What Does "Sponsored" Mean On Amazon? (You‘ll Be Surprised)

Hey there! When you‘re scrolling through Amazon, you‘ve probably noticed some products labeled "Sponsored." At first glance, it‘s not totally clear what this means. But sponsored products are actually Amazon advertisements, and they make up a huge part of the site.

Here‘s a quick rundown of sponsored products:

  • Sponsored means advertised – The seller paid Amazon to promote that listing.
  • Specialized ads – Only top sellers can advertise products. Amazon is selective.
  • Appear frequently – Sponsored ads are everywhere on Amazon. Hard to avoid them!
  • Benefits and downsides – They help find relevant items, but may feel overwhelming.
  • You can adjust them – Shoppers can decrease personalized sponsored ads.

This comprehensive guide will explain everything you need to know about sponsored products on Amazon. Let‘s dive in!

What Exactly Are Sponsored Products on Amazon?

When you see "Sponsored" on an Amazon listing, it means the seller paid to promote that product listing as an advertisement.

  • Over 80% of Amazon‘s total sales now come from its third party sellers.
  • Last year, sellers spent $35 billion globally on Amazon ads.
  • Sponsored products make up 90%+ of Amazon‘s paid ads.

These sponsored product ads appear prominently in Amazon search results through a bidding process. Sellers bid against each other for sponsored placement.

For example, let‘s say you search for "iphone charger" on Amazon. Multiple sellers selling iPhone chargers may bid to show their listings as sponsored products.

The advertisers only pay Amazon when shoppers click on their ads. These small sponsored labels help sellers get their products seen by millions of Amazon shoppers.

According to Feedvisor, 85% of shoppers don‘t even notice sponsored ads on Amazon. But sponsored products drive an average 13-25% sales lift when used by sellers.

How Can You Identify Sponsored Product Ads?

Amazon makes it easy to spot sponsored products, though some shoppers still overlook them. Here are the telltale signs to look for:

Sponsored Label

All sponsored products will include the word "Sponsored" in small grey text just under the product name. This is the most obvious identifier.

Example of sponsored product label

If you ever see this Sponsored label, it guarantees that listing is a paid ad.

Ad Background

Often the background color behind sponsored ads is light grey or white. This helps visually set them apart from other organic listings.

Top Placement

Paid ads get preferential placement above normal results. Sponsored products almost always appear at the very top of the search listings.

Multiple Ads

You‘ll frequently see multiple sponsored products bunched together in a row or column. Amazon stacks the ads, with each one labeled accordingly.

Near Buy Box

Prime real estate for sponsored ads is next to the Buy Box. This coveted spot goes to the top bidder willing to pay the most.

Using those identifiers, it becomes very obvious which results are paid product ads versus organic rankings. Just look for that little Sponsored tag.

What Types of Sellers Get Access to Sponsored Ads?

Amazon doesn‘t let just any seller advertise products. To qualify for sponsored ads, sellers must meet strict advertising policies and performance requirements.

Amazon‘s Seller Standards

First, sellers need to comply with all of Amazon‘s seller policies to stay in good standing. Violations like counterfeit products or review manipulation will get sellers banned.

To be eligible, here are some of the key seller standards according to Amazon:

  • Good account status – No active policy warnings or violations.
  • High-volume seller – Past sales and revenue thresholds indicating strong demand.
  • Positive feedback rating – At least 90% positive lifetime feedback.
  • Low order defect rate – Less than 1% of orders with issues.
  • Fast and on-time shipping – At least 99% of orders must ship on time.
  • Fast responses – 90% of customer emails/messages responded to within 24 hrs.
  • Sufficient stock – No more than 12-15 days out of stock per year.

As you can see, Amazon sets the bar extremely high in terms of past performance. Sellers must achieve near perfection across all these metrics over time to remain eligible for ads.

Additional Requirements

On top of that, Amazon imposes additional requirements for sponsored products specifically:

  • Competitive pricing – Products must be priced competitively based on Amazon‘s internal data.
  • Relevant keywords – Ads must target keywords closely related to the product.
  • Trademark policies – Listings can‘t violate trademark restrictions.
  • No coupon abuse – Coupons must provide true value to the customer.

Meeting every standard is challenging. But it shows sellers are committed to a good customer experience consistently.

Essentially, only the "cream of the crop" sellers on Amazon qualify for sponsored product advertising. Poor performing sellers simply can‘t compete.

According to Marketplace Pulse, a typical sponsored ad comes from a seller that:

  • Has over $1 million in annual Amazon revenue
  • Receives 98% positive feedback from customers
  • Maintains an on-time shipping rate of 99%
  • Has over 500 reviews across their products
  • Has over 10 years experience selling on Amazon

As you can see, these are very large, very successful companies selling top notch products. The barriers to entry for advertising prevent risky sellers from promoting inferior products.

Are Sponsored Products High Quality?

In most cases, yes. Since Amazon sets such high standards for advertising eligibility, the sponsored products come from the top tier of sellers.

These sellers have consistently proven themselves through good reviews, fast shipping, low defects, and excellent service over many years.

A few examples of companies that use Amazon sponsored ads:

  • Sony electronics
  • Nintendo
  • Instant Pot kitchen products
  • Bose audio equipment
  • Pyrex glassware
  • Oscar de la Renta luxury fashion
  • NatureMade vitamins

For sellers, losing eligibility to advertise means losing access to millions of customers. Big brands would never risk that, so they ensure their products and service are top-notch.

There are exceptions, of course. Some sellers may produce generic, low quality products but price them competitively and manage to qualify for ads. It‘s not impossible.

But on the whole, sponsored products come from experienced sellers with long histories of satisfied customers and flawless performance. This means higher chances of receiving a good product.

Where Do You See Sponsored Products on Amazon?

Amazon lets advertisers promote products pretty much anywhere on the site. Some common places you‘ll encounter sponsored products include:

Search Results Pages

Sponsored ads appear at the top, sides and bottom of the search listings. Amazon reserves the top few rows for its highest paying advertisers.

Product Detail Pages

The top or sides of individual product pages will feature sponsored products. Amazon calls these "Similar items related to this product" ads.

Browse and Category Pages

On browse pages like "Gifts for Teens" or category pages like "Toys & Games", you‘ll see sponsored products mixed in.

Shopping Cart Page

Your shopping cart will display sponsored recommendations for complementary products. This spot goes to the top bidder.

Account Dashboard

Amazon sells ad space on your account homepage too. Sponsored products may show up here when you‘re signed in.

Wherever there is open ad space, Amazon sells it off. This injects sponsored products throughout the shopping journey – from discovery to purchase.

According to Feedvisor, the #1 most viewed placement is the top of search results. Amazon makes a killing selling this prime real estate to advertisers.

What Do Amazon Sponsored Ads Cost Sellers?

Sponsored products work on an auction-style model. Sellers bid on keywords relevant to their products. The top bid wins the sponsored placement.

There is no fixed price for sponsored ads. The cost depends on the competition and desirability of the keyword. Here are the factors that increase bids:

  • Relevance – More specific product keywords are more expensive. For example, "nike running shoes" costs more than just "shoes".

  • Demand – Higher search volume and interest makes keywords more expensive. Seasonal products like "inflatable pool float" would see higher summer bids.

  • Competition – Lots of advertisers bidding on the same keyword will drive bids up.

  • Time of year – Keywords cost more during peak sales seasons like the holidays.

  • Ad placement – Buy Box spots command the highest bids.

A typical bid may range from $0.10 to $2 per click for less popular keywords. But for competitive keywords around in-demand products, bids can reach $5 to $10+ per click.

Top advertisers manage campaigns of hundreds of thousands of keywords. They use sophisticated software to optimize bids around their budget and targets.

It‘s an efficient process since sellers only pay when someone actually clicks their ad. Their spend scales up or down directly with sales.

Pros and Cons of Sponsored Products for Shoppers

Sponsored product ads present a trade off to customers. Here are the key advantages and disadvantages to be aware of as a shopper.

Potential Benefits

Relevant recommendations – See products actually related to your search faster. Helps you discover new items you want.

Quality sellers – Higher likelihood of good products, service, shipping, returns, etc. Reduces purchase risk.

Trending & new products – Brands promote the latest hot sellers or new product launches. Helps you find the newest releases.

Helps small sellers – Levels the playing field so small sellers can afford to advertise too.

Can drive lower prices – More sellers competing with ads may lower prices and encourage promotions.

Potential Drawbacks

Disrupts organic results – Blends ads in so you don‘t know what‘s organic vs paid.

Feels overwhelming – Too many sponsored products clustered together looks messy and distracting.

Repetitive ads – Seeing the same products advertised over and over again is annoying.

Doesn‘t guarantee relevance – An ad doesn‘t necessarily mean that specific product suits your needs.

Privacy concerns – Some shoppers dislike the personalized/targeted nature of sponsored products.

As a shopper, it‘s a matter of weighing these pros and cons. Sponsored ads are so ubiquitous now that avoiding them is near impossible on Amazon.

How Can You Control Sponsored Product Ads?

If you want fewer sponsored product ads, you do have some control as a shopper. Here are ways to minimize ads on Amazon:

Use Ad Preferences

You can opt out of personalized ads based on your shopping behavior:

  1. Go to Your Account > Manage Your Advertising Preferences
  2. Switch OFF "See personalized recommendations" and "See interest-based ads".
  3. This limits ads tailored to you specifically. Amazon will still show generic sponsored ads.

Turn Off Browsing History

To disable personalized recommendations:

  1. Navigate to Browsing History under Your Account.
  2. Select "Manage History" > "Turn Browsing History OFF".

Without browsing history, Amazon loses the ability to customize ads based on your viewing behavior.

Use an Ad Blocker

Browser ad blocker extensions like uBlock Origin can hide some Amazon sponsored products. This method is hit or miss but can help reduce clutter.

Shop Incognito

When shopping in private/incognito mode, Amazon doesn‘t know who you are or what you view. This prevents personalized sponsored products.

VPN/Proxy Services

Masking your IP and location using a VPN or proxy service disables geo-targeting and other tracking used for sponsored ads.

Short of avoiding Amazon altogether, these steps allow you to regain some control over the sponsored product experience.

Common Questions about Sponsored Products on Amazon

Still have some burning questions about sponsored products? Here are answers to some frequently asked questions:

Do all sponsored products have the "Sponsored" label?

Yes, Amazon clearly labels all paid product listings as "Sponsored" so customers can identify ads vs organic results. Any listing without that label is not sponsored.

Can any seller pay to be the Buy Box?

Not exactly. Sellers bid to show their sponsored ad placements around the Buy Box, but only highly qualified sellers can compete for that visibility. Amazon controls which specific listings get the direct Buy Box spot.

Why do sponsored products change when I refresh?

Product targeting and bids are constantly changing in real time, so the auction-determined sponsored ads will change frequently. Refreshing may show different sponsored products.

Is AmazonBasics a sponsored brand?

No. AmazonBasics is Amazon‘s own private label brand. They do not need to pay for sponsored placement – Amazon can programmatically promote and position AmazonBasics products above others.

Can sellers pick which exact keywords to target?

Yes. Sellers choose keywords to bid on that are relevant to their products. The platform provides keyword suggestions to help advertisers make those selections.

Do I still see ads if I have an Amazon Prime account?

Yes. Having an Amazon Prime membership does not impact sponsored products. All shoppers will see sponsored ads – they are site-wide promotions.

Hopefully these common questions provide more insight into how sponsored products work and why you see them.

The Bottom Line

When browsing Amazon, keep an eye out for those small "Sponsored" labels. They indicate a paid product listing – promotions that sellers are paying Amazon big bucks for.

These sponsored product ads are everywhere now, and for good reason. They work. Advertisers bid competitively to get their products in front of Amazon‘s hundreds of millions of shoppers.

The auction model and selective qualification requirements help ensure sponsored ads meet a certain level of quality and relevance. As a shopper, they bring potential benefits as well as downsides.

While sponsored products will likely never disappear completely, you can adjust your preferences to limit personalized and interest-based ads if you desire.

Either way, now you know what it means when a product says "Sponsored"! Amazon advertising is a multi-billion dollar market, so expect to keep seeing plenty of sponsored products in your search results.

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