In this article, let’s learn about the ins and outs of how bidding works in an Amazon ad campaign and explore the dynamic bidding strategies.
Launching a series of PPC ads is more or less a must-have approach if you want to increase the listing’s visibility and earn more customers for your Amazon store. To ensure the success of your sponsored content, it is crucial that you pick out the perfect bidding tactics to keep things up and running.
Among them, dynamic bidding stands out as one of the most popular and highly effective choices. If you are still unfamiliar with this concept, keep reading and find out more below!
What Is Amazon Dynamic Bidding?
Released in 2019 as part of the $14 billion investment program, dynamic bidding refers to a particular Amazon bidding mode. Here, you can adjust the amount of money spent on an ad in real-time without having to stick to the initial expense.
How Many Types Of Dynamic Bidding
In the past, if you wanted to set up a PPC campaign, you were presented with only one option: entering a maximal bid that could not be changed once the ads started running. But now, with dynamic bidding, there will be two different choices to suit your needs.
Down only bidding means Amazon will automatically lower your given bids when it senses that your ads are underperforming. When chosen, this can essentially stop the entire campaign should the ads keep being ineffective and incapable of bringing back any return.
For example, you are willing to pay $2.2 for ad placements on the first search result page. Whenever a customer clicks on your Sponsored Product content, you will be charged the exact amount. After a few days, there are only ten or eleven clicks, and you have not managed to convert a single user.
If you go for down only bidding, Amazon would evaluate the conversion rate and reduce your bid to as low as $0 if needed. The reduction percentage is made automatically through Amazon’s algorithms and is not affected by your will.
For those of you looking for a cost-effective way to enter an auction and keep the cost at a minimum, it is highly recommended that you stick with this approach. If your ads meet the expectations, then the expenditure required is still within your capacity.
But if your ads have failed to reach the target audience, Amazon would provide you with a reasonable escape and make sure you do not waste the valuable resources on futile ads.
Up and down
The working mechanism behind up and down bidding is pretty similar to down only bidding. However, the former differs from the latter in its ability to adjust the bidding amount. Besides reducing the bid when your ads appear to be insufficient, this solution can also do the opposite: raising the bid if the conversion rate is on the rise.
Let’s stick with the instance above. You keep your ads running for another week, and there starts to be some optimistic signs. More and more shoppers are flocking to your product landing page, and many of them decide to seal the deal.
It is estimated that for every 100 visitors, your ads have converted 15 of them into buyers. Amazon seizes the opportunity and gradually increases the original bid. Now, with more money pouring into each auction, the ads are promoted to a higher ranking, dramatically increasing their visibility.
Subsequently, a larger base of customers are exposed to your store, and they will eventually join the traffic.
Up and down bidding is a profit-driven tactic that gives retailers the chance to maximize the potential of their ad campaign. However, it can turn out to be relatively expensive, considering that Amazon may double the money spent on each bid.
In case you wish to implement this bidding strategy, make sure your budget leaves plenty of room for unexpected spending.
Why Should You Choose Dynamic Bidding
Dynamic bidding might be new to Amazon ad selling services, but its popularity has soared recently, especially when there are reports about the supposed effectiveness compared to fixed bidding. Below are a few outstanding benefits of this procedure if you still need a bit of persuasion.
- It allows you to have second thoughts: Usually, you cannot alter the bid after you join an auction and place a payment over specific keywords.
While you can stop the campaign altogether should the cost become too high or your ads turn out to be fruitless, it still takes a lot of time, money, and effort. Dynamic bidding brings you a choice to change your mind midway without compromising the entire work.
- It is more economical: When Amazon decides that your ads are less likely to convert, it will curtail the initial bid to prevent a loss. Unless you want to spare money on unproductive ads, dynamic bidding does a great job at keeping down the price tag involved.
- It is self-adjustable: Unlike manual bidding, which calls for your constant checkups, dynamic bidding is governed by Amazon itself.
Therefore, you do not have to stay updated with the ads 24/7 and modify them along the way. Amazon will take care of this heavy task and deliver the expected results in no time.
Nevertheless, you should know how each type of dynamic bidding functions and choose one based on your financial situation. Of course, it is tempting trying to go for the seemingly most profitable tactic, but do not stretch yourself.
Mastering the art of dynamic bidding and learning how to apply it to your Amazon ad campaign can be quite a challenge. This is when Olifant Digital enters the picture and offers Amazon store owners multiple tools and advice to solve the problem.
Rest assured that you will be presented with customized, tailored suggestions on making the most out of your ads while keeping the cost at a minimum. So check it out now and see for yourself!