Amazon Advertising Bidding Strategies Every Seller Should Know

One of the most crucial aspects in determining the effectiveness of an Amazon advertisement is the amount that a seller will pay per advertisement click.

Sellers need to have an in-depth understanding of how bidding functions on Amazon and also know the bidding options available to sellers, as choosing the right bidding strategy can have direct consequences on the outcome of their Sponsored Ad Campaign.

In this article, you’ll learn the most important Amazon Ad Bidding Strategies that every seller needs to be aware of, to create successful ad campaigns.

How Does Amazon PPC Bidding Work?

Sponsored Products, Sponsored Brands, and Sponsored displays all to follow the cost-per-click model where sellers are only charged when a user clicks on their advertisement.

Amazon employs a bidding mechanism to determine which vendor gets the advertising space on its product listings. Amazon adheres to Second-Price Auction rules that state that the bidder with the highest price is only $0.01 over the second-highest bidder.

Auction sellers compete using a compilation of relevant keywords and product goals and after that, they submit bids to the level of the target. The bid is the maximum amount a seller will pay to click the advert.

The bid amount often isn’t what is paid by the seller, and could be less than their declared price. The winner of the auction doesn’t necessarily have to be bidding the highest amount to secure the first position because, in addition to the bid amount that is targeted, Amazon takes into consideration many other aspects.

This includes the relevancy of the ad, its rank (tied to the sales speed for the item) as well as conversion rate and the click-through rate, to determine and rank the most qualified ads. It is not uncommon for the older sellers to pay less for each click in an auction than newer sellers.

Check out this video to drive more sales:

What is Dynamic Bidding on Amazon?

Dynamic Bidding is an optimization option that is designed to enhance the performance of a campaign by automating. Each time a seller’s Sponsored advertisement is eligible for display, Amazon adjusts the seller’s bid by the likelihood of a click turning into an actual sale.

Amazon is able to access a vast amount of information on buying behavior as well as the performance of previous ads in the product’s niche as well as other information that allows them to calculate the probabilities of a consumer clicking an advertisement of a seller and then converting.

In addition to product and keyword targeted bids, sellers can choose three bidding strategies at the level of the campaign in Sponsored Products or Sponsored Display ads.

They include:

• Dynamic Bids — Down Only,
• Dynamic Bids — Up and Down, and
• Fixed Bids.

What is the Best Campaign Bid Strategy on Amazon?

The most efficient campaign bidding method to use on Amazon will be the one that will result in the greatest amount of sales at the most appropriate target ACoS and help sellers meet their goals. Sellers should test their bidding strategy to find out what is most effective for their campaigns.

For Discovery campaigns that are trying to determine which of the new keywords perform well in this case, we can allow Amazon some flexibility to make decisions on our behalf making use of Dynamic Bids ‘Down Only’.

What is Amazon Suggested Bid?

Suggested bids can be customized to allow sellers to get impressions for their keywords.

If a seller is looking for an estimate of the amount it will cost to place an offer for a particular keyword The suggested Bid gives information on the amount their competition is spending.

This suggested range of bids is built upon similar bids to those that have won Impressions during the past 7 days.

The Suggested Bid will give novices some idea about what rivals are bidding that can be used as a base to determine what they’re prepared to spend.

The new sellers need to think about the goals of their campaign, and then use the lower part of their suggested range as a starting point and gradually increase bids as time passes.

The suggested bid can at times be extremely high. New sellers should ensure that the bid is in line with their business goals and not just simply follow Amazon’s bid suggestion.