors men, and Environmentalists. 
  3. Contextual segments find customers and audiences based on what they are browsing in real-time. This allows consumers to see contextually relevant advertisements.
  4. Remarketing segments re-engage shoppers that have searched for your product, viewed your PDP, and/or purchased your products or similar ones.
  5. Audience Lookalike segments include audiences with similar shopping behaviors as your current customers.
  6. Advertiser Audiences segments use your data from a CRM database, an email list, or a website page with a tracking pixel.

Amazon DSP uses these particular segments to target audiences and consumers. You can handle customers that looked at your Amazon page but did not buy, or explored your product on your brand website. The program tracks consumers who looked at your competitor's websites. You may offer all of them an ad that redirects them back to your Amazon listing, so they can finish their purchase.

Where does Amazon Demand Side Platform Appear?

Advertisers can reach audiences using Amazon DSP at these sites:

  • Amazon marketplaces (i.e.,, etc)
  • Fire TV
  • IMDb
  • Freedive (IMDb Streaming)
  • Kindle
  • Apps
  • Published Partners
  • Third-Party Exchanges
  • Twitch

5 Types Of Demand Side Platform Advertising

DSP ads can appear in one of the following formats:

  • Desktop Display Ads
  • Mobile Banners Ads
  • Mobile Interstitial Ads
  • Image & Text Ads
  • In-stream Video Ads

Who can use Amazon Demand-Side Platform?

With a few exceptions, Amazon demand-side platform is available to every Amazon seller. Unlike traditional PPC, which Sellers can manage themselves, Amazon is the one responsible for managing your DSP. Your second option is a recognized partner agency that Amazon has authorized after completing their training.

You must commit to a minimum campaign budget of $35,000 to run it through an Amazon-managed account.

The partner agencies that are allowed to run advertising for clients through DSP have slightly more budget flexibility. This is mostly for companies that have reached their potential on Amazon and need to expand beyond the platform.

If a firm isn't currently paying $200K-$300K a year on Amazon advertising, adding DSP is usually not a good idea. However, if they have a budget of $500K or more, they should undoubtedly utilize DSP.

Amazon Ad Console Explained

Sponsored Products, Sponsored Brands, and Product Display Ads are the three types of ads available in the Amazon Ad Console. Brands can utilize this suite of cost-per-click (CPC) advertising to promote to Amazon shoppers.

Advertisers who use the Amazon Ad Console will bid on keywords in order to reach those who are actively looking for them. Brands only pay when a shopper clicks on their ad in the CPC model.

Because you're contacting customers lower down the marketing funnel using the Amazon Ad Console, the total size of your audience pool is limited.

Amazon Demand-Side Platform Automation

Enterprise self-service and Amazon's managed-service are the two main ways to run Amazon Demand-Side Platform.

Ad agencies manage enterprise self-service. They have access to this platform, and you hire them to manage your ads.

Amazon's managed services team has complete control over the managed service. Let's take a closer look at each of Amazon's marketing services:

Benefits of Amazon DSP Self-Service

The self-service DSP option is ideal for brands that have had success with their Amazon advertisements. These brands want to expand their reach beyond Sponsored Products, Brands, and/or displays.

To get onboarded, you must spend $25 million on Demand Side Platform annually. While you and the agency control the self-service option, the ad buying process is programmatic. This means a lot of the work is done ahead of time to set up the parameters of the campaigns you'll be running.

Once these ads are online, your agency will most likely handle the day-to-day monitoring, reporting, and optimization.

Optimization differs from other sorts of advertising because you'll be testing creative (both copy and graphics) sites where your ads are delivered.

Benefits of Amazon-Managed Service (DSP)

To get started, the Amazon managed-service option is largely automated and requires a minimum ad spend of $35,000 – $50,000.

It operates entirely in the background and is overseen by Amazon staff tasked with identifying the most effective advertising solutions for you.

This allows you to run advertisements on Amazon Marketplace, Kindle, Fire TV, Twitch, and other non-Amazon sites all across the web. You can do this knowing that your products are reaching the proper people.

Key Takeaways

New sellers and smaller brands selling on Amazon don't need to worry about Amazon DSP.

However, it's a great addition for brands with a healthy ad budget who want to keep scaling and maintaining year-over-year growth. They can achieve this by leveraging the power of Amazon's first-party shopper data to attract new customers. The brands can also use it to retain existing customers from the vast world of shoppers who exist outside of Amazon's marketplaces.

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