EP14: Understanding Amazon DSP
The new big thing that allows brands to reach shoppers beyond Amazon, and get super granular with their targeting. Who is it for, when is the right time for it, what campaign metrics are available, and tips & tricks – Episode 14 of DataHawk’s eCommerce Podcast presents Amazon DSP for dummies.
Raphael: With over 2.5 million active sellers across Amazon, it’s becoming more and more difficult for you to stand out. If you’re not reengaging your potential customers, your competitors will be deploying sophisticated programmatic campaigns is critical for your business to stay competitive. Well, today we’re going to talk about Amazon DSP. It is a great tool for anyone selling on Amazon and even those who don’t. We’re going to help get you up to speed when it comes to the Amazon DSP. Welcome to a new episode of DataHawk eCommerce podcast. I’m Raphael. I’m your host and I’ll be assisted with Pat, Amazon expert at DataHawk. Pat, what’s up?
Prateek: Hi, Raphael. How’s it going?
Raphael: Good. So, you’re getting ready for your sweet vacation right?
Prateek: In a week’s time, but there’s still a lot of work to get done before that. How was your summer? You were gone for a month.
Prateek: We missed you, man.
Raphael: I missed you too. It was good to go offline for a little bit.
Prateek: Where all did you go?
Raphael: North of France. I mean, we stayed in France. We went in the north, we went in the south, we stayed in Nice. It’s pretty fun.
Prateek: Yeah, Nice is beautiful. How was the weather? Was it really hot?
Raphael: It was super hot. Except so the beach in Nice it’s not like, um, how do you say that? It’s not sand. It’s like pebbles.
Prateek: Pebbles. Can you really go into the water there? Does it hurt your feet?
Raphael: You have to take the, it hurts.
Prateek: Just take some painkillers.
Raphael: Exactly. We took the train; we went near Monaco and everything.
Prateek: Ooh. Fancy.
Raphael: It sounds fancy but, yeah. We stayed in Nice.
Prateek: I think that’s the best way to do the south of France. You know, base yourself in Nice.
Raphael: M wife is American, right? She discovered the French Riviera for the first time.
Prateek: For the first time? No way.
Raphael: And she was just like really blown away.
Prateek: Blown away, right?
Raphael: It’s amazing.
Prateek: Is that like her favorite part of France?
Raphael: So far, yeah. I mean, when you only see Paris in France, you’re like, okay, France is cool. But it’s so much more than Paris, right?
Prateek: So much more than Paris.
Raphael: And she’s discovering that more and more.
Prateek: Oh, wow. Is she now asking you to move?
Raphael: All my friends are in Paris. So, Paris is Paris, right? Anyway. So, let’s talk about Amazon GSP today.
Prateek: Let’s do that.
Raphael: We’re going to start with the main question. What is Amazon GSP? Who is it for? When is it a good idea? How is it different from Amazon PPC? I think it’s a legit question. What KPIs should you be looking at when you run those DSP campaigns?
Raphael: And some tips and tricks to finish. So, let’s dive in. Pat, let’s start with the obvious question. What is Amazon DSP?
Prateek: Ralph, that sounds like an easy question, but in this case, it’s really not. And I don’t even know where to start because DSP is such a vast topic. I’ll try to sum it up as briefly as I can. Essentially, Amazon DSP, enables advertisers to programmatically buy, display, video, and audio ads both on and off Amazon, right? Essentially so then you’d be able to show your ads not only on Amazon, but Amazon-owned websites and assets like IMDb and Twitch, et cetera, in addition to on third-party websites, right? But what truly sets Amazon DSP apart from other DSPs is that you can leverage Amazon’s 1P data to reach highly targeted audience groups wherever they are online.
Raphael: Got it. It makes sense. Last sentence about 1P data and highly targeted audience groups. I’m interested. Can you elaborate on that, please?
Prateek: Yeah, absolutely. That’s the whole value proposition of Amazon DSP so it’s important that we break it down. So, Raphael, unlike Facebook, which tells you what people like, and Google, which tells you what people search for, Amazon actually tells you what people buy, right? They have the largest database in the Western world of online shoppers and shopping habits. As such, when you’re creating your campaigns, you can get super granular in your targeting. As an example, you can target based on people’s lifestyle, target based on demographics or geographies. You can choose to target in-market segments, which are basically people who have a high shopping intent. These are people who probably recently looked at a competitor’s product. You can retarget, too, and that is basically going after the people who saw your product but didn’t make the purchase. Here’s a little fun fact for you. According to Amazon, only 4% of shoppers, complete their purchase during the initial product search. That’s where DSP delivers a lot of value by allowing you to reach the remaining 96%.
Raphael: I believe in that for real. I’m certain I’m one of those who are pulling the first-time conversion rate low.
Prateek: So here Raphael. Do you know what Tinder’s conversion rate is?
Raphael: Bro, how would I know? I’m married.
Prateek: Well, but you’re also French, right? So, the ring is purely symbolic.
Raphael: Baby if you’re listening to this, I’m not on Tinder. All right, so what is Amazon DSP for then?
Prateek: Well, it’s for those who have a lot of money to spend.
Raphael: But Amazon plus huge spending don’t usually go hand in hand, right? I mean, Amazon is where people go to save money with coupons. Yeah.
Prateek: But if you want to participate in Amazon DSP, you need to commit to spending $35,000 per month. So, unless you’re generating, let’s say, millions of sales or are well-funded DSP is not for you. And DSP is not available to everyone like PPC is, you need to be invited by Amazon to use DSP.
Raphael: You need to be invited. Okay. So that’s a big buyer to entry with DSP, right? 35k a month.
Prateek: Yeah, absolutely. But in order to work around that, just go with an agency. Because look, agencies have multiple clients, right? And essentially, they’d be able to split that $35,000 monthly costs among several clients, right? So, most agencies will run DSP for you for, let’s say 5-10 thousand dollars per month. And that way you needn’t have to commit to spending $35,000 a month and you can still be running DSP ads. Nonetheless, DSP will still be expensive to run, right? One thing that makes it more expensive than PPC is that it’s more of an awareness creation tool. Of course, you can use it for other parts of the funnel, but awareness creation is the main benefit of DSP.
Raphael: Why the emphasis on awareness?
Prateek: Good question, Raphael. DSP, by nature, is for those who are trying to create new, let’s say, additional demand for their products, meaning it’s for those who have already exhausted all of the existing demand on Amazon itself. Once their sales begin to plateau on Amazon, they need to look outside Amazon to make more people aware of the brand so as hopefully drive sales in the future, right? That’s one of the primary factors making DSP more expensive. Here’s how. Those who are browsing on Amazon are, let’s say, mid to bottom of the funnel. In other words, they have high purchase intent, right? I mean, you go to Facebook and Instagram to stop people and while the time away, right? Not to Amazon. You go to Amazon only when you’re either, let’s say, somewhat interested or highly interested in buying something, right? As such, if I were to spend to show you an ad there, I’d have a higher likelihood of you converting than if I were to show you an ad, let’s say on Facebook. Now, not to mention, PPC is pay per click, right? While DSP, you’re paying for impressions.
Raphael: You’re paying for impressions. OK.
Prateek: Exactly. So, when you couple those two factors, that people on Amazon have a high shopping intent and that you incur a cost only when someone clicks on your ad while with DSP is showing your ads to people who, let’s say, may or may not be in the shopping mindset. In other words, the more top of the funnel while you’re paying for impressions. That’s what makes DSP more expensive.
Raphael: So, if it’s that expensive, isn’t it ideal to use DSP if your products are already expensive?
Raphael: Okay. Could you maybe elaborate on that?
Prateek: Absolutely. So, either expensive or if they have, let’s say, repeat purchase value, that kind of a thing. Expensive products have a longer consideration, period. Meaning, let’s say people need more time to decide whether or not they want to make the purchase. Think about it, Raphael. If you want to buy, let’s say, a jar of coffee, you won’t spend too much time thinking about it, right? But if you want to, maybe cosmetics spend a lot of time.
Raphael: Coffee, yeah, you know your coffee.
Prateek: Exactly. Right. You’re sort of addicted to a specific kind. Right. But if you want to buy a cellphone, you’re going to spend more time. Right. Doing your research, you’ll read about the various models, you’ll ask your friends, and so on. This extended length of time you’d be spending doing RND, contemplating the purchase is referred to as the consideration period.
Prateek: Exactly. And this is an Amazon-coined term. I didn’t make that thing up. Exactly. You’re considering, right? And DSP, given that it allows you to retarget, is really good for that, right? Your propensity to make the purchase will be higher if the brand keeps retargeting you with their ad, right? Now, if the product was something that’s not expensive, it wouldn’t make sense for the brand to retarget you because their cost of acquisition would be higher, right? Because remember, with DSP, you’re paying for impressions.
Raphael: Got it. Super clear. Thanks, Pat. But you also mentioned something about the product having repeat purchase potential. Why is that?
Prateek: Yes, if you have a product that’s not expensive, but it’s the kind which people will buy repeatedly, let’s say, like CPG products. Right. Moisturizers, coffee, chocolate. I buy a lot of chocolate. Like maybe too much chocolate. Sure.
Raphael: He’s always giving me – guys. At the office every morning at 10 o’clock he’s offering me chocolate.
Prateek: Believe me, if I could inject cocoa into my blood, I would just do it.
Raphael: Sorry to interrupt. Go ahead.
Prateek: You can still run DSP ads, right? If the product, let’s say, is the kind that people will buy repeatedly. The rationale being, although your CAc will be high initially, given that DSP is expensive, while your products don’t have the margin that expensive products do, you will recover those high CAc costs as a shopper, as, let’s say, shoppers, buy your products repeatedly over time.
Raphael: But what are some of the KPIs one should look at when running the SPIs?
Prateek: Yeah. So firstly, look for impressions. You know how with PPC you’re looking at rows, with DSP, you have to look at impressions because remember, with DSP, you’re paying for impressions, not clicks. And it’s an awareness tool. So, the more impressions you capture, the more awareness you’re generating, right? The next metric you can look at is the estimated cost per detail page view. So, if your cost per detail page view is lower, let’s say from one channel, maybe increase your spend on that channel and lower it for others. Let’s say Facebook and Google, et cetera, et cetera. So why? Because essentially, if this cost is lower for a particular channel, it’s because more of the people who saw an impression clicked on it, thereby lowering the cost per detail page view.
Raphael: Estimated cost per detail page view.
Prateek: Exactly. You got that right.
Raphael: Got it.
Prateek: The next thing Raphael, is you want to measure your branded traffic over time, right? That’s the search volume over time for branded search terms. Because look, if you’re creating awareness for your brand, you’d expect the search volume for your brand name to go up. And there’s a host of tools out there like Helium 10, et cetera, which can help you with that. Amazon provides so many metrics here which help you assess the success of your brand awareness campaigns. For example, new-to-brand purchases.
Raphael: Wait what’s new to brand purchase?
Prateek: Yeah. New to brand purchases are, let’s say, people who are buying your product for the first time in the last twelve months.
Raphael: Without the consideration phase or anything?
Prateek: No. These are basically people who are new to your brand.
Raphael: Got it.
Prateek: These are people who have never purchased products from your brand in the last twelve months.
Raphael: New client. New users.
Prateek: Yes. Amazon considers them as being new to your brand, right?
Raphael: Got it.
Prateek: And then you can also look at, let’s say, new to brand rowers, the percentage of purchases new to the brand, new to brand effective cost per purchase, new to brand purchase rate. It’s a long list. How much time do we have?
Raphael: I love those new metrics. I mean, Amazon comes up with so many new stuff and new metrics. I love that.
Raphael: I’m wondering, on the Walmart side, is there any stuff as such?
Prateek: Yeah, that’s a good question you brought up. So look, Amazon built their own DSP. Walmart, though, on the other hand, didn’t do it themselves. They worked with a company called Trade Desk. So Trade Desk, white-label DSPs for you. So they built Walmart’s DSP for them.
Raphael: Okay. But they didn’t do it in the house themselves. But it exists.
Prateek: Exactly. Yeah. Let’s say bought an off-the-shelf solution. But of course, you can customize it and things like that because today Walmart also has a lot of 1P data.
Raphael: Super interesting. Before we close this episode, do you have any tips and tricks for listeners?
Prateek: I can think of a few. So, you know, Raphael, when running off Amazon DSP ads, bid on unbranded category search terms along with the words on Amazon. As an example, bid on words like bedsheets on Amazon, right? Why? Because people who search for something like this have high purchase intent, even if they’re not on Amazon.
Raphael: Right. That’s great.
Prateek: I do my research. I do some reading.
Raphael: Good one.
Prateek: And secondly, Raphael, complement with defense sponsored product.
Raphael: Of course.
Prateek: Look, you’re paying to bring traffic from outside Amazon to your listings, right? The last thing you want to do is have shoppers land on your page, see a competing product, and then go and buy that competing product. As such, you want to run defense ads and show your products on your PDPs.
Raphael: You can never control fully where your customers end up on which listing and where do they buy?
Prateek: You can, for example, you can redirect them, let’s say, to your brand store, or you can redirect them, let’s say, to a specific product.
Raphael: Got it.
Prateek: And then if you’re redirecting them to a specific listing on Amazon, like a specific product, run defense ads and start showing your other products on that same PDP.
Raphael: I see. But if your listings suck,
Prateek: That’s a different conversation. Remember the art and science of optimization. I also recommend running ad console campaigns for branded search terms at the same time. Look, because if your DSP efforts work and you increase your brand awareness, you will also see an increase in branded searches, right? So, when people come to Amazon and search with your brand name, you want to make sure they see your products in search results, right? Another good thing you can do is use your own 1P audience data, right. As an example, you can upload a list of customer or prospect emails into DSP, right?
Raphael: This is a boom. This is a pow.
Prateek: Exactly. I know all you marketers advertisers love the lookalike audience.
Raphael: This is great. I didn’t know you could do that’s. Amazing.
Prateek: Yeah. So, create a lookalike audience and then run a targeting strategy off of that audience, right? And finally, negate certain audiences for accurate self. So, look, what I mean by that is it’s very easy with DSP to inflate your rows, right. If you don’t want to inflate that if you want to keep it real. So, let’s say if somebody has organically seen your product in the last three to five days, negate them when you’re targeting via DSP in the sense don’t show your ad to these people who’ve just seen your products organically in the last three to five days. Why? Because your product is still fresh in their mind, right? And if they buy, they were probably going to buy anyways regardless of whether or not they see your ad the next time they come to Amazon
Prateek: I’m glad you think like that.
Raphael: That was great. I really hope that all of you guys learn a bunch of new stuff on Amazon GSP. We encourage you. I know the barrier of entry is high. Go for an agency.
Prateek: Yeah. And the thing is, RAF, because of how vast this topic is we couldn’t touch on so many aspects. You can get really custom with your creatives with DSP than you can with PPC, but we can’t squeeze everything into one episode. Maybe there’ll be a part two or something.
Raphael: Guys, if you want to send us any feedback and if you want to dive deeper, I mean, all the metrics we heard and more tips and tricks on Amazon DSP, something that is interesting to you, please,
Prateek: Or talk about just chocolates.
Raphael: Also do an episode just on that. Thanks, guys, for listening until the end of this episode. Thank you so much. Let’s hope that nobody died in the middle of this episode.
Prateek: Thank you, Raphael. It was a pleasure.
Raphael: Thank you. Pleasure is all mine. See you next time for a new episode of the DataHawk eCommerce podcast.
Prateek: See ya. Bye-bye.
Raphael: Okay. Bye-bye.