In the “Bidding strategy for advertising campaigns” column, the system provides three bidding options: “Dynamic bidding only lowers”, “Dynamic bidding only lowers”, and “Fixed bidding”. Let’s compare them.
1. Dynamic bidding only lowers
“Dynamic bidding only lowers” is the system default setting. When the “Dynamic bidding only lowers” strategy is selected, the Amazon system will automatically determine that for clicks that are unlikely to be converted into orders, the system will lower the bid in real time.
For example, suppose the seller is promoting watches, and the keyword is “sports watches”, and the seller’s bid is $1.00. If the Amazon system predicts that the relevance of this ad keyword is low, the display position is not good, etc., resulting in a low possibility of conversion into an order, the seller’s bid may be automatically reduced to $0.20.
This strategy is relatively conservative and can better control advertising costs, but the conversion rate may be low, and it also cannot achieve the goal of obtaining as much traffic as possible through advertising.
2. Dynamic Bidding – Increase and Decrease
When sellers choose the “Dynamic Bidding – Increase and Decrease” strategy, the Amazon system will increase the seller’s bid in real time for clicks that are more likely to be converted into orders, and will decrease the bid for clicks that are less likely to be converted into orders. For the placement at the top of the first page of search results, the system will increase the bid by no more than 100%, and for other placements, the system will increase the bid by no more than 50%.
Taking watches as an example, the bid for the keyword “sports watches” is $1.00. If the Amazon system evaluates that the seller’s ad is highly relevant and has a good placement, it is more likely to be converted into an order, and the bid may be automatically set to $1.40: If the Amazon system predicts that the seller’s ad is less likely to be converted into an order, the corresponding bid may be reduced to $0.20. For ads that can be displayed at the top of the first page of search results, the Amazon system’s maximum automatic adjustment is 2 times the seller’s bid, and for ad bids in other placements, the Amazon system’s maximum adjustment is 1.5 times the seller’s bid.
Under this strategy, the system will automatically adjust the advertising bid up or down based on the prediction of the conversion rate. Sellers can choose this strategy when the advertising budget is not spent according to their own advertising situation. It should be reminded that for products with fierce competition, the use of this strategy may lead to rising advertising costs and increased expenditures, so be cautious when using this strategy.
3. Fixed Bid
After selecting the “Fixed Bid” strategy, the Amazon system will use the seller’s exact bid for all advertising opportunities and will no longer adjust the seller’s advertising bid based on the conversion rate.
According to Amazon’s official data, the “Fixed Bid” strategy can increase advertising exposure by 45% and clicks by 29% under the same bidding conditions. If the seller’s products are must-have products for consumers, the products are well optimized, and the prices are competitive, then using this strategy to place ads will often have better results (input-output ratio).
The “Adjust bid according to ad position” setting, I suggest that you do not need to set it when you first create an ad campaign. During the ad operation, you can refer to the actual data performance of the ad operation and make appropriate adjustments based on the ad bidding.
For example, for an ad campaign with a bid of $1.00, if the ad data shows that the ad exposure and click volume at the top of the search results homepage are large, but the conversion rate is very poor, while the exposure and click volume on the product page are relatively small, but the conversion rate is very good, in this case, you can adjust the ad display by setting “Adjust bid according to ad position”, reduce the ad bid from $1.00 to $0.20, set “Top of search results (homepage)” to 200%, and set “Product page” to 800%. In this way, the ad bid at “Top of search results (homepage)” is only $0.60, while the ad bid at “Product page” becomes $1.80, which is more conducive to spending the budget on ad positions with high conversion rates.
Regarding ad bidding, my suggestion is not to set it blindly. In the current Amazon system, the default bid for most categories of product ads is $0.75. It should be noted that this price is only the default setting in the system and has almost no reference value for sellers. Instead, it is like the “misdetermination effect” in psychology, which has become a “mistake” for many sellers to set advertising bids. What we have to do is to break this “mistake” and make our own decisions. The author suggests considering advertising bidding from the following 4 aspects. Take “one-tenth of gross profit” as a reference. This is considered from the perspective of input-output ratio. Assuming that the seller’s product conversion rate is greater than 10%, using one-tenth of gross profit as the advertising bid, the direct input-output ratio of advertising should be cost-effective.
Take “suggested bid” as a reference. Different products have different suggested bids (and suggested bid ranges).
Take “suggested bid for core keywords of manual ads” as a reference. In the process of setting manual ads, because the core keywords and products have a high match, the bids given by the system are more real and reliable, so the bids for automatic ads can refer to this price.