Bidding & Placement strategies

This article is step 2 of our step-by-step guides through Amazon PPC Sponsored Products


 

In January 2019, Amazon rolled out new settings for advertising campaigns enabling you to choose from up to 5 different bidding options.

What has changed?

Previously, all you could do was to set a desired maximum bid per keyword. It is then widely believed that Amazon would run an auction system combined with a conversion likelihood algorithm to place your ads. In other words, highest bidder wins.

Amazon would therefore determine (a) your final bid per click at or below your indicated maximum bid and (b) the placement: ie. page 1 or page n of search results; at the top, middle, side, bottom of the search result page; on a competitors product listings page.

You could also, do something call “Bid+” which gave the permission to Amazon to increase your stated bid by 50% in order to win the auction for appearing at the top of the search results page.

So, what’s new?

In short, quite a lot actually!

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.

 

You now have to consider 3 elements:

Bid + Placement + Bidding Strategy = Actual 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: 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
  • Placement:

Amazon has classified the various places where your ad could appear into 3 ‘Placements’:
Top of Seach (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: https://docs.google.com/spreadsheets/d/1UQ_fzBEVwAGh52_XyR8tR3yjDz5g1v3t4PFPXA9yR1k/edit?usp=sharing

 

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: https://sellercentral.amazon.co.uk/gp/help/G4X4KYVCW7BK5Q4U

 

We’ll be updating this article in the coming weeks as we collect more insights on the best use of Dynamic Bidding

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