Amazon began as an online bookstore, but is today a retail behemoth that delivers billions of orders annually. For the brands that want to claim their slice of this massive market, Amazon Ads is both a blessing and a curse. With growing competition and advertising costs high, however, many marketers are wondering whether Amazon’s ad platform remains worth the investment.
In this overview, we give you the main advantages and possible drawbacks of Amazon Ads so you can decide if this ad channel suits your business objectives and budget.
The Argument for Amazon Ads
Unmatched Product Exposure
Amazon Ads places your products before already shopping customers with the intention to buy. Unlike targeting potential customers in the conventional manner, Amazon’s marketplace places high buy intent users before you. Your sponsored products are given high visibility on search results and product detail pages whenever customers search for specific products or browse related categories.
This visibility advantage is particularly valuable during holidays and other peak seasonality shopping events when organic search results are most competitive. Sponsored products also occupy high-end real estate above organic results, expanding the potential for customer interaction exponentially.
Precision Targeting Capabilities
Amazon’s advertising platform uses detailed customer data to offer extremely targeted campaigns. You can target customers based on their browsing history, search history, and purchase history. This targeting allows businesses to reach customers who have already shown interest in similar products or complementary items.
The platform also features automated targeting, which uses Amazon’s algorithms to find the appropriate audiences, and thus it can be used by businesses that have no large ad experience.
Measurable Performance Indicators
Amazon Ads provides in-depth analysis that tracks key performance indicators like click-through rate, conversion rate, and return on ad spend. Those indicators provide clear insight into campaign performance and allow companies to optimize their ad strategy.
As opposed to some difficult attribution ad platforms, Amazon’s closed loop environment tracks the entire customer journey from click to buy, providing you with accurate information regarding campaign performance. Marketing professionals such as kingkong.co can ensure your campaigns are on the right path.
Potential Challenges to Expect
Rising Advertising Expenses
Amazon’s growing popularity with advertisers has also made it more competitive and more expensive cost-per-clicks. Hot keywords in highly competitive niches can become expensive in a hurry and eat into profit margins for businesses that operate on thin advertising budgets.
Small businesses may not be able to match larger companies that have the leeway to make larger bids, especially on competitive product groups.
Steep Learning Curve
Although Amazon has auto-targeting capabilities, the best performance is usually realized through understanding campaign types, keyword research, bid management, and regular optimization. The interface and terminology of the platform can be daunting to new Amazon advertisers.
Organizations need to invest time in acquiring best practices or hire professionals to manage their campaigns, and this cumulatively forms part of the total investment.
Campaign Management Complexity
Successful Amazon Ads campaigns require ongoing monitoring and optimization. Keyword performance is inconsistent, competitor activity changes bid dynamics, and seasonal trends affect campaign performance. This constant management requirement can be time-consuming for businesses without dedicated marketing staff. Thankfully, professional management services exist to help.
Making the Investment Decision
Amazon Ads will be profitable for the right set of companies that understand their audience and possess a moderate concept of campaign management needs. Companies that have differentiated products, high margins, and sufficient resources to dedicate to optimization on an ongoing basis will be most successful.
That being said, companies in very competitive markets or with low advertising budgets must seriously consider whether the potential benefit is worth the investment and administrative inconvenience.
The key to success is to begin with targeted campaigns, track performance closely, and make incremental commitments from proven results instead of committing on a large scale without testing and failure.
