Amazon Sponsored Display Ads: The Underused Third Ad Format — with Cosima (AMZELL)

In the hierarchy of Amazon Advertising, Sponsored Products (SP) remains the undisputed volume king, with Sponsored Brands (SB) following as the standard-bearer for brand visibility. However, many Amazon sellers and vendors in the DACH region overlook the third pillar of the advertising ecosystem: Sponsored Display (SD). During a recent AMASessions deep dive, host Christian Kelm sat down with Cosima from AMZELL to unpack why this format is frequently underutilized and how it bridges the gap between bottom-of-the-funnel conversions and top-of-the-funnel brand awareness. Far from being just another "expensive" ad format, Sponsored Display offers unique placements and data-driven targeting capabilities that neither SP nor SB can replicate.

The Dual Architecture: Product Targeting vs. Audiences

The first step in mastering Sponsored Display is understanding its two distinct targeting engines. As Cosima highlights, the strategic intent behind each is fundamentally different. Product Targeting allows you to place your ads on specific ASINs or broad categories. This is "contextual" advertising; your ad appears because a customer is looking at a specific product detail page (PDP), whether that is your own product or a competitor’s.

The second engine is Audience Targeting, which shifts the focus from "where the customer is" to "who the customer is." By leveraging Amazon’s first-party behavioral data, you can target users based on their browsing history (Views Remarketing), their past conversions (Purchase Remarketing), or their long-term interests (In-Market and Lifestyle segments). This capability is what allows SD to follow the customer off-Amazon, appearing on third-party websites and apps within the Amazon DSP network while still being managed directly within the Advertising Console.

The Brand Registry Requirement and Creative Flexibility

While Sponsored Products are available to almost all professional sellers, Sponsored Display is gated behind Brand Registry. For Amazon Vendors and registered Brand Owners, this opens up a suite of creative options that go beyond the standard product image. Within the SD builder, you can customize your logo, headline, and—most importantly—a custom background image.

Cosima notes that for German brands focusing on the "Lifestyle" or "Premium" segments, the custom image is a game-changer. It allows you to communicate brand values or product USPs (like "Bio-certified" or "Designed in Germany") directly on the PDP of a competitor. For Vendors, the creative control is even more granular, often allowing for specific call-to-action (CTA) buttons. Using high-quality lifestyle imagery instead of a plain white-background product photo can significantly improve Click-Through Rates (CTR), particularly in the "Beauty" and "Home & Kitchen" categories where visual storytelling drives the purchase decision.

Defensive ASIN Targeting: Protecting Your Territory

One of the most immediate "Quick Wins" discussed in the session is the defensive play. In the German market, where competition on CPCs is rising across the board, your own product detail page is valuable real estate. If you do not fill the SD slots on your own ASINs, your competitors certainly will.

By targeting your own ASINs with Sponsored Display, you create a "brand wall." This prevents a potential buyer from being distracted by a cheaper or higher-rated competitor ad located right under the "Add to Basket" button or the bullet points. This strategy is also highly effective for cross-selling and up-selling. If a customer is looking at your entry-level 500ml shampoo, your SD ad can promote the 1000ml professional size or the matching conditioner. While the ACOS on these defensive campaigns might look artificially low (as the customer was already on your page), the "hidden" value is the prevention of "customer churn" at the final step of the funnel.

Offensive ASIN Targeting: Conquesting Competitors

On the flip side of the defensive strategy is offensive conquesting. This involves targeting the ASINs of your direct competitors. In the DACH market, where consumers are often highly price-sensitive and research-oriented, being present on a competitor's page can win over "switchers."

Cosima suggests a methodical approach here: do not just target everyone. Focus on competitors where you have a clear advantage, such as a lower price point, a better star rating, or a specific certification (like the "Vegan" or "Fairtrade" labels, which carry significant weight in Germany). Because SD ads can appear in prominent positions—like directly under the Buy Box—you have the chance to intercept a sale at the moment of highest intent. However, be prepared for higher ACOS here, as you are essentially trying to "steal" a customer who is already considering another brand.

Remarketing Windows: The Science of Recency

One of the most powerful features unique to Sponsored Display is the ability to set lookback windows for remarketing. Amazon allows you to target users who have viewed your PDP (or similar products) but haven't purchased within the last 7, 14, 30, 60, or 90 days.

Selecting the right window requires an understanding of your product's "consideration period." A cheap impulse-buy item, like a pack of smartphone screen protectors, usually has a 7-day window. If they didn't buy it within a week, they likely bought it elsewhere. However, for high-ticket items like premium espresso machines or ergonomic office chairs—common staples in the German "Mittelstand" product landscape—a 30 or 60-day window is more appropriate. These customers take time to compare specs and read reviews. Staying top-of-mind during those two months via off-Amazon SD placements is critical for closing the sale.

Bid Types: CPC vs. vCPM

Sponsored Display introduced the concept of vCPM (cost per 1,000 viewable impressions) to the self-service console, a metric previously reserved for the Amazon DSP. This marks a shift from "payment per click" to "payment for eyeballs."

For most Amazon sellers focused on immediate ROI, the standard CPC (Cost Per Click) model is the safest bet. You only pay when a customer engages. However, for brand-building and "Views Remarketing," Cosima explains that the vCPM model can be highly effective. It optimizes for "viewable" impressions, meaning at least 50% of the ad must be on screen for at least one second. When using vCPM, Amazon’s attribution model also changes to include "view-through" conversions—counting a sale if a customer saw the ad but didn't click it, yet purchased the product within 14 days. This often results in a vastly different "ROAS" calculation that requires a more holistic view of your marketing spend.

Deciphering Attribution and Benchmarks

Comparing Sponsored Display performance to Sponsored Products is often an "apples to oranges" mistake. In the German market, typical ACOS for SP might sit between 15-25% for established brands. With Sponsored Display, specifically on "Audience" and "Off-Amazon" campaigns, ACOS can easily climb to 40-50% or higher.

The reason, as Christian Kelm and Cosima discuss, is the nature of the traffic. SD is often bringing in net-new customers who were not actively searching for your brand. It serves a different part of the sales funnel. Instead of looking solely at ACOS, successful SD users look at New-to-Brand (NTB) metrics. If 70% of your SD sales are NTB, the higher ACOS is justified as a customer acquisition cost (CAC). Over time, these customers should move into your "Purchase Remarketing" loop, where you can target them for repeat buys at a much lower cost.

Budget Allocation and Maturity Stages

How much should an Amazon seller in the DACH region actually spend on SD? AMZELL’s typical client setup suggests a tiered approach based on brand maturity:

1. Launch Phase: 0-5%. Focus almost exclusively on Sponsored Products to build sales velocity and indexing.
2. Growth Phase: 5-15%. Begin defensive SD campaigns to protect your growing PDP traffic and experiment with "Views Remarketing" to capture "window shoppers."
3. Established/Market Leader: 15-25%+. At this stage, you have maxed out search volume for your main keywords. To grow further, you must find customers outside of search. This is where "In-Market" audiences and "Competitor Conquesting" become the primary drivers of incremental growth.

In the German market, where VAT (19%) and logistics costs (FBA fees) are high, maintaining these percentages requires a strict eye on the "Total Advertising Cost of Sales" (TACOS). SD should not cannibalize your profits but rather expand the total size of your customer "pie."

The Technical Edge: Categories and Refinements

A neglected feature in Sponsored Display is the ability to target categories with "Refinements." Instead of targeting the entire "Coffee Machines" category, you can refine your target by price point, star rating, or even shipping eligibility (Prime vs. Non-Prime).

For a premium German brand selling a €500 kitchen appliance, it makes no sense to show an ad on a €20 budget competitor. Using refinements, you can instruct Amazon to only show your SD ad on products that cost more than €400 and have a rating of less than 4 stars. This is a surgical strike—you are appearing exactly where the customer is most likely to be dissatisfied with the current option and is willing to pay for quality. This level of granularity is what separates the professional AMZELL setup from a standard "Auto-campaign" approach.

Off-Amazon Reach and the "DSP-Lite" Effect

Perhaps the most unique aspect of Sponsored Display is its ability to serve ads outside of Amazon.de. Through the Amazon Associates program and the TP (Third Party) exchange, your ads appear on sites like Der Spiegel, Bild, or niche hobbyist blogs.

This provides a "DSP-Lite" experience without the €15,000–€30,000 minimum monthly spend typically required by agencies for managed DSP services. For a small to medium-sized German "Händler," this is the only way to get programmatic display reach with a budget of as little as €10 a day. It’s important to monitor the "Placements" report to ensure your off-Amazon spend is actually converting, as the bounce rate from external sites is naturally higher than the buy-ready traffic found within the Amazon app.

The AMZELL Workflow for SD Implementation

When taking over an account, Cosima’s team at AMZELL typically starts with "Purchase Remarketing." This is the lowest-hanging fruit. By targeting customers who bought your product 60 days ago but haven't bought it since, you are essentially running an automated loyalty program.

From there, the workflow moves to "Defensive Product Targeting," followed by "Competitor Conquesting." Only once these bottom-funnel tactics are optimized do they move into "In-Market" or "Lifestyle" audiences. This step-by-step expansion ensures that the brand doesn't waste budget on broad awareness before they have secured their home turf. For German brands looking to scale in 2024 and 2025, mastering this "Third Way" of advertising is no longer optional—it is the prerequisite for staying competitive in an increasingly crowded marketplace.

This article is based on a session from the AMASessions series, where Christian Kelm discusses the intricacies of Amazon marketplace dynamics with leading industry experts. To get the full depth of the strategies mentioned above, including live dashboard walkthroughs and specific case study data, watch the full session with Cosima from AMZELL on the AMALYZE YouTube channel.