What is Amazon’s Sponsored Products Program?

Currently in beta mode, this program allows the ability for merchants to bid on keywords to have their Amazon products show up alongside search results, similar to Google’s  Adwords.

In short, how it works is, say you’re Tom’s Tennis Shop, and if you’re selling tennis rackets on Amazon’s marketplace you’re in for a bit of competition:

As of now you have little ability to leap the rankings in either getting your specific product to the top (where the Wilson Energy product currently is), nor do you have a ton of ability in getting your store to the front–at least in any quick or easy manner.

For anyone that’s never had to deal with the hassles of marketplace selling, essentially it’s a long-winded process in which Amazon will reward you for providing good service and positive feedback as your products get more popular, by increasing your product’s and store’s rankings for search terms.

But ultimately it’s a chicken/egg effect–how will your product ever gain popularity if it’s buried at the bottom to start with?

How It Works

Amazon is trying to help people like Tom’s Tennis Shop (for a fee) escalate the process by allowing them to gain quick exposure through bids. So if tennis enthusiast Tim does a search for “tennis racket”, he can find Tom’s Tennis shop in an ad that’ll take him to Tom’s shop–and in turn Tom pays Amazon a fee for the click.

This is on top of the commission he pays Amazon if Tim does make a purchase of course.

Doesn’t Amazon Already Have a CPC Program?

The difference between Amazon’s Sponsored Results and their Product Ads program is that Product Ads will take a merchant from Amazon to the merchant’s site, e.g. tomstennisshop.com.

What Amazon’s Sponsored Products program does is keep the merchant on Amazon, letting Tim purchase from Tom’s Shop from Amazon–so Amazon gets to keep the click money and the commission fee.

It’s somewhat similar to Google’s Adwords, where if a merchant finds it difficult to rank organically in Google’s results for competitive terms, they can purchase ad space from Google for a fee.

What Does It All Mean?

If Amazon starts to roll this out to more merchants, this could absolutely change how the largest marketplace on the planet operates.

For any merchant that either:

  • is new to Amazon’s marketplace
  • is currently doing low volume
  • has good margins on their products even with Amazon’s commission
  • wants to increase Amazon Marketplace volume (hint: nearly everyone)

This program will prove to be a tremendous asset if managed correctly. It should automatically provide a boost to a marketplace campaign, similar to any website that advertises using Google’s Adwords seeing a boost in traffic.

In short, like any marketing campaign, it allows merchants to throw money at Amazon to help their store.

Furthermore, any user that’s already on Amazon and is doing a search for your product (e.g. “tennis racket”) is automatically a very motivated buyer–as opposed to a Googler who may just be looking for information–and their conversion rates should be quite high depending on the specificity of your targeted keywords.

Not only that, the increase in orders–provided the merchant provides a high level of service–should automatically boost the merchant’s credibility in Amazon’s eyes.

This then provides them with a boost in “organic” search results in Amazon–so even if a merchant operates at a loss with this program, it could help them out big time in the long run.

In the end, with more merchants coming on to the program, the free-market (place) will dictate bid prices for keywords.

Similar to how Google’s Adwords have evolved with bids ranging from pennies to $40-$50+ per click for certain terms, a properly managed Amazon Sponsored Results Campaign could absolutely be a game changer.

For full information on what it offers, check out Amazon’s website.

If you qualify Amazon will be contacting you by e-mail.

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About the AuthorTien Nguyen is a co-founder of CPC Strategy and deals with data feeds in his waking hours and often in his sleep. He spends his free time with Rubik's cubes while rooting for the underachieving Raiders and UCLA sports teams where he graduated with a mathematics/economics degree. See all posts by this author here.

  • http://www.facebook.com/profile.php?id=663165134 Rob Schmults

    Tien — really great summary. Thanks so much for a very useful overview. One caveat I’d add to “What does it all mean?” — because of the Buy Box component of advertiser eligibility, it’s going to be tough for new sellers to do much in the short run. This requirement makes a ton of sense in terms of Amazon’s core commitment to customer experience (i.e., they don’t want sellers who don’t deliver on price, service, and fulfillment using Sponsored Products to try and grab volume before Amazon can weed them out). But it does mean that even legitimate sellers who are new to the marketplace will have to stick to the “long-winded process” of building their credability before they’ll be able to fully benefit from Sponsored Products.

    • http://www.facebook.com/profile.php?id=2500302 Tien V Nguyen

      Great point Rob, I wonder if in the long run they’ll introduce something similar to Google’s “quality score”, where the more established you are on A mazon the lower your CPC rates end up being to get ranked higher–and if you’re new and have complaints against you, you’d have to pay a higher CPC rate in order to outrank Amazon’s established brands.

      Either way Amazon comes out the big winner, since to them it doesn’t matter who a consumer buys from since their commission rate is the same, but now they’ll get money for clicks as well.

  • http://www.facebook.com/profile.php?id=100001967727188 Paul Marcus

    Tien – how does selling products not found elsewhere affect one’s success in this new CPC program, and 2) how do these types of products affect one’s ability to rise to high exposure?

    • http://www.facebook.com/profile.php?id=2500302 Tien V Nguyen

      I think it has great potential to really help if the products in question are not selling too much in the first place.

      With the bidding system one should be able to gain as much as exposure as they want (depending on their budget/what they’re willing to pay), which they previously would never have been able to do otherwise.

      Like Google Adwords, it’ll of course depend on the type of products and how competitive the keywords are for it. So if you are able to

      a) get click-throughs to your products through bidding, then
      b) get orders for those products and provide good service

      Then it should follow that Amazon will give you a bump to your products and stores.

  • http://www.facebook.com/profile.php?id=100002031281309 Chris Mills

    We may try this. we sell pickled sausages on http://www.glazierhotdog.com and Amazon.

  • http://www.facebook.com/profile.php?id=100002031281309 Chris Mills

    We may try this. we sell pickled sausages on http://www.glazierhotdog.com and Amazon.