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Amazon Opens Up Headline Search Ads to Third-Party Sellers

Earlier this month, Amazon started allowing select third-party sellers to run Headline Search Ads. Previously, this ad format was only available to vendors, or manufacturers that sell inventory wholesale directly to Amazon.

This added capability expands the Amazon Marketing Services available to third-party sellers, which were formerly restricted to advertising on Amazon only through Sponsored Product Ads.

What are Headline Search Ads?

Headline Search Ads are keyword-targeted banner ads that show on Amazon search results pages above the other product-specific results. The ad format works well for showcasing a product assortment, since it features up to three in-stock products.

Several elements, including the headline, image, and landing page, are customizable. If a shopper clicks on one of the three products, they will land directly on that product page; if they click elsewhere on the ad, they will go to an Amazon landing page of the advertiser’s choosing.

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For vendors, we’ve observed strong sales-per-click numbers on Headline Search Ads that are comparable to those of Sponsored Products campaigns. However, overall volume is lower than Sponsored products since only one ad can show on each SERP.

What is the Impact of This Change?

Adding third-party sellers to Headline Search Ads will significantly increase competition for this format, driving up Amazon’s ad revenue in turn. Why Amazon decided to open this format up to third-party advertisers now is left to speculation.

From a financial standpoint, it’s unclear what Amazon’s motivation might have been for limiting this advertising format to first-party sellers in the first place.

On the campaign management side, however, there are clearer reasons that explain why this format has only been available for first-party sellers. The product is still relatively new overall for Amazon. A staged roll-out could have been an effort to tweak and fine-tune the tool before expanding it more broadly.

Additionally, there are some reporting attribution challenges that make the value of the ads tough to gauge, especially for third-party sellers. When a shopper clicks and converts through a Headline Search Ad, the advertiser will see an order in their reporting as long as a product from that brand gets purchased within two weeks of the click, regardless of whether it was purchased from the advertiser. Let’s walk through an example of that to more clearly illustrate what’s happening.

Let’s say ACME tools is a manufacturer selling on Amazon and they are running a Headline Search Ad for their power drills. A shopper clicks through that ad and is taken to a product page. They browse a few different sizes, and ultimately purchase an ACME drill from a reseller called Tools Supply Plus. The revenue associated with this order would still show up in the ACME tools Headline Search Ad reporting, even though ACME will not receive the money directly for that sale.

For vendors, this is not as problematic because, as the manufacturer, they eventually share in some part of the revenue regardless of which seller the shopper chooses. However, for a third-party seller this can be very challenging to navigate. It can cause substantial reporting discrepancies between advertising reports and actual revenue realized.

Knowing That, How Do I Wade into Headline Search Ads Effectively as a Third-Party Seller?

The above reporting issue also illustrates a second challenge with Headline Search Ads for third-party sellers – if managed haphazardly, many ad dollars can be spent on shoppers clicking through your ad to purchase from a competitor. As such, Headline Search Ads are best used by third-party sellers for two sets of products:

1) Those where you’re consistently winning the Buy Box. The Buy Box “is the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts”. The seller winning the Buy Box is more prominently displayed than other sellers, giving them a leg up on getting the conversion. Headline Search is a good fit for products winning the Buy Box because shoppers are more likely to purchase from you than from a competitor, meaning the ad spend is more likely to lead to revenue.; and

2) Those where you have little competition. ASINs (Amazon Standard Identification Numbers) with these characteristics are more likely to capture an order once a shopper arrives on the product page via Headline Search Ads.

Amazon’s reporting provides advertisers with Buy Box win rates for each ASIN. Competitive information, like the presence of competitors and their pricing,  is unfortunately only available from outside third-party tools. Amazon does not provide any such information on competitor win rates in its own reporting.

Conclusion

It’s exciting to see that Amazon is opening up more of the Amazon Marketing Services suite of products to a wider range of sellers. However, it is imperative that they solve the reporting issues quickly to enable advertisers to understand true performance and use the platform as efficiently as possible. This will be key in allowing third-party sellers to scale their investment in Headline Search Ads, which will benefit both Amazon and advertisers in the long term.

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