Is Geo-Targeting on Amazon Worth It?

As an Amazon advertiser, you’re always looking for ways to optimize your campaigns and reach the right audience in more and better ways than your competitors. One strategy that is gaining more feasibility within Amazon is: geo-targeting. But is Amazon Geo-targeting really worth it? 

In this blog post, we’ll dive deep into geo-targeting on Amazon, exploring its benefits, limitations, and best practices.

Before we begin, let’s first define Geo-Targeting.

What is Geo-Targeting?

Geo-targeting is the practice of delivering ads to a specific audience based on their geographic location. This can generally be done at various levels, such as country, state, city, or even zip code. By targeting users in specific areas, advertisers aim to increase the relevance and effectiveness of their campaigns.

So this is where you find out if Amazon Geo-targeting is worth it, or not… Read below.

Geo-Targeting on Amazon DSP: The Basics

When it comes to Amazon advertising, geo-targeting has primarily been available through Amazon DSP (Demand-Side Platform). DSP allows advertisers to create custom audiences based on factors like location, interests, and browsing behavior. 

Here are the key geo-targeting capabilities in Amazon DSP:

1. State-level targeting: You can include or exclude specific states from your campaigns.
2. City-level targeting: Narrow down your audience to users in particular cities.
3. DMA (Designated Market Area): this is a region grouping together zip codes and counties.
4. Zip code targeting: Reach users in specific zip codes for highly localized campaigns.

Benefits of Geo-Targeting on Amazon

1. Customized Creatives: Tailor your ad creatives to resonate with users in different regions. For example, promote winter coats to users in colder states or feature local sports teams in your ads.
2. Audience Refinement: Exclude irrelevant locations to avoid wasting ad spend. If you sell beach gear, you might want to exclude landlocked states from your campaigns.
3. Enhanced Relevance: By delivering location-specific ads, you can increase the perceived relevance and value of your products to users in those areas.
4. Improved ROAS: Geo-targeting allows you to allocate your budget more efficiently, focusing on high-performing regions and avoiding low-converting areas.

Limitations on Amazon

1. Limited Availability: Geo-targeting is primarily available through Amazon DSP, which requires a significant minimum ad spend. Smaller advertisers may not have access to these features.
2. Aggregation Thresholds: When analyzing geo-specific performance data, Amazon sets minimum user thresholds to protect privacy. This can limit your ability to gain insights at highly granular levels, like zip codes, unless you have a large user base.
3. Increased Complexity: Implementing a geo-targeted strategy can add complexity to your campaign management. You’ll need to create and optimize separate campaigns for each location, which can be time-consuming.
4. Potential for Over segmentation: While targeting specific locations can be beneficial, over-segmenting your audience can lead to limited reach and diminished returns.

Amazon Sponsored Display. It was Short-lived.

Around Valentine’s Day 2024, there was a bit of virality around a new feature spotted in Amazon’s Sponsored Display campaign creator that showed you can add another targeting refinement based on location.

This move brings Sponsored Display (SD) closer to enjoying the functionalities that Amazon DSP (Demand-Side Platform) users currently have. However, we couldn’t find this feature in any of our accounts, including brands that spend 7-figures each month on Amazon Advertising.

Shortly afterward, we confirmed that Sponsored Display ads do offer geo-targeting options that are only for non-endemic advertisers. These are campaigns for brands that either don’t sell products on Amazon or run link-out campaigns away from Amazon.com.

The brief hype was due to this capability being accidentally extended to various Sponsored Display users. The feature was swiftly withdrawn from the grasp of our hopeful hands. Such a dagger!

Nevertheless, we anticipate Amazon heard the craze and will add this to their more near than-far roadmap.

It’s important to note that, as of the publishing of this article, geo-targeting is not available for any type of Sponsored Products or Sponsored Brands ads.. 

Measuring Geo-Specific Performance with Amazon

To determine if geo-targeting is worthwhile for your business, you need to analyze your ad performance across different locations. This is where Amazon Marketing Cloud (AMC) comes in handy.

AMC allows you to run queries and analyze your ad performance at a granular level, including breakdowns by geographic location. You can compare metrics like unique reach, total conversions, and conversion rates across states, countries, and media markets.

By examining these insights, you can determine if there are significant differences in ad performance across regions and whether a geo-targeted strategy makes sense for your business.

Navigating Aggregation Thresholds

When running geo-specific queries in AMC, it’s crucial to be aware of aggregation thresholds. These thresholds represent the minimum number of users required in a data set for Amazon to show the full results. They are put in place to protect user privacy and prevent the identification of individuals based on their location.

Aggregation thresholds are particularly strict for highly specific locations like zip codes. If your query doesn’t return enough users in a given zip code, Amazon will withhold the data. To work around this, you may need to broaden your location parameters (e.g., analyze at the state level instead of zip code) or ensure you have a large enough user base in each location.

Best Practices for Geo-Targeting on Amazon

1. Analyze your Data: Before implementing a geo-targeted strategy, analyze your historical sales and ad performance data to identify high-performing and underperforming regions.
2. Start Broad, Then Refine: Begin with broader location targets, like states or cities, and gradually refine your targeting based on performance data.
3. Tailor Your Creatives: Develop ad creatives that resonate with users in each target location. Incorporate local imagery, language, or promotions when appropriate.
4. Monitor and Optimize: Regularly monitor the performance of your geo-targeted campaigns and make adjustments as needed. Reallocate budget towards high-performing locations and pause or optimize underperforming segments.
5. Leverage AMC Insights: Use Amazon Marketing Cloud and tools to gain deeper insights into your geo-specific performance. Use these insights to inform your targeting and optimization decisions.

Combining Geo-Targeting with Dayparting

Geo-targeting can be even more powerful when combined with dayparting, the practice of scheduling your ads to run during specific times of day or days of the week. By layering these two strategies, you can reach users in specific locations at times when they are most likely to engage with your ads.

For example, if you sell coffee products, you might find that users in certain cities are more likely to convert during morning hours. By combining geo-targeting for those cities with dayparting to show your ads predominantly in the morning, you can maximize your chances of reaching high-value customers at the right time.

To effectively combine geo-targeting and dayparting, you’ll need to analyze your AMC data to identify trends in performance across both dimensions. Look for patterns in conversion rates, click-through rates, and other key metrics by location and time of day. Use these insights to create targeted campaigns that deliver the right message to the right user at the right time and place.

Geo-targeting on Amazon can be a powerful tool

This is especially true for advertisers looking to optimize their campaigns and reach high-value audiences. By leveraging Amazon DSP’s capabilities and analyzing geo-specific performance with AMC, you can determine whether a geo-targeted strategy aligns with your business goals and target markets.

However, it’s important to be aware of the limitations and complexities associated with geo-targeting, such as limited availability for certain ad types, aggregation thresholds that can restrict granular insights, and the potential for over-segmentation if not implemented carefully.

By following best practices like starting broad and refining over time, tailoring your creatives to each location, regularly monitoring and optimizing your campaigns, and leveraging AMC insights, you can maximize the impact of your geo-targeting efforts. And by combining geo-targeting with dayparting, you can take your targeting to the next level, reaching high-value users in the right place at the right time.

Ultimately, the key to success with geo-targeting on Amazon is to approach it strategically, armed with data-driven insights and a willingness to continuously test, learn, and adapt your approach based on performance. By doing so, you can unlock new opportunities to engage your target audience, drive conversions, and grow your business on Amazon.