When Should I Be Using Amazon DSP? A Straight Answer for Brands

The real question isn't what DSP is, it's when to use it

Most brands have heard of Amazon DSP. Fewer know when it should actually slot into their strategy, or whether their business is ready for it. This session set out to answer exactly that, with Toucan Senior Advertising Partner Marla walking through what DSP is, how it complements Sponsored Ads, the audiences it opens up, and the concrete signs that it's time to activate. Here's the substance.

Watch the full session (40 mins)

What is Amazon DSP?

DSP stands for demand-side platform: a system that lets advertisers and agencies buy online ad inventory programmatically, across many websites and devices, through an automated exchange. It's what most people mean by display or programmatic advertising.

Amazon DSP is the only DSP that gives you access to Amazon's own inventory, including Amazon itself, Prime Video, Freevee, Twitch, IMDb and Fire TV. It also carries Amazon's uniquely large pool of shopper data, which feeds directly into targeting. Five things set it apart: exclusive Amazon audiences, unique reach across devices and formats, that exclusive inventory, brand-safety safeguards against fraudulent or unsuitable placements, and closed-loop reporting so you can actually measure and scale from real metrics.

A useful way to think about it is as the modern equivalent of traditional media buying. A billboard or a magazine spread can be impactful, but you can't measure its direct effect, you can't be sure it's reaching the right people, and it usually demands a large upfront fee. Amazon DSP flips all of that: pay-as-you-go rather than upfront, precise audience control, and the ability to react and optimise quickly to wherever performance is strongest.

Amazon DSP vs Sponsored Ads: four key differences

These two work best together, not in place of one another, but they differ across four areas.

1. Reach. DSP drives millions of impressions both on and off Amazon across multiple devices, with tight control over where your ad serves. Sponsored Ads mostly appear in contextual placements on product pages, with less control over placement.
2. Audience. DSP targets people by lifestyle, behaviour, interests, demographics and content consumption. Sponsored Ads reach people browsing Amazon for something specific at a specific moment, like someone typing "vitamins".
3. Location. DSP serves across Amazon-owned inventory and third-party sites, and can direct traffic to Amazon or your own site. Sponsored Ads link into Amazon and serve primarily on Amazon.
4. Cost. DSP mainly runs on a CPM model (paying per thousand impressions), while Sponsored Ads are predominantly cost-per-click, though some recent Amazon updates offer CPM options.

The important point: the two are stronger together. Amazon's own large-scale study found that brands running DSP and Sponsored Ads together saw a 15% uplift in new-to-brand customers and a 7% increase in sales versus advertisers using only one. And in Toucan's own remarketing tests, running the same ad across both on a like-for-like CPM basis, DSP delivered higher engagement and a far higher return (a ROAS of 13.39 versus 2.59), while Sponsored Ads came in cheaper on CPM and cost-per-click. The lesson is that DSP isn't only a top-of-funnel awareness tool. It can complement your lower funnel and drive conversion too.

The audiences Amazon DSP unlocks

This is where DSP earns its place. There are eight core targeting options.

1. Lifestyle: consumers whose shopping and viewing behaviours (Amazon, IMDb, Prime Video, Twitch) map to lifestyle segments. Good for top-of-funnel awareness, for example reaching foodies with a healthier tomato sauce.
2. In-market: people who've shopped a given category in the last 30 days. This is your consideration layer, such as reaching people in market for gin or other white spirits.
3. Contextual: the sister to Sponsored Ads, serving where people are browsing right now, ideal for impulse buys. You can contextually target competitors' ASINs so your ad appears on their pages.
4. Remarketing: people who've engaged with your ad, product, brand or Store, or the equivalent for a competitor's audience. Strong for converting people who've shown interest but not yet bought.
5. Lookalikes: broaden reach to people similar to your best audiences. Build your own from first-party data, build them in Amazon Marketing Cloud, or use Amazon's ready-made ones (such as lookalikes of Prime Day shoppers).
6. Advertiser audiences: built from your own first-party data (hashed emails, mobile numbers, the Amazon ad tag) to retarget people who've engaged with your brand, or to negatively target existing D2C buyers.
7. Demographic: target by gender, age, income, education, family size, even car ownership. A teething-toy brand could target parents of children aged nought to eighteen months.
8. Device: target by device or by specific apps and sites, for example focusing on Kindle for a new book launch.

On top of these sit Amazon Marketing Cloud custom audiences, which go a level further: lookalikes built on any attribute, audiences of people searching specific keywords (yours, a competitor's, or generic) but not yet buying, cart abandoners, traffic-acquisition audiences that move people down the funnel, and audiences built around promotion or new-to-brand purchases. AMC audiences genuinely bridge the gap between Sponsored Ads and DSP, retargeting the searchers your keyword ads reached but who didn't convert.

Where AMC fits in

Amazon Marketing Cloud is an analytics and clean-room solution that simplifies measurement across your marketing channels, giving you audience and behaviour insight and letting you evaluate effectiveness across the funnel. In short, it can run campaign deep-dives (reach, frequency, total funnel impact), media-mix analysis, deep audience insight for optimisation, journey and path-to-conversion assessment, customer attribution, and omnichannel impact. When should you pair DSP with AMC? Effectively at any point, because it adds context and identifies levers to pull across data, targeting, optimisation and strategy.

The six signs you should be using DSP

If any of these describe you, it's a signal to integrate DSP:

1. You want to reach new, untapped audiences and boost brand awareness.
2. You've maximised your opportunity on Amazon Sponsored Ads search and it's performing well.
3. Your Sponsored Display is promising, but you want to keep engaging new pools of consumers at scale.
4. You want richer audience data to use cross-channel, in social or other advertising.
5. You want to test new avenues and creatives to see what works for your brand.
6. You want to be highly targeted, focusing on new-to-brand customers or lifting conversions.

Most brands come to DSP for top and middle-of-funnel reach and awareness, but it should never be viewed as awareness-only. It complements Sponsored Ads at every stage: awareness (reach, new-to-brand, streaming TV and audio), consideration (getting people to actively consider your brand through audience targeting), and purchase and loyalty (retargeting and remarketing engaged shoppers).

What can your budget actually do?

There are no minimums on Amazon DSP, and every strategy should be purpose-built to your goals rather than forced into a one-size-fits-all template. As rough guidance:

At around £2k a month you can reach selective regions of the funnel, but not run full-funnel. At £5k you can do more: impactful audio and video placements, or full-funnel DSP activation, but not both well. At £10k you can run both impactful audio and video and a full-funnel strategy, though you'll need to be careful how you split budget across funnel regions. At around £20k you can drive impact across the full funnel plus top-of-funnel audio and visual placements, genuinely driving reach and moving consumers down the funnel.

DSP also works best on an always-on basis, and shouldn't be judged head-to-head against Sponsored Ads. It's a tool to feed the funnel and support conversion at the bottom of it.

Proof it works

For a CPG brand in Germany, Toucan ran a Freevee campaign alongside a full-funnel Amazon DSP campaign and drove a 16% increase in brand awareness, a 12% increase in brand consideration and a 12% increase in purchase intent, outperforming the brand's CPG benchmarks. And relaunching the DSP strategy for a probiotic brand (previously run by another agency), Toucan grew ROAS by 253% and ad sales by 96%.

Key takeaways

Amazon DSP is a powerful reach tool that, thanks to Amazon's vast customer base and advanced targeting plus your own first-party data, lets you build highly targeted campaigns. It should run parallel to Sponsored Ads to cover every stage of the funnel. Its exclusive supply and inventory give it a real edge over other DSPs. Even brands that don't sell on Amazon can use it. And it's best introduced as early as possible, from driving initial awareness right through to market dominance.

Frequently asked questions

• DSP is great for awareness, but how does it drive conversion and loyalty? Lower down the funnel you can activate creatives that are more native to Amazon, similar to Sponsored Display, known as responsive ecommerce ads, which are strong for driving detail-page views and conversions. Pair those with remarketing (people who viewed your product or brand, or bought before) and AMC audiences (cart abandoners, branded-keyword searchers who haven't purchased) to capture intent that hasn't yet converted.
• How do I access Amazon Marketing Cloud? In your Sponsored Ads console there's a "measurement and reporting" tab where AMC usually sits. If you have an account, you'll find your instance there. If you don't, an agency like Toucan can create an instance for you and start collecting data.
• Can I narrow audiences by overlaying different targeting options? Yes. You can overlay audiences freely. For a shaving brand, you might combine in-market-for-shaving with demographic targeting (male, over 45) and add a negative-targeting layer to exclude anyone who's bought from you in the last 30 days.
• If I don't sell on Amazon, why use Amazon DSP over other DSPs? Two main reasons: the exclusive inventory (Prime Video, Twitch, Freevee, IMDb, Fire TV and Amazon itself, available nowhere else) and the depth of Amazon's audience data across shopping and the wider Amazon ecosystem. Add closed-loop reporting and built-in brand safety, and it's a uniquely measurable, well-protected way to run programmatic, even linking out to your own landing pages.

Mahlah is an Advertising Director at Toucan, an Amazon Ads Advanced Partner, and leads full-funnel Amazon advertising across Sponsored Ads and DSP. To discuss whether DSP is right for your brand, get in touch at hello@toucanecommerce.com.