Sponsored Products (often abbreviated to “SP“) are advertisements on Amazon that are always displayed when the keywords or products match the customer’s search query or are highly relevant to it. This form of advertising is available to both vendors and sellers (provided they have registered their brand in the trademark register). It is what is known as PPC advertising(abbreviation for “Pay Per Click”). This means that retailers pay for their ads as soon as they are displayed on Amazon’s search results page and clicked on by potential customers. It is irrelevant whether the customer ultimately buys the product. The costs are already incurred when the respective ad is clicked on.
Sponsored products are used to advertise individual product listings. The aim is to drive more traffic to the respective product detail page. This form of advertising is probably one of the most common in Amazon Advertising.
Where are sponsored products displayed?
Sponsored products hardly differ from the organic search results. Ultimately, they can only be recognized by the grey “Sponsored” label. The ads are displayed in different places. On the search results page, SP ads can be found above, between and below the organic search results.
But sponsored products can also be found on product detail pages, e.g. under the Buy Box, in a carousel under the product description and often again in the customer reviews section.
An algorithm decides where and whether a Sponsored Product ad is displayed. Ultimately, however, it also depends on how much you or your competitors bid for a keyword. The aim is, of course, for the SP ad to be displayed in one of the first positions. This position offers the greatest chance that potential customers will click on the product and, in the best case, buy it.
A small example shows how PPC advertising works:
Two sellers offer a table grill and want to push sales with the help of sponsored products. Seller A offers a maximum amount of 0.40 euros for the search phrase “table grill gas”. Seller B bids a maximum of 0.50 euros for the same search phrase. If a potential buyer enters this search term in the search field on Amazon, both bids compete with each other. As a rule, the seller with the higher bid wins. The advantage for Seller B in this case would be that he would not have to pay his stated maximum bid of 0.50 euros, but only 0.41 euros. Even this one cent is enough to outbid Seller A.
When are sponsored products displayed?
For an SP ad to be displayed, the vendor or seller must not only have placed the highest bid for a keyword as described above, but must also be in possession of the Buy Box. As soon as a merchant loses the Buy Box, the Sponsored Product ad placed for it is also paused. For the retailers concerned, this has the advantage that no advertising costs are incurred for a product that customers cannot currently buy. In addition, no advertiser on Amazon is interested in placing ads for their competitors’ products and improving their conversion rate.
In general, the goal of every merchant should be to own the Buy Box for a product – and not just to advertise it. As a rule, the Buy Box is always awarded to the seller who, from Amazon’s point of view, offers the best “overall package” of offer and seller performance for the end customer. In fact, most customers click directly on the “Add to cart” or “Buy now” button. Very few customers look at what other shopping options are available, as these really have to be “actively” searched for. The list of alternative sellers can only be accessed by clicking on “New & used” or further down on one of the sellers under “Other sellers on Amazon” – a detour that most consumers avoid.
What forms of sponsored products are there?
With Sponsored Products ads, advertisers have two options. The campaigns can be created and controlled either manually or automatically. SP ads are therefore also ideal for advertisers with little experience in performance marketing.
As ads are only displayed if they match the search query of the potential buyer, it makes sense to get an overview of the different keyword match types in advance. By entering the desired keywords in the Sponsored Product Ad, you can control the search queries for which the ad is displayed. Retailers can differentiate between the following match types:
- Broad: The keyword does not have to match the buyer’s search query exactly.
- Exact: The keyword and the customer’s search query match exactly.
- Phrase: The keyword is contained in the search query.
To prevent ads from being displayed for inappropriate search queries, irrelevant search terms can be excluded using negative keywords. This can also reduce wastage and therefore unnecessary costs. With negative keywords, a distinction is made between the exact and phrase match types.
The following table explains the different keyword match types using the search term “shampoo oily hair”:
| Keyword types | MATCH-TYPE | WITH AGREEMENT | WITHOUT AGREEMENT |
| Positive | BROAD | shampoo for oily hair ladies, dry shampoo for oily hair, shampoo for oily hair | shampoo blonde hair, shampoo and shower gel, shampoo conditioner |
| EXACT | shampoo oily hair | silver shampoo oily hair, shampoo oily hair 200 ml | |
| PHRASE | shampoo oily hair men, solid shampoo oily hair | oily hair solid shampoo, oily hair shampoo soaps | |
| Negative | EXACT | shampoo blonde hair | |
| PHRASE | shampoo oily hair against dandruff |
Targeting, i.e. the orientation of a campaign, determines when and for which search query an ad is placed. With the help of the above-mentioned match types, sellers and vendors can ensure that the right product is advertised for the corresponding search query. Now you have to decide whether you want to control your Sponsored Products ads automatically and/or manually. Both types differ in terms of effort and accuracy.
Sponsored products: automatic targeting
With automatic ads, Amazon takes over the targeting. Based on listing information and the respective product category, Amazon independently decides which keywords or products the campaigns should target. As setting up automatic Sponsored Products ads takes very little time, this type of campaign placement is a good option, especially for Amazon Ads beginners. In addition, automatic ads can be used to find keywords that you may not even have thought of. This point is particularly important if you want to transfer the results of the automatic ads into a manual Sponsored Products campaign later on.
The following targeting options are available for automatic ads:
- Close match: The ad is displayed when a buyer uses a search term that is closely related to the product.
- Remote match: The ad is displayed when the potential buyer enters:in a slightly broader search term.
- Supplements: These are search queries that supplement the product.
- Substitute products: At this point, the ad is directed to search queries that are very similar to your own product (possibly from a different brand).
Tip: In order to better track the individual targeting options, it can be useful to display each targeting in one campaign instead of one campaign with all four targetings. This has the advantage that each playout can be assigned to exactly the right targeting. The budget can also be defined individually for each targeting option. The whole thing requires a little more effort, but is a good decision in the long term.
However, negative product and keyword targeting can also be used here to exclude unsuitable search terms and categories. This reduces the likelihood that customers will click on the ad even though the search query and purchase probability do not match your own product. In the best case scenario, costs incurred due to unsuitable clicks can be avoided.
How can you tell if a keyword should be excluded?
- Inappropriate content: The keyword for which we are displayed simply does not match the product. Let’s assume we are advertising a hyaluronic serum and are displayed for the keyword tablecloth. This probably makes little sense and no traffic is generated.
- Poor performance: This point can only be assessed once the campaign has been running for a while and analyzable data is available.
These are just a few pointers, but they are very clear. Incidentally, these characteristics also apply to manual sponsored products.
As already mentioned, auto campaigns are relatively simple and quick to create. Compared to manual sponsored products, however, they are not as granularly controllable. For this reason, it makes sense to run both campaigns and to transfer the findings from the automatic campaigns to the manual campaigns after a certain period of time.
After successfully transferring relevant keywords into manual sponsored products, this search phrase should be negated in the auto campaign, i.e. specifically excluded from the application.
Here is a small example: The keyword “shampoo oily hair” is recognized as relevant and high converting in the automatic playout and is therefore specifically advertised in a manual SP campaign with the match type “Exact”. This exact search query is then excluded from the auto campaign. With this approach, a very detailed picture of the exact keywords advertised that really match the product can be achieved over time.
Sponsored Products: manual targeting
Compared to auto campaigns, manual Sponsored Products are somewhat more time-consuming. However, manual campaigns are also much more precise in their targeting, so the effort can be worthwhile.
In manual campaigns, relevant keywords and products are researched and booked by the retailers themselves (usually with the help of tools). However, as mentioned above, automatically generated search terms or products can also be transferred to manual SP campaigns. These can then be granularly controlled and optimized in terms of their advertising efficiency. Here too, it is possible to filter out irrelevant search queries with negative keywords and negative product placements. Keyword targeting is carried out using the aforementioned match types. Product and category targeting can be applied to categories and sub-categories as well as to specific products. These products can be booked using filters such as brand, price and ratings. Unwanted brands and products are excluded using negative product targeting via ASIN.
This may seem a little time-consuming at first glance, but it is worthwhile, especially for top-selling items. The potential of such articles should definitely be exploited. It is important to mention at this point that you should book match types and keywords with caution. If these do not match the product, there is a risk that the costs for this sponsored product ad will be too high. The ACoS would also be worse in this case. In addition, incorrect targeting can also lead to too few or no impressions being generated. Due to a lack of relevance, the SP ads are then no longer displayed at all. Although no costs are then incurred (what is not displayed cannot be clicked on), no traffic is generated either.
A decisive advantage of manual SP ads is category and product targeting. This allows sponsored products to be targeted more precisely and limited to specific product pages or categories.
- Targeting on products or ASINs: If the targeted product/ASIN is in first place in the organic search results, the ad is also displayed. Negative product targeting can be used to control which products the ad should or should not be displayed with. If an unwanted product appears in the organic search results, the SP ad will not be displayed.
- Targeting on categories and subcategories: The ad is displayed as soon as the first organic search result belongs to the targeted category or sub-category.
Advantages and disadvantages of automatic and manual sponsored products
Before deciding on automatic and/or manual campaigns, you should consider the advantages and disadvantages of both forms.
Advantages of auto campaigns:
- Easier to handle as it is created automatically (based on product description and category assignment)
- usually associated with less time expenditure
- Good introduction for sellers or vendors who are not yet very familiar with Amazon Advertising
- provide a good basis for creating manual campaigns
Disadvantages of automatically generated campaigns:
- Not as granularly controllable as manual campaigns
- generally less efficient
Advantages of manual displays:
- Product and category targeting can be applied to categories and subcategories or to specific products
- can be controlled very granularly
- can be optimized in terms of advertising efficiency
- Well-running, automated campaigns can form a good basis and be easily converted into manual sponsored products
- Irrelevant search queries with negative keywords and negative product placements can also be filtered out here
Disadvantages of manual displays:
- more complex to handle
- You have to take care of the investment and administration yourself
- Keyword and product lists must be created and maintained independently
- Bids must be regularly adjusted upwards or downwards
- You should have enough time and expertise
So much for the theory: the next section will now deal specifically with the creation of sponsored products.
How do you create sponsored products?
When creating sponsored products, it is necessary to create a sensible structure and thus a solid foundation right from the start.
In Seller Central, sellers go to the tab Advertising -> Manage campaigns – > Campaigns -> Create campaign. Vendors create their ads via Amazon Ads. Here they first log in, select the country for which they want to place ads and then click on the advertising console. From here, the path is identical to that of the seller (Campaigns -> Create campaign).
Both sellers and vendors will then be taken to the “Select campaign type” option:
Here, retailers can choose between the following options: Sponsored Products, Sponsored Brands or Sponsored Display. In this case, we opt for Sponsored Products. First, we start by creating an automatic SP campaign.
Creation of an automatic Sponsored Products campaign
Before the first campaigns are created, it is necessary to think about a sensible structure and naming. Particularly in view of the fact that further campaigns will be launched over time, these should be well structured from the outset and named in such a way that all Sponsored Product ads can be meaningfully assigned even after a longer period of time. The campaign structure should also be aligned with the previously defined objectives. These goals can vary depending on the product. Whether it is increasing performance, achieving higher visibility or launching a new product – each of these goals must be considered individually. The campaign is then structured according to category or product type.
Once all these considerations have been made, you can get started:
- Define campaign name: As described above, this step is particularly important. Care should therefore be taken to ensure a good structure in the campaign name.
- Define end date for sponsored products: For special promotions or holiday offers, it can be useful to define an end date. Normally, however, this can be dispensed with, as automated campaigns are the ideal basis for displaying keyword performance. An optimal evaluation can only take place if the SP campaign can also show a longer history.
- Determination of the daily budget: The daily budget is intended to ensure that the campaigns are played out throughout the day. To do this, enter the desired amount in the “Daily budget” field.
Tip: It is best to start with a low daily budget, as the campaign ideally “only” serves as a basis for keyword research for manual sponsored products to be set up later. However, the budget can always be adjusted afterwards. It is important to know that the budget is not fixed but flexible. It can be higher or lower from one day to the next. Overall, however, the budget for a month is not exceeded. The calculation is as follows: Daily budget x days in the month. - Targeting: As soon as a search query appears to be relevant for Amazon, the Sponsored Product campaign is automatically assigned. This search query then also appears in the search term report, which you should urgently download. These results are important for subsequent manual SP ads.
- Creation of an ad group: The products to be advertised are assigned to the respective ad group.
- Defining the bidding strategy: 3 campaign bidding strategies are available here:
– Dynamic bids – only lower: Amazon lowers the bid if the ad is unlikely to lead to a sale.
– Dynamic bids – increase and lower: Amazon increases the bid by up to 100% if there is a high probability that the ad will lead to a sale. However, the bid is also lowered if the probability is rather low.
– Fixed bids: Amazon does not make any changes to the bid. Only the seller or vendor can do this themselves.
At the beginning, it is recommended to work with “lower bids” or “fixed bids”. A standard bid is then set. This bid is used to determine the click price. If, for example, a price of EUR 0.40 per click is selected for a daily budget of EUR 24.00, this corresponds to 60 clicks. - Adjustments with the bid modifier: Bid adjustments of up to 900% are possible with this. For the start of an automatic Sponsored Product campaign, however, you can disregard this part for the time being.
- Book negative keywords: Unsuitable keywords can be excluded in the last step. These can also be added at a later stage.
- Start campaign: Once the “Start campaign” button has been clicked, you can get started straight away
Creation of a manual Sponsored Products campaign
Automatic sponsored products are a perfect basis for creating manual campaigns, but tools can also play a major role in the search for suitable keywords. As with automatic campaigns, good structuring is particularly important here too. Most of the steps of the automatic campaigns can also be used for manual Sponsored Product Ads.
You can be a little more generous with the daily budget than with automatic sponsored products, as the control options for manual SP campaigns are much finer. The standard bid can also be increased slightly here.
Under “Keyword targeting”, a list of keywords is suggested by Amazon under “Suggested”. You can also add your own keywords from research under “Enter list”. You can also select the match type here (broad, phrase or exact – broad, phrase, exact match).
Amazon then displays suggested bids per keyword. This bid can be adjusted manually by the seller. Finally, any negative keywords are added and the campaign can be started.
Optimization of sponsored products
Before you optimize your campaigns, you should think about how high the advertising costs should be. A good indicator for this is the ACoS. It indicates how high the turnover is in relation to the advertising costs. The ACoS is calculated as follows: ACOS = advertising costs/sales x 100
IMPORTANT! But not only the ACoS should be considered. You also need to look at the production costs, Amazon fees, shipping costs, etc. in advance. This part is actually one of the first points that should be considered. How high is the profit if all fees and costs are deducted from my turnover? This question should be clarified at an early stage.
Once these points have been clarified, you should keep your hands off them in the first two weeks after creating the campaigns. Especially at the beginning, the values often look rather unfavorable. However, Amazon needs a certain amount of time to collect data on the performance of a campaign. Only then can decisions be made and the campaigns optimized. And here too, automatic and manual campaigns must be considered separately.
However, to be able to make a decision on where and what can be optimized, sellers or vendors should view the data in the campaign manager under Amazon Ads. Here you will find data such as spend, sales, impressions, clicks, ACoS, ROAS and much more. These KPIs are useful indicators for evaluating campaigns.
Optimization of automatic sponsored products
If you click on Auto Campaigns in the Campaign Manager, you will be shown all the search terms that Amazon has targeted for the advertised product. The aim is now to find out which keywords are performing particularly well or particularly poorly.
Poorly performing keywords can be recognized by the fact that they generate a lot of spend but no or only a few sales. By looking at these values, sellers or vendors can find out which keywords are unsuitable. You should create a list of these search terms and then exclude these keywords.
For keywords that are performing well, retailers should pursue the goal of converting these into manual campaigns. Here too, expenditure, revenue, AcoS and other KPIs must be considered.
Optimization of manual sponsored products
Sellers or vendors should transfer the keywords that they have previously identified as successful in the automatic campaign to the manual Sponsored Product Ads. Here, too, it is important to look at income and expenditure. If the performance is poor, the budget should be reduced and if the result is good, it should be increased. But here too, it is important not to lose sight of the previously defined goals.
Important: Whether automatic or manual campaigns, sellers and vendors should always track performance and results precisely. This is the only way to achieve good alignment of the Sponsored Product campaigns in the long term.
Conclusion on sponsored products
Sponsored Products are an important component for any seller or vendor who wants to offer their products successfully on Amazon. Since manual and, above all, automatic campaigns can be created relatively quickly and easily, this type of campaign is the ideal way to get started – even for sellers who do not yet have much experience with Amazon Advertising. In the long term, however, Sponsored Products should always be a fixed component, as they are largely responsible for sales success.
The experts at ameo are happy to assist you with the setup and management of campaigns. We know from many years of experience how time-consuming and complex a professional campaign setup can be. With sometimes several thousand manual advertising campaigns per marketplace and customer, we ensure maximum controllability and advertising efficiency. With the right combination of automation, human control and professional expertise, we regularly develop our advertising strategy further. Let’s take a look at your campaign activities and goals together.