The Future of Programmatic Advertising on Amazon

Image of a smart phone with Amazon DSP open on the screen

Getting advertising right is the key to outpacing your competitors on Amazon. For ecommerce managers and sales leaders, understanding the future of programmatic advertising on Amazon is key, especially when dealing with underperforming ads.

Programmatic advertising on Amazon is like the backstage magic in the digital ad realm, where ads are purchased automatically based on data-driven criteria. Programmatic ads incorporate accurate targeting, cost-effective investment, and customized messages. 

Programmatic Ads on the Amazon DSP

Amazon DSP is a demand-side platform that allows advertisers to automatically purchase and optimize display, video, and audio ads on Amazon-owned sites and certain third-party sites.

Simply put, a DSP automatically connects supply and demand for ad space.

When visualizing the marketing and advertising funnel (awareness, consideration, conversion, and loyalty), DSP typically takes place at a high level. DSP ads begin by increasing brand awareness and then continue to target new and existing audiences at each stage of the buying journey.

Over time, Amazon has changed its advertising strategy from relying on conventional tactics to more advanced programmatic approaches. The drivers behind this evolution are:

The Current State of Programmatic Advertising on Amazon

Types of Programmatic Amazon DSP Ads

There are several ad types used in Amazon programmatic advertising. To reach their target audience, advertisers use Streaming TV, Online Video, Streaming Audio and Display Ads. Several factors determine placement such as bid, targeting, and optimization features.

Where Do Amazon DSP Ads Appear?

There are three options for Amazon DSP placement:

Amazon DSP provides increased brand visibility by running ads where customers shop and get entertainment, both on and off Amazon.

When in the Advertising Funnel is Amazon DSP Used?

The DSP can be used at the top of the funnel to build brand awareness and further down the funnel in retargeting purchasers with display ads. Advertisers can build audiences for each stage of the customer journey using segments such as demographics, lifestyle, life events, and customers in the market for certain goods.

Competition and Trends

The Amazon advertising market is highly competitive and trends are always shifting. Advertisers must stay on top of rapid changes in the space. Some examples of advertising changes include the rising popularity of video ads, improved targeting possibilities, and the incorporation of external data to understand customers’ preferences.

Difficulties Faced by Amazon Advertisers
Although there are many advantages, advertisers have to contend with serious challenges. These problems include:

1. Fierce Competition: Amazon advertisers face tough competition as numerous brands vie for attention, requiring strategic differentiation.

2. Soaring Ad Costs: Ad costs on Amazon are rising, demanding effective budget management and campaign optimization for a positive ROI.

3. Algorithmic Changes: Frequent Amazon algorithm updates impact ad visibility, requiring advertisers to adapt swiftly for optimal results.

4. Programmatic Complexity: Finding and solving programmatic advertising complexities requires a deep understanding that enables the advertiser to leverage its full potential.

5. Data Privacy Challenges: Adhering to guidelines around the privacy of consumer data is a critical requirement for all advertisers. 

6. Consumer Behavior Shifts: Adapting and following the trends of changing consumer behavior is crucial. It requires agile strategies to stay relevant and impactful in an increasingly competitive field.

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The Role of Data and AI in Programmatic Advertising

The core element of Amazon’s programmatic advertising is data. By analyzing this data, marketers can create more individualized and targeted advertisements by gaining future insights into the behavior, interests, purchasing patterns, and other relevant points of their target audience. Brands can promote special offers, discounts, and other seasonal sales based on data and measure growth and efficiency.

The Significance of AI and ML

Artificial intelligence (AI) and machine learning (ML) enable dynamic ad optimization. By analyzing vast amounts of data in real time, these technologies enhance ad performance. The focus is on specialization and personalization, ultimately improving overall results.

Targeting and Personalization Strategies

Amazon’s programmatic advertising mostly depends on targeted ads and customized content related to customers’ tastes and preferences. AI-driven algorithms and data analysis help marketers:

  • Create customized messages for specific audience segments 
  • Boost engagement 
  • Customer conversion rates

The Future is Promising

Amazon’s programmatic advertising future is promising. Advertisers can expect innovations in ad formats, strategic placements, deeper integration with Amazon’s ecosystem, and enhanced measurement and analytics for more effective campaign assessments.

Regulatory and Privacy Considerations

It’s critical to comply with the rules and regulations for customer privacy. In addition to keeping your brand compliant with federal laws, it builds trust with your customer base.

Advertiser Strategies for the Future

Developing future-proof tactics is essential for brand success in the dynamic world of Amazon advertising. That’s where partnering with a dedicated Amazon advertising agency like WBX Commerce adds tremendous value. Agencies take the heavy lifting out of navigating Amazon’s complex advertising ecosystem and set up campaigns that outpace the competition. 

Adjusting to Changing Policies and Algorithms

Because Amazon’s algorithms are always changing, advertisers need to be flexible. Maintaining advertising effectiveness requires understanding changes and acting quickly to adjust.

Increasing Brand Awareness and Customer Lifetime Value

Advertisers’ main focus should be on creating a strong brand presence integrated with increasing customer retention rates. Brands can keep customers happy and grow loyalty with exceptional customer service and branded experiences. 

Importance of Working with a Dedicated Amazon Advertising Agency 

Working with a seasoned Amazon advertising agency gives you access to cutting-edge targeting technologies. At WBX, we use data from the Amazon Marketing Cloud to formulate highly targeted audiences on the Amazon DSP (demand-side platform). 

Contact WBX Commerce for Expert Amazon Advertising Management

At WBX, our technology enables our Amazon advertising management team to manage campaigns precisely and efficiently. For each of our partners, we optimize, scale, and automate campaigns to get the greatest return on each investment. You can focus on building a portfolio of great products and leave the heavy lifting of your Amazon growth to us. Ready to drive profitable performance? Contact us today.