Are Brands Getting as Much Out of Amazon DSP as they Could?

This article has been updated and originally published in August 2022.

The Power of Amazon DSP for Consumer Brands

A growing industry belief is that display spending is increasing much faster than other Search Advertising spends on Amazon. We took a deep dive into our data and can see that brands are barely scratching the surface of what DSP can do as part of their Amazon Advertising portfolio. Let’s take a look. 

Amazon DSP is an amazing platform, It allows brands to use customer behavior data from the 4^th most visited website in the U.S. to target their digital media.

How Much are Consumer Brands Spending on DSP?

The reason Amazon DSP spending is growing so quickly relative to spend is that it is still only a tiny part of ad spend. Looking at year to date spend for >30 brands, we see that while Display Advertising spend has more than doubled year/year it still only accounts for 1% of average spend, while the vast majority of spend is still on Sponsored Products.

Some brands are spending a lot on DSP, but the vast majority of that spend is still via managed buys directly from Amazon rather than through self-service DSP placements, which give brands far greater control. By allocating only small percentages of spend for self-service placements, mainly to retargeting ads, we believe that’s where most brands aren’t fully leveraging the power of DSP as part of their Amazon Advertising portfolio. Here are some reasons why.

How does DSP Perform Compared to Search Advertising?

While Sponsored Products Advertising (search) still outperforms display advertising in terms of raw Return on Ad Spend (ROAS), DSP Ads drive a larger halo spend than search advertising (27% vs. 16% for Sponsored Products). This shows that, if properly targeted and managed, a program that combines search and display advertising can be more effective than a program focused heavily on search at driving increases in total sales.

Who is Getting the Most Out of DSP and Why?

Performance varies across categories, with Personal Care categories showing the best combination of spend and performance

The behaviors that are currently driving higher than normal performance for Display Ads and represent real opportunity are:

• Targeting competitors
• Using “Audience” targeting to find customers that are browsing but not buying on detail pages of related products

The best way to leverage DSP opportunities is to combine the power and flexibility of self-service placements. That’s where an AI-driven platform like CommerceIQ can help by quickly making adjustments to spend based on holistic metrics like total sales and share of digital shelf. An ad tech platform makes it much more possible to do the following:

• Identify competitor target products that are out of stock
• Automatically focus spend on ads that drive better organic search position, maximizing the halo spend advantage display ads have

Are you maximizing your Amazon ad spend budget mix? Find out how a technology-driven approach can help by requesting a demo today.