Imagine checking your Amazon Advertising dashboard to discover your Display Ads campaign has achieved unprecedented conversion rates with significantly lower ACOS (Advertising Cost of Sale). Does this mean you've found the holy grail of Amazon marketing? Before celebrating, let's examine the reality behind these seemingly perfect metrics.
Display Advertising: Amazon's New Battleground
Within Amazon's advertising ecosystem, Display Ads occupy a unique position. Unlike Sponsored Products and Sponsored Brands that rely on keywords, Display Ads focus on targeting audiences based on demographic data and behavioral patterns. Essentially, they aim to reach "the right people" rather than waiting for "people who search."
However, Display Ads initially underperformed. In 2019, conversion rates typically hovered around 1%, with high ACOS deterring many sellers. They appeared to be an underutilized tool in Amazon's marketing arsenal.
The Data Anomaly: A Conversion Rate "Miracle"
In April 2020, Display Ads metrics underwent a dramatic transformation. Conversion rates skyrocketed beyond 100%, while ACOS plummeted. This raised questions: Was this genuine improvement or something else entirely?
Upon investigating Amazon's advertising mechanisms, we discovered this shift likely resulted from changes in how Amazon calculates conversion rates.
Redefining Conversion Metrics
Traditionally, conversion rate measures the percentage of website visitors who become paying customers. On Amazon, this typically means dividing orders by total clicks. However, for Display Ads, this equation appears to have changed.
Amazon offers three primary targeting options for Display Ads:
- Product Viewers: Retargets customers who viewed your products or similar items
- Similar Product Searchers: Reaches users actively searching for related products
- Past Purchasers: Targets existing customers for repeat purchases
For the first two audience types, Amazon uses a Cost-Per-Click (CPC) model. For past purchasers, it employs a Cost-Per-Thousand-Impressions (CPM) model. More importantly, Amazon altered its attribution methodology: conversions now count from views, not just clicks.
View-Through Conversions: The Data Secret
Amazon defines conversions as "orders for advertised products sold by Amazon and third-party sellers, as well as all products within your brand, within 14 days after viewing or clicking your ad." This means if a customer sees your Display Ad but purchases through another channel (like Sponsored Products or organic search), the sale still attributes to your Display campaign.
For example: A prospect views your product page but doesn't buy. Weeks later, they purchase three items via a Sponsored Products ad. Under the new attribution model, all three sales credit to your Display campaign.
For "Product Viewers," Amazon still only counts sales from clicks within 14 days. But for "Similar Product Searchers" and "Past Purchasers," view-through conversions now contribute to reported metrics.
Strategic Implications for Advertisers
Amazon's attribution changes make Display Ads appear more effective, but they complicate performance analysis by blending click-based and view-through conversions. The platform's fundamentals haven't changed - only how results get reported.
This blurred attribution raises important questions. If a customer sees your ad on a third-party site but doesn't click, Amazon counts this as an impression. If they later purchase through another channel, which campaign deserves credit? Amazon doesn't clarify, potentially allowing double-counting across multiple campaigns.
Similar phenomena occur on other platforms like Google, where advertisers sometimes overestimate ad-generated revenue.
Optimizing Your Advertising Approach
How should advertisers respond to these metric changes?
First, maintain perspective on high conversion rates and low ACOS. Look beyond surface numbers to understand what drives performance. Distinguish between click-based and view-through conversions to accurately assess campaign effectiveness.
Second, leverage Display Ads' targeting capabilities. Use precise audience segmentation to improve performance. Retarget product viewers, reach similar product searchers, or engage existing customers with promotions.
Third, integrate Display Ads with other campaign types. They complement Sponsored Products and Sponsored Brands to create a comprehensive advertising strategy that builds brand awareness and sales.
Finally, commit to continuous testing and optimization. As Amazon's platform evolves, regularly analyze performance data to identify what works and adjust accordingly.
Conclusion: Data-Driven Decision Making
Amazon's revised conversion attribution makes Display Ads appear more successful, but advertisers must analyze these metrics critically. By combining precise targeting with multi-channel strategies and ongoing optimization, businesses can maximize Display Ads' potential while maintaining realistic expectations.
Display Ads remain a valuable marketing tool, but they're not a get-rich-quick scheme. As Amazon's advertising platform develops, we anticipate enhancements in dynamic bidding and analytics - particularly clearer conversion reporting.