Amazon PPC Campaigns Dynamic Bidding

The Changing Landscape of Amazon PPC: Unlocking New Sales Catalysts

Amazon has recently introduced new features to its PPC (Pay-Per-Click) advertising system, revolutionizing the game for sellers. Setting up a PPC campaign has become more intricate, but the potential rewards are greater than ever. Whether you find it exciting or daunting, these changes are here to stay. In this guide, we’ll explore the game changing PPC features that can act as sales catalysts for your Amazon business. Get ready to embrace the new dynamics and unlock your sales potential on Amazon.

Table Of Content

1. Let’s Begin

2. Dynamic Bids – Down Only

3. Dynamic Bids – Up and Down

4. Here is an illustration that will cover an arbitrary range of bidding.

4.1. Fixed Bid

4.2. Ad Placement

4.3. Top of Search (First Page).

4.4. Product Pages

4.5. Watch Out For The Killer Combination

4.6. Word of Advice & Caution

4.6.1. Concluding Remarks

Let’s Begin

The Campaign Bidding Strategy: Unraveling the Changes

In both automatic and manual campaigns, Amazon provides a dedicated section for campaign bidding strategies. While Amazon’s explanation is clear and straightforward, we’ll provide a paraphrased version to ensure everyone understands the changes that are unfolding. This is where the exciting transformations in your PPC campaigns begin. Let’s delve into the details and uncover the new strategies that will shape your advertising success on Amazon.

Dynamic Bids – Down Only

By opting for this feature, you are essentially instructing Amazon to limit your bid to the value you set as the default bid. If necessary, when the likelihood of conversion decreases, Amazon will gradually reduce the bid in a descending order until it reaches zero.

It is worth noting that experienced sellers commonly used this option as their default setting in the past. Consequently, a significant portion of the available guidance and content on PPC found on the internet and YouTube videos primarily revolves around this bidding strategy.

Dynamic Bids – Up and Down

This is where the new aspect comes into play. By opting for this feature, you not only grant Amazon the ability to decrease the bid price but also to increase it up to 100% if they detect a potential conversion.

It is a straightforward concept where you establish a range within which Amazon can operate, giving them the authorization to maximize or minimize the bid accordingly.

Here is an illustration that will cover an arbitrary range of bidding.

Fixed Bid

With this option, you establish a default bid that Amazon will not modify based on conversion likelihood. There are no additional factors or adjustments involved, meaning your bids will remain constant, and you will be charged the set bid price without any changes or modifications.

Ad Placement

These new options give sellers greater control over the placement of their product ads, providing them with additional leverage and opportunities to maximize their visibility. There are two options available for ad placement weighting, allowing sellers to assign percentages up to 900%. These percentages determine the priority and prominence of your ad in relation to other competing ads. Now, let’s delve into each option and understand what these percentages signify.

Top of Search (First Page).

By choosing this option, your ad will be positioned at the topmost row of the first page of search results on Amazon. This prime placement offers increased visibility and exposure for your product, ensuring that it is prominently displayed to potential customers.

However, it is important to note that this premium position comes with an additional cost, as the bidding for such prime ad placement tends to be more competitive. We will provide a detailed example later to illustrate the impact on costs.

Product Pages

By selecting this option, your ad will be displayed on product detail pages, either outside the search results or near the buy box. This placement can be particularly advantageous if you are targeting to position your ads alongside or near your competitors’ products.

To illustrate the impact of percentage assignment, let’s consider an example. Suppose your default bid is $0.75. If you assign 900% to either the Top of Search or Product Pages option, your bid will increase to $7.50. This represents a significant tenfold increase from your original bid, allowing you to secure the desired ad placement. It’s important to note that the maximum 900% assignment is not obligatory—you have the flexibility to gradually increase the percentage and determine the optimal bid that yields the best results for your advertising goals.

Watch Out for The Killer Combination

Indeed, it is crucial to carefully consider the financial impact of bidding strategies and percentage assignments. The example you presented highlights the potential cost implications of utilizing both the “Dynamic Bids – Up and Down” option and applying a high percentage, such as 900%, for ad placement.

In the extreme instance you described, starting with a default bid of $0.75, the “Dynamic Bids – Up and Down” feature doubles the bid to $1.50. When combined with the 900% assignment for ad placement, the bid further increases to $15. This means that a single click on your ad would cost $15.

It’s essential to evaluate the potential return on investment and conversion rates when considering such high bidding amounts. While securing top ad placements can increase visibility and potentially drive more sales, it’s important to weigh the cost against the likelihood of conversions and the profitability of your product.

Sellers should carefully analyze their advertising goals, budget, and performance data to determine the most effective bidding strategies that align with their overall business objectives.

Word of Advice & Caution

Here are some important considerations and recommendations when it comes to the new bidding options on Amazon PPC:

  1. Experimentation and unpredictability: Since the introduction of these new bidding features is relatively recent, there is limited precedence or case studies available. Sellers are currently in an experimentation phase, and it’s challenging to determine the most effective strategies with certainty.
  2. Give it time: When implementing changes to your bidding strategy, it’s important to allow at least two weeks to observe a definite trend and make informed adjustments. Changing one variable at a time while keeping others constant will help control the test and evaluate the impact of each change.
  3. Beta phase: Keep in mind that these features are in their Beta phase, and Amazon will be gathering feedback and closely monitoring their performance. This means that the mechanics and algorithms behind the bidding adjustments may still be evolving.
  4. Reliance on Amazon’s judgment: With the “Dynamic Bids – Up and Down” option, you are entrusting Amazon to make bidding adjustments based on their judgment. The exact mechanisms of how bids move up and down are not disclosed, adding an element of uncertainty to the process.
  5. Monitor key metrics: To assess the effectiveness of your bidding strategy, closely monitor important metrics such as click-through rate (CTR), conversions, and Advertising Cost of Sales (ACOS). Regularly reviewing these metrics at short intervals will help you gauge the impact of the bidding changes.
  6. Start with small campaign budgets: To minimize the risk of overspending, it’s advisable to set small campaign budgets, preferably not exceeding $30. This allows you to test the new bidding options without risking a significant portion of your advertising budget.
  7. Prioritize existing well-performing listings: Begin by applying the new bidding options to your existing product listings that are already performing well. This will provide a baseline for comparison and help you understand the impact of the bidding changes.
  8. Safe starting point for beginners: For newcomers and less experienced sellers, it’s recommended to start with the “Dynamic Bidding – Down” option as a safer choice. This allows you to reduce bids when conversion likelihood is lower, minimizing the risk of overspending.

Remember that strategies and best practices may evolve over time as more data and insights become available. Regular monitoring, testing, and adjustment based on your specific product and campaign performance will be key to optimizing your Amazon PPC bidding strategy.

Concluding Remarks

In conclusion, dynamic bidding has revolutionized ad placement on Amazon, empowering sellers with greater control and flexibility. While the new features offer exciting opportunities for increased visibility and performance, it’s crucial to approach them with caution.

Sellers must carefully analyze their financials, set appropriate budgets, and closely monitor campaign performance to mitigate the potential risks. Incremental adjustments, data-driven optimization, and adaptability are key to success in this dynamic landscape.

By staying informed, testing strategies, and making informed decisions, sellers can harness the power of dynamic bidding while minimizing financial pitfalls and maximizing their advertising ROI.