Bidding & Placement strategies (step 2)

This article is step 2 of our step-by-step guide to Amazon PPC Advertising

First and foremost: Amazon will now try to optimise conversions as much as possible by using all the data it has at its disposal:

  • Individual customer shopping behaviour
  • Your product organic performance
  • Your product advertising performance
  • Your current campaign performance
  • + Anything else you can possibly imagine Amazon can get their hands on!

This is really important for you to know this. Why?

  1. Your campaign metrics (impressions, clicks, CTR, CR) will be impacted as Amazon will manipulate your final bid and placement to improve conversions (Remember: All Amazon cares about is selling products to happy customers as fast as possible!)
  2. If your product and campaign are doing well, Amazon will propel you further. If however, Amazon detects poor conversions for your product (whatever the reason), you’ll find yourself losing out even if you bid crazy amounts. This emphasises even further the need for a strong product with a great listing and happy customers.

Ok, with this in mind let’s look at creating a new sponsored products campaign.

Bidding Options

You have to consider 3 elements:

Bid + Placement + Bidding Strategy = Final Bid

Let’s break this down step-by-step:

  • Bid: This is the bid you want to use as a starting point. If you choose a “Fixed Bid” bidding strategy (see bidding strategies below), then this will be the bid Amazon will use. If you choose “Down Only” or “up and down” bidding strategy, then Amazon will use this Bid value and adjust it
  • Bidding Strategies
    • Dynamic – down only: Amazon will never bid more than the bid you have set. They’ll adjust the bid to drive maximum conversion based on all the factors mentioned earlier.
      • Example: You’ve set your bid to $1.00. Amazon’s bidding range is therefore Minimum 0.02 and Maximum $1.00
    • Dynamic – up and down: Amazon will use your set bid and will increase by up to 100% (in other words, double it) to appear top of page and will increase by up to 50% to appear on a product page.
      • Example: You’ve set your bid to $1.00.
        • For being placed on Top of Page: Amazon’s bidding range is therefore Minimum 0.02 and Maximum $2.00
        • For appearing on Product Pages: Amazon’s bidding range is therefore Minimum 0.02 and Maximum $1.50
    • Fixed Bid: Amazon will bid exactly what you are telling it to without adjusting anything.
      • Example, you’ve set you’re bid to $1.00. Amazon will therefore bid $1.00

We recommend you use “Dynamic – down only” if you are just started out. Everything else is to be used on a more tactical basis and with closer monitoring, especially “Dynamic – up and down” as this can lead to your daily budget being consumed in a very short space of time.

  • Placement:

Amazon has classified the various places where your ad could appear into 3 ‘Placements’:
Top of Search (first page): The first few results at the top of Page 1

Rest of Search: Any sponsored ads anywhere else on the search page results

Product Pages: On a product detail page, under “Sponsored products related to this item”

With the new bidding strategies you can now set an increased bid for specifically appearing on the top of the first page of results and on product pages that Amazon deems appropriate:

  • Top of search (first page)
    • You can choose to increase your default bid by up to 900% in order to ensure you win an advertising space at the top of first search results page
  • Product pages
    • You can choose to increase your default bid by up to 900% in order to ensure you win an advertising space on a Product Page

The formula goes like this: [Your set Bid] + [Placement] + [Bidding Strategies]

Here are some examples:

You’ve set a bid of $1.00.
Your bidding strategy is “up and down”
Your Placement is 100% for top of page and 50% for product pages

You get to a maximum bid of: 1 * 100% * 100% = $4.00 for Top of page
and 1 * 100% * 50% = $3 for product pages

We’ve created a useful Google Sheet to help you quickly determine the bid ranges depending on each of those variables. You will need to create a copy of the Google Sheet before you can edit it:

If you are new to Amazon PPC advertising we recommend you do not use the Bidding Strategy options until you have a good grasp of your budgets and of which keywords you should be pushing.

Dynamic Bidding Best Practice:

  1. Apply Dynamic bidding to campaigns with existing data. The more data a campaign has, the better Amazon can judge its performance. You can then compare the performance without Dynamic Bidding and with Dynamic Bidding
  2. Do not run the same campaign with 2 different bidding strategies, as these will compete against each other
  3. Do not compare the performance of an old “Down Only” campaign with a new “Up & Down” as the new one will not have as much data and therefore is likely to perform less well

Amazon has created some good resources on Seller Central. We recommend you read through them for more details:

You’re now ready to continue to Step 3 “Our best practice guide to Amazon Sponsored Products”!

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