Amazon has become the largest online marketplace in today’s e-commerce landscape, amassing millions of customers and billions of sellers worldwide. Hence, it is not surprising that there is tough competition on the platform, as many businesses strive to boost sales and drive traffic to their products.
Thankfully, Amazon Ads bidding can help brands to improve their visibility, grow their traffic and expand their sales. But with so many different strategies available, it can take time to decide which one to follow.
This article will cover everything businesses need to know about Amazon Ads bidding, including their different types and helpful tips to help brands bid successfully on the online marketplace.
Table of Contents
The basics of Amazon bidding
Types of targeting to use on Amazon
Types of Amazon Ads bidding
Tips to help choose the right bidding strategy
Rounding up
The basics of Amazon bidding
Amazon bidding uses an auction system that lets sellers bid on keywords or products they wish to rank for. When a buyer’s search term matches a brand’s target keywords, Amazon serves ads depending on bid amount, ad significance, and previous performance. Businesses with best-selling keywords and who bid the highest win the auction, and Amazon shows their ads to potential customers.
Advertisers only pay when customers click on their ads; this system is called cost-per-click or CPC advertising.
Businesses that want long-term profit must optimize their bidding strategy on the platform, considering factors like budget, advertising goals, and target audience. It is also crucial to check campaign performance regularly, update keywords to improve ad relevance, and adjust bids when necessary, as this ensures that they stay competitive by continuously driving traffic to their product listings.
Types of targeting to use on Amazon
Businesses can use two types of Amazon targeting when setting up keywords for advertising campaigns. These are automatic targeting and manual targeting.
Automatic targeting
Businesses can use Amazon’s algorithm feature to generate relevant placements and keywords based on product catalogs, categories, and customer search patterns. Amazon offers four different match types when setting up automatic targeting:
Close match: This will generate keywords closely related to the products.
Loose match: This will generate keywords slightly related to the items.
Complements: It will display ads to customers who visit pages of products that complement the items (for example, showing ads for toothpaste in a toothbrush section)
Substitutes: This will display ads to buyers who visit product pages with similar items.
While bidding, sellers can adjust their bids based on the ad group if there are few listings. However, ad groups with several listings cannot identify the best results. Hence, limiting the number of listings in a single ad group is recommended by adding only closely-related segments.
Automatic targeting is ideal for new sellers or brands with large product catalogs, as Amazon handles all the keyword research, making it easier to run campaigns.
Pros:
– Easier
– Less time-consuming
– Helps to make new products or categories visible
– Requires little to no expertise
Cons:
– Limited control of target-keywords
– Low chances of conversions
– More expensive if not properly monitored
Manual targeting
Manual targeting allows sellers to choose their keywords and placements for their ads. It is ideal for businesses that understand their target audience well, as it is more likely to earn clicks and conversions. Amazon offers three keyword match types in this targeting. They are:
Broad match: Triggers when customers search target keywords in any order, including synonyms. These match types do not guarantee great results but are suitable for gathering data.
Phrase match: Triggers if a buyer searches the keywords in the same order, including prefixes or suffixes.
Exact match: This will only display the ad if a shipper uses the exact words as the target keywords. This option generates the most conversions and reduces expenses.
Businesses can place bids on keyword and ad group levels in manual targeting. However, bidding on the keyword level is better as it is best suited for seasonal sales.
Pros:
– More control over target keywords
– Easily customizable to meet specific campaign goals
– Higher chances of significant clicks conversions
– Cheaper if done effectively
Cons:
– More tedious and time-consuming
– Requires continuous adjustments and optimization to maintain effectiveness
– Requires expertise in keyword research and advertisement and good knowledge of the target audience
Types of Amazon Ads bidding
Bidding at the placement level
This method refers to bidding on placing specific ads on Amazon’s top search results or product detail pages. Advertisers can adjust their bids based on the ad performance and its impact on their campaign goals. It is usually used to target high-performing placements and prevent low-performing ones.
Bidding at the keyword level
Bid amounts are placed on specific keywords and phrases relevant to a product or a target audience. Businesses can adjust the bids depending on the performance of individual keywords.
Special occasions to consider
It refers to occasions affecting Amazon advertising campaigns, such as seasonal holidays or significant sales events.
Businesses are advised to adjust their budding strategies to capitalize on them during these occasions. It can be through increasing bids for specific keywords in high demand during those seasons and adjusting their budgets to sustain the increased ad spending that may arise due to the intense competition in those seasons.
Tips to help choose the right bidding strategy
Dynamic bidding (down only) is a safer bet
The down-only bidding strategy automatically lowers bids for clicks less likely to turn into sales. Amazon will reduce a bid by up to 100% by default to every ongoing campaign, reducing the risk of wasted advertising costs.
This option is suitable for a profit-oriented strategy and is a safe choice for new Amazon sellers or businesses with a limited budget.
Dynamic bidding (up and down) is more risky
Here, Amazon raises a bid by up to 100% if a click is likely to convert and increases by 50% for all other placements. It will also reduce a bid by up to 100% if a click is less likely to convert. They can do it for bids on placements in the first-page search result.
This strategy is more aggressive and requires expert advertising and campaign enhancement knowledge. Businesses can use this strategy if bids are highly unstable in their market, as it is more flexible and leads to more sales.
Nevertheless, it can potentially increase or decrease advertisement costs depending on the likelihood of conversion, so it is not advisable.
Fixed bids are the go-to for new products
Fixed bids let sellers set a specific bid amount for each placement and keyword, ensuring greater control over the spend and return on investment. As Amazon will not dynamically adjust the bid based on conversion, businesses can establish a basis for accomplishment and easily predict their advertisement costs. Advertisers might benefit from this in running new campaigns while Amazon still gathers data.
Fixed bids are great for raising brand awareness and growing an impression. Unfortunately, it may cause overpayment as Amazon applies the fixed bid to every placement, regardless of whether it will lead to conversion.
Monitor the CPC
Cost per click is an essential metric in advertising that shows how much businesses have to pay for each click on their ad. Hence, monitoring the CPC and adjusting bids when necessary is essential to avoid overspending on keywords or placements that are not performing well.
Consider using Amazon AI
Businesses can consider using Amazon’s AI to automatically optimize their bids based on campaign effectiveness, especially if they have huge product catalogs or limited financial resources, as it enhances cost efficiency and helps free time for other tasks.
Rounding up
Amazon Ads bidding is a vital part of advertising on the platform, and businesses looking to grow their income must master the art of bidding. They can achieve it using the right bidding strategy by learning about their target audience and optimizing their campaign performance to lead the competition.
Both new and pro-Amazon sellers must stay updated with the best trends and practices in Amazon Ads, making sure to utilize various tools available. Businesses can continuously test and improve their campaign approach to improve their campaign effectiveness and attain lasting success in the competitive platform.
