The best Amazon sellers are always looking for ways to take their game to the next level, adopting advanced Amazon PPC techniques like campaign bidding and adjusting bids by placement.
These new Amazon PPC features are making some Amazon sellers nervous. Others are adopting them without hesitation and leveraging their unique capabilities to streamline and amplify their operations.
Dynamic bidding is just as it sounds. Bidding fluctuates depending on market forces to ensure Amazon sellers get a good return on investment when spending money in the PPC market.
1. How Does Dynamic Bidding Work?
Amazon's dynamic bidding is affected by the probability of your item selling in the open market.
This type of bidding intends to help you find the "sweet spot" where you're consistently spending what you want to per click. And getting the conversion rate you need to drive a solid return on investment.
There are three options to choose from in dynamic bidding:
1. Down Only
2. Up and Down, and
3. Fixed Bidding
- Down Only
With Down Only bidding, if a click on your listing is less likely to end up in a sale, the bid can be reduced by a large margin. If the chance of conversion is low enough, the bid might not trigger at all! Down Only is a protective measure that ensures you don't get burned trying to chase the shiny object when competition level suggests it isn't worth pursuing.
- Up and Down
With Up and Down dynamic bidding, Amazon could double your bid to get it to the top of the search results' first page, but not always. For all other search placements, the Amazon PPC will raise your bid up to 50%, but not more than that to retain balance. You can see the inherent risk here, right? Getting in a race to the top using Up and Down could get very costly very fast. Especially if several of your competitors are using it also. However, if it works appropriately and the competition level is low, the payoff could be well worth the risk.
- Fixed Bidding
And, well, fixed bidding is fixed. Under fixed bidding, you're not using dynamic bidding at all. You're using the traditional Amazon bidding style of choosing a default bid per click and sticking with that despite the market forces. Dynamic bidding is deactivated when you use fixed bidding.
There's nothing dynamic or risky about it because you've already predetermined your acceptable level of risk by setting it where you did.
2. What Happens to My Existing Amazon PPC Campaigns When I Adopt Dynamic Bidding?
When Amazon released all of these new bidding strategies, they were quiet about it. Not surprisingly, right? They're not always 100% transparent about changes and updates, but that's a story for another day.
Amazon moved all of your existing campaigns to Down Only. This move happened when Amazon replaced the old Bid + system with dynamic bidding.
Down Only will be the default for any new campaigns you create going forward, so be extra careful to double-check those options before running a new campaign. Especially if you want to take more risk using Up and Down or don't want to take any at all. Bidding based on the likelihood of conversion is a shaky reality, but like it or not, it's a new reality.
3. Bidding Based on the Likelihood of Conversion
In simplest terms, the greater the amount of competition in a product category, the more likely the campaign will spend more money to drive your bids toward the chance of winning a sale. And vice versa.
If the competition in a category is relatively light and using dynamic bidding, it won't be as necessary to spend as much to increase your chances of winning a sale. Trying to set your Amazon PPC budget given these scenarios isn't easy. It takes trial and error to determine how complex bidding becomes in competitive markets. And how predictable it is in less competitive categories. If you're going to commit to dynamic bidding based on the likelihood of conversion, make sure you have enough money in the reserve to weather the storm.
There will be times when you're riding high and nailing the bidding pattern that increases conversion, but also times you'll be spending money in a chase that you can't win. Part of this process is learning enough to be able to recognize the difference and react accordingly. Quickly. It's also possible to mix multipliers with your campaign bidding strategy to create a multi-pronged approach to push toward Top of the Search.
4. Using Placement Multipliers and Campaign Bidding Strategy Together
The adjust by placement feature gives you the option of baking in bid multipliers to your campaign strategy. You can set these multipliers anywhere between 0% and 900% for Sponsored Product slots you're trying to claim for a specific category.
For example, let's say you were willing to bid $2 per click - at face value - using 100% Up and Down dynamic bidding to try to get to Top of Search. This $2 per click is the goal, but you have a little wiggle room in your budget. So you add a 300% placement multiplier to your bidding campaign.
This multiplier allows Amazon to spend anywhere from $0 per click on the low end if you can't compete to $6 per click if you max out on the 300% multiplier.
Mixing placement multipliers and campaign bidding is a great way to find a balance that works well for your budget. And for the level of aggressiveness, you want to use overall in your campaign bidding strategy from now on. When you use this strategy, it's easier to understand how to calculate the maximum Amazon bid to get Top of Search.
5. How to Calculate the Maximum Amazon Bid for Top of Search
Amazon will raise bids by a maximum of 100% for Top of Search and 50% for other placements in real-time if the ad is more likely to convert a sale. However, the nice thing is you have full control over how much you want to set as a maximum bid for Top of Search. The old Amazon default was 50% without exception. Now you can set the bid up to 900% if you want to take a run at Top of Search for a product you covet.
However, our best advice is to be careful in implementing a high initial bid amount and a high multiplier. Have a deep understanding of your level of acceptable risk.
Like anything else with Amazon's PPC strategy, understanding how to use dynamic bidding, placement multipliers, and always bidding with conversion in mind takes some trial and error. You'll likely fail some at first. But, you'll also start to get intimately familiar with your risk tolerance and acceptable levels of loss.
Both of those things are invaluable to keep you honest and understand the difference between a solid opportunity and a likely loser at first glance.
6. How to Use Adjust Bids by Placement on Amazon PPC
There are three unique placement locations for any Amazon ad:
1. Top of Search
2. Rest of Search, and
3. Product Pages
There's a considerable difference in how these ads lead to conversion, how risky they are, and how expensive they can become. Top of Search almost always leads to more conversion but will be more expensive because everyone is racing to the top.
Conversely, product pages very rarely lead to conversion, but one will happen now and then. It's not a good idea to count on it.
7. How Do I Get Started Adjusting Bids by Placement?
To get started adjusting bids by placement, you first need to do due diligence on your product category and keywords associated with it. Every ad group and the keyword is different. Therefore it's vital to have a strong understanding of how this relationship works and which placement locations make sense for you.
When you're chasing a Top of the Search listing, the goal is to land on the first two slots in the Amazon Search Engine Results Pages (SERPs). To get to the top two in the SERPs, you'll be up against the stiff competition. It's a bidding war. The highest bidders will land in these first two slots in the SERPs.
But it doesn't end there.
The way you position your dynamic bidding strategy will determine whether you're able to hold onto these spots once you land there. Product pages can be valuable, but only more so than the Rest of the Search placements in the overall hierarchy. Sometimes click-through can be up to 10 times worse than Top of Search, for example. Bids on product pages are specifically Sponsored Product placements that land at the bottom of the details page for a product and sometimes on add-to-cart pages.
These types of bids aren't nearly as "visible" as Top of Search pages, and a good majority of casual shoppers will glance past them. The rest of the Search placement is anything below Top of Search and on forever through the sea of SERPs. You can't make adjustments to Rest of Search Amazon PPC placements, so it's a better idea to modify your bids for Top of Search and Product Pages and let the chips fall where they may.
8. How Do I Use Bids by Placement to My Advantage?
Effectively using bids by placement to your advantage requires you to have a defined strategy to which you're committed. Bids by placement are risky at their core. So not to continue beating the drum here, but you have to be willing to take on some risk to make this technique worthwhile.
There's some psychology at play. When a casual shopper on Amazon is looking at a particular product, they're not going to recognize the difference between the Sponsored Products at Top of Search and the organic listings Amazon provides based on search intent. Whether your product reached the "top of the fold" on a product page by your campaign bidding efforts - or good old-fashioned SEO - most Amazon shoppers won't recognize the difference.
This same psychology is why there's still value in the Rest of Search and product page placements. Sophisticated Amazon shoppers look through these listings to find a good deal, which they've started to understand through experience, isn't likely to happen at the top of the fold. Therefore, there are wins to be won throughout the SERPs. It just depends on what types of wins are most important to you in your overall Amazon PPC and marketing strategy.
9. How Does Bid Increase Modification Work?
There's a misconception out there that bid modifiers on Amazon PPC placement settings work as they should in traditional math, but they do not.
Bid increase multipliers work with addition, not multiplication! This process runs the opposite of traditional math, where if you're using a "multiplier," you're increasing the number you had to start with by severalfold. For example, if you increase your bid modification from 0% to 200%, it's not growing by 200%; it's quadrupling!
It's easy to get carried away with these large increases to get to Top of Search or improve your SERP placement. Make sure to use the built-in tools Amazon provides to double-check the effect of your bid increases on your overall PPC spend. There are plenty of great third-party tools that help with this as well.
Knowing how often to tweak your increased multipliers is another skill that's essential to develop if you're going to make this practice a core element of your strategy.
10. New Amazon Multiple Accounts Manager
For eCommerce sellers, agencies, and advertisers managing multiple accounts it is possible to now access multiple advertising accounts within one single dashboard in Amazon Advertising console.
Campaign Manager Account is available to sellers, vendors, and agencies.
Here are the steps to start using a manager account
1. Sign in to Advertising Console.
2. On the left side of the accounts, click on the manager account.
3. Click on the “Create a Manager Account”, decide on the name of the account.
4. After selecting the account type, either as an advertiser or as an agency, your manager account is set.
You can view seller and vendor accounts as unified under one dashboard or also if you are managing different marketplaces, you can combine the same regions under a single regional manager account. A unified dashboard allows you to manage different accounts while identifying which one needs immediate attention.
Read here for more detailed information about Manager Accounts by Amazon.
11. Always Be Thinking About Your ACoS
The best way to know when to ramp up - and back off - bid modifiers is to understand your Amazon Advertising Cost of Sale (ACoS). The ACoS should be your North Star, which helps you decide when to take more risk or back off to let things settle or try another keyword or product. In simplest terms, ACoS is your advertising spend divided by the sales that result from that spend. It's typically stated as a percentage to make things easy, math-wise.
As you kick off any Amazon PPC campaign - but especially dynamic bidding campaigns - it's essential to know your target ACoS for the campaign. As an example, let's say your ACoS is 30%. It won't be a rarity for Top of Search to be performing at a much tighter ACoS, maybe something like 10%-15%, while product pages will be twice to three times that.
If you want to get to 30%, you're going to have to aggressively multiply your bids to get in the mix and lower all of your other bids for the Rest of the Search and Product Pages.
Here's an easy formula to figure out how to position your max bid on ACoS standards:
Maximum Bid = Revenue Earned Per Click X Target ACoS%
Use this groundwork to start to build best practices that work for you!
12. Optimize your Amazon Bidding Strategies with DataHawk
Dynamic bidding is actively changing the ecosystem of amazon keyword bidding strategies and marketing. It’s a valuable replacement for the old system, allowing you, the seller, to modify your PPC strategy with much more finesse, ultimately resulting in lower costs, better ROI, and better conversion rates.
DataHawk's Sponsored Products Keywords Report analyzes advertising performance, profitability & inventory metrics for keywords on which there are active Sponsored Products campaigns with Keywords Targeting.
- This report is a great way for you to access bidding performance where you have an overview of the number of unique keywords you are bidding on.
- The period performance section gives you the numbers as to how much you have generated in terms of impressions, ad spend, paid sales
- In terms of inventory headroom, it helps you understand where you are bidding more or less and if you need to be more aggressive in your CPC bidding.
For brands seeking reliable tools to enable success on Amazon, DataHawk provides Robust Analytics and Amazon Selling Tools for SEO, Product Intelligence, and Advertising.
Without risk, there's no reward. Adopting campaign bidding and adjusting bids by placement requires a learning curve. But that curve's worth navigating. Amazon's not changing this preference any time soon. So it's in your best interest to give it a shot. Tweak things as you go, and find a pattern that allows you to succeed under the new rules and systems. After all, isn't that what Amazon is selling anyway?
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