Oct 31, 2024
Building a
Full-Funnel DSP Strategy For Amazon Sellers
Danny welcomes Sam
Lee, an Amazon DSP expert with years of experience at companies
like Thrasio. Sam provides insights into the Amazon DSP (Demand
Side Platform), a less accessible yet powerful tool compared to
Amazon’s PPC. DSP allows for advanced targeting using Amazon’s
first-party data, perfect for those ready to expand beyond
traditional ad methods. Danny and Sam dive into the essentials of
DSP, covering campaign structures, targeting methods, and common
pitfalls that many brands face when venturing into DSP.
What is Amazon
DSP?
Sam explains that
Amazon DSP is different from traditional Amazon PPC in
accessibility and functionality:
- Barrier to Entry: DSP isn’t as easy to access
as Seller Central; it requires Amazon-approved agencies or meeting
certain spend thresholds.
- Initial Challenges: Early misuse led to its
reputation issues, as many advertisers applied blanket strategies,
not optimizing DSP for unique brand/product needs.
Building the
Full Funnel
Sam emphasizes a
strategic approach to DSP that adapts to product price points and
buying cycles, avoiding a one-size-fits-all approach:
- Understanding Customer Journey: Higher-priced
products require longer consideration windows, so retargeting
timelines should vary.
- Tailoring Campaigns by Product Type: A $10
product doesn’t need a 30-day retargeting window, while a $200
product may need up to 45 days to properly engage the
audience.
Key Metrics
for Success in DSP
To evaluate DSP
campaign effectiveness, Sam discusses focusing on core
metrics:
- Return on Ad Spend (ROAS) and Total ROAS as
primary performance indicators.
- Effective Cost Per Detail Page View: Lower
costs (below $1) signal efficient DSP campaigns, with top
performers achieving $0.50 or less.
- Percent of Purchases New-to-Brand: Indicates
how well DSP attracts fresh customers, avoiding retargeting those
already inclined to purchase.
Sam highlights
Amazon Marketing Cloud (AMC) as a tool to monitor customer
touchpoints in the purchase path, offering more transparency into
DSP’s role in converting new users.
DSP Budgeting
Insights
One misconception
Sam dispels is that DSP requires excessive budgets to yield
results:
- Optimal Spend Range: While larger budgets
provide more data for refinement, DSP can still be tested
effectively at lower levels if PPC campaigns are fully maximized
first.
- Synergy Between PPC and DSP: He advises
investing as much as possible into PPC until returns diminish, then
strategically layering DSP to further boost conversions.
Evaluating DSP
Managers
When hiring or
assessing a DSP manager, Sam recommends looking for these critical
skills:
- Sales Deduplication Knowledge: A solid
understanding of deduplicating sales between DSP and PPC, often
through merchant tokens, which ensure accurate attribution.
- Customized Campaign Strategy: Effective DSP
managers tailor retargeting windows and budgets based on product
price points and sales cycles, avoiding generic settings.
- Expertise with Streaming and Video Ads:
Familiarity with OLV (Online Video) and Streaming TV (OTT) can add
value to campaigns, especially for brand awareness.
Streaming TV
and Online Video (OLV) Advertising
Sam and Danny
discuss the advantages of Streaming TV (OTT) and Online Video (OLV)
as part of DSP’s offerings:
- OTT vs. OLV: OTT, or Over-the-Top Media, is a
more premium option, placing ads on streaming platforms like Hulu
and Prime Video, while OLV covers a broader online space (e.g., ads
between games or online content).
- Use Cases: Streaming ads are highly effective
for certain brands but come with higher costs, while OLV offers a
budget-friendly alternative for brands targeting broader,
online-savvy audiences.
DSP for
Non-Amazon Sellers
One of the most
forward-thinking DSP strategies involves leveraging Amazon’s
first-party data for external brands:
- Application for Non-Amazon Sellers: Brands not
selling on Amazon, like car companies or public services, can still
use DSP to target potential customers based on Amazon’s deep data
insights.
- Geotargeting and Demographics: For example,
public transit services like LA Metro have used DSP to target
specific areas, showing the versatile applications of DSP
data.
The Role of
DSP in Amazon’s Search and Ranking Algorithm
Sam shares
advanced insights on how DSP impacts Amazon’s ranking system
through behavioral targeting:
- Bayesian Update System: Amazon’s algorithm
adapts based on live data (clicks, conversions), helping
high-performing products “win” visibility quickly while demoting
less successful items.
- Behavior-Driven Launch Strategy: For launches,
a well-optimized DSP campaign can create significant early
traction, contributing to better search rankings.
Common
Pitfalls and Misconceptions in DSP
Sam addresses
frequent DSP errors that agencies and brands make:
- Misleading Attribution: Lack of merchant
tokens can lead to inflated success metrics, misleading clients on
actual DSP effectiveness.
- Uniform Strategy Application: Applying the
same retargeting window or budget across all campaigns, regardless
of product type or target audience, can dilute DSP’s impact.
Amazon as a
Search Engine First
Both Sam and Danny
agree that Amazon’s primary goal is search relevancy, driven by
conversion rates and user experience:
- SEO Principles on Amazon: Amazon prioritizes
high-conversion products to ensure users find relevant, desirable
items. Successful DSP campaigns enhance this by generating
high-quality traffic.
- Cold Start Problem: New products face Amazon’s
cold-start challenges, where initial performance metrics determine
future visibility. DSP’s behavioral targeting can boost early sales
velocity, easing this process.
Closing
Thoughts
Danny and Sam
conclude by reinforcing Amazon’s profit-centric nature, encouraging
sellers to align with Amazon’s goals to maximize DSP benefits. For
sellers looking to experiment with DSP, Sam advises working with
knowledgeable agencies or managers to avoid wasted spend and
achieve incremental gains over PPC alone.
Reach Out to
Sam Lee:
Looking for a
Free PPC Audit?