Are Amazon Advertising Bidding and Adjust bids important? How will it affect ad results?

In the price adjustment of Amazon advertising, dynamic bidding is already a more commonly used function. Dynamic bidding is exactly what it sounds like, with bids that change based on market conditions, with the goal of ensuring sellers get a better return on investment when they spend money on advertising. But it is also because dynamic bidding seems uncontrollable, which makes many sellers feel very dangerous and uneasy.

1. How does dynamic bidding work?

Amazon's dynamic bids are influenced by your product's sale in the marketplace. The purpose of this type of bidding is to help you find the "sweet spot" where you can keep the CPC you came up with and have a good conversion rate to keep your ROI high.

There are three options to choose from in dynamic bidding:

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1. Down Only

With Down Only bidding, if your listings are less likely to lead to sales, this way you can control your bids effectively. And if the conversion rate reaches a certain level, exposure will be suppressed under this bidding method. Down Only is a safeguard that ensures you don't waste a lot of ineffective fees blindly chasing high clicks when you're less competitive.

2. Up and Down

With Up and Down dynamic bidding, Amazon can double your bids to get to the top of the first page of search results, but not always. For all other search placements, Amazon PPC will increase your bids up to 50% , but not more than that to keep things balanced. Using Up and Down can increase bids quickly, especially if several of your competitors are also using it. However, if it works well and the level of competition is low, the rewards are also very impressive.

3. Fixed Bidding

Under Fixed Bidding , there is no dynamic bidding. You're using the traditional Amazon bidding method, i.e. choosing a default bid per click. When you use fixed bidding, dynamic bidding will be disabled. It doesn't have any risk of volatility in the bid because you have pre-determined an acceptable level of risk by setting it to a fixed value.

2. Bidding based on conversion likelihood

In general, the more competitive a product category is, the more likely it is that ads will spend more money and win sales. vice versa. If the competition in a category is relatively light and you use dynamic bidding, you don't need to spend as much to increase your chances of winning a sale. Given these circumstances, setting up an Amazon bid is not easy, requiring trial and error to determine how complex it is in a competitive marketplace, and how predictable it is in a less competitive category. Sometimes you go all the way and identify a bidding model that increases conversions, but sometimes you can't immediately find a bidding model that works right now. Part of this process is learning enough to be able to recognize differences and react accordingly.

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3. Use a combination of placement ratios and campaign bid strategies

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Adjustment by position gives you the option to include positional bid scaling in your campaign strategy. You can set these percentages anywhere between 0% and 900% for the ad slots you're trying to get your product to appear in a specific position.

Let's say you set a bid of $ 1 per click, using Up and Down dynamic bidding to try to get to the top of the search, where $ 2 per click is the cap. But your budget has a little wiggle room, so you add a 50% percentage of above-the-fold placements to your auction. If the auction cannot be successful, the minimum bid is equivalent to $ 0 , and if the first page auction is successful, the maximum bid is $ 3 .

4. How to Calculate the Maximum Amazon Bid at the Top of Search

If an ad is more likely to convert to a sale, Amazon will increase bids above the fold by 100% in real time and by 50% in other placements. However, the upside is that you have full control over how much you want to set as a maximum bid above the fold. Now, if you want to grab your product above the fold in trending searches, you can set your bids up to 900% .

As with anything else in an Amazon advertising strategy, understanding how to use dynamic bidding, placement ratios, and bidding that always considers conversions takes some trial and error. You may fail a little at first. However, you will also begin to familiarize yourself with your risk tolerance and acceptable level of loss. These two things are invaluable for keeping you in an objective mindset and understanding the difference between a credible opportunity at first glance and a likely loser.

5. How to use position-adjusted bids on Amazon Advertising

There are three unique placements for any Amazon ad:

1. Top of Search

2. Product Pages

3. Rest of Search

Figure 3

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How these ads lead to conversions, how risky they are, and how much they cost varies greatly. Above the fold will almost always lead to more conversions, but will be more expensive because everyone is competing. Conversely, product pages convert less, but also show up, so don’t give up either.

6. How do I start adjusting my bids by placement?

To start adjusting bids by placement, you first need to do thorough research on your product market and the keywords associated with it. Every ad group and keyword is different. Therefore, it is crucial to have a deep understanding of how this relationship works and which placements make sense for you. When you're competing to be above the fold, the goal is to land in the top two positions on Amazon's search engine results page (SERP) . To get into the top two SERPs , you'll face stiff competition.

But it didn't end there. How you position your dynamic bid strategy will determine whether you can keep those positions once you reach them, and the value and evaluation of each position varies widely. For example, product pages can sometimes have a CTR that is 10 times worse than above the search fold, and bids on product pages are sponsored product placements at the bottom of product detail pages, and sometimes on add to cart pages. These locations are not as compelling as "above the fold" and the vast majority of consumers skip them. The rest of the search position is anything below the search fold, and you can't make adjustments to the rest of the search Amazon placements, so it's best to modify your bid ratio to the top of search and product pages and have products fall where you want them to be.

7. How can I use bid by location to my advantage?

Effectively using bid by placement to your advantage requires you to have a clear strategy and execute it. Bidding by location is risky, but the rewards are also very impressive, so you have to be willing to take some risk to make this feature worthwhile.

There is some psychology at work. When consumers on Amazon look at a particular product, most of them don’t realize the difference between a sponsored product above the fold and Amazon’s organically presented products based on search intent. Whether your product is trying to get "above the fold" on your product page through your campaign bidding efforts or through good SEO, most Amazon shoppers won't recognize the difference.

The same psychology is why there is still value in other search page placements and product page placements. Many Amazon shoppers browse these seats to find great deals they love, and they've come to know this through experience. So there are opportunities throughout the SERPs , it just depends on what is most important to you in your overall Amazon advertising and marketing strategy.

8. Always consider your ACOS

The best way to know when to adjust and cancel your bid ratio is to keep an eye on your ACOS . ACOS should be a core metric you monitor at all times, and it can help you decide when to take more risk or stand back and let things work out or try another keyword or product. In simple terms, ACOS is your ad spend divided by the sales generated by that spend, expressed as a percentage, and this metric makes things simple and easy to make decisions.

Knowing your target ACOS is critical when you launch any Amazon Advertising campaign (especially a dynamic bidding campaign). Assuming that your comprehensive ACOS is to be controlled at 30% , Top of Search is the right choice to implement with a stricter ACOS , maybe around 10%-15% , and the product page will be twice to three times that. If you want to be lower than 30% , you can also try lowering the overall bid and increasing the ratio of the above-the-fold position to reduce the ratio of the product page to present as much of the product as possible in the high ACOS position. Finally, here's a simple formula for you to figure out how to target your max bid according to the ACOS criteria: max bid = revenue per click X target ACOS% .