• by Laurie Sullivan  @lauriesullivan, March 9, 2018

Since the biggest challenge for marketers looking to reach consumers on Amazon remains a lack of understanding of how the marketplace’s ad network and search services work, Merkle has created a playbook geared toward outlining the nuances, benefits and limitations of its ad business.

Merkle's Amazon Ads Playbook looks at proven strategies for managing Amazon ad campaigns. It provides tips on how to optimize product page data to appear on relevant search queries and drive conversions, and how to engage the display programs through the Amazon Advertising Platform or Amazon Media Group.

Consumer behavior continues to change Amazon’s business, and is seemingly pushing Amazon to build out its search capabilities and ad business. Todd Bowman -- senior director of SEM and feeds at Merkle and one of the authors of the ad guide -- believes Amazon will build out its search engine allowing consumers to find and sell products from across its owned sites, but doubts that the company would fully integrate the network.

“Amazon is already incorporating Whole Foods products through their Pantry and Fresh programs to provide customers with their private labels and fast delivery with Fresh, Bowman wrote in an email. “I am not sure Amazon will ever take an approach to fully integrate all of their owned brands. Instead, I see Amazon utilizing its .com search engine to find and sell products from its owned sites if they improve selection, quality and can be sold profitably at a low price.” 

Amazon’s increased focus on search clearly would support its growth in advertising. One JPMorgan estimate suggests Amazon’s fledgling's ad business brought in $2.8 billion in 2017, and that number should reach $6.6 billion in 2019

JPMorgan is not the only firm predicting changes. A new Forrester study suggests brands will invest 55% more in online marketing and advertising by 2023, but fewer dollars will go toward traditional search channels like Google, Bing and Oath. A change in consumer shopping habits will transition to Amazon and other retail websites. Consumers will go to Google and traditional search engines when they need answers to questions. 

How Amazon’s search ad business works varies depending on strategy, Bowman says.

For organic results, Amazon determines ranking based on relevance, sales velocity, total reviews, average review scores and product data. Amazon wants products that have the best chance to sell showing at the top of organic results and uses the factors outlined above to make that determination.

Similar to Google’s paid-search ads, Amazon considers which ads to serve based on product relevancy, targeted keyword and match type, bid and click through rate (CTR) to determine the auction result rankings for Sponsored Products and Headline Search Ads, Bowman explains.

Generally the higher the bid, the better chance the ad will serve on the first page. Match type is important, but exact match has more weight than phrase, and phrase more than broad. It’s not surprising to learn that the product must be relevant to the query.

“You can have $15 max bids but your bid won’t matter if you’re trying to show an ad on a product that is not relevant to the search,” he said. “For CTR, Amazon doesn’t have a visible quality score for sellers to monitor, but they do pause keywords in Headline Search Ads campaigns if they have a low CTR.”

Amazon also offers a program called Bid+ for Sponsored Products that provides marketers the ability to increase bids by 50% to get to the No. 1 spot.

The Product Display auction is similar to the other two, but without the keyword and match type component. Since Product Display ads can target lifestyles, categories or other ASIN, Amazon relies more on the bid and relevancy to determine the product that shows.

Most of these tips explained by Bowman are available in the playbook.