SSA #014: Which Bidding Strategy Should You Use?Apr 08, 2023
Read Time: 5 minutes
If you've been running Amazon Ads for any length of time, you will have come across an option whilst setting up your campaigns called Campaign Bidding Strategy, as shown in the screenshot below.
A question you may have asked yourself is which one should I use:
– Dynamic Bids – Down Only
– Dynamic Bids – Up and Down
– Fixed Bids
Well, today, I'm going to answer that question for you, as we'll dive into the ins and outs of each bidding strategy and look at some scenarios of when to use each of them.
Whether your goal with Amazon Ads is to optimize or scale, you achieve it through adjusting your bids, not your budget – a common misconception in the Amazon Ads world.
By bids, I simply mean how much you are prepared to pay for a click on your Amazon Ads.
As an advertiser, you choose your bid for each keyword, ASIN, or category you're targeting. Your bidding strategy impacts how that bid is adjusted, if at all, by Amazon's algorithm, based on who sees your Ad and how likely it is that a click on your Ad from that specific person would result in a sale.
Complex stuff, right!
Increasing the budget of a Campaign won't help you scale. Just as decreasing the budget of a Campaign won't help you optimize or reduce your wasted Ad Spend.
Only bids can do that.
And bidding strategies play a more significant role than you might think in how Amazon spends your money, as well as how your Amazon Ads perform overall.
Each bidding strategy performs very differently and has a different purpose depending on your goals for a specific campaign.
The other consideration is how aggressive you want to be with your Amazon Ads, as well as the current performance (i.e. daily sales and bestseller rank) of the book you wish to advertise.
Without further ado, let's explore each of the bidding strategies in more detail and determine which one is right for your campaigns.
Dynamic Bids – Down Only
This is, without a doubt, the safest bidding strategy, so if you're apprehensive about spending too much money on Amazon Ads, choose Dynamic Bids Down Only.
With this bidding strategy selected, you are giving Amazon permission to LOWER your bid, in real-time, IF the algorithm believes a click on your Ad is unlikely to result in a sale of your advertised book.
Whilst Dynamic Bids Down Only acts as a good safety net and allows Amazon to lower your bid for you, the biggest issue I've found with it is that if an advertised book has little in the way of sales history, Amazon will almost always reduce your bid to almost zero.
The reason it does this is that it has so little evidence that your book converts well into sales. The same can be said for newly launched books; without proof that your book sells well, Amazon will automatically reduce your bid, making it difficult to gain traction.
When To Use Dynamic Bids Down Only
If your advertised book has been selling well, reliably, for some time now through other means of marketing or advertising, such as Facebook Ads, and you want to dip your toes into the waters of Amazon Ads, Dynamic Bids Donw Only can be a good choice.
If you have a newly launched book though, or a book that doesn't sell particularly well, then there is a better bidding strategy for you, which we'll cover shortly.
When you have an Amazon Ads campaign that's been performing well for some time using one of the other bidding strategies, if you want to dial things back a touch, and perhaps make things a little more profitable, Dynamic Bids Down Only can be a good option.
Dynamic Bids – Up and Down
Similar to Dynamic Bids Down Only, with the Dynamic Bids Up and Down bidding strategy, you're allowing Amazon to LOWER your bids when its algorithm deems a click unlikely to result in a sale, but INCREASE your bid when it thinks a click is more likely to result in a sale.
Keep in mind that with Dynamic Bids Up and Down, Amazon can increase your bids by up to 100%. It won't always increase it by that much, but it has permission to do so.
As an example, a $1,00 bid could potentially become a $2.00 bid, which adds considerable cost to your Amazon Ads.
This spike in your bids can make Dynamic Bids Up and Down an expensive bidding strategy to use that can spiral out of control if you're not keeping a close eye on performance.
When To Use Dynamic Bids Up and Down
This bidding strategy is one I reserve for only my best-performing campaigns. If Amazon can see that a campaign is converting well, I want to give it permission to increase my bids.
Increasing bids isn't something I want to do manually – and it becomes impossible to do it manually anyway, on a per-click basis! Instead, let Amazon's algorithm figure out when your bid needs to be increased and when it needs to be lowered.
If, 1-2 weeks after switching a campaign to Dynamic Bids Up and Down, the campaign performance dwindles and profitability suffers too much for your threshold, change things back to where they were before.
In general, though, Dynamic Bids Up and Down is a great option when you have a good-performing campaign that you want to scale up to reach more readers and sell more books.
The final bidding strategy is Fixed Bids. With this option selected, you aren't using Amazon's algorithm at all, as you are with the previous 2 bidding strategies.
You are preventing Amazon from messing with your bids entirely. If you bid $0.50 on a keyword, that is your bid. Amazon won't reduce it or increase it. Your full bid is taken into account in the Amazon Ads auction.
With Dynamic Bids Down Only though, a $0.50 bid, for example, could become a $0.23 bid, a $0.48 bid, or even $0.01 bid.
In short, with Fixed Bids, you remain in complete control of how competitive you are in the Amazon Ads auction.
A warning about Fixed Bids though before you go and switch up every single one of your campaigns to use this bidding strategy...
Fixed Bids will, in most cases, spend a good chunk of a campaign's daily budget.
If you're used to Amazon only spending a small fraction of the budget you give it, and you switch to Fixed Bids, you may come into your account and see that your spend for a campaign has significantly increased.
When To Use Fixed Bids
If you have a brand new book you want to advertise with Amazon Ads, start your campaigns with Fixed Bids.
If you'd like to advertise an existing book with Amazon Ads, that hasn't been selling well for some time, and has a low bestseller rank (over 50,000), use Fixed Bids on all your campaigns.
The reason for this is that, without much data and proof of sales, by using any of the other bidding strategies, Amazon is likely to lower your bids continuously, meaning your campaigns will take a LONG time to gain any sort of traction.
This is an aggressive bidding strategy, without a doubt, so keep a close eye on how your campaigns using Fixed Bids are performing to make sure they're not plowing through your budget without generating sales.
What I will sometimes do is launch a campaign with Fixed Bids to get some initial traction, then switch to Dynamic Bids Down Only once the campaign has got some momentum. This just helps to rein in the spend a little and prevent things from spiraling out of control.
Bidding strategies may seem like small fry in the grand scheme of things, but they can truly make or break your Amazon Ads.
Each bidding strategy has its place, but as is the case for books, what works for one author may not work for another, so I encourage you to test each bidding strategy and discover which one is right for your books.
You will also, most likely, have a mix of bidding strategies across the campaigns in your Amazon Ads Account, depending on the types of campaigns you're running, the books you're advertising, and various other factors.
So, don't feel you need to stick to one bidding strategy for every single campaign. Look at each campaign on an individual basis and choose the bidding strategy that is right for each of them.
That's it for today! Hope you've enjoyed this deep-dive into bidding strategies and you now have a better understanding of what they are and when to use them.
Thanks for reading and I'll see you again next Saturday.
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