The process behind landing a Sponsored Product ad on the first page of Amazon is comprehensive and at times daunting. There are multiple factors to consider and decide on before reaching this milestone. It is imperative to have a strategy as you begin structuring your campaign for succeeding in this process. After choosing the ad type you would like to utilize for promoting your product, bidding is the variable to consider next. Amazon bidding strategies are important when it comes to the success of your advertising performance.
Therefore, Amazon merchants should understand their options when it comes to bidding strategies. Amazon currently supports the execution of 3 bidding strategies, which include:
- Dynamic Bids: Down Only
- Dynamic Bids: Up & Down
- Fixed Bids
Each strategy can prove to be useful for merchants. However, it is key to note that the most effective strategy depends on the parameters of an Amazon campaign. In this blog, we will describe what each of these bidding strategies represents, and when it makes sense to use them.
Amazon Bidding Strategy One – Dynamic Bids: Down Only
If you choose dynamic bids – down only, you allow Amazon to reduce your bids in real-time for clicks that are less likely to convert. For example, if someone was to search a less relevant query, Amazon would use the opportunity to reduce your bid as the data may prove it is unlikely your ad placement would convert to a sale.
This strategy is great for merchants getting started in the Pay-Per-Click space. Moreover, those looking to protect their budget and gain some data to better understand consumer trends, as well as keywords, should consider this option. In essence, dynamic bids – down only, can be seen as a defensive strategy that allows merchants to protect or control their spending while still trying to expand visibility.
Amazon Bidding Strategy Two – Dynamic Bids: Up & Down
On the other hand, choosing dynamic bids – up & down permits Amazon to increase your bids (up to 100%) in real-time, specifically for clicks that are more likely to convert to a sale. For example, if your bid is $2.00 Amazon will increase your bid to $4.00 in an attempt to win the auction if there is a highly relevant search query that is likely to convert. At the same time, this strategy also enables Amazon to reduce your bids in real-time for clicks that are less likely to convert.
This strategy is ideal for sellers who are willing to give Amazon the freedom to assist in their marketing efforts as they may have more budget for visibility. It is also beneficial for sellers that are running discovery campaigns and intending to understand strong keywords. This strategy will result in more conversions and sales.
However, your ad spend will likely run out faster as bids double in line with the likelihood of conversion. You should avoid using this strategy for new campaigns as Amazon will not have the data required to understand which keywords are most likely to convert. Nevertheless, this two-dimensional strategy is most effective for merchants that have accumulated some ad history and data and are willing to expand their budget for more conversions.
Amazon Bidding Strategy Three – Fixed Bids
If you have the data, expertise, and time to utilize fixed bids, you should do so. Fixed bids are the strategy to ensure you have complete control over your ad spend. This strategy will keep your bids at the amount that you have set. Even if you don’t have data but want to grow your brand visibility, fixed bids will allow you to get your products in front of as many consumers as possible. Keep in mind these consumers may not always be looking to buy your product. However, if you have access to data, understand the complexity of managing fixed bids and have the time for it, this is the strategy for you.
As you learn and collect data from the dynamic bids, fixed bids will become more beneficial as you understand high conversion keywords. You will then be able to make sure your bids are high on strong keywords and low on experimental keywords. Sellers who utilize fixed bids should optimize their campaigns daily to ensure they are as successful as they can be.
Bids By Placement
After choosing your bidding strategy, you will also have the option to select different bids by placement. Placements are the location or positioning of your ad. There are three bid placements to consider:
- Top of search (first page) – refers to the Sponsored Product ads in the top row on the first page of the search.
- Rest of search – refers to Sponsored Product ads visible in the middle or bottom of the first page and all Sponsored Product ads on the second page of search results and beyond.
- Product pages – refers to Sponsored Product ads on all non-search placements such as ads on the product details page, add-to-cart page, etc.
Concluding Thoughts
Depending on your selected strategy, you can allow Amazon to increase your base bid by up to 900% if you want to win a certain placement. Of course, the top of the search (first page) is the most valuable placement for many sellers. This is because most consumers on Amazon buy from the top of the search as it is most relevant and visible. However, the rest of the search and product page placements maintain their conveniences. With time, data, and practice you will understand which bidding strategy and placement are most effective for your product and business.
Remember, Amazon is not an easy game to play. With Trellis’ 1-click automated growth platform by your side, you can unlock the path to limitless Amazon success.
