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In Amazon Advertising, the different bid scenarios in an Amazon PPC campaign can get complicated. 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.
Not too long ago, around the end of 2020, Amazon advertising rolled out a new feature on the campaign level called “Campaign Bidding Strategies” and “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.
These are two new bidding features:
- Campaign Bidding Strategy
- Adjust Amazon Bids by Placement (replacing Bid+)
With the new campaign bidding strategy, you can now optimize bidding based on relevancy via the Amazon algorithm. 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.
Dynamic Bid Types Explained (Amazon PPC Campaign Bidding Strategy)
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.
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.
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 choosen:
- 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.
What Bid Strategy settings to use on a new Amazon PPC Campaign?
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:
- 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.
- 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
- 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.
Our Recommendation on using Amazon PPC Campaign Bidding 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.
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.
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.