Amazon PPC Bidding Strategies: All you need to Know in 2023
Amazon PPC bidding strategies that you choose play a significant role in the success of your Amazon Ads campaigns.
As an advertiser, it is crucial to have a clear understanding of the various Amazon PPC bidding strategies to optimize campaigns effectively and avoid excessive advertising expenses.
In this tutorial, we will explore the different types of Amazon PPC bidding strategies and provide guidance on selecting the most appropriate one based on your goals.
What is Amazon Campaign Bidding Strategy?
Campaign bidding strategy dictates the desired level of strategic aggressiveness for your campaign bidding. You have three options, each of which dictates a specific level of bidding aggressiveness.
Types of Campaign Bidding Strategies
Fixed bids
Amazon will use your exact bid and will not adjust your bids based on the likelihood of a conversion.
For instance, if your initial bid is $2.00, there will be no adjustments made by Amazon algorithms, and this will always remain constant for all bid auctions.
A fixed bidding strategy is usually recommended for new campaigns since Amazon won’t have much data to make intelligent bid adjustments on your behalf.
Therefore, using a fixed bid can ensure that you quickly acquire clicks and impressions in your campaign, allowing you to quickly make a further bid and bidding strategy modifications.
Dynamic bids - up and down
When you choose the dynamic bids – up and down strategy, Amazon increases your bids if a click has a higher likelihood of conversion. Similarly, it reduces bids for clicks that are less likely to convert.
Keep in mind that Amazon won’t increase your bids by more than 100% for placements at top of the page search results and by more than 50% for other placements.
For instance, if your initial bid is $2, the maximum bid adjustment for top-of-search placements can be $4, and for other placements, it can be $3.
This Amazon Campaign Bidding Strategy is usually recommended for mature campaigns with an ACOS way lower than the target ACOS, as Amazon can help you obtain more profitable impressions based on the likelihood of conversion.
Dynamic bid - down only
This campaign bidding strategy option is likely the least aggressive among the three. With this bidding strategy, Amazon reduces your bids in real-time by up to -100% for clicks that may have a lower likelihood of converting.
For instance, if your initial bid is $2, Amazon can reduce your bids by 100% down to $0 if there is a low probability of clicks resulting in a sale.
This Amazon PPC bidding strategy is ideal for most campaigns as it helps you reduce wasted ad spend from low-converting clicks and optimize your campaign performance.
Mistakes to be avoided
- Avoid running concurrent “Down Only” and “Up and Down” campaigns to compare results as they’ll compete in the same auction.
- Don’t compare a new “Up and Down” campaign to an established “Down Only” one, as the latter has more data and will likely perform better.
- Avoid using the “up and down” dynamic bidding strategy for new campaigns, as the Amazon algorithm can sometimes make inaccurate predictions due to insufficient data, resulting in wasted ad spend.
To play with Amazon PPC bidding strategies you must be aware of the algorithms and data sets influencing its decision-making around bidding optimizations.
Let’s dive deep into it.
Out of all the impressions, to judge the Likelihood of Conversion, Amazon takes majorly three data pools into consideration:
Data about the shopper
Amazon adjusts bids based on shopper behaviour, including their likelihood of purchasing after browsing through SERP and their preferred purchasing time and consideration of product detail pages.
Data about Product Category
Amazon adjusts bids by considering the most likely purchasing time for a niche and factors such as the top converting keywords and the demographics of the target audience.
Data about that particular ASIN
Amazon adjusts bids based on the performance of your advertised product across various placements, keywords, and the optimal time for purchases.
Benefits of Amazon Dynamic Bidding
- It reduces manual work.
- When advertisers lack in-depth knowledge of bidding strategies, running automated bidding in campaigns with Amazon’s machine learning algorithms can deliver satisfactory results.
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Limitations of Amazon Dynamic Bidding
- It needs significant data to perform satisfactorily well. The problem here is, you may have to burn a significant advertising spend to be able to give enough data to Amazon’s algorithm.
- Though it decides on the basis of 100s of data points but still is only capable of optimizing for immediate conversions and cannot take into account long-term goals.
- Amazon’s algorithm cannot tailor its decisions to fit a specific brand’s unique goals.
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