Amazon Bidding Strategies: Complete Guide to Dynamic Bids vs Fixed Bids, Placement (bid+) & More

TL;DR

I’m launching a brand new product with zero sales history. Which bidding strategy should I choose?

Use “Dynamic Bids – Down Only.” Since your listing lacks data, you need to gather intelligence cost-effectively. “Down Only” protects your budget by lowering bids on unlikely conversions, whereas “Up and Down” could aggressively spend your budget before Amazon’s algorithm understands your product’s relevance.

My ACoS is too high on a keyword that drives sales. Should I pause it?

No. Pausing a converting keyword kills your algorithmic momentum. Instead, reduce the bid incrementally by 15-20%. This lowers your Cost Per Click (CPC) and improves efficiency without completely cutting off the sales volume that fuels your organic ranking.

Amazon’s “Suggested Bid” is really high. Do I have to pay that to get impressions?

Rarely. Amazon’s suggested bids often lean toward the high end. A safe and effective strategy is to start your bid 20-30% lower than the suggestion. If you don’t get impressions after a few days, inch it up slowly until you find the “sweet spot” where traffic begins to flow.

How do “Top of Search” multipliers interact with my Dynamic Bidding settings?

They compound each other aggressively. If you set a $1.00 bid with a 900% Top of Search multiplier and “Dynamic Bids – Up and Down” (which can double your bid), your actual bid could skyrocket to $20.00 for a single click. Always calculate the maximum possible theoretical bid before enabling both settings simultaneously to avoid draining your budget in minutes.

Understanding and selecting the appropriate Amazon bidding strategies is central to Amazon Advertising Management. Depending on the scenario, different bid strategies will deliver optimal performance. As Amazon PPC campaigns can get complicated it can be hard for sellers to make the right calls. How a seller can ultimately win a bid is determined by many different factors. This includes product relevancy, your bid, and other sellers/advertisers’ bids. Sometimes you feel like there is no control over the outcome of the Amazon bidding process. Let’s break down the factors that determine the best Amazon bid strategy for your FBA business.

Definition: Amazon Bidding Strategy

To first explain what Amazon bidding strategies entail: Amazon sellers can bid on certain keywords. These keywords are then matched with search terms shoppers input in the Amazon search bar and enter the ad auction. In this ad auction different advertisers’ ads compete for the top position in Amazon search results. One of the factors that determines whether your ad shows up (and in which position) is your ad bid. So the amount of money you are maximum willing to spend for a click. Determining the appropriate bid is key to advertising success as bidding too low may mean that your ads do not show up at all (or in positions that are too low to get clicks). Bidding too high on the other hand may also result in inefficiencies as you are potentially overspending on clicks that do not convert (i.e. more informational search queries).

Amazon bidding strategy optimization describes the process of setting optimal bids for your ads.

The Amazon Ad Auction: The Concept of “Second Price Auction“

To optimize Amazon Ad bids, it’s important to understand the logic behind winning the ad auction. Amazon uses what is called a “Second Price Auction”. A second price auction refers to an auction where the winning offer will always be a penny more than the next highest bid, all else being equal. It is important to understand this because it means that you do not always have to spend your maximum CPC bid to win an ad auction. For example, your keyword bid for the term “leather notebook” is $1.00, whereas the next highest bidder is $0.95, again all else equal. You would be charged $0.96 for each click, which will be your CPC (cost per click). So much for the theory. Let’s move on to more practical considerations.

How to Determine Initial Amazon Ad Bids: Amazon Suggested Bid and Bid Range

When creating new campaigns and adding keywords many Amazon sellers encounter a basic problem: How to determine the initial bids or bid ranges for their keywords? No need to worry: Amazon is here to help! Or maybe not?

When adding new keywords, Amazon will propose “suggested bids”.

According to Amazon “The suggested bid provides an estimate of bids that have been used by other advertisers for products similar to yours. The purpose of this bid range is to help you get started with advertising.”

In our experience, the suggested bid range is almost always on the higher end of what would be a sensible bid. So, we recommend starting out with initial bids that are 20-30% lower than the Amazon suggested bid. If you then notice that your ads do not get many impressions and or clicks, adjust the bid up step by step and observe the impact it has on ad delivery.

How to Calculate your Optimum Amazon PPC Bids

One of the best ways to avoid overbidding and underbidding is to optimize your Amazon PPC bid. You can mathematically determine what bids make sense for your product. If you sell an item that cost’s $5 it would obviously not make any sense to pay a CPC of $6 per ad clicks as you would make a guaranteed loss. Assume a conversion rate and then calculate how many clicks you need to generate one sale and see if the numbers add up for your business.

You can use this formula to calculate your optimum bid:

Optimal Bid = (Average Order Value (AOV) x Conversion Rate) x Target ACoS

Example:

Optimal Bid = ($19 x .10) x 0.3 = $0.57

Continuously Adjusting your Amazon Ad Bids Based on Campaign Performance

Setting your initial bids is only the first step. To win in the long run with Amazon PPC you need to adjust your bids based on incoming campaign data (refer to your search term report). To maximize profitability, you must transition from a “set it and forget” mentality to a dynamic, data-driven optimization routine. You will often find yourself in one of these four scenarios:

Scenario A: High ACoS, Bleeding Budget 

When a keyword is generating sales but operating at a dangerously high Advertising Cost of Sale (ACoS), i.e. an 85% ACoS when your target is 30%, the first idea that comes to mind may be to pause this keyword. This decision is not always correct. It also depends on how many sales the keyword has actually generated. If a 80% ACoS has only been achieved because you have made a single sale, then pausing might be the right move. But if it’s rather a matter of your bids being not profitable (so there are actually multiple unit sales), then all it means is that you are overpaying. To correct this, reduce your bid incrementally by 15% to 20%. Avoid drastic bid cuts as this may completely kill momentum with Amazon’s A9 algorithm. Slow and steady wins the race. Adjust down, wait a week or two and then re-asses.

Scenario B: High Traffic, Zero Conversions 

You will inevitably encounter keywords that eat up clicks (and budget), but yield absolutely no sales. However, another painfull truth is: to determine which keywords fall into the category of budget-eaters, you need to keep spending! A common mistake sellers make is pulling the plug after 5 or 6 clicks. Statistically, if your average conversion rate is 10%, you shouldn’t make a definitive judgment until a keyword has accrued at least 15 to 20 clicks. In practice, you will often need many more clicks as expected conversons are likely much lower than 10%. This is also the advantage of working with an Amazon seller agency, like SellerMetrics. We can aggregate the learning from dozens of accounts and know much sooner which keywords (on average) tend to drive conversions. 

If a keyword crosses a statistically significant threshold without generating a single sale, it is actively harming your overall campaign conversion rate. If you deem it relevant, try bidding lower, but ultimately you may have to cut the keyword and even consider adding it as a Negative Exact keyword to prevent further ad spend wastage.

Scenario C: Low ACoS, High Profitability 

Keywords that convert at low ACoS are the cash cows in your ad account. Also, if a keyword were operating at a 10% ACoS and your target were 35%, you may actually be leaving money and market share on the table. Review your impression share. Is your highlight profitable keyword showing up all the time when it’s eligible to show up? If not, then your strategy should be aggressive expansion. Increase your bid by 10% to 20% to capture more impression share and push your ad to the absolute Top of Search. Monitor the keyword closely: your goal is to find the point of diminishing returns where your bid increases result in maximum sales volume without breaching your target ACoS threshold.

Scenario D: Highly Relevant Keyword, Low Impressions 

If you have seeded a highly relevant keyword into your campaign but it is barely registering any impressions, your bid is likely too weak to win the auction. A too conservative bid essentially prevents your campaigns for getting served at all. In a competitive niche, a bid that is too low simply won’t surface your ad. Increase your bid aggressively in 30% increments until impressions begin to flow. If raising the bid doesn’t work, your product listing itself may lack relevance in the eyes of Amazon’s algorithm in this case Amazon Listing Optimization may be required to increase relevance. Ensure the keyword is strategically placed within your product title, bullet points, and backend search terms to improve your organic relevance score.

Dynamic Bidding vs. Fixed Bidding: A Detailed Comparison

When selecting bid strategies, there are two basic approaches to select from: dynamic bids and fixed bids. As the names imply, the difference between fixed and dynamic bids is that with “fixed” bids you can set a maximum cost-per-click (CPC) that Amazon’s ad algorithm must not exceed when bidding on keywords. With dynamic bidding on the other hand you give the ad algorithm more freedom to determine which bids are most appropriate in a particular situation. Armed with all its a priori insights Amazon will either bid higher or lower in an attempt to maximize performance towards your campaign goal. Amazon’s algorithm observes factors such as:

• Search terms used
• Device type: Conversion rates differ for mobiles and computers)
• Time of day: Also known as “day-parting”. Shoppers are more likely browsing during certain hours of the day and more likely going to make a purchase during other times
• A shoppers past behavior

If the ad algorithm predicts a higher chance of purchase, it may raise your bid within the parameters you set (in Up & Down mode) or reduce it (in Down Only mode) if the likelihood of conversion is deemed lower. We explain exactly how this works further down. This real-time approach helps capture high-intent shoppers while cutting back in underperforming scenarios.

Think of this as having a driving assistant take over. You are still kind of in the driver’s seat, but really the machine has taken over. So much for the theory. The flip side of this approach is less control. Always keep in mind that the Amazon Advertising Business unit is ultimately incentivized to maximize its OWN revenue! It does so by maximizing your ad spend. As Amazon decides when to raise or lower your bids, you might see higher costs if the algorithm is too aggressive or if your product listing doesn’t convert as well as predicted. It is also worth mentioning that with Amazon automatic campaigns you can go even one step further and let Amazon decide which keywords to bid on. This can make sense in some situations and we double-click on this topic on our blog post on Amazon automatic vs manual campaigns.

With fixed bidding on the other hand you set a hard ceiling: to keep your maximum cost-per-click at the exact level you set, regardless of the context. While this offers more predictability in controlling your ad spend it may result in foregone sales if competitors outbid you on clicks that end up converting. But even with Amazon Auto-Campaigns you have some level of control as you you can provide some input as to how bids are set.

Mastering Auto-Campaign Bidding: The 4 Targeting Match Types

Many sellers view automatic campaigns as a blunt instrument, allowing Amazon to spend their budget however it sees fit. However, sophisticated advertisers know that automatic campaigns offer nuanced bidding controls through four distinct targeting groups. By breaking down your automatic campaign bids, you can channel your budget toward the highest-converting traffic.

• Close Match: This targeting group shows your ads to shoppers who use search terms intimately related to your product. If you are selling a “stainless steel garlic press,” a close match would be “metal garlic mincer.” Because this traffic carries the highest purchase intent, you should allocate your most aggressive bids to the Close Match group.
• Loose Match: This group casts a wider net, showing your ads for broadly related searches, such as “kitchen cooking gadgets.” While this is an excellent discovery tool for harvesting new long-tail keywords, the conversion rate is typically lower. Set your Loose Match bids 20% to 30% lower than your Close Match bids to protect your ACoS.
• Substitutes: This group targets shoppers viewing the detail pages of products similar to yours—essentially, your direct competitors. If your product has a superior rating, more reviews, or a more attractive price point than the competition, bid aggressively here to steal their market share right at the point of purchase.
• Complements: This placement shows your ad on the detail pages of products that complement your own. If you sell acoustic guitars, your ad might appear on a listing for guitar picks or tuners. Because these shoppers are not actively searching for your specific item, purchase intent is lower. Keep your Complement bids conservative, using them primarily for brand awareness and incremental sales.

Dynamic Bid Types Explained

As mentioned above, the campaign bidding strategy allows your campaign to adjust bids based on relevancy. There are 3 options that you can select.

Two of the options use a system called “Dynamic Bidding”. This allows Amazon the freedom to adjust your bids dynamically based on relevance. Bid adjustments like this are automatic and in real-time. The high-level logic is that when your ad is eligible for display, Amazon will determine the likelihood of the click converting to a sale.

So how does Amazon analyze the likelihood of a sale? The exact method for this is not publicly published. Amazon has a vast amount of data on customer search queries and the product conversion rate on that query. They can easily run it against an AI model to predict a sale’s expected probability.

Back to the dynamic bidding options, these options allow Amazon to change bids up to 100%. So if your bid is $2, by selecting either of the two dynamic bidding options, your bid can range ultimately between $0 (-100%) or $4 (+100%).

Dynamic Bid – Up and Down

This option allows Amazon to raise your bid, (by max. 100%) in real-time when your ads are more likely to convert into a sale. On the other hand, Amazon can lower your bid (also by max. of 100%) in real-time too. This is when your ads are less likely to convert into a sale. Keep in mind that 100% adjustment is only the max. Most of the time, the adjustment will be less than 100%.

Dynamic Bid – Down Only

In this option, Amazon will lower the bid only (by max. 100%). It does this in real-time when your ads are less likely to convert into a sale

*For existing campaigns before implementation of the Campaign Bidding Strategy, the “Dynamic bid – Down Only” option is the default option.

Fixed Bids

Amazon will use your exact bid and any manual adjustments you set. It won’t change your bids based on the likelihood of a sale.

Amazon Campaign Bidding Strategies and “Adjust Bids by Placement”

At the end of 2020, Amazon advertising rolled out a new feature on the campaign level called “Adjust Bids by Placement.” Although some of you might think this is another level of sophistication, this new feature is also an opportunity to apply more control to the Amazon bid process and optimization.

With adjust bid by placement, you can now optimize bidding based on your ads’ placement. Hence giving the seller/advertising/KDP publishers a new dimension of bid control.

Adjust Amazon Bids by Placement Explained

Placements are the different areas where ads are shown across Amazon search pages. There are 3 main placements where you can bid for on the Amazon advertising platform. They are Top of Search, Rest of Search, and Product Pages.

• Top of Search (first page) ➡️ refers to the Ads on the first row or the top banner of the search results.
• Rest of Search ➡️ refers to the ads in the middle or at the bottom of the search result page.
• Product Pages ➡️ ads that appear in the product detail page (ASIN) and other non-search page placement (such as add to cart)

The new Adjust Amazon Bids by Placement feature allows you to make and set specific bid adjustments (% increase) based on placements.

For two of the above placements (Top of Search and Product pages), you can specify if you want to increase the bid up to 900% increase for specific placement.

In the above example, if the bid is $0.75 and the Top of search adjustment is 500%, the bid for the top search placement could potentially be ($0.75 * 6) = $4.50.

While for product pages, a 350% increase on an initial bid of $0.75 can mean a bid increase up to ($0.75 * 4.5) = $3.38.

This new placement adjustment allows for stranger passive controls to stay on either the top of search results or specific product pages. Why is this important? Because ads on the top of the search result have a much higher conversion rate and higher ROI. This is proven by data and studies. This is also a great feature to have if you are looking to continue to be competitive and dominant on the top of the search results for certain keywords.

How do Dynamic Bid and Placement Bid work together?

What if you use both campaign bidding strategy AND adjust bids by placement in an Amazon PPC campaign? How will the bid calculation work?

In this case, Amazon has described clearly how it calculates the bid with both strategies very clearly. The short answer is adjusted bids by placement are calculated before the dynamic up/down bid strategy.

Lets say the following option is chosen:

• Your bid ➡️ $0.75
• Top of Search ➡️ +900%
• Product Page ➡️ +400%
• Campaign Bidding Strategy ➡️ Dynamic Bids – Up and Down

First Step, your bid of $0.75 is adjusted based on the placement %. In our example above, the top of search adjustment will adjust the bid $0.75 ➡️ $7.50. Meanwhile, the product page adjustment will adjust the bid from $0.75 ➡️ $3.75.

Top of the Search Adjustment

$0.75 + ($0.75 * 900%) = $7.50

Product Pages Adjustment

$0.75 + ($0.75 * 400%) = $3.75

Second Step. The placement adjustment amount ($7.50 and $3.75) from the first step is used in the campaign bidding strategy. In this example, it’s the “Dynamic bid – up and down” strategy. This means that for Top of search placement, the final bid with “placement adjustment” and “dynamic bid up and down” can be up to $15 ([$0.75*10]+100%). Meanwhile, for the Product pages, the final bid with “placement adjustment” and “dynamic bid up and down” can be up to $5.63 ([$0.75*5]+100%) .

Top of the Search Adjustment with Dynamic Bid – Up and Down

$7.50 + (100%) = $15.00

Product Pages Adjustment with Dynamic Bid – Up and Down

$3.75 + 100%) = $5.63

So it seems like the above only give up bid scenarios. For the down scenarios, the results will always be the same. The logic will be that your bid will go down all the way to $0 if Amazon thinks it’s unlikely that the bid will convert into a sale. Even with “placement adjustment” enabled.

Bid Optimization for Different Keyword Match Types

Each keyword match type—broad, phrase, and exact—can serve a distinct role in your overall bidding strategy. Broad match casts the widest net, capturing searches related to your target phrase in various orders and combinations. This approach can be a discovery tool for identifying new, high-converting keywords you hadn’t originally targeted. Because it brings in a wide range of search queries, monitor performance closely. If your spend outstrips returns, consider lowering the bids or adding negative keywords to keep irrelevant traffic in check.

Phrase match narrows the search scope, ensuring that the order of words in your keyword remains intact, though extra words might appear before or after. This middle ground can yield a higher conversion rate than broad match while still discovering keyword variations that might be relevant to your product. Bids can be set slightly more aggressively than broad match if these new variations show promise.

Exact match is the most restrictive, allowing your ads to appear only for the exact keyword or close variations. While this results in the least volume of clicks, the traffic tends to be highly relevant, often leading to higher conversion rates. Sellers frequently set higher bids on well-performing exact match keywords to maximize visibility where the likelihood of conversion is strongest.

What Bid Strategy settings to use when Launching a new Product on Amazon?

When you are running a new campaign and launching a new product. It is highly advisable that you use “Dynamic Bid – down only” campaign bidding strategy while keeping all your placement adjustment to 0% on both Top of search and Product page options.

The reason for this is that you want to be able to test your campaign against your ads/keywords combinations as cheaply as possible. Since you do not have any data on your end, the next best option is to leverage Amazon’s data. You can use Amazon’s advanced algorithm to determine the relevance of keywords/targets you will bid for.

After that, you have tested and are confident about two things. 1) The keywords that are converting for 2) Which placement are doing well relatively. Then, you can set the campaign bidding strategy to “Dynamic Bid – up and down” option. You can also add % adjustments for the placement adjustment.

What Amazon Says

Amazon also recommends starting with only ‘Down only’ bidding strategy, then change to ‘Up and Down’ once the campaign is doing well. They also recommend using a 2 weeks timeframe to test the before and after performance of using different strategies.

There are also a few caution when you are doing any strategy testing on an Amazon PPC campaign:

1. Don’t create 2 campaigns on two campaign bidding strategies to compare results ➡️ if they are bidding against the same keyword, they will just bid against each other.
2. Don’t compare old ‘Down only’ campaigns with newly created ‘Up and Down’ campaigns ➡️ The old ‘Down only’ campaign will perform much better because it has a lot more data. If you really need to compare, you need to use the same timeframe (2 weeks), and switch strategy after the timeframe
3. Don’t copy an existing campaign and set it to a different strategy ➡️ when copying a campaign the sales history will not transfer over

You will also need to consider your objectives in your campaign. According to Amazon different placement groups will have different performance (click-through rate and conversion rates) due to their locations on Amazon.

For example, if your objective is sales, then you want to use the “Dynamic bid – up and down” strategy. This strategy will maximize conversions on all placements at similar ACoS. If your object is to take over an impression on a competition ASIN, then you use “Adjust bids by placement” and shift your ad impression on a product page.

Navigating Seasonal Bidding: Prime Day, Black Friday, and Q4

Standard bidding rules go out the window during Amazon’s marquee shopping events. During Prime Day, Black Friday, and Cyber Monday, traffic surges, conversion rates skyrocket, and the auction floor becomes fiercely competitive. If you maintain your standard evergreen bids during these periods, you will like loose clicks and sales to other sellers that bid more aggressively.

To capitalize on the influx of high-intent shoppers during peak sales seasons, you must implement a seasonal bidding strategy. One to two weeks prior to the event, begin incrementally raising your bids and daily budgets on your top-performing, highest-converting keywords. If you are profitable enough do the following: During the actual event days, switch your campaign bidding strategy to “Dynamic Bids – Up and Down.” Because the likelihood of a shopper converting is statistically much higher during Black Friday, allowing Amazon’s algorithm to boost your bids by up to 100% for Top of Search placements will ensure you capture the lion’s share of the holiday rush. Once the event concludes, cut your bids immeditately back to their historical baselines to avoid a massive ACoS spike during the post-holiday shopping hangover.

Advanced Amazon PPC Bid Strategies

The first thing you should be doing as mention above is testing your campaign initially with “Dynamic bid – down only” strategy. Getting data on your campaign should be your first step.

After 2-4 weeks, you will look into reporting data on Amazon by going into ➡️ “Reports” on your Amazon Advertising dashboard ➡️ click “Create Report” ➡️ On Report Type” select “Placement”. Run, download and open the report, this report will show you how your ads perform based on the different “Placements” on Amazon

Analyze on a campaign by campaign basis, whether the Top of Search placement does better than other placement and make your placement adjustments accordingly. By adjusting for placements, you optimizing for sales based on placements.

Another 4 weeks after your placement adjustments, you now want to switch the campaign bidding strategy to “Dynamic bid – up and down”. By selecting this option you optimizing your bids not only downwards, but also upwards based on relevance.

At this point your campaign will have matured and be well-optimized enough to the point that using both placement adjustment and “Dynamic bid – up and down” strategy will mean you are optimizing for sales and efficiency which in turn should increase your ROI.

SellerMetrics Campaign Placement Report

We at SellerMetrics offer Amazon PPC software that offers automation features such as bid adjustments, keyword harvesting, and negative keyword creation. At the same we have offer advanced reporting and analytics, one such reporting is the Campaign Placement reports.

Using our reports, you can quickly analyze your campaign placement performance through different timeframes. By gathering the result from our reports, you can have an accurate idea on which ads placements deserves higher bid placement adjustments.

Conclusion

That covers a comprehensive explanation of the new campaign bidding strategy feature. It is a very exciting time to be using Amazon advertising as new features are rolling out consistently. To get the best results from your Amazon PPC, always stay informed and test new features/strategies out. For more insights read our related blog posts on: Amazon PPC Campaign Structure, Amazon PPC Negative Keywords and What is a Good ACoS for Amazon PPC?.

If you have questions or insights to share, please feel free to post them via the comments section. Please also consider joining our Facebook Group where we discuss any questions you may have about running an Amazon business.

We are SellerMetrics, our Amazon PPC tool helps Amazon sellers, brands, KDP Authors and agencies navigate Amazon Advertising PPC via bid automation, manual bid changes, and analytics.

FAQ: Amazon Bidding Strategies