Amazon offers a suite of advertising options for brands, ranging from on-site Sponsored Ads (like Sponsored Products and Sponsored Brands) to the more advanced Amazon DSP (Demand-Side Platform). Each serves a different purpose in your marketing strategy. In this guide, we’ll compare Amazon DSP against Sponsored Ads, explain their strengths, and discuss when to use each. The goal is to help brand owners and enterprise marketers develop a full-funnel Amazon advertising strategy that maximizes ROI and brand growth.
Sponsored Ads on Amazon are pay-per-click (PPC) ads that appear within Amazon’s shopping platform. The two primary types are Sponsored Products and Sponsored Brands (with Sponsored Display as a newer format). These ads are available to Amazon sellers/vendors with products listed on Amazon, and they aim to capture shoppers who are actively browsing or searching on Amazon.
Sponsored Products: These ads promote individual product listings (ASINs) in search results or product detail pages. They match relevant keywords or product targeting to display your product to interested shoppers. Because they target shoppers with high purchase intent (searching for specific items), Sponsored Products are highly conversion-focused. Studies show that Sponsored Product campaigns often deliver 2–5× higher conversion rates and 20–30% lower CPCs compared to Sponsored Brands. Not surprisingly, Sponsored Products account for roughly 80% of all Amazon ad spend as of 2023 – they are the workhorse for driving sales volume on Amazon.
Sponsored Brands: These ads showcase your brand by featuring a custom headline, brand logo, and multiple products (up to 3) or a video. They appear in premium placements (such as the top of search results) and can drive traffic to your Brand Store or a custom landing page. Sponsored Brands are ideal for building brand awareness and cross-selling, nurturing long-term growth.
How Sponsored Ads work: All Sponsored Ads operate on a PPC bidding model – you bid on keywords or product targets and pay only when a user clicks your ad. There’s no minimum budget requirement, so campaigns can start small and scale as needed. The Amazon Ads console provides an intuitive interface for sellers to manage campaigns, with automated bidding and targeting tools. Since ads are generated from your product listings or templates, it’s relatively easy to launch campaigns without design skills. Sponsored Ads are accessible and effective for sellers of all sizes to boost visibility and drive direct sales on Amazon.
Amazon DSP (Demand-Side Platform) is Amazon’s programmatic advertising platform that allows advertisers to buy display, video, and audio ads both on and off Amazon. Unlike Sponsored Ads, DSP ads can reach audiences across Amazon-owned sites (IMDb, Twitch, Fire TV) and third-party apps in Amazon’s ad network. Amazon DSP leverages first-party shopper data for advanced targeting and retargeting, making it a powerful tool for awareness and customer acquisition beyond the Amazon search page.
Advanced Targeting: DSP targets audiences by demographics, lifestyle, online behavior, and shopping history. You can reach viewers who browsed certain products, purchasers of specific brands, or custom audiences from your own data. You can also retarget shoppers who viewed but didn’t buy—something far beyond keyword targeting.
Rich Ad Formats: With DSP, you can run display, video, and audio ads across diverse placements, including OTT streaming and mobile apps. DSP ads allow custom creative design—such as banners or videos showcasing your product—giving brands creative control and flexibility unavailable in Sponsored Ads.
Broader Reach (On + Off Amazon): Amazon DSP reaches users across Amazon’s properties and the wider web. Brands that don’t even sell on Amazon can use DSP to reach Amazon’s audience or link ads to external URLs—a flexibility not offered by Sponsored Ads.
Cost Model: DSP uses CPM (cost per thousand impressions) while Sponsored Ads use CPC (cost per click). Neither model is universally better—it depends on goals. CPM suits awareness, while CPC excels for conversions.
Budget Requirements: DSP has higher minimum spends—typically around $10K/month self-service or $35K/month managed. Sponsored Ads have no minimum. DSP is suited for medium to large brands ready for upper-funnel investment.
Management & Complexity: DSP requires expertise in programmatic strategy, while Sponsored Ads are self-service. Many brands partner with DSP agencies to run campaigns efficiently.
Sponsored Products – Best for Direct Sales & Launches:
Use Sponsored Products for immediate sales and keyword-driven conversions. They’re ideal for launching new products, boosting rank, or capturing active shoppers. Because of efficiency, even large enterprises allocate major budgets here.
Sponsored Brands – Best for Brand Discovery & Building:
These ads increase awareness and drive traffic to your Storefront. Sponsored Brands are great for showcasing multiple products and your brand’s story.
Amazon DSP – Best for Advanced Targeting & Retargeting:
DSP reaches audiences beyond Amazon, perfect for re-engaging shoppers or building awareness at scale. Brands use Amazon DSP to target lookalikes, upsell past customers, or reach long-consideration buyers. It’s ideal when your listings are optimized and you’re ready to invest in long-term brand growth.
It’s not “DSP vs. Sponsored Ads”—the best results come from both. Sponsored Ads capture demand; DSP generates it. According to a Perpetua analysis, running DSP alongside Sponsored Products improved conversion rates by 19% and ROAS by 3%. DSP awareness primes customers, while Sponsored Ads close the sale.
Consider how DSP unlocks growth. Skale Strategy helped an apparel brand grow sales by +96% YoY using DSP alongside Sponsored Ads. By targeting niche audiences pre-launch and combining retargeting with optimized listings, they achieved a DSP ROAS of 5.49. The strategy built buzz before listings went live—something Sponsored Ads alone couldn’t do.
Both Sponsored Ads and Amazon DSP are powerful tools. Sponsored Ads capture demand and drive conversions; DSP builds awareness and retargets off-Amazon audiences. The best strategy blends both:
Smaller brands should master Sponsored Ads first; larger brands should layer in DSP for scale and storytelling. Many successful brands do both: running always-on Sponsored Ads for efficiency and layering DSP during key launches to maximize exposure.
Need help? Agencies like Skale Strategy specialize in managing PPC and DSP together, ensuring your ad spend drives results across the entire funnel.
