Amazon Retargeting Ads: Strategies to Maximize Sales & Optimize ACoS

Rick Wong 15 June 2024
Amazon Remarketing Ads

What are Amazon Remarketing Ads?

Have you ever searched for an item on Amazon or visited a product page, only to see ads for this exact item a few days later as you continue browsing items on Amazon and other websites? You are likely seeing Amazon retargeting ads (also referred to as remarketing ads) in action. Remarketing users who are in buying mode and have not yet completed a purchase is a standard digital advertising tactic aimed at ‘closing the sale’. Retargeting ads are essential for re-engaging audiences who have expressed interest in your products but have yet to make a purchase.

Every time a customer leaves without buying, the abandoned purchase or abandoned cart represents potential revenue lost. Retargeting ads are designed to remind shoppers of the products they viewed while encouraging them to return to complete their transaction.

This comprehensive guide will dive into Amazon retargeting ads, cover their mechanics, benefits, and strategies to help you optimize your ads for better performance and more sales.

Benefits of Amazon Retargeting Ads

Remarketing ads are typically among the best performing ads in terms of ACoS and overall sales contribution. The reason therefore is simple: Shoppers who are already engaging with your products, potentially have added them to cart already are, statistically speaking, more likely to complete a purchase than shoppers who may be at the very beginning of their purchase decision making journey, or are maybe not even in buying mode at all. These are common benefits of remarketing campaigns:

  1. Strong Conversion Rates: By targeting users who have already shown interest in your products, retargeting ads have a higher likelihood of converting them into real customers.
  2. Cost-Effective Marketing: Since these ads focus on a specific audience who have already expressed interest, this method often results in a better return on investment (ROI) / ACoS compared to broader advertising strategies.
  3. Improved Brand Recall: Retargeting keeps your brand top of mind, increasing the chances of converting potential customers simply by creating brand salience.
  4. Better Shopper Insights: Retargeting provides valuable data on customer behavior, as well as how well your products perform. You can for example compare the click-through-rates (CTRs) and cost per click (CPC) of different products that are included in your remarketing campaigns and can based on these insights refine and further optimize your marketing strategies.

How Amazon Retargeting Ads Work

Amazon uses cookies and tracking pixels to monitor user behavior on its platform. When a user visits a product page, adds an item to their cart, or performs any other trackable actions, Amazon logs this interaction. Armed with this data, Amazon can then serve ads that retarget these same users with ads that show products they have previously looked at.

Beyond Retargeting: Prospecting with Amazon Ads

In addition to retargeting, Amazon allows advertisers to target shoppers who have engaged with similar products or brands. This strategy, while not technically retargeting, leverages Amazon’s vast dataset to reach potential customers already in a buying mindset for a specific product or brand. This approach, known as prospecting, can be particularly useful for sellers with a small retargeting pool, as it helps scale campaigns by targeting high-intent shoppers.

Types of Amazon Ads Formats that can be used for Retargeting

Amazon offers Sponsored Display Ads, Sponsored Product Ads and Sponsored Brand Ads with options for retargeting.

Best Practices for Retargeting with Sponsored Display Ads

  • Optimization Goal: You can optimize sponsored display ads for reach (CPM buy), page visits (CPC buy) or conversions (CPC buy). In most cases, for remarketing campaign, optimizing for conversions is the best option.

    But there are exceptions:
    If your brand is very new and you do not have many sales yet, optimizing for conversions may limit Amazon’s ad algorithm from learning. So in this case you can test optimising for Page Visits, which will usually have a lower cost-per-click and thus help you generate more traffic.

    Another scenario where optimizing for page views can be the better strategy are cases where you have product pages with many variations (i.e. many different sizes or colors). In those cases, the conversion rate of a single product may not be high, but the overall conversion rate of a listing that contains a bunch of products (due to the many variations) could be quite high.
  • Audience Selection: Make sure to select only audiences who have viewed your products. When you setup campaigns, there are also options to go broader and to select, as mentioned above, audiences who have looked at product “similar” to yours. You can experiment with these audiences too, but keep in mind that these are not remarketing audiences and that they will likely not convert at the same rate as shoppers do you have actually browsed your products.
  • Ad Creatives: Use high-quality images and compelling copy that remind users of the products they showed interest in. You can also experiment with videos if there is a strong benefit to your product that can be explained in a very short video.
  • Product Selection: Be sure yo keep your remarketing campaign setup granular. If you add too many products in the same ad group, chances are that some products will get very little exposure and that most ad spend will concentrate on just a few products (typically those with most traffic).
  • Look-back Window Selection: When you select a remarketing audience, you can choose from people who have visited your product pages in between the last 7 / 14 / 30 / 60 or 90 days. If you sell a product that is lower priced and where purchase decisions are often made spontaneously, selecting a long lock-back window will likely be inefficient. On the other hand, if you sell technically more complex products that require users to spend time to do product research, then you can opt for a longer period (i.e. 30 days).

    Pro Tip: If you operate a direct-to-consumer eCommerce website site, you can use data available in Google Analytics 4 to learn how long your customers’ conversion path is (create a “funnel exploration” report and look for the option to show ‘elapsed time’.

How to Get the Most out of Retargeting with Sponsored Products Ads

Amazon Sponsored Products Ads remarketing works on the basic principle as Sponsored Display remarketing campaign: You reach potential shoppers who have interacted with your products. The main difference is that Sponsored Products are triggered by search keywords that shoppers use on Amazon. These ads show up on top of organic search results (and also in other positions on the search results page). This makes these types of ads very powerful: A shopper who is still searching has most likely not yet made a purchase. This also affects how to optimize Sponsored Products Ads:

  • Refine Your Target Keywords: Keep reviewing your ‘Search Term Report’ to monitor and refine your keyword targeting. Identify search terms with high click-through-rates (and of course sales conversions) and then adjust your targeting based on this. Likewise if you spot keywords that drive a lot of clicks but hardly ever convert, stop targeting them. However, be mindful to ensure that you have reached a statistically significant threshold. Even if a certain keyword has generated 50 or even 100 clicks without any sales conversions, this may not mean that the keyword is not working!
  • Negative Keywords: Do add negative keywords to exclude irrelevant search terms and focus your budget on high-performing terms. Also, be mindful about targeting or not targeting other brand names. Depending on how different your products are from your competitors bidding on other brand names may or may not work.
  • Bid Setting: By default Amazon Ads will propose a “Suggested Bid”. We strongly recommend that you set your own bids. Keep in mind that Amazon will maximize its ad revenue by encouraging sellers to let it determine “ideal” bids. In the digital world letting an ad platform determine bids by itself is the equivalent of letting the fox guard the henhouse – it’s really a terrible idea. If you are unsure what bids will work for your products, start with a lower amount (i.e. $0.5) and then observe if you ads are getting impressions and how things go (and then adjust). Having a sophisticated approach to bid management can make a huge difference: Based on understanding during what times of the day, what days of the week and many other variables it is possible to frequently adjust bids and to squeeze the best possible ACoS (Advertising cost of sales) out of an account. That is why at SellerMetrics we have developed our own proprietary bid management software to help our clients leap ahead of their competition. Contact us if you want to learn more about this.
  • Bid Adjustments: Adjust bids based on the performance of individual keywords and audience segments. In simple terms: for search terms that convert well you want to make sure to bid aggressive enough so that you do not miss out on sales opportunities.

    Pro Tip: This is also where the ‘Search Term impression Share Report’ comes in handy. This report shows you “how your account-wide impression share for each search term compares to other advertisers”. You can use this report to gauge if you are already capturing a significant share of all searches for a specific (profitable) query, or if you are missing out and your competitors are actually capturing most impressions.

    But be aware: this report is aggregated at account level. Meaning: if different ad campaign, ad groups, or keywords trigger the same search term, then what you see in this report is the aggregated performance of all these different ads in relation to a given search term.

Retargeting Shoppers with Amazon Sponsored Brands Ads

Sponsored Brands Ads, previously known as Headline Search Ads, are designed to increase brand visibility and drive traffic either your Amazon storefront or custom landing page that basically shows a three-product carousel plus a main visual, a headline and your brand logo. These ads appear at the top of search results and can also be used for remarketing. Just like Sponsored Products Ads targeting is also keyword based.

Which one is Better for Retargeting Campaigns? Sponsored Products or Sponsored Brands?

As targeting options for both ad formats are fairly similar, what makes the difference is the creative. If you have strong visuals that can communicate important differentiators of your products well, then Sponsored Brands could be the way to go.

Also, in general, the CPC of Sponsored Brands is lower than the average CPC of Sponsored Products ads. This is because the latter is the default remarketing ad format that most sellers will use as it does not require any creative input and is thus easier to set-up (but also more competitive).

So, if you have strong creatives, give Sponsored Brands ads a try and follow the same best-practices outlined above when setting up your campaign.

Measuring the Success of Your Retargeting Ad Campaigns

Drawing the right conclusions from data is vital in determining not just whether your retargeting campaigns are worth the investment, but more importantly if they could provide an even better Return on Ad Spend (ROAS).

Thus, in the Amazon universe the most important KPI to look at is your ads ACoS: ACoS stands for “Advertising cost of sales”and compares the amount spent on ads to revenue these ads have generated. To calculate it use the formula: Ad Spend / Ad Revenue x 100 = ACoS (Whereas ROAS would be Ad Revenue / Ad Spend). Thus the lower your ACoS the better. Besides ACoS there are other metrics you should analyze. Think of these as filter metrics. If the click-through-rate (CTR) of your ads for example is low, then few users will land on your product pages and it thus unlikely that your ads will work well.

Filter metrics are important because they often provide us with more data in a shorter amount of time (and with lower ad spent). In practice you will always have more ad clicks than sales conversions. Making decisions based off of sales conversions can thus require a longer amount of time and a higher ad spend. Experienced PPC managers will know long before if an ad is likely going to perform or not. They can infer the performance based on these filter metrics. At SellerMetrics, we manage millions of dollars in ad spend and can thus help you save time – and money! Contact us today to discuss how we can help you optimize your Amazon ads.

Important Filter Metrics to Track

  • Click-Through Rate (CTR): Indicates how often users click on your ads. A higher CTR suggests that your ad is relevant and engaging.
  • Cost-Per-Click (CPC): This metric shows how much you have to pay for ad clicks. If CPCs are too high, it can become economically infeasible to to run ads. Thus optimizing your ads’ CPC is a critical step in ad optimization.
  • Conversion Rate: Measures the percentage of clicks that result in a purchase. A high conversion rate indicates effective targeting and ad relevance. Obviously if your conversion rate is very low, your performance will suffer. Keep in mind that product conversion rates can differ vastly and are impacted by your product sales price, the number have reviews your products have and the quality of your product listing.

Amazon Advertising Reporting: Which Reports for which Ads

Amazon ads provides a wealth of reporting. But note: while some reports are available at a very granular level (i.e. at target product level), others only show account wide data. Thus some data wrangling is typically required to extract actionable insights. Here is an overview of reports available for different ad types.

Ad Reports available for Sponsored Products

  • Search Term Report
  • Targeting Report
  • Advertised Product Report
  • Campaign Report
  • Budget Report
  • Placement Report
  • Purchased Product Report
  • Performance Over Time Report
  • Search Term Impression Share Report
  • Gross and Invalid Traffic

Ad Reports available for Sponsored Display

  • Campaign Report
  • Targeting Report
  • Advertised Product Report
  • Purchased Product Report
  • Matched Target Report
  • Gross and Invalid Traffic

Ad Reports available for Sponsored Brands

  • Keyword Report
  • Keyword Placement Report
  • Campaign Report
  • Campaign Placement Report
  • Search Term Report
  • Search Term Impression Share Report
  • Category Benchmark Report
  • Attributed Purchases
  • Gross and Invalid Traffic

Ad Reports available for Sponsored Brands (Videos)

  • Keyword Report
  • Campaign Report
  • Campaign Placement Report
  • Search Term Report

The Impact of Customer Reviews and Ratings on Retargeting Ads

Retargeting ads can make a big difference, but especially for sellers that have just started, or for newly launched products, their efficiency can be limited. This is largely due to lack of user reviews.

Positive reviews and ratings build trust and credibility, making users more likely to convert. On the other hand, if they see a retargeting ad and then discover that a product does not yet have any (or just a handful of) reviews, they may hesitate to dip their toes in the water. This creates a chicken and egg situation, as you of course need product sales in order to get reviews, but if you do not have reviews, then this will create a significant purchase barrier. So keep that in mind when you create remarketing campaigns. You really want to set yourself up for success and use them tactically to squeeze more sales out of your best-performing ASINs.

If you want to learn about ways to overcome the above described chicken-and-egg problem, do not hesitate to contact us. We have fast experiences launching new brands and products on Amazon and can help you execute strategies that are proven to work.

Given the role of customer reviews and ratings in advertising and retargeting, encourage satisfied customers to leave reviews. Send follow-up emails to customers after their purchase and consider offering incentives such as discounts or loyalty points to encourage customers to leave reviews.

Recap: Take Your Retargeting to the Next Level

With the right strategy and when properly optimized, Amazon retargeting ads can be one of most effective ways to scale your sales at a profitable ACoS. But note that converting these “high-intent shoppers” is getting tougher by the day and competition amongst sellers is fierce. We hope that this post is useful to you and will help you get ahead. To learn more about how we can help you maximize results, get in touch with us to get a free consultation.

Related readings: How to conduct Amazon PPC keyword research and our guide on Amazon Ad creative best-practices

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