BLOG: Advertising
3 Min Read | November, 2024
Amazon's Marketing Cloud (AMC) now offers Custom Audiences, enabling advertisers to segment users based on highly specific, self-defined criteria. Unlike standard Amazon audiences, Custom Audiences extend across all major Sponsored Ad formats:
- Sponsored Products
- Sponsored Brands
- Sponsored Display
This innovation lets marketers leverage personalization at scale, combining traditional keyword or product targeting with rich audience insights. For the first time, advertisers can apply tailored strategies for different audience groups directly within Sponsored Ads.
The game-changing potential of custom audiences
Custom Audiences go far beyond traditional targeting, offering the ability to pinpoint high-value customers with precision. Here's what makes them so powerful:
Advertisers have already achieved up to 30% higher ROAS using Custom Audiences within Amazon DSP compared to standard audiences.
Sponsored Ads account for 90% of most advertisers' budgets, while DSP is often limited to 10–15%. With Custom Audiences now available for Sponsored Ads, these performance gains can scale across the entire media mix.
Custom Audiences allow advertisers to prioritize their highest-value customers (e.g., those with high Customer Lifetime Value or frequent purchase behavior) by adjusting bids accordingly.
How Custom Audiences Work in Sponsored Ads
Custom Audiences don’t replace existing keyword or product targeting; instead, they serve as bid multipliers. This means advertisers can refine their campaigns based on audience insights, allowing for more targeted bids.
Imagine a customer searches for "washing machine." Previously, advertisers would compete for the keyword equally, regardless of who performed the search. With Custom Audiences, a brand can identify valuable users (such as those with a high lifetime value) and bid significantly more to secure their clicks. This approach ensures advertisers prioritize high-conversion opportunities.
How custom audiences work in sponsored ads
Brands can implement Custom Audiences in multiple ways to supercharge their ad campaigns. Here are a few proven strategies:
Focus on repeat buyers or loyal customers, who are more likely to convert. Adjusting bids for these users can lead to higher ROAS and greater long-term value.
If certain customers consistently make larger purchases, invest in premium products and higher bids to capture their attention.
By combining keyword targeting with audience segmentation, advertisers can fine-tune bids and minimize wasted impressions, driving up conversions.
How will custom audiences impact Amazon media spend?
The introduction of Custom Audiences is set to transform Amazon's advertising landscape. Average CPCs (Cost-per-Click) are likely to rise as competition increases, but early adopters could gain a strategic edge with better performance at lower costs.
Brands sticking to traditional methods may face higher CPCs without seeing the same uplift in ROAS. For those embracing Custom Audiences, the result could be improved efficiency, profitability, and competitive advantage.
What This Means for Advertisers
The shift to Custom Audiences represents a massive opportunity for forward-thinking advertisers. By tapping into Amazon Marketing Cloud and applying advanced segmentation, brands can:
- Achieve higher ROI on their ad spend
- Optimize total media investment
- Future-proof their marketing strategies against rising competition
For long-term success in the Amazon ecosystem, adopting this innovation early could make all the difference.
Conclusion
Custom Audiences are the next frontier for Amazon advertising. By targeting users with unprecedented precision, brands can improve their campaigns, secure a competitive edge, and maximize profitability. Those who act now will position themselves as leaders in the evolving Amazon marketplace.
Want to be at the forefront of this evolution?
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About the author
Benjamin Weyrich
He is the Founder and Managing Director of CATAPULT. With around ten years of experience in ecommerce and business intelligence, he focuses on strategic consulting for global brands aiming to strengthen their market position both on and beyond Amazon. Through his deep expertise, he helps companies make data-driven decisions and scale their growth across digital channels.
