Amazon DSP vs Sponsored Display Ads: Differences You Should Know

Are you deep in the Amazon marketplace ecosystem, tweaking ads and obsessing over ACoS? It's time to step outside the bubble – your customers are out there, too.

They're watching TV, reading news, and shuffling apps – wandering hither and thither. This is where Amazon DSP (demand side platform) comes into the picture. 

However, the real dilemma is choosing the right platform – whether to focus within Amazon's ecosystem with sponsored ads or target customers outside it with DSP? What are the outcomes of investing in Amazon sponsored display vs DSP?

How do you decide the right advertising platform and when to scale your ad spend budget?  

We get your perplexity! In the next coming sections, you will discover:

• What is Sponsored Display advertising?

• What is Amazon DSP? 

• Where do Amazon sponsored display vs DSP ads appear and when to focus on each?

• How to allocate ad budget and optimize ROI for sponsored and DSP ads smartly? 

  
  

Amazon DSP vs Sponsored Display Ad: Key Differences & Why It Matters

As an FBA (Fulfillment by Amazon) seller on Amazon, you hold the reins as the advertiser for your products. Amazon offers a multitude of options for your product ads, allowing you to determine the best choice for your marketing strategy. It’s essential to understand the qualifying criteria, costs, and target placement for these ads.

The right platform can boost ROI, target customers more effectively, and optimize ad spend. Understanding the features, benefits, pros & cons of Amazon DSP vs Sponsored Display will help you make the best choice for your brand's goals.

Before we dive into each ad type, here’s a quick TL;DR table comparing the differences between Amazon sponsored display and DSP ads: 

What is Sponsored Display Advertising?

If you’re looking for a low-barrier, high-impact way to drive conversions on Amazon, Sponsored Display is where it’s at. Simply put, it’s a lower-funnel advertising solution designed to re-engage potential customers – those who’ve already shown some interest but haven’t bought yet.

Key Features

Self-Serve Model: One of the biggest perks here is the flexibility. There’s no minimum spend required, so whether you’ve got a small budget or a big one, Sponsored Display can work for you.

CPC Pricing: Sponsored Display uses a Cost-Per-Click (CPC) model, meaning you only pay when someone clicks on your ad. No clicks = no cost.

Targeting Options: Whether you’re aiming at customers who’ve shown interest in your products or those browsing similar items, Amazon sponsored ads offer many options to target your audience. For instance:

• Product targeting: Show ads to customers browsing similar products.

• Audience targeting: Retarget visitors who didn’t buy.

• Remarketing: Re-engage cart abandoners.

• Interest-based targeting: Target shoppers by habits and interests.

Metrics to Track

Track the below key metrics to ensure your Sponsored display campaigns are on point:

• ACoS: Measures how much you’re spending on Amazon ads compared to your sales revenue. Keep ACoS low, and you're in good shape.

• ROAS (Return on Ad Spend): The higher your ROAS, the better your ad is performing.

CTR (Click-Through Rate): Tracks how many people click on your ad after seeing it. A higher CTR generally means your targeting and creatives are working.

Pros of Sponsored Display Ads

• Easy to set up.

• Immediate sales boost through re-targeting.

Cons of Sponsored Display Ads:

• Limited audience reach.

• Not ideal if the objective is building brand awareness.

With atom11, optimizing Sponsored Display campaigns gets easier. It syncs retail signals like inventory, pricing, and total sales with Amazon Ads, helping you adjust bids and targeting in real time for better ad spend efficiency, without manual effort. In addition, you can keep track of Sponsored Display campaign changes through the History tab, which is currently not possible on the Ad console.

What is Amazon DSP?

Amazon DSP is a programmatic advertising platform that lets you reach audiences both on and off Amazon. It's perfect for advertisers who want to take advantage of advanced targeting and real-time bidding. DSP advertisers can either send traffic to a product listing on Amazon or it can be used to send traffic to external websites that are not associated with Amazon.

Key Features

Advanced Audience Targeting: Amazon DSP allows you to segment audiences based on behavioral, demographic, and contextual data, giving you a huge edge in reaching the right customers.

1. Behavioral Targeting: Target users based on their past browsing history, like which categories they've previously browsed or purchased from.

2. Demographic Targeting: Reach consumers based on demographic data—age, income, location, etc.

3. Contextual Targeting: Show your ads to users based on the content of the webpage they’re browsing, such as displaying clothing or accessories ads to someone browsing fashion or retail content.

Sequential Messaging: It allows you to serve ads that build on each other based on where a customer is in the purchase funnel. For instance, if a user visits your product page for a laptop, the first ad might make them aware of the laptop’s key features. If they don’t buy, a second ad might offer a special discount to push them to purchase. Another example would be, say someone has just made a purchase. The next ad could promote accessories that complement the product they just bought.

Programmatic Ad Buying: It uses Amazon’s first-party data for precise ad targeting. The programmatic ad buying process automates everything, bidding for impressions in real time and optimizing delivery. You get full control over ad placement, targeting, and bidding through Amazon’s advanced algorithm. 

Cost Structure

• CPM-Based Model: Amazon DSP works on a CPM (cost per thousand impressions) model, which means you pay for every thousand times your ad is shown. This is great for brand awareness campaigns where you want to maximize visibility across a wider audience.

• Minimum Budget: Amazon DSP typically requires a minimum spend of $3,000 for DSP Self-serve and $50,000 for Amazon Managed. This may vary by country.

Best Use Cases

Amazon DSP is ideal for several types of campaigns, especially those focused on retargeting and brand awareness:

1. Retargeting High-Intent Customers: Once users engage with your brand on Amazon or elsewhere, you can follow them across the internet with retargeting ads on platforms like Fire TV, Amazon Music, Twitch, and third-party sites.

2. Increasing Brand Awareness: Amazon DSP helps brands gain traction fast, with new brands seeing a 5.3x higher lift in awareness than established ones – proving its power in driving visibility and growth.

3. Custom Ad Formats: Whether it’s display ads, video ads, or OTT (Over-The-Top) ads, Amazon DSP allows you to create custom ads that fit different marketing objectives. For example, you can create video ads for engaging customers or display ads for products.

Pros of Amazon DSP

• DSP allows you to advertise on third-party sites and apps.

• With Amazon Marketing Cloud, DSP provides in-depth audience data such as demographics, shopping behavior, cross-device engagement, and ad-attributed conversions.

Pros of Amazon DSP

• May not be ideal for Amazon sellers with a small budget.

• Requires a high level of expertise for effective management. Sellers may need an Ad expert or Amazon PPC software for better results.

  
  

Where Do Amazon Sponsored Display vs DSP Ads Appear?

Sponsored display keeps ads within Amazon, while DSP expands reach to external sites, apps, and platforms. Here’s an overview:

Sponsored Display Ads Placement

Sponsored Display ads appear in select placements, targeting buyers deep in the purchase process, in the following spaces:

• Competitor's product page

• Search result

• Product detail page

Your ad can show up right when shoppers are considering similar items. This boosts your chances of conversion by reminding them that you offer something they might like better.

Mobile shoppers are all about quick decisions, so Sponsored Display ads show up alongside search results or product pages, perfect for impulse buys. On desktops, ads appear in more spots like carousels and related products, catering to shoppers who take their time researching. Mobile placements tend to get 2-3x higher click-through rates, while desktop ads attract more thoughtful, research-driven buyers.

Amazon DSP Ad Placements

If you’ve been using Amazon DSP, you know that it’s a much broader, full-funnel advertising tool. This platform isn’t just about targeting customers on Amazon itself but far beyond that in places like: 

• On Amazon Properties: DSP ads can appear across several Amazon properties. On Fire TV, they show up while users are browsing for content, perfect for engaging people already in browsing mode. With Amazon Music, you can run audio ads, a unique way to reach the right listeners. You can also target Twitch’s 35 million active userbase, especially gamers or younger audiences, making it a great spot for reaching your target demographic.

• Off Amazon: You can place ads in third party mobile apps, be it a fitness app or news app, and even on connected TVs, giving you huge exposure while people stream content daily.

• Brand-Safe Placements: Amazon DSP lets you control where your ads appear, so you can easily filter out placements that don’t match your brand’s vibe and keep your image intact. For example, a luxury skincare brand can avoid appearing on low-quality or irrelevant websites that might hurt its premium image.

  
  

Smart Budget Allocation & ROI Optimization Tips

Effective budgeting on Amazon is key to balancing profitable campaigns for Amazon DSP vs Sponsored Display and avoiding wasted spend. Following are some best practices for ad budgeting and ROI optimization that are worth incorporating:

Best Practices for Budgeting

Start With Data-Driven Budgeting

Avoid arbitrary numbers. Base your initial budget on your daily sales projections. For new products, use Amazon's forecasting tools or perform Amazon competitor analysis. Factor in seasonal trends, market conditions, and product maturity.

Formula for Initial Budget Allocation:

1. Project Daily Sales: Estimate this by averaging your sales over the last 30 days. This gives you a realistic base of your daily revenue to anticipate.

2. Determine Target ACoS: This should reflect your profit margins after subtracting all costs, such as FBA fees, operational expenses, etc. For example, with a 40% margin, a 25% ACOS could be ideal for established products.

3. Calculate Daily Ad Budget:
   Daily Ad Budget = Projected Daily Sales × Target ACOS percentage
   Example: $500 sales × 25% = $125 daily budget.

This means you would allocate $125 per day towards advertising to stay within your target ACoS and aim to optimize your advertising spend relative to your sales projections.

Scaling Framework 

• Define Metrics: Specify criteria for "strong sales and impressions" with exact figures to standardize scaling decisions.

• Gradual Scaling: Implement a tiered scaling strategy where the budget increase is based on the extent to which the target ACoS is undershot. For example, increase budgets by 20% for slightly below-target ACoS and up to 30% for significantly better performance.

• Frequent Monitoring: Review campaign performance every 3-4 days post-scaling to adjust quickly if needed.

• Optimization Tactics: Detail specific actions to take during the 72-hour optimization period for underperforming campaigns. Tactics could include A/B testing ad elements, refining keywords, or adjusting bids strategically. Provide a clear action plan that can be implemented swiftly and efficiently.

• Data-Driven Decisions: Use analytics with the help of tools like atom11 to check performance data and refine scaling criteria and optimization strategies based on data-driven insights.

• Exit Strategy for Failing Campaigns: Establish performance thresholds that trigger a campaign reassessment or halt.

• Feedback Loop: Create a continuous improvement cycle using insights from all campaigns to enhance future strategies.

Seasonal Budgeting 

Prepare for peak shopping periods like Prime Day and Black Friday by increasing your budget, often doubling it. Start two weeks ahead to build momentum. Prioritize lightning deals and coupons, adjusting based on competitor activity.

Performance Optimization Tips

Performance Monitoring

Daily Monitoring (15-20 minutes)

Look for ACoS spikes, CTR changes, and budget pacing issues from the previous day. Adjust quickly to avoid overspending and capitalize on high-performing ads.

Weekly Review (45-60 minutes)

Analyze weekly data to identify trends. Shift budgets from low to high-performing campaigns and refine keywords based on recent results.

Monthly Analysis (Two hours)

Compare this month’s performance with previous months, assess market trends, and plan for the next month. Reassess campaign structure and explore new advertising opportunities.

Creative Testing & Ad Variations

Start with testing different product images (e.g., main image vs. lifestyle shots) for at least two weeks to see which performs best. Video ads are becoming more essential. Keep them under 30 seconds, with the first five seconds being engaging enough to grab attention. Show the product in action and include a strong CTA (call-to-action).

Dayparting Strategies 

Different times of day bring different shopper behaviors:

• Morning (7-9 AM): Research Phase - Shoppers are generally in research mode, so increase bids on broad match keywords. This increases visibility and primes these early browsers for future conversions.

• Lunch Break (12-2 PM): Impulse Buying Peak - With a surge in mobile traffic during these hours, shoppers make quicker purchase decisions. Optimize for mobile and increase bids to capture these impulse buys, particularly with attractive quick-decision promotions like Subscribe & Save.

• Evening (8-11 PM): High Conversion Window - As the day winds down, shopper purchase intent peaks. Elevate bids on high-intent keywords to capitalize on this readiness to buy, securing conversions from those finalizing their shopping decisions.

With atom11's advanced dayparting dashboard, you can automatically adjust your bids based on real-time hourly performance data. Moreover, atom11’s proprietary AI allows you to move away from manual data analysis to AI-led optimizations. It identifies your best and worst performing hours and gives AI-generated recommendations for precise dayparting. 

This enables you to refine your strategy with precision, responding to peak shopping times without manual monitoring.

Amazon Sponsored Display vs DSP: Which One's Right for You?

Both are solid options for Amazon advertising, but they serve different purposes.

Use sponsored display when:

• You want to drive immediate sales without breaking the bank. 

• You have products already getting some traction on Amazon. 

• You want to catch shoppers while they're browsing similar items.

• You want flexibility to test what works.

Use Amazon DSP when:

• You need to build brand awareness beyond just Amazon.

• You’ve a bigger budget and want to get fancy with targeting. 

• You want to use Amazon's data to find exactly who you're looking for and bring them back through retargeting.

  
  

Sponsored Display & DSP: The Best of Both Worlds

While each platform has its benefits, using a hybrid approach can be beneficial for you. You can use DSP ads to capture broad interest from potential customers on external sites. Next, refine their journey with sponsored display ads on Amazon to nurture and convert that initial interest into sales.

For example, you can target fitness enthusiasts with DSP ads on health blogs to build awareness, then use sponsored display’s audience retargeting to show tailored fitness gear deals when they browse related products on Amazon.

Conclusion

So, when should you choose Amazon Sponsored Display vs DSP? 

Choosing between Sponsored Display ad and DSP depends on your goals. Sponsored Display is great for immediate conversions, while DSP is better for brand awareness and larger campaigns. A hybrid approach can also maximize your results, combining both platforms for full-funnel success.

Want to see how atom11 can help you get better results with your Amazon advertising campaigns?

We’ve got the tools and expertise to ensure your ad spend is working smarter, not harder. Book a demo today and let us show you how we can help optimize your campaigns for higher ROI.

Frequently Asked Questions

1. What is the minimum budget for Amazon DSP?

The minimum budget for Amazon DSP typically starts around $50,000 USD, though it may vary by country. This higher budget requirement makes it more suited for larger campaigns.

2. Can I use both DSP and Sponsored Ads together?

Yes, you can use both DSP and Sponsored Ads together. A hybrid approach allows you to drive immediate sales with sponsored ads while building brand awareness and retargeting with DSP, enhancing overall campaign performance.

3. Is Amazon DSP suitable for small businesses?

Amazon DSP may not be ideal for small businesses due to its high budget requirement and complexity. It’s better suited for larger businesses with more significant ad spend and expertise in programmatic advertising.

4. What’s new in Amazon sponsored ads for 2025?

There are a couple of new things:

• Amazon now allows integration of sponsored ads in Rufus AI Assistant, which allows for targeted advertising through conversation-based interactions.

• Amazon has introduced Business Placements, enhancing sponsored ads for B2B customers. Brands selling in large volume now have better ad placement control to improve campaign effectiveness.

5. How much can you make a week with Amazon DSP?

Earnings through Amazon DSP depend on your advertising strategy, budget, and product. While predicting a specific weekly income is difficult, a well-executed Amazon DSP ad campaign can significantly increase brand exposure and sales over time, especially with retargeting and brand awareness efforts.