Amazon Dynamic Bidding & Bid Adjustments: 10x CTR Overnight


Amazon is constantly introducing new and effective tools to manage your Amazon advertising campaign performance. Perhaps one of the most impactful as of recent is the new Amazon dynamic bidding and placements features. Pay attention as this is having a big impact on client’s performance.

If you’re an Amazon seller, you’ve probably spent a considerable amount of money on Amazon Advertising. If not, you should certainly consider the impact it can have on your business’ overall profitability and share of the coveted “digital shelf.” When looking at our customer’s sales, our data shows that 15-40% of total sales are driven through paid search and it’s on the rise. If you’re not paying attention to this, your bottom line may be suffering severely.

However, Amazon Advertising is complex and is becoming more and more confusing with each update. Not to mention, these updates are happening with increased frequency. Understanding the Amazon Advertising platform and all of its capabilities is the first step in successfully setting up your next campaign.

One of the biggest drivers of campaign performance is the amount you’re paying per advertising click. This guide sheds some light on the new bidding strategies offered within Amazon Advertising and the direct implications they have on your sponsored ads strategies.

What is Amazon Dynamic Bidding?

As of the New Year, Amazon Sponsored Products campaigns are equipped with three (really two) new bidding strategies. These new bidding options are as follows:

  1. Dynamic bidding – Down only
  • When ‘down only’ is selected, Amazon will lower your bid in any auction where your ad is “less likely” to convert. Any campaign that was created before January of this year is using this bidding strategy. In practice, let’s say your bid is set at $1.50. In auctions where Amazon deems your ad less likely to convert, they may lower your bid to $0.60.

So what does this mean for advertisers? Amazon is deciding, in real-time, whether or not your ad is likely to convert a sale from a click in that particular auction. Based on past ad performance, buyer behavior, and presumably several other data points, Amazon is able to determine the likelihood of clicks turning into conversions. This is likely to result in ads receiving fewer clicks during times where conversion has been historically poor.

2. Dynamic bidding – Up and down

  • When using the ‘up and down’ bidding strategy, advertisers give Amazon discretion in adjusting bids both up and down based on the likelihood of a conversion. This setting permits Amazon to raise your bids up to 100% for placements at the top of the first page of search results. Amazon defines top of search as the first grouping of sponsored ads on the first page of search results. For all other placements, e.g. product pages and rest of search, Amazon will only increase your bid by up to 50%.
  • Practically, let’s say your bid is again set at $1.50 with dynamic bidding – up & down selected. In auctions where Amazon identifies a likely conversion opportunity at the top of the first page of search results, they may raise your bid to $3.00 based on a 100% bid adjustment. For opportunities outside of the first page of search results, (product pages) your maximum bid would be $2.25 based on a 50% bid adjustment. Inversely, Amazon may lower your bid to $0.60 in auctions less likely to convert.

What are the implications of Up and Down Dynamic Bidding?  Again, Amazon is deciding, in real-time, whether or not your ad is likely to convert a sale. In instances where your ad is more likely to drive a sale, your bid will be automatically increased. In auctions less likely to convert, Amazon will automatically decrease your bid resulting in fewer clicks on ads during poor conversion times. Assuming this works as Amazon intends, this could be a great way to drive down CPCs and increase conversion rates on your ads!

3. Dynamic bidding – Fixed bids

  • When using a ‘fixed bids’ strategy, Amazon will not deviate from your set bid. Again, if set at $1.50, Amazon will not adjust your bid based on the likelihood of a conversion.

Why use this bidding strategy? This bidding strategy gives the advertiser the most control over the performance of their ad. With fixed bids, you’re able to set your exact bid while not having to worry about an algorithm deciding whether or not to show your ad in particular auctions. This strategy would be best for a new ad campaign without any history. This way, your ad will continue to deliver and gather data without Amazon changing bids, affecting deliverability. You could use fixed bids until your campaign has accumulated enough data for you to decide which bidding strategy would work best.

Amazon Ad Placements

There are a few different placements recognized by Amazon, e.g. top of search, rest of search, and product pages. Before going any further into strategy, let’s define each of these placement types…

  • Top of search (first page)  – Amazon defines top of search as the first grouping of sponsored results on the first page of search results. Depending on the layout of the search results page and the number of products per page, this could mean 2-4 sponsored results. The two ads in the screenshot below represent the top of search for the keyword “fish oil.”
  • Rest of search – This refers to any ad spot that is not in the first grouping of sponsored products on the first page of the search results for a given keyword. The screenshot below shows sponsored results in the “rest of search” placement.

Product pages – These placements are shown directly on product detail pages in the “sponsored products related to this item” section. You can find these ads by visiting a product detail page and scrolling down past the listed bullet points. The screenshot below shows a list of sponsored products on the detail page of the #1 ranking product for “fish oil.”

Now, we’ve established a good understanding of the different placements of Amazon ads. Let’s get deeper into the weeds and discuss how strategies should differ for each placement.

Implementation Strategy – Bid Adjustments by Placement

Bidding by Placement

If you’ve been selling on Amazon for awhile or have at least dabbled in Amazon Advertising, you’ve almost certainly heard of Bid+. This was the old mechanism that allowed Amazon to programmatically raise your bid in an auction where you may not have the highest set bid. This old system only allowed Amazon to raise your bid, at most, 50%. With this recent update, Bid+ has been retired, though advertisers are now able to input their own maximum bid increase percentage. Even more, you’re able to input a maximum bid increase percentage unique to each placement!

Top of Search (first page)

As mentioned above, Amazon has retired Bid+ and replaced it with bid by placement. For auctions in ‘top of search’, you are now able to set your own maximum bid increase percentage. Prior to the update, Amazon set your default max bid percentage increase at 50%. Now, advertisers have the ability to input their own percentage up to 900%…

This can increase your bid and spend your budget extremely quickly. For example, let’s say you sell a fish oil. You have an existing campaign with ad history that has sold units at a reasonable rate for at least the last four weeks. For the sake of simplicity, let’s say all of your bids are set at $1.00. You then adjust your maximum bid increase to 100% for auctions in the top of search. If dynamic bidding – up & down is your selected bidding strategy, you could potentially pay up to $4.00 per click. We’ll do some quick math to explain… $1.00 bid increased by 100% = $2.00 due to your setting for adjusting bids by placement. Since the campaign is using an up & down dynamic bidding strategy, Amazon may increase your bid by another 100% taking your bid from $2.00 to $4.00 for auctions most likely to convert.

In the same scenario, if dynamic bidding – down only is selected, your max bid would be $2.00 for placements in the top of search. $1.00 bid increase by 100% = $2.00 due to your setting for adjusting bids by placement.

Product Pages

Keyword targeting campaigns deliver in different placements, including on product pages. For example, looking at a campaign that has received 85,959 lifetime impressions, over 70,000 of those impressions were received through product pages. With the new placements reporting feature, you’re able to view a breakdown of ad placements on existing campaigns.

Before deciding whether or not to set your maximum bid percentage increase for product pages, make sure to analyze your past performance for those placements. In this instance, you can see how much better the ad performs when delivering for the targeted keyword(s) compared to product pages. In this case our product page placements are still well within our ACoS target of 30%, so we would consider adding a max bid increase percentage to get more clicks in these auctions.

How are keyword targets delivering for product pages? When a buyer searches a keyword, a list of search results is populated… a process we’re all very familiar with. However, when the buyer clicks on an organic or paid search result, another list of products is shown in the product pages placement that we learned about earlier. The ads that are shown on a detail page are still attributed to the keyword the ASIN was trafficked through. This is new information never before available to sellers and has huge implications on keyword selection!

Why do my existing campaigns have a 50% increase for top of search? Any campaigns that were created before the update, and had Bid+ enabled, will have a 50% maximum bid increase for top of search. This setting should behave similarly to Bid+ if left unchanged.

Above, you see an active campaign using different maximum bid increase percentages based on the placement. For top of search, we’re willing to bid up to 50% more than our set keyword bid in order to get quality clicks. On product page placements, our bid adjustment percentage is only 25%. Since most product placement ads are shown on detail pages of direct competitors, they have a much lower likelihood of converting sales. However, they typically have much lower CPCs than search terms do! This means advertisers can afford to have a lower conversion rate and still stay within a desired ACoS range.

How should I incorporate bidding by placement into my campaigns? This bidding strategy is best for existing campaigns already running within your desired profitability threshold. This bid increase percentage will allow for more clicks in the top of search. If your product converts historically well through the ad, you’re likely willing to pay slightly more to get clicks, especially in auctions where Amazon deems your ad most likely to convert. Keep in mind, in order to get the same level of traffic, you may need to increase your daily budget. Spending more per click allows for fewer clicks if budget is not scaled up.

For brand new campaigns, we do not recommend using dynamic bidding – up & down. If this bidding strategy is used on a new campaign, you likely won’t see desired results. Without historic performance data, it would be difficult for Amazon to accurately predict which auctions have the highest likelihood for a conversion.

How to 10x your Click-Thru Rate Overnight!

If you only take away one tactic you can apply to your business from this blog post, let it be the following. This strategy could more than triple the CTR on your campaigns in less than 24 hours!

Since Amazon has given us visibility into the placement breakdown of existing campaigns, we know that in most cases, we are delivering many more impressions on detail pages than we are for keyword searches. An analysis of campaigns VL has managed over the last few months shows that 83% of total impressions happened on detail pages! The rest of search produced 13% of impressions and top of search received 2.5%.

How can I make sure to deliver for keywords rather than product pages? When we discovered that more than 80% of our total impressions were being shown on detail pages rather than for keywords, we were shocked (to say the least). We quickly rallied to figure out a way around this and we think we’ve come up with a great solution. We tested this theory and proved it out, though we’re working to collect more data before releasing a full case study.

That said, we have enough examples to prove that this method works and will drastically change how your ads deliver. When setting up a new campaign or editing an existing one, you are able to change your bid adjustment percentage based on the placement type. In order to ensure you deliver for more search terms than product pages, you can set your bid very low, while setting an aggressive bid modifier for top of search. This ensures that your bid is very low for product pages while still allowing for aggressive bids to be placed on auctions showing in top of search!

For example, we took an existing campaign, reduced the bid from $1.52 to $0.30 with an 800% bid adjustment for top of search (effectively a bid of $2.40 for just top of search, $0.30 for product pages, and $0.30 for rest of search). By doing this, we were able to reduce total impressions for detail pages to ZERO. Furthermore, we were able to improve CTR nearly tenfold in a matter of two days by eliminating poor performing ad placements on product pages.

Conclusion

Dynamic Bidding strategies are still in Beta phase, so it’s very likely adjustments will be made to the algorithm as Amazon gathers more data. In the meantime, this guide explains how these new bidding strategies should be implemented into your existing campaigns. When exploring these new bidding strategies and how they may influence your campaigns, make sure to test them on existing campaigns first! A new campaign has no historical data making it essentially impossible for Amazon to determine when an ad is more or less likely to convert. By applying an up & down bid strategy to a top performing campaign, you may be able to drive more conversions with a similar amount of ad spend!

Viral Launch’s R&D team has spent the last 12 months managing and analyzing hundreds of successful Amazon Advertising campaigns. As we gather our own data around these bidding strategies, we’ll be sure to share the tactics producing the best results so advertisers can boost the effectiveness of their ads.

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Comments

comments

20 Comments

  1. David Goldstrohm said:

    Nice find! You state you would not recommend using this strategy on new campaigns as they do not have sufficient history. However, since Amazon has actual organic KW performance history, I wonder if they could use this to supplement dynamic bidding for new campaigns.

    January 14, 2019
    Reply
    • Hey David, thanks for the feedback!

      Great thought around Amazon potentially using organic keyword performance history when determining the likelihood of a conversion on a new campaign. Unfortunately, that doesn’t seem to be the case. In their explanation of these new bidding strategies, Amazon explicitly instructs advertisers not to use an up & down bidding strategy on a new campaign due to lack of historic performance metrics. This is most likely because organic and paid keyword performance is much different and not necessarily applicable to one another.

      January 17, 2019
      Reply
  2. Mike said:

    Great info. I’m wondering if you could elaborate on how to set-up and then further optimize your campaigns weekly while using the hack? For example, for existing campaigns, would you advise using the hack on just your top performing keywords by changing the bids to 30 cents while setting an aggressive bid modifier for top of search. If so, would you do any optimizing each week, and in what way?

    January 15, 2019
    Reply
    • Hey Mike, I appreciate the feedback.

      Before using the hack to deliver for just top of search, make sure that is your best performing placement. In the majority of campaigns we’ve analyzed, top of search is the best performing placement, but that is not always the case. If top of search is where you see the best results, then yes, I would suggest delivering in just that placement to maximize the efficiency of your ad spend.

      In our example we lowered our bid to $0.30 though that’s not necessarily where you should always start. It depends on the competition for the keyword and what CPC you have historically delivered at. You may need to play around with the low bid and % placement adjustment a bit to find a sweet spot based on the keyword. I would also regularly monitor the campaign; especially towards the beginning. Ensure that the ad is actually delivering with a low bid and then scale from there. Assuming you convert well for top of search, you should see a fairly immediate and positive impact on ACoS.

      January 17, 2019
      Reply
    • Mike said:

      Thanks Andrew. Could you also advise on how you might set up new campaigns for a variation of a product that is already selling well, for both product and keyword targeting? I imagine you don’t want to compete for the same ad spots as your main product is already running on.

      January 22, 2019
      Reply
  3. Mike said:

    Thanks Andrew. So suppose you check, and a given campaign performs best at “top of search”, and say you have 200 to 300 keywords in that campaign. Do you go through each keyword one by one and reduce to a low bid? If not, how do you decide which keywords to adjust?

    January 17, 2019
    Reply
    • Hey Mike, if your campaign has 200-300 keywords in it, I’m assuming that maybe only 50, at most, are generating the majority of sales for that campaign. In most cases we see that large keyword sets very rarely deliver for all of the keywords; rather just for a small subset. If that’s the case with your campaign, you can likely pause those low spending keywords and then apply this hack to a more targeted keyword set that drives the vast majority of sales for the campaign.

      January 21, 2019
      Reply
  4. John said:

    If rest of search if best for the campaign. Top is best. Product pages is worst. It won’t let me make any adjustment percentage to rest. So if I put the keyword bids way low to then use the multiplier percentage for increasing bids on top of search, then I sabotage my rest of search aspect because I can’t make adjustments up to it.

    Also I am not seeing anywhere that you can adjust placement at the keyword level, only at the campaign level is that correct?

    January 19, 2019
    Reply
    • Hey John, if your campaign is performing well for all placements you may not want to make any adjustments! This hack is mostly meant for campaigns that deliver inefficiently for product pages and rest of search.

      Correct, you’re only able to set placement adjustments at the campaign level rather than for each keyword.

      January 21, 2019
      Reply
  5. Sven said:

    Hey Andrew,

    we tried a similar version of this tactic for the last 2 weeks, but we run into issues.

    A lot of our campaigns have a significant amount of sales with low ACOS from “other placements”

    When lowering the default bid for the keyword so the product page impressions go down, we can only increase the bid for Top Placement, but the “other placements” lose almost all impressions and clicks.

    Can you give a little insight on “other placements” and why it has only 111 impressions in your campaign? They make up 20-30% of clicks and sales in a lot of our campaigns.

    January 19, 2019
    Reply
    • Hey Sven, this hack is meant to be used in instances where your campaigns are delivering inefficiently for product pages and rest of search. In most, but not all cases, we saw that our campaigns were delivering on product pages that weren’t converting; driving up ACoS. Bypassing this inefficient traffic, we’re able to target only the placements in which our ad performs the best. For campaigns that deliver and convert well for all placement types, this hack likely doesn’t make sense to use.

      Analyze each campaign individually to decide whether or not to divert traffic from product pages. If product pages and rest of search drive a significant number of sales and have a reasonable ACoS, it makes total sense to keep driving traffic there!

      January 21, 2019
      Reply
  6. Jason said:

    Was just thinking about this while awaiting my 1st day test results… I’m wondering how this will affect ranking… Amazon (may – but who knows?) consider relativity for its placements. If we assume conversion rates (along with sales, of course) influence organic rankings and I have a campaign with the following results:
    Top of search results – 4.9% CTR, 6.6% CR, $300 PPC sales
    Product page – 0.5%, 4.0%, $700
    Rest of search results – 1.2%, 4.7%, $200

    I wondering if / how much ranking would suffer using this strategy?

    By focusing on Top of Search, maybe I double or even triple its sales staying at the performance BUT now my product page and rest of search performance will be very low, if not nothing. If my product page and/or rest of search performance was relatively better than competitors, that influenced my ranking positively for those keywords.

    Wondering if the positive impact from top of search results focus and performance would outweigh (re: organic rankings) the decline in product page and rest of search results performance?

    Any insights???

    January 22, 2019
    Reply
  7. oded said:

    Hey Andrew, thanks for this info.

    It seems that you are willing to lose the profitable sales coming from the Details Page Placement in order to increase the CTR of the entire campaign.

    In many of my campaigns this placement is generating most of the sales and with profitable AcOS however it does take down the CTR significantly.
    Would you recommend I improve the campaign overall CTR in exchange for all these profitable sales?

    Also: would you implement this strategy differently for Auto and Manual campaigns?

    Many Thanks.

    January 23, 2019
    Reply
    • I think there may be a little confusion around when to use this hack. We aren’t suggesting that everyone go implement this strategy without due diligence. Before lowering bids and adding large bid placement adjustments, make sure you look at the breakdown of your ad placements. It sounds like you are generating a significant number of sales through detail pages at a reasonable ACoS. If that’s the case, you wouldn’t want to divert traffic from those well-performing ad placements.

      This hack should be used in scenarios where your ads are delivering inefficient traffic to detail pages. The majority of campaigns we manage deliver and convert much better for top of search than either of the other placements. There are definitely exceptions to this though and you may see some ads deliver well for product pages. I suggest letting those campaigns continue to deliver that way since those are likely cheap clicks and it sounds like they convert at a profitable rate!

      January 23, 2019
      Reply
  8. Oded said:

    Thanks, Andrew,
    I am confused when you say: “some ads deliver well for product pages.”
    Should I only look at AcOS or CTR ? in your example you are diverting the traffic from this placement based on the super low CTR while you still have a nice and low AcOS.

    In many of my campaigns, the AcOS on the product pages is good but the CTR is VERY Low comparing to the other placements – what should i do in these cases?

    January 23, 2019
    Reply
  9. Parker Breinholt said:

    In this example: For example, we took an existing campaign, reduced the bid from $1.52 to $0.30 with an 800% bid adjustment for top of search (effectively a bid of $2.40 for just top of search, $0.30 for product pages, and $0.30 for rest of search). By doing this, we were able to reduce total impressions for detail pages to ZERO. Furthermore, we were able to improve CTR nearly tenfold in a matter of two days by eliminating poor performing ad placements on product pages.

    Did you guys do this in a dynamic bid – down only or in a dynamic bid up and down?

    January 28, 2019
    Reply
    • Hey Parker, in this case we were using dynamic bidding – down only. The only adjustments we made here were lowering the bid and applying a large bid placement multiplier to top of search. However, we have heard some success stories from clients who have applied an Up & Down bidding strategy as well. This essentially allows Amazon to increase your bid another 100% on top of your bid placement adjustment percentage in auctions likely to convert.

      January 28, 2019
      Reply
  10. Hi Andrew! Thanks for this “HACK”! I have a question though. If I already have a running campaign dynamic bidding up and down, is it possible to change it to dynamic bid only?
    I didn’t find where to do that (if it is possible) thanks, Roland

    February 24, 2019
    Reply
  11. Olivet said:

    Hi Andrew. Quick question, does this hack also applies to a campaign using product targeting strategy?

    March 20, 2019
    Reply

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