The Pros and Cons of Amazon Text Ads

Transitioning to Amazon Text Ads

* Update – As of October 2015, Amazon has discontinued the Amazon Text Ads program*

Last month, Amazon announced the discontinuation of Amazon Product Ads as of October 31st.

The announcement states “While your ads will no longer be visible on Amazon as of that date, you may access your performance reports through December 31, 2015.”

Historically, Amazon Product Ads have filled the void for sellers who could not sell on the Amazon marketplace (whether that’s because of budget, category restrictions, lack of knowledge on the marketplace, etc).

APA allow retailers to advertise on the Amazon marketplace without having to actually sell their products on the marketplace itself by linking to external websites.

Although Amazon acknowledges the announcement could cause a “disruption”, they are recommending sellers impacted by the change should transition to Text Ads to continue to drive traffic to their site.

roman-fitchWe spoke with Roman Fitch, Retail Search Manager at CPC Strategy who shares his findings working directly with the Amazon Text Ads program.

Amazon Text Ads vs. Product Ads

If you scroll all the way to the bottom, whether you are on an Amazon Product Page or Search Page, you will see Amazon Text Ads. In the grand scheme, the ads take up a very small portion of the Amazon page.

According to Fitch, in the SERP there are 6 placements but Amazon Text Ads (beta) is only available for the number one spot. All 5 other listings are generated from a third party and are considered a separate type of auction.

amazon-text-ads

For comparison, below is an example of the soon-to-be extinct Amazon Product Ads:

amazon-product-ads

 

“The placement is right where Product Ads used to be, except now you’re not looking at an image with price and a name over the product, you’re just seeing this text ad. The click-through-rates are really poor but since we are only paying 10 cents each, and there are so many searches for these keywords, if you can get one of those products to convert, the ROI is going to be pretty good,” he said.

One of the biggest differences with text ads is that sellers are not using their feed to target a product.

This “old school, keyword-based” strategy allows sellers to bid on keywords and different match types. When they create the ad they can decide which landing page (including the product detail page) they want to send their customers to and bid on each word accordingly.

“It takes a lot more time to set up, (more variables to manage) but the biggest advantage is this number one ad spot is reserved for beta only.”

In theory, if no other sellers are in the beta that’s bidding on the same keyword you are, then you only have to pay the minimum bid to show up.

“This bid used to be a penny but in just three weeks, Amazon has already bumped it up to 10 cents. The main benefit is that sellers can win that spot by outbidding only other advertisers in the beta,” he said.

“As far as I know,  you have to already have an existing product ads account (to be accepted into the beta program). If you already have an existing product ads account, then you are automatically in the beta.”

Amazon Text Ads: Bad CTR, High ROI

According to Fitch, in his experience with Text Ads he’s seen poor click-through-rates and okay conversion rates (still not as good as product ads). If products do convert, the ROI is really good because advertisers are paying an extremely low CPC.

“There is a first mover advantage here. If nobody else in your space is advertising the same keyword, then you win that top spot with a low CPC. You can still win it in your Google account but you are going to be paying a much higher CPC.”

As of today, Amazon Text Ads (beta) have:

  • Low CTR
  • Good ROI
  • Cheap CPCs

With UTM tagging, sellers can also track the amount of traffic coming to their site from Amazon.

“I don’t know if Text Ads are going to have long term positive effects, but they definitely have first mover advantages right now. Once it becomes a full auction, retailers are probably going to be paying a lot more.”

Fitch anticipates Amazon Text Ads will open up beta mode to full auction soon, “I’m sure they will want to on board sellers for Q4,” he said.

For more information on Amazon Text Ads email tara@cpcstrategy.com

Amazon Text Ads Resources

Amazon Announces Discontinuation of Amazon Product Ads

 

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About the AuthorTara graduated from the University of New Hampshire with a B.S. in Journalism / Business. Her passion for creative publishing and quality reporting landed her work opportunities at several companies in Massachusetts, New York and California. She is a leading voice behind CPC Strategy’s Blog. See all posts by this author here.