Everything You Need to Know About Amazon Bidding Strategies
In this blog, you will learn the basics of Amazon PPC bidding. Understanding the concept better and forming an effective bidding strategy can take you a step further towards reaching your advertising goals.
The key to success when managing bids is to track your KPIs (such as impressions, CPC, etc.) and search term reports regularly.
To form a good bidding strategy, it is useful to know all your costs as well as profit margins. If your profit margin is sitting around 20% yet your ACoS is 25%, then you are losing money (which is also okay in certain situations).
Keep in mind that when it comes to bid management, less is more. Optimizing bids once a week is a good place to start. Campaigns need to gather data, especially in the first couple of months. If something seems to work well, don’t touch it! With all this in mind, let’s deep dive into this topic.
What is a bid?
Bids are what you are willing to pay for ad placement. It is a tool that helps you reach your advertising goals. A good strategy is to start a little conservative and increase your bids as you go.
Good bid management is the key to success in advertising whether your goal is profitability, increasing awareness, or market share.
What is the right bidding strategy for you?
Dynamic Bidding (Down Only Bidding)
This should be the setting you use most of the time. It prevents you from overpaying for an ad placement. Amazon will reduce your bids if your ad is less likely to convert.
This is considered the best option for a profit-driven ad strategy since you can reduce your ad spend.
- Dynamic Bidding (Up & Down Bidding)
Amazon will increase your bid by up to 100% if your ad is likely to convert, and decrease it when it is not. This setting is also useful for certain situations such as if you want to be aggressive with a campaign, increase the Top of Search impressions, and win more auctions. Even though this could be a good option for certain strategies, it is always recommended to track your ad spend closely. When placing bids, make sure you are comfortable with spending 100% more than you bid.
- Fixed Bids
This setting is considered the least useful. Your bids don’t change based on the likelihood of conversion. In short, what you bid is what you pay.
Using this bidding option is not recommended in most cases because it is almost certain that you will be overpaying for a click.
On the other hand, if product awareness is the main goal, (rather than conversion), then it would make sense to use this bidding strategy. Amazon will show your product in every auction you win. It also makes sense to go for fixed bids if you know exactly what you should pay for a click after careful consideration of profit margins and advertising goals.
Bids by Placement
This feature increases the chances of an ad being shown. Depending on your advertising goals, you can use these adjustments for certain placements.
- Top of Search (First Page) Placement
This setting helps you to boost your ad spot to show on the very first row of the search results. It is a great option if you want to aggressively target certain keywords, increase brand awareness, and Top of Search impression share.
For instance, if you bid $2 on a keyword and use 100% Top of Search bid adjustments, Amazon will increase your bids up to $4 to place your ad on the top spot.
- Product Page Placement
This placement refers to Sponsored Products placements on the product details page. If you are launching a product targeting campaign, you can use this adjustment to increase the chances of your ad being shown under the competitor listings that you target.
- Rest of Search Placement
This placement refers to any spot in search results that comes after the Top of Search.
Using the Amazon Suggested Bids
Amazon offers suggested bids for each keyword that you are targeting. This helps to get an estimate of the costs to win a keyword placement. It also helps you understand the competition for a keyword. If a keyword has a relatively high suggested bid, it shows that your competitors are willing to pay more for that keyword.
On the other hand, it is not necessary to follow the suggested bids. If it doesn’t suit your advertising goals, do not blindly follow these suggestions.
Amazon suggested bids are useful when first choosing a bid, and are generally a good place to start.
During the launch phase, bidding 15 to 30% more than the suggested bid can be a good starting point. If you’d like to be even more aggressive when targeting certain keywords, you can bid 20% more than the highest bid suggestion that Amazon shows. If you feel like you’re bidding too much for a keyword, don’t be afraid to bid conservatively. You can always bid less than a suggested bid and increase it later if you are not happy with the impressions/clicks the keyword receives.
Remember, the key to success is to track your KPIs closely and make adjustments when needed.
Here at Bellavix, we know that growing brands on Amazon requires a thorough analysis of organic and paid performance. If you are struggling with overwhelming amounts of data and finding it difficult to identify your KPIs – reach out. We’ll help you create a strategy designed specifically for your brand’s needs.
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