An Introduction to Amazon DSP

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Amazon’s Demand Side Platform has often been viewed as a lesser platform than many of its competitors, lacking a few of the key components necessary to make it a true ‘hit’.

Many users have instead described their relationship with the Amazon DSP as born out of necessity, rather than a true belief in its capabilities.

However, it seems that the tide is starting to turn for Amazon, with more people using the platform and getting to know how it works.

The key competition to Amazon DSP has long been Google, but now Amazon is starting to significantly overtake its closest competitor.

What is Amazon DSP?

Amazon DSP – short for Amazon Demand Side Platform – is a platform designed for advertisers who want to buy video ads and display ads.

It provides a variety of key features which help it to stand out from the crowd, including exclusive access to Amazon audiences.

Audiences can be reached both on and off Amazon programmatically via Amazon Publisher Services and a range of third-party arrangements, helping to ensure one of the most comprehensive advertising platforms of its kind.

Advertisers also have access to Amazon’s exclusive inventory on Amazon O&O and IMDb only through Amazon DSP.

In addition, DSP provides a range of solutions to help brands evaluate their bids, and safeguard their reputations and quality standards to the highest possible level.

Ad formats

Ads generated with Amazon DSP can be created in these formats:

  • In-stream video ads – These adverts can be used in video content, allowing advertisers to access customers who are streaming online.
  • Dynamic e-commerce ads – These ads are generated based on prior shopper behaviour, helping to ensure their relevancy.
  • Mobile interstitial ads – These ads are delivered in a full-screen format on mobile apps, and appear during applicable ‘breaks’ and transitions for a seamless advertising experience.
  • Mobile and desktop display ads – These ads can be displayed on desktop and mobile devices, accessing customers (and potential customers) wherever they are.

Who should use Amazon DSP?

Amazon DSP can be used by brands who want to buy display and video advertising on a large scale. It allows users to grow their existing reach further, and can also be utilised by users who don’t currently sell on Amazon yet want to use Amazon to grow their audience.

There are two options for managing your Amazon DSP ads, as they can be either created self-service or managed by Amazon. Self service is only accessible via an agency, rather than the brand itself.

Key benefits of Amazon DSP

In addition to growing in its own right, Amazon has an advantage over Google, in that it is also developing in new segments of programmatic markets.

Amazon’s ability to use the first party data to report back on how users have engaged with adverts also gives their DSP an edge over any other in this ecosystem.

The history of Amazon’s advertising capabilities lie in managed services, but the platform has also worked at adding significant and agile capabilities in the self-service category. This ensures that regardless of the level of guidance each advertiser requires, Amazon is able to meet their needs.

There are a few key benefits of using Amazon DSP, which attract brands and their agencies alike. In short, the platform can be used as a way of:

  • Developing brand awareness – A major consideration for brands which are still growing a following, as Amazon DSP helps them to strengthen their existing presence and improve visibility. Brands who want to get more attention can achieve this goal with strategic use of Amazon DSP.
  • Boosting consideration – If a brand has already developed reasonable awareness yet is still struggling to be considered alongside key competitors, then this is another area in which the Amazon DSP can help.
  • Fuelling purchase behaviour – Purchases can also be encouraged via the Amazon DSP, helping to re-engage with prospects who have already seen the products for sale yet, for whatever reason, did not choose to buy.

What is programmatic advertising?

To fully understand the appeal of Amazon DSP ads, it’s important to also understand the power of programmatic ads. This process involves buying (and selling) digital ad placements using a dynamic pricing structure.

This process gives advertisers the chance to adjust the price of each of their bids, and in turn allows them to keep track of their budgets and scale according to the perceived ‘worth’ of each impression of their campaign.

For advertisers who want to be efficient in optimising their budget, it’s a fantastic way to achieve this goal.

Key facets of programmatic ads include:

  • A dynamic pricing process
  • The ability to bid on impressions and get ads seen by a custom audiences
  • An automated buying process

The ability to target ads to the right audience allows brands to limit their wasted budget, and ensure ads reach that audience at the most appropriate time.

Why does Amazon have an advantage?

Mockup of many phones with Amazon spelled on their screens

Amazon tracks customer behaviour at each stage of the purchase process, and facilitates easy integration across other platforms. This helps the platform have a further advantage over competitors which is contributing to enhanced trust and usage amongst advertisers.

Using the Amazon DSP, advertisers have the chance to develop greater awareness at every level of the customer journey. Amazon DSP can be used for a number of key marketing goals, whether aimed at brand awareness or sales – making it a particularly flexible part of Amazon’s advertising capabilities.

How is Amazon DSP growing?

The number of people using Amazon has grown massively over the past few years and use of Amazon advertising solutions has grown with it.

The usage rate of Amazon DSP has grown significantly since 2017, not encompassing around 46% of all digital ad purchases. This can be easily compared favourably to the performance of Google, which has seen its usage drop to just 33% during the same time frame.

Many players have attempted unsuccessfully to dominate the DSP space, with both AOL and Google making significant strides in this area. Verizon Media and further competitors such as The Trade Desk have also played their role, but it seems as though Amazon DSP is setting itself up for longevity.

Amazon has overseen billions of shopping transactions, as one of the largest e-commerce platforms in the world. Amazon has one of the largest databases for online shopping globally, and for many advertisers, this presents the true value of Amazon DSP over its closest competitors.

Less than a year ago, Amazon DSP was still struggling to compete on the same playing field as Google, but is now overtaking this digital advertising giant in ways which will probably not surprise its growing number of happy customers.

Advertisers reducing their advertising platforms

Alongside Amazon DSP’s expansion, advertisers are actively working to cut down on the number of DSP’s they use at any given time. This is another reason why Amazon is experiencing growing success.

Ad buyers are able to reduce their costs in all areas of the advertising process by simply reducing the number of platforms they engage with, which is a positive step for the advertisers and brands themselves, but could prove problematic for the platforms they use.

Many DSPs have similar, even indistinguishable features. This lack of differentiation means that those which do not have a specific niche and scalability will inevitably suffer as advertisers make moves towards smarter, more streamlined activities.

While many companies have tried their hand at building an effective DSP, their market share is largely reducing while Amazon’s grows. This is in many ways another inevitability of the marketplace, as a competitive arena will begin to narrow down to its most effective players after a period of fluctuation and fierce competition.

Amazon DSP competitive Advantage

In summary, the key reasons for Amazon DSP’s competitive advantage can be outlined as follows:

Self-service options

instead of demanding that users opt for a managed service, Amazon DSP has a self-service option which helps to lower the barriers to entry and enables more advertisers to use the service in a way which works for them and their goals.

This is particularly appealing for digitally-savvy advertisers who know what they want and don’t want to rely on outwardly-managed campaigns to get there.

Lower fees

Having lower fees than many competitors ensures that advertisers and brands feel safer in getting involved in the process. There is a smaller than average initial investment required, which boosts confidence. This again also allows a wider audience to access the service, effectively making the Amazon DSP one of the more accessible platforms in this space.

Advertisers reducing their DSP platforms

As advertisers use fewer DSPs to cut costs and streamline their activities, only platforms which are effective and offer something specific will be able to gain sustained success. It is estimated that the current number of DSPs advertisers work with ranges between 2-4 at any given time.

This shrinking usage of a wide variety of DSP platforms in turn means that some of the DSPs which were previously engaged with will start to shrink from the digital marketing space – or at the very least, will have to re-think their current strategy if they wish to continue competing with companies like Amazon in a meaningful way.

Unique data

This is perhaps the most important factor amongst advertisers, with data that advertisers can use to enhance their own strategies. Amazon makes the most of its world-leading status as an online marketplace and transfers the wealth of data accumulated to brands and advertisers who can use it to their own benefit. Such an extensive inventory appeals to advertisers and allows them to monitor their activities more meaningfully.

The ability to target audiences based on prior shopping history is a fantastic way to ensure relevancy in programmatic ads, and this is something that Amazon offers its users in abundance.

Why use Amazon DSP?

Person sitting at desk working on a laptop

Amazon DSP allows advertisers to boost their brand exposure and increase their Amazon sales. However, the tool is not for all Amazon sellers. To use the platform, you should already be the brand owner and have developed a strong online presence with healthy profit margins.

Using this platform along with Amazon Sponsored Ads will allow users to further develop their online reputation and give their branding a significant push in the right direction. In addition, DSP also allows users to push traffic from sources outside of Amazon in an efficient and effective way.

Amazon DSP Vs Sponsored Display Ads

Amazon Sponsored Display ads are similar to DSP with both allowing the retargeting of audiences and the ability to reach audiences on and off the Amazon platform.

There are a couple of key differences though:

  • DSP allows greater flexibility and control – choosing the audience, price points, and other elements of the campaign.
  • The barrier to entry for DSP is higher

Getting the most from Amazon DSP

Before beginning any Amazon marketing strategy, it’s important to first understand the overarching goals of the advertising activity which is planned.

For brand awareness strategies, we recommend focusing on exposure, showcasing products and the brand itself to a wider audience who may not have the same knowledge of the brand as more devoted audiences.

These campaigns should judge success by click through activity, page views and impressions.

For strategies driven by sales, look for the return on investment of activities. These advertising strategies can work on retargeting customers who may have already encountered the brand, and coax them into making an all-important sale.

How to get started

It is possible to select either managed or self-service options when using Amazon DSP, helping advertisers keep as much control as they want.

We recommend opting for the managed service if you have limited experience in the world of programmatic advertising, though this option is accompanied by strict minimum spending limits.

We are a specialist Amazon DSP agency so if you need any assistance, be sure to get in touch and we will be happy to help.

You can get started here: https://advertising.amazon.com/en-gb/solutions/products/amazon-dsp

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