Building a Full-Funnel DSP Strategy For Amazon Sellers
Danny welcomes Sam Lee, an Amazon DSP expert with years of experience at companies like Thrasio. Sam provides insights into the Amazon DSP (Demand Side Platform), a less accessible yet powerful tool compared to Amazon's PPC. DSP allows for advanced targeting using Amazon's first-party data, perfect for those ready to expand beyond traditional ad methods. Danny and Sam dive into the essentials of DSP, covering campaign structures, targeting methods, and common pitfalls that many brands face when venturing into DSP.
What is Amazon DSP?
Sam explains that Amazon DSP is different from traditional Amazon PPC in accessibility and functionality:
- Barrier to Entry: DSP isn't as easy to access as Seller Central; it requires Amazon-approved agencies or meeting certain spend thresholds.
- Initial Challenges: Early misuse led to its reputation issues, as many advertisers applied blanket strategies, not optimizing DSP for unique brand/product needs.
Building the Full Funnel
Sam emphasizes a strategic approach to DSP that adapts to product price points and buying cycles, avoiding a one-size-fits-all approach:
- Understanding Customer Journey: Higher-priced products require longer consideration windows, so retargeting timelines should vary.
- Tailoring Campaigns by Product Type: A $10 product doesn't need a 30-day retargeting window, while a $200 product may need up to 45 days to properly engage the audience.
Key Metrics for Success in DSP
To evaluate DSP campaign effectiveness, Sam discusses focusing on core metrics:
- Return on Ad Spend (ROAS) and Total ROAS as primary performance indicators.
- Effective Cost Per Detail Page View: Lower costs (below $1) signal efficient DSP campaigns, with top performers achieving $0.50 or less.
- Percent of Purchases New-to-Brand: Indicates how well DSP attracts fresh customers, avoiding retargeting those already inclined to purchase.
Sam highlights Amazon Marketing Cloud (AMC) as a tool to monitor customer touchpoints in the purchase path, offering more transparency into DSP's role in converting new users.
DSP Budgeting Insights
One misconception Sam dispels is that DSP requires excessive budgets to yield results:
- Optimal Spend Range: While larger budgets provide more data for refinement, DSP can still be tested effectively at lower levels if PPC campaigns are fully maximized first.
- Synergy Between PPC and DSP: He advises investing as much as possible into PPC until returns diminish, then strategically layering DSP to further boost conversions.
Evaluating DSP Managers
When hiring or assessing a DSP manager, Sam recommends looking for these critical skills:
- Sales Deduplication Knowledge: A solid understanding of deduplicating sales between DSP and PPC, often through merchant tokens, which ensure accurate attribution.
- Customized Campaign Strategy: Effective DSP managers tailor retargeting windows and budgets based on product price points and sales cycles, avoiding generic settings.
- Expertise with Streaming and Video Ads: Familiarity with OLV (Online Video) and Streaming TV (OTT) can add value to campaigns, especially for brand awareness.
Streaming TV and Online Video (OLV) Advertising
Sam and Danny discuss the advantages of Streaming TV (OTT) and Online Video (OLV) as part of DSP's offerings:
- OTT vs. OLV: OTT, or Over-the-Top Media, is a more premium option, placing ads on streaming platforms like Hulu and Prime Video, while OLV covers a broader online space (e.g., ads between games or online content).
- Use Cases: Streaming ads are highly effective for certain brands but come with higher costs, while OLV offers a budget-friendly alternative for brands targeting broader, online-savvy audiences.
DSP for Non-Amazon Sellers
One of the most forward-thinking DSP strategies involves leveraging Amazon's first-party data for external brands:
- Application for Non-Amazon Sellers: Brands not selling on Amazon, like car companies or public services, can still use DSP to target potential customers based on Amazon's deep data insights.
- Geotargeting and Demographics: For example, public transit services like LA Metro have used DSP to target specific areas, showing the versatile applications of DSP data.
The Role of DSP in Amazon's Search and Ranking Algorithm
Sam shares advanced insights on how DSP impacts Amazon's ranking system through behavioral targeting:
- Bayesian Update System: Amazon's algorithm adapts based on live data (clicks, conversions), helping high-performing products "win" visibility quickly while demoting less successful items.
- Behavior-Driven Launch Strategy: For launches, a well-optimized DSP campaign can create significant early traction, contributing to better search rankings.
Common Pitfalls and Misconceptions in DSP
Sam addresses frequent DSP errors that agencies and brands make:
- Misleading Attribution: Lack of merchant tokens can lead to inflated success metrics, misleading clients on actual DSP effectiveness.
- Uniform Strategy Application: Applying the same retargeting window or budget across all campaigns, regardless of product type or target audience, can dilute DSP's impact.
Amazon as a Search Engine First
Both Sam and Danny agree that Amazon's primary goal is search relevancy, driven by conversion rates and user experience:
- SEO Principles on Amazon: Amazon prioritizes high-conversion products to ensure users find relevant, desirable items. Successful DSP campaigns enhance this by generating high-quality traffic.
- Cold Start Problem: New products face Amazon's cold-start challenges, where initial performance metrics determine future visibility. DSP's behavioral targeting can boost early sales velocity, easing this process.
Closing Thoughts
Danny and Sam conclude by reinforcing Amazon's profit-centric nature, encouraging sellers to align with Amazon's goals to maximize DSP benefits. For sellers looking to experiment with DSP, Sam advises working with knowledgeable agencies or managers to avoid wasted spend and achieve incremental gains over PPC alone.
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