Amazon was quick to follow in Google's footsteps with the sponsored product ads business model. Merchants were always able to use Product Ads, which run on Amazon's Website and direct users to the merchant's main Website. But now merchants have another option to help their products stand out from the pack in the standard Amazon product listings: Sponsored Product Ads.
Amazon Sponsored Product Ads are based on the PPC model; merchants only pay when an ad is clicked. And instead of sending traffic back to your main Website, it's directed to your product listing on Amazon.com.
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If you run an e-commerce store, you know that it can be tough to compete with mass-market e-commerce sites like Amazon because of the vast array of products available and the ability to browse an entire category of products while comparing prices and vendors within the same browser window.
Amazon Sponsored Product Ads Early Success
eCommerceBytes.com talked about the early success of Amazon's Sponsored Product Ads program with Moshe Melamed, co-founder of LexMod.com, a modern-furniture retailer. LexMod was one of the first users of Amazon Sponsored Product Ads. So far they're reporting a lower cost-per-click of about 40 percent less than comparable advertising channels, such as Google AdWords.
Conversion rates are also higher, which Melamed attributes to users being further along in the buying process; instead of simply searching for information about a product, most users who visit Amazon.com are ready to make a purchase or at least decide on a brand and model.