To determine which PPC ads get shown, Amazon leverages a bidding algorithm. Amazon’s algorithm decides which ad it shows online shoppers based on keyword bids. Keywords then connect to the customer search terms that sellers want their product(s) to show up for.
The seven principles of persuasion by Dr. Robert Cialdini
6 Options For Determining Amazon Ad Campaign Starting Bids
1. 6 Options for Determining
Amazon Ad Campaign
Starting Bids
2.
3. Advertising on Amazon is an auction system.
To determine which PPC ads get shown, Amazon leverages a bidding algorithm.
Amazon’s algorithm decides which ad it shows online shoppers based on keyword
bids. Keywords then connect to the customer search terms that sellers want their
product(s) to show up for.
The seller with the highest bid and who also has a quality ad usually wins the
auction and gets their ad displayed at the top of the search. When an online
shopper searches that term on Amazon, the seller’s ad will appear to them and
create an impression.
4. Because a seller’s advertisement will only show up if he or she wins a spot in the
auction, this makes selecting the right bid extremely important.
Newer Amazon sellers are often unsure as to how to determine an appropriate
starting bid when using Sponsored Brands, Sponsored Products and Sponsored
Display campaigns.
They find themselves staring at a large number of different keywords, never
actually feeling 100% confident as to what to enter as their opening bid. These
newer sellers ask themselves over and over again:
5. “How do you actually bid the right amount?”
“What is the right amount?”
For sellers who are unsure as to what their starting bids should be in their ad
campaigns – this blog is for you. It will lay out your options for how best to
approach your starting bids when advertising on Amazon.
7. The first option when choosing a starting bid is to use the Amazon suggested bid
price.
The suggested bid column shows a recommendation for how much you should bid
on a keyword. Suggested bid and bid range are calculated from a group of recent
winning bids for ads that are similar to yours.
BONUS TIP: The bid range is a range of winning bids for most ads in a seller’s
product category. If your product is new, you probably need to bid higher.
8. Use the suggested bid and bid range together to decide on a bid for your keyword
or ad group. Consider your goals for the campaign and use the low end of the
suggested bid range to start and inch your bids upward.
The suggested bid can give beginners better insight into what their competitors
are bidding, thus providing a new seller with a good place to start.
For more experienced sellers, who may not be using the suggested bid because
they already know what their average CPC (Cost per Click) is, the suggested bid
can provide a good comparison point.
9. Amazon suggests that keywords for Sponsored Products are 56% more likely to
get Impressions within the first 7 days, if a seller uses a bid close to the suggested
bid price range.
When using Sponsored Products campaigns (keyword targeting), sellers have the
ability to filter by Broad Match, Exact Match and Phrase Match.
10. Sponsored Display ads give sellers more options for targeting such as targeting
by product or audience. For Product Targeting, Amazon does not suggest any
keyword bid prices for the seller.
However, for Audiences (under Daily Estimate), Amazon will show information
related to Reach and the estimated cost per 1,000 Impressions for sellers based
upon the type of audience they are targeting (Search or Purchase).
11. BONUS TIP: Search audiences are made up of online shoppers who search with
keywords relevant to your product but have not purchased in the last 30 days.
Purchase audiences are comprised of online shoppers who have previously
bought from you but have not done so in the last 365 days.
Amazon will show you the estimated number of Impressions you will get based
upon your starting bid price (per audience).
12. Sponsored Display shows you the potential Impressions and Reach (the number
of people your ad appears before) of the audiences selected by a seller.
There are usually more Searchers than shoppers who have previously bought
from a seller, so the number of Impressions for the Purchase audience can be
significantly lower.
13. Amazon Suggested Bids are updated daily, based on the increase or decrease in
competing bids and ads in each auction.
If you have a specific business objective in mind, however, Amazon recommends
that you enter a bid that will enable you to meet this objective and then adjust it
based on your campaign performance.
15. The second option when determining a starting bid is to use the product average
cost per click. This data is especially useful to sellers who must decide where to
start bidding with their newer campaigns.
Sellers who bid right at or above the average cost per click that Amazon charges
for their category, seek to ensure that their ads will be both seen and clicked.
16. Sellers who bid lower than the average cost per click, should expect that their ads
will be seen and clicked far less than they desire. The goal is to use the average
cost per click in order to bid at a comfortable price that promotes plenty of clicks
and accordingly, sales.
The type of product that a seller wishes to sell, and its corresponding category
have an effect on the average cost per click. Certain niches are more competitive
than others. In niches with more competition, the bids tend to be higher than those
which are less popular.
18. The third option for choosing a starting bid looks at the maximum cost per click,
which focuses on two key factors…the profit margins of a product, and the number
of clicks it takes to get a sale.
If a seller has a body of information pertinent to these data points, this should
allow them to estimate a good starting bid. The goal is to breakeven on your
advertising costs.
20. The next option involves starting with a really Low Bid (.05, .10, .20). This type
of campaign can be used to build awareness and possibly get a few low
ACoS sales. (The Entourage Playbook Series will guide you step-by-step on
how to set up an Automatic Low Bid Campaign.)
22. The fifth option for a starting bid (aggressive), is an ideal strategy for sellers
● who are in a very competitive niche,
● want to highlight products that feature some type of
advantage/competitive edge,
● who are launching a new product.
It requires sellers to bid above the Amazon suggested bid, or to bid much
higher than their average cost per click / max cost per click.
24. As the name implies, the sixth option is to start with moderate bids, then scale
bids up until the target ACoS is reached. These types of ad campaigns should
be monitored closely to determine their effectiveness and to prevent the
overall campaign budget from being used up too quickly.
Amazon PPC advertising is more complex and nuanced than most sellers
expect. This is especially true when it comes to the bidding system that
determines which ads get shown. Understanding how to determine the proper
starting bid in ad campaigns can be the difference between failing and thriving
on Amazon.
25. A meticulously conceived and well executed
approach to optimizing your advertising campaigns
can place your business on the path to achieving
success as an Amazon seller.
The Entourage Playbook Series contains 28
proven-in-the-trenches strategies that will give you
a strong foundation to build a profitable business.
Grab Your Copy Today!
Entourage: Software to Scale Amazon Ads and
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