Amazon Demand Side Platform (DSP): Into The Great Unknown

What is Amazon DSP (Demand-Side Platform)?

It’s no secret that Amazon Advertising is booming, and it’s revenue continues to grow. Obviously, the vast majority of this revenue comes from PPC advertising, but today’s post is about the other side of the advertising coin: Amazon DSP.

Amazon DSP is a “Demand-Side Platform” that enables advertisers to programmatically buy display and video ads. The platform let’s sellers reach audiences across both Amazon-owned sites and apps, like IMDb, and leading publishers’ sites through direct inventory from Amazon Publisher Services and third-party exchanges.

Huh, kinda feels like we’ve seen this before….

Anyway, DSP is unlike other ads on Amazon in that is not Pay-Per-Click! Instead, DSP is an impression-based model that is CPM (“Cost Per Thousand Impressions”). That means your bidding strategies will be based on awareness/reach and not sales.

Speaking of starting DSP, you may not be able to. Amazon is only letting companies with over $35,000 in ad spend use the platform.

Why is DSP Guarded?

So why is DSP so exclusive? The impression-based model has a lot to do with Amazon only letting large companies use the platform. 

With this model comes a unique set of challenges:

• DSP can’t be scaled in the same way as paid search.
• With sponsored products you set bids, keywords, and your budget. DSP has an entirely different system, and a more restrictive one. DSP requires a relationship with Amazon, and doesn’t give a seller 100% control of the DSP account.

There’s also a spend requirement for agencies and individuals to use DSP, hence our earlier statement about needing $35,000 in ad spend to gain access. The exact spend requirement for agencies isn’t published by Amazon.

DSP and Your Funnel

So, let’s say you can afford DSP and are invited, where would it fit into your funnel? 

DSP is a top of funnel and middle of funnel tool. You won’t see anywhere close to the same conversion rates and ROAS as Sponsored Products. 

That being said, Amazon DSP has a lot more information about households and customers than Seller Central. The platform is extremely effective for top of funnel brand awareness.

For example, let’s say you make kitchen appliances and you want to use demographic and psychographic information to target your ads, DSP allows you to dig deep into targeting.

Another key feature of DSP’s targeting is consideration. 

For example, if you’re looking for a coffee maker on Amazon and browsed through a couple listings, Amazon DSP might tag you as someone who’s considering buying a coffee maker. This can be incredibly effective for a company who sells coffee makers because after you leave Amazon.com, you can be served an ad on another site.

Data and DSP

One thing we hear a lot from sellers who start running DSP is a frustration with the data they get back. There might be different classifications of retargeting groups, but you can’t see the pages that got clicks and led to conversions. Even with psychographic information, you can’t see the performance of each audience.

Amazon makes it so you have to be totally invested in the platform (seller/vendor account, premium analytics purchase, DSP) to get the most data possible and that’s still very limited.

Silver Lining of DSP

There must be an upside to this platform, right? Absolutely.

If a seller has the right goals and expectations, DSP can work for them. Sellers can target customers who are researching competitors’ products or are very likely to be in the market for a certain product. 

In addition, DSP and PPC can be very effective when used together. According to Amazon, 10X more high intense shoppers can be reached with the combination rather than PPC Alone.