Amazon was quick to follow in Google’s footsteps with the sponsored product ads business model. Merchants were always able to use Product Ads, which run on Amazon’s Website and direct users to the merchant’s main Website. But now merchants have another option to help their products stand out from the pack in the standard Amazon product listings: Sponsored Product Ads.
Amazon Sponsored Product Ads are based on the PPC model; merchants only pay when an ad is clicked. And instead of sending traffic back to your main Website, it’s directed to your product listing on Amazon.com. If you run an e-commerce store, you know that it can be tough to compete with mass-market e-commerce sites like Amazon amazon because of the vast array of products available and the ability to browse an entire category of products while comparing prices and vendors within the same browser window.
eCommerceBytes.com talked about the early success of Amazon’s Sponsored Product Ads program with Moshe Melamed, co-founder of LexMod.com, a modern-furniture retailer. LexMod was one of the first users of Amazon Sponsored Product Ads. So far they’re reporting a lower cost-per-click of about 40 percent less than comparable advertising channels, such as Google AdWords.
Conversion rates are also higher, which Melamed attributes to users being further along in the buying process; instead of simply searching for information about a product, most users who visit Amazon.com are ready to make a purchase or at least decide on a brand and model.
Sponsored Product Ads Give New Products a Boost
Sponsored Product Ads is a useful tactic if you’re introducing a new product that fits into a popular category. They’re also useful for drawing attention to a product on which you’re offering a special discount or promotion. Even fancy new products at great prices will struggle to gain attention in the vast recesses of Amazon’s product listings.
But with Sponsored Product Ads, you can place those products on the first page of Amazon’s search results to earn those first few customers and start working your way up the sales rank ladder. Melamed points out that by using Sponsored Product Ads to generate some sales, you improve the sales ranking of your product which in turn improves its placement in the product results.
Breaking into Amazon is Tough
It’s a difficult cycle to beat at first. If you’re introducing brand new products, or you’re a brand new merchant on Amazon.com, you have no customer feedback or sales history. That data is what Amazon uses to determine which products appear first in its product search results. But if your products are buried on page 35 among thousands of similar products, how will you ever get those first few sales and start earning positive feedback?
This is precisely where Sponsored Product Ads come in. Sure, you’ll spend a little CPC money upfront, but you’ll gain some much-needed attention for your products. Boosting those initial sales with sponsored ads can pay off handsomely in the long run; should your product become a bestseller on Amazon.com, you’ll benefit from premier placement in relevant product searches and stand to earn substantial residual income as a result.