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Amazon DSP vs Sponsored Products: Why Successful Advertisers Use Both
When running Amazon ads, many advertisers eventually face the same challenge.
They increase their advertising budget.
Their campaign settings are not fundamentally wrong.
They adjust their bids.
And yet, sales do not grow as much as expected.
When this happens, the problem is not always the campaign setup itself.
The real issue may be that search-based advertising, mainly Sponsored Products, has a structural limit in terms of how many users it can reach.
To achieve further growth with Amazon advertising, brands need to reach not only users who are already searching for products, but also potential customers who have not yet started searching.
This is where Amazon DSP becomes important.
In this article, we explain the differences between Sponsored Products and Amazon DSP, the role each plays, and why successful advertisers use both together.
Sponsored Products Alone Has a Growth Limit
Sponsored Products and Sponsored Brands are among the most important ad formats in Amazon advertising.
When users search for products on Amazon, ads appear in search results or on product detail pages.
Because these ads reach users with high purchase intent, they are highly effective at driving conversions.
For example, when users search for terms such as “protein powder,” “wireless earbuds,” or “stroller,” advertisers can display their products at that exact moment.
This mechanism is extremely powerful.
However, it has one major limitation.
It can only reach users who are already searching.
The number of users actively searching for a product category on any given day is limited.
Once an advertiser has secured a certain level of impression share, bids are competitive, and conversion rates are stable, increasing ad spend further may not lead to significant sales growth.
This does not necessarily mean the advertising strategy is poor.
It means that search advertising itself has a structural ceiling.
What Is the “Search Ceiling” in Amazon Advertising?
The “search ceiling” in Amazon advertising refers to the limit of demand that can be captured through search-based ads alone.
Sponsored Products and Sponsored Brands are highly effective for capturing users who are already looking for products.
However, they cannot reach users who have not yet started searching.
Increasing ad spend may temporarily increase impressions and clicks.
But when an advertiser has already captured much of the available search demand, additional budget may not create new demand.
In other words, the advertiser is simply competing within the same pool of search users.
In this situation, CPC tends to rise, and ACOS can easily worsen.
To continue growing, advertisers need to do more than wait for users to search.
They need to build awareness before users enter the search phase.
What Is Amazon DSP?
Amazon DSP is an advertising platform that allows advertisers to serve display and video ads across both Amazon-owned and third-party inventory.
While Sponsored Products are triggered by search keywords, Amazon DSP is driven by audiences.
This means advertisers can reach users based not only on what they search for, but also on their shopping behavior, products they have viewed, categories they are interested in, and other audience signals.
Amazon DSP is mainly used for three types of strategies.
1. Retargeting: Bringing Back Users Who Did Not Purchase
One of the most common ways to use Amazon DSP is retargeting.
For example, a user may visit a product detail page but leave without making a purchase.
This user has already shown interest in the product.
In other words, they are not a completely cold audience.
By using DSP to show ads again to users who visited the product page through Sponsored Products or organic search, advertisers can encourage them to reconsider and complete the purchase.
The key point here is not to waste traffic that has already been acquired.
If an advertiser spends money to bring users to a product detail page, but those users leave and are never reached again, that is a missed opportunity.
DSP makes it possible to reconnect with those users and increase the chance of conversion.
How Is This Different from Sponsored Display Retargeting?
Sponsored Display also offers retargeting capabilities.
However, the reach is different from Amazon DSP.
Sponsored Display is mainly focused on placements within Amazon.
Amazon DSP, on the other hand, can serve ads not only on Amazon but also across external websites and apps.
This means advertisers can continue reaching users even after they leave Amazon.
DSP also allows for more detailed audience targeting.
For example, advertisers can adjust delivery based on audiences such as:
- Users who viewed a product detail page
- Users who did not purchase within a certain period
- Past purchasers
- Users interested in specific categories
- Users with similar shopping behavior
Sponsored Display and Amazon DSP share some similarities, but they do not serve the same role.
In terms of reach and audience flexibility, DSP offers more advanced possibilities.
2. Prospecting: Reaching New Customers Who Do Not Yet Know Your Product
Another important role of Amazon DSP is prospecting.
Prospecting means serving ads to new customers who are not yet familiar with your product or brand.
Sponsored Products generally show ads after users search.
DSP, on the other hand, can introduce products and brands before users start searching.
For example, advertisers can reach users whose shopping behavior is similar to that of existing customers, or users who have shown interest in related categories.
This allows advertisers to reach audiences who may not yet know their products and create new demand.
Of course, prospecting often takes longer to generate results than retargeting.
It may not lead to immediate purchases, and measuring its impact is not always simple.
However, because it allows advertisers to reach users beyond search demand, it is an essential strategy for mid- to long-term growth.
3. Retention: Encouraging Repeat Purchases and Cross-Selling
Amazon DSP can also be used to reach existing customers, not just acquire new ones.
For example, advertisers can serve ads to past purchasers to encourage repeat purchases.
This is especially effective for consumable products or products that are purchased repeatedly over time.
DSP can also be used for cross-selling by recommending related products to past customers.
Once a user has already purchased from a brand, they often have a certain level of trust in that brand or product.
As a result, the barrier to purchase is lower than with a completely new customer.
By using DSP, advertisers can maintain ongoing touchpoints with customers instead of ending the relationship after a single purchase.
Why Is Amazon DSP Often Undervalued?
Amazon DSP is sometimes seen as an ad format whose impact is difficult to measure.
One reason for this is last-click attribution.
With last-click attribution, credit for a purchase is assigned to the ad that was clicked immediately before the purchase.
For example, imagine the following customer journey:
- A user sees a DSP display ad on Tuesday
- On Thursday, the user searches for the brand or product name on Amazon
- On Friday, the user clicks a Sponsored Products ad and makes a purchase
In this case, the conversion is attributed to Sponsored Products.
Even though DSP helped build awareness and interest before the purchase, it may appear to have generated no results when only last-click attribution is used.
In reality, DSP may have brought the user into the purchase funnel and influenced the later search and purchase behavior.
This means the value of DSP cannot be properly evaluated through last-click attribution alone.
Why Evaluating DSP Only by ROAS Can Be Misleading
Many advertisers try to evaluate DSP performance based on ROAS.
However, judging DSP only by ROAS is not appropriate.
ROAS only looks at sales directly attributed to advertising.
The role of DSP is not always to generate an immediate click and purchase.
DSP can increase brand awareness, encourage users to search later, and support purchases that happen through organic search or Sponsored Products.
As a result, the impact of DSP may appear across other channels.
If advertisers look only at ROAS, they may overlook the true value created by DSP.
Even when ROAS is high, it is not always clear whether DSP generated truly incremental sales or simply captured users who were already likely to purchase.
What matters is not the ROAS of a single channel, but whether the overall balance between total sales and advertising spend is improving.
To Evaluate DSP, Look at TACOS
One of the most important metrics for evaluating Amazon DSP is TACOS.
TACOS stands for Total Advertising Cost of Sale, and it shows how much advertising spend is used in relation to total sales.
While ACOS measures ad spend against ad-attributed sales, TACOS uses total sales as the denominator, including both ad-driven sales and organic sales.
When DSP brings in new users who later purchase through search ads or organic search, that impact may not be reflected clearly in channel-level ROAS.
However, if total sales increase, the effect should appear in TACOS.
After introducing DSP, advertisers should look at two key points:
- Whether total sales are increasing
- Whether TACOS is not worsening significantly
If total sales increase after launching DSP and TACOS remains at roughly the same level, this may indicate that DSP is generating incremental growth rather than simply shifting attribution between channels.
Using AMC to Understand the Customer Journey More Accurately
To better understand the impact of DSP, it is important to use Amazon Marketing Cloud, also known as AMC.
AMC is an analytics environment that combines Sponsored Ads, DSP, and Amazon retail data.
Rather than identifying individual users, AMC uses anonymized data to statistically analyze the touchpoints that lead to purchase.
With AMC, advertisers can understand things such as:
- The percentage of users exposed to DSP ads who later purchased through search ads
- How long it took users to purchase
- Which audiences were most likely to convert
- How search ads and DSP worked together
- Where advertising budget should be reallocated
This makes it possible to visualize DSP’s contribution, which is often hidden when relying only on last-click attribution.
However, using AMC effectively usually requires SQL knowledge, which can be a barrier for many advertisers.
That is why m19 Pro is designed to provide AMC insights without requiring users to write SQL.
Amazon DSP Performance: What the Data Shows
m19 analyzed 168 advertisers using DSP automation, comparing performance during the 60 days before DSP launch and the 60 days after launch.
The results showed that, at the median level, total sales increased by 8%, while TACOS increased by only 1 percentage point.
Across the full dataset, sales increased by 30%, while TACOS increased by 2 percentage points.
In other words, sales increased without a major deterioration in the ratio of advertising spend to sales.
This suggests that DSP may be generating incremental growth.
Of course, DSP performance varies depending on the category, competitive environment, creative assets, and audience strategy.
However, the trend is clear: advertisers with mature search advertising accounts that added DSP were able to achieve growth that search ads alone could not deliver.
Sponsored Products and Amazon DSP Are Not Competitors
Sponsored Products and Amazon DSP are not alternatives where advertisers must choose one or the other.
They play different roles.
Sponsored Products capture users who are already searching.
Amazon DSP reaches users before they search and helps create new demand.
AMC helps analyze how each advertising touchpoint contributes to purchase.
These three should not be treated as separate initiatives.
They should be viewed as one connected growth system.
DSP reaches new users.
Those users later search on Amazon.
Sponsored Products capture the purchase.
AMC analyzes the customer journey and informs the next budget allocation.
By combining DSP, Sponsored Products, and AMC, advertisers can pursue growth that search advertising alone cannot achieve.
Conclusion: To Move Beyond the Search Ceiling, Advertisers Need DSP
Sponsored Products are extremely important for driving results on Amazon.
However, relying only on search advertising will eventually lead to a growth ceiling.
The number of users actively searching is limited, and no matter how aggressively advertisers increase bids, search ads alone cannot create new demand.
To grow further, advertisers need to reach users before they begin searching and build awareness of their brand and products.
That is the role Amazon DSP plays.
Through retargeting, prospecting, and retention, DSP helps advertisers reach users that search advertising alone cannot reach.
To evaluate its impact properly, advertisers need to look beyond ROAS and use metrics such as TACOS and tools such as AMC.
Sponsored Products capture existing demand.
Amazon DSP creates new demand.
AMC reveals what actually contributed to results.
By combining these three, Amazon advertising evolves from simple campaign management into a more strategic growth engine.
If growth is slowing down with search ads alone, the problem may not be bids or keywords.
It may be the structural limit of search advertising itself.
To move beyond that limit, Amazon DSP can be a highly effective option.
SOPHOLA, Inc. / m19 Japan
Executive Officer / Director
Kaori Iino