Amazon's Bidding Strategies and Placement Modifiers
Updated: Mar 13
Don't take keyword bids at face value. Depending on the bidding strategies you deploy at the campaign level, a $1 bid can turn into a $20 bid in real time.
How so? Watch our webinar to get a step-by-step breakdown of Bidding Strategies and Placement Modifiers. Or if you are pressed for time read the high level notes below.
In this webinar we will help you solidify your understanding of the following topics:
Bids by Placement
Dynamic Bidding
Strategies and Best Practices
What does "Bids by Placement" refer to?
Bids by Placement is the ability to change your bids depending on where your ads are shown. So, this is a way for Amazon to say that if you like to bid more for certain placements, then we can show your ads in those placements. Moreover, it is through bids placement that you can win a bid when there's competition. You'll be competing for opportunities, and the higher you bid, the more likely you'll be picked.
3 Types of Bids Placement
Top-of-Search
Rest-of-Search
Product Pages
WHY IT IS IMPORTANT:
Bids by Placement gives you a chance to:
Increase Bids by Specified Amounts
Change Default Bids Dramatically
What is Dynamic Bidding?
In comparison to Bids by Placement, wherein you focus on your competition, Dynamic Bidding puts emphasis on the likelihood of conversion based on buyer behavior.
Here are the 3 Bidding Strategies
Dynamic bids - down only - Amazon will lower bids in real-time if ad may be less likely to convert to a sale.
Dynamic bids - up and down - Amazon will raise bids by a maximum of 100% for Top of Search and 50% for other placements in real-time if ad may be more likely to convert to a sale, and lower bids when less likely to convert to a sale.
Fixed bids - Amazon will use the exact bid and won't change bids based on the likelihood of a sale.
Combining All the Different Bidding Options
The example below shows how you can use Placement Bid Modifiers and Dynamic bidding strategies using the Dynamic Up/Down strategy and Top of Search (TOS) and Product Pages (PP) as placement bid modifiers.
Let's take a look at the Product Pages scenario first, which is in red. So, if you have a $1 bid on a dynamic 50% with no change to the PP, your bid will increase to $1.5. However, it can go up to $5 if you don't see a likelihood of change for the dynamic, but you have the option of other competing products, which is 400%. And lastly, if you have a PP increase to 400% and a dynamic 50%, you'll get $7.5.
In the TOS scenario, if you have a dynamic 100% and no change in the TOS, your $1 will become $2. In contrast, if you have a dynamic 0% and TOS with an increase of 900%, you'll get $10. And if it's an increase of 900% for TOS and 100% for dynamic, you'll get $20.
3 Strategies to Follow When Bidding by Placement
Strategy #1: Measure and Modify
Look at the placement data for every single campaign and determine how to adjust your modifiers. You can also download the placement report, which is more convenient. Or you could simply look at PPC Ninja's Campaign Placement View that allows you to view, filter and edit modifiers at each modifiable placement.
Strategy #2: Segment your Keywords by Campaign
We've been seeing a shift in the number of keywords that go into an ad group going down to a thousand. But, keep in mind that even if you fill thousands of ad groups with keywords, not all of them will make an impression, and that is such a waste. Amazon will usually favor those that continue to show results. That's why the trend nowadays is to segment your keywords so that all of them will get more attention and budget allocation.
4 Ways of How to Separate Keywords:
Single Keyword Campaigns - Pick a few keywords that are super relevant and go aggressive on those with Top of Search modifiers. Make sure to allocate a specific budget and separate those keywords from the other ones.
Volume Based Separation - Keywords that have many volumes actually eat up a lot of the budget. If you mix up high and low volume keywords, the low ones won't get many impressions. So, separate them, and you can have a more intentional use of your bidding strategy.
Relevance Based Separation - Focus on relevant keywords and keep them in buckets. It will give you more opportunities as far as placement modifiers go.
Branded vs. Non-Branded - Branded keywords get more attention, so separate them from non-branded keywords. Make sure to allocate a certain budget and bidding strategy.
Strategy #3: Change Bidding Strategy After Launch
When it comes to launching your product, you need to make the most out of the first two to three weeks. This is when your products get more exposure, so you want to make sure that it takes off. You can call this the honeymoon phase, where a lot of historical data is ignored.
In this strategy, you also have to make sure that you don't have sparse data. This won't allow a dynamic up and down activity. We suggest at PPC Ninja that you decide how much you'd like to bid and go for it. You can choose the fixed bids strategy instead. You also have the option of Dynamic Bidding but keep Dynamic Down bidding. Make sure to have the max default bid you're willing to spend and watch it for 2 to 3 weeks. Once it settles down, you can look at the ACOS. If it's high, you need to contain it by sticking to the Dynamic Down. But if the ACOS is good, you can use the Dynamic Up/Down bidding strategy.
Did this post spark your curiosity or trigger a question? Comment below or email us at support@ppcninja.com. We'd love to hear from you!
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