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- The right setup: initial bidding and budgeting
- Controlling within the five optimization phases
- The value of an additional unit sold through advertising
The right setup: initial bidding and budgeting
A detailed keyword research should already be carried out for the creation of a listing, which later forms the basis for the advertising campaigns. If the filling of the campaigns with keywords is finished, the question arises how to set the starting bid of the keywords. This depends on various factors, such as the sales price, the conversion rate (CR) and the target ACoS.
When placing and later optimizing the bid, you should make sure that your maximum click price (CPC) is not exceeded. The max. CPC can be easily calculated with the following formula: max. CPC = price x Target-ACoS x CR .
This becomes clear from an example: With a sales price of 30 EUR, a target ACoS of 20% and a CR of 10%, our max. CPC = 30 EUR x 20% x 10% = 0,60 EUR.
Each purchase, which usually takes place after 10 clicks, may therefore not exceed 10 x 0,60$ = 6,-$ or rather 20% to my price.
Closing from max. CPC to max. bid
We have analysed several million bids and their CPC and developed a formula with which you can derive almost exactly the right bid from the maximum CPC.Embed info graphic CPC vs. Bid
As it can be seen in the graphic, the bid is always higher than the CPC. We have developed a linearised model from this, in which the correlation is 87%, so that up to a bid of 3.50$ it is very likely that the right bid can be predicted for a desired CPC. The bid in our example above should not exceed 0.83$ in this case.
How do I place my starting bid?
We now know which bid we should not exceed, but is this also the right one to start? This depends on the strategy. With the calculated bid you will certainly achieve good results quickly. However, CR in particular is an approximation at the beginning, since organic CR differs from purchased CR on the one hand and may be different for each keyword on the other. The "Recommended Bids" from Amazon provide an indication of how individual starting bids can now be placed. We have investigated to what extent these bids are correct.
It turns out that the average bid is 0.28$ above Amazon's recommended bid. Please note that an exact keyword is much further away from the recommended bid than a broad keyword that is much closer to the recommended bid. 82% of keywords exceeding the critical CTR limit of 0.4% have a bid above the lower recommended limit. Over 58% of sales resulted from a bid above the recommended limit of Amazon.
It is recommended to set the start bid at least to the lower recommended limit to be display. Depending on the strategy pursued, the bid can also be placed directly on the bid recommended by Amazon or above the recommended upper limit. In the following weeks, the bids were to be gradually increased in order to increase CR on the one hand and to identify profitable keywords at an early stage on the other.
How do I set my daily campaign budget?
The campaign budget should not be too tight, otherwise Amazon will be limited in showing the ads and may focus on more profitable keywords for Amazon. In order to indicate a rough order of magnitude, the turnover currently generated with advertising can be considered. The budget now depends on the expected daily turnover and our Target ACoS. Example: If our product from the above example sells 20 times a day it generates a turnover of 20 x 30$ = 600$. If 20% of the turnover is to be generated via advertising, this corresponds to 4 units or a turnover of 120$. Based on our target ACoS of 20% we can determine that the expenses and thus the budget for the campaigns may not exceed 120$ x 20% = 24$.
Similar to the maximum CPC in relation to the bid, a surcharge of ~30% can be made here, so that with a structure of three campaigns (an AUTO, a BROAD and an EXACT campaign) 10$ each can be set as daily budget.
Controlling within the five optimization phases
In the analysis of several million keywords, a very efficient approach has emerged for optimization. The five phases therefore consist of the optimization after:
Let's assume we have found relevant keywords for which initial sales have already been made. We are now in the 4th phase of optimization. With the sales, the ACoS of the display can now also be calculated. If the ACoS is below the percentage profit, the advertising campaigns carry themselves and achieve a small surplus. The ACoS in which the advertising costs correspond to the profit of a product sale is called Break-Even-ACoS. The calculation of the Break-Even-ACoS can be seen in the following graphic.
Amazon and the tax
It is important to note that Amazon calculates net costs with gross sales for sponsored products in Seller Central. This can be compared with margin and profit percentage. If the gross sales price is 30$ and our calculated target ACoS is 20%, the 20% ACoS in Amazon displayed at that moment corresponds to the profit percentage while the correct calculation with net sales price amounts to an ACoS of 23.8%, which in turn corresponds to the margin (profit / net sales price: 6$ / 25.20$ = 23.8%, assuming 19% German VAT).
For vendors at Amazon Marketing Services (AMS) Amazon shows VAT. In this case, ACoS is calculated from gross costs and gross sales. It has to be considered that our CPC can increase by 19% VAT and our budget is 7,14$. The ACoS displayed by the gross values is 16% lower.
When are my sales assigned to the ads?
Amazon needs 48 hours to validate the clicks. During this time, for example, fraudulent clicks are eliminated. Amazon assigns the sales visible in Seller Central to clicks for up to seven days or up to 14 days for AMS ads. It is important to note that on the one hand approx. 87% of the sales are already assigned after three days and on the other hand the set cookie remains active for up to 30 days and can be viewed via the API. This has an influence on the time until an adjustment of bids on the one hand and on the other hand that e.g. during the Christmas season many customers click on an advertisement in November, but buy the article only in December and as a seller you do not receive the actual sales and ACoS for the keywords.
Optimization by profit
For this it is important to look at the overall picture. This includes revenues generated organically and through the use of advertising, subtracted by all costs including advertising costs. As a result, sometimes a higher ACoS can generate a higher overall profit, assuming the higher ACoS is below your Break-Even-ACoS. In addition, the value of an additional unit sold must be taken into account, which will be discussed in the next section.
The value of an additional unit sold through advertising: The magic PPC roundabout
If you push Amazon traffic or external traffic, this increases the number of detailed page views, which in turn leads to an increase in seller performance, which increases the number of organic ratings and organic rankings. An increase in the ranking in turn leads to an increase in sales, which leads to higher purchase volumes and thus to a reduction in product costs. This reduction can also be passed on to the consumer by reducing the price, thus increasing competitiveness and, moreover, sales.
Additionally sold units increase your experience!
Furthermore, the Experience Curve Act states that
With each doubling of the cumulative sales volume of a product over time, there is a cost reduction potential of 20-30% (based on all inflation-adjusted unit cost included within the product's value).The reasons for this are learning effects (e.g. efficiency increases through repetition of processes), technical progress and changes within the product (e.g. cheaper or fewer components).
You have to buy some information!
The performance data also provides information about the exact wording used by customers to search for your products on Amazon and which keywords Amazon considers relevant for your products. Moreover, one of the most critical KPIs is only visible through Sponsored Products - the click through rate! This is particularly relevant if A/B tests are executed and e.g. images, titles or prices are varied.
At the same time, you get the relative search volumes for your current ads. And you can use those to add the most important search terms to your listing or to position those more prominently.
Conclusion: PPC generally offers great added value
It turns out that advertising can have a decisive factor on overall sales performance. The search terms as well as their impressions and clicks have a particularly high value. This information represents a component block for continuous optimization and the associated sustainable success on Amazon.
About BidXBidX offers Amazon sellers an efficient SaaS solution to optimize their advertising. By automating bid adjustments, as well as keyword and negative keyword management, the merchant uses his advertising budget more efficiently, increases his profit and is considerably relieved of time. The success of the product and the founding team is based on many years of experience as a seller on Amazon, excellent IT knowledge and innovative machine learning technology.
Try BidX today for free here.
Fortunately, more and more merchants are well aware that a bid manager, such as BidX, is indispensable for long-term success in the field of Amazon advertising. Many merchants regularly invest resources in monitoring, analysing and optimizing their superordinate KPIs, but, unfortunately, without taking sufficient account of one of the most important basic indicators – the keyword-set.
The keyword-set is the foundation for your success, which can significantly influence sales and profitability – both in the field of Amazon PPC advertising as well as organically. A broad understanding of the target audience, the competition, the marketplace, the trends, and of other time-related factors is the groundwork for extended and profound keyword researches and, consequently, valuable keyword-sets. Merely copying keyword lists from the usual keyword tools just doesn't do it.
Defining Amazon PPC goals
Every keyword research is different. Why? Because goals, resources (budget, time, data), homogeneity of the product range and brand awareness can differ substantially. Thus, the keyword strategy is always customized, type and extent of the keyword-sets determined significantly.
First outline your goals and options in order to make the subsequent research more efficient. The time factor for successful research processes should not be underestimated. For small product portfolios, it pays to work out the maximum, for dynamic portfolios with hundreds or thousands of products compromises have to be made.
For further infomation about PPC goals read our post about bidding strategies.
Keyword researches for Amazon PPC
On ASIN level, the keyword set should be individual (depending on product features, target audience, pricing and brand awareness) and dynamic (depending on season, trends, internal and external competition and PPC knowledge) and fully indexed for the Amazon search. For simplicity's sake, we now assume that we would like to research all possibly relevant keywords for our product. Please consider that the process of keyword research and keyword selection is always individual due to your goals, strategies and resources.
Now we try to precisely cover all possible search phrases of a potential customer. Example: If "toaster 2 slices wide slot" is supposedly searched for, we store exactly that phrase in our Sponsored Product Ads (SPA) or Headline Search Ads (HAS), and not just "toaster" or "toaster wide slot". Thereby, very long keyword lists occur, which individual elements often repeat themselves, but are only updated once into the product data - more on keyword relevance later.
Attention: Keyword and search term are not identical! Amazon explains the difference as follows: A customer search term is the exact set of words a customer enters when searching for a product on Amazon. A keyword is the word or set of words you bid on in Campaign Manager to target your ads to customers.
Before you start the keyword search, you should answer the following questions:
Which properties does the product describe? (e.g. functions, colours, fit, theme, feel, size/quantity)?
What use does the product have?
Who is the target audience (differentiate between buyer and user)?
In which price and quality segment is the product located?
Is the product subject to seasonality?
In order to keep the overview and to be able to combine keywords more efficiently later, a categorization of the developed information and keywords is recommended (for example with Excel).
During research, we differentiate between keyword stem and additional keyword. We define the keyword stem as a keyword that, when viewed in isolation describes the product comprehensibly and requires as few words as possible.
Example: Correct: "spice mill" or "salt and pepper mill" - Wrong: "salt" or "spice mill black" (because "spice mill" is already a keyword stem). Additional keywords can complementarily be placed in front of or behind the keyword stem.
For the beginning of the research, we recommend you to not be immediately influenced by keyword tools, but to create an uncensored base. For that, the so called cluster procedure is suitable. Clustering is a brainstorming procedure in which, originating from the core of the cluster, associations are listed and logically connected. It stimulated creativity and ensures an intensive confrontation with the product, use and target audience. Especially additional keywords can be worked out particularly well by reflecting on the questions that have already been answered. Thus, you do not get caught in the limited bubble of keyword databases. Due to the fact that our memory performance is based on association chains and the individual associations are influenced by experiences, this is a subjective point of view that possibly only covers a part of the target audience.
Inspirations for keyword stems and additional keywords
thematically fitting platforms for categories, filters, product titles, SEO-descriptions and brand names, as for example ASOS, Wayfair, zooplus, BESTBUY, Walmart, IKEA, MENARDS (for german language Zalando, Otto , Conrad, CONTORION, Billiger.de, ALTERNATE, Media Markt, Fressnap, Hagebau, myToys, Rewe)
the product data, reviews, seller ratings, questions, and categories of your competitors on market places such as amazon, ebay, Jet, AliExpress, etsy, Wish, real and Rakuten
Dictionary.com, Thesaurus.com and Woxikon, to find synonyms and usual spellings
Keywordtool.io and Google Keyword Planner, to receive first relevant keyword
combinations from Amazon's and Google's search slot
wikipedia.org, to familiarize with the origin, development history and distribution of
your products - and to find further usual names of your product!
regional differences such as idiom
news pages and social media channels regularly
search term reports of existing Amazon campaigns
Now you should have found a variety of keyword stems, which need to be expanded as follows:
Separation of jointed words, because many words are searched for incorrectly
usual spelling mistakes and typing errors, because Amazon does not correct all
mistakes (in long-tail area partially none at all)
combine all keyword stems with the matching additional keywords, e.g. via Excel formula
Use Amazon search suggestions
Since Amazon does not publish any official search volume concerning keywords, Amazon search suggestions are valuable indicators of the relevance of a keyword. The displayed search suggestions are updated regularly and are always sorted by relevance, thus, decreasing search volume. The function Amazon autocomplete also enables us to expand the previously gathered keyword stems, so the various long-tail keywords can be identified. Try to create routine for checking new or changed search suggestions – it’s not done with just one search before product launch!
Using keywordtool.io, the search suggestions can be generated without manual input into the Amazon search slot. The tool simulates the search in the form [keyword] [blank space] [a-z /0-9] and saves the first ten suggestions (in the free version only five). Attention: Since only the first level after the keyword stem and only the letters a through z are simulated, various (important) keywords are missing.
toaster a leads to: toaster and kettle sets, toaster and kettle, toaster and kettle sets
toaster b leads to: toaster bags, toaster bags reusable, toaster black, toaster blue,
• toaster bl leads to: toaster black stainless steel, toaster black 4 slice, toaster black 2 slice, toaster black and decker white
You should be aware that keywordtool.io only displays a fraction of the possible search suggestions and you would need to do various manual entries for a more complete result.
Keyword relevance – this is how you generate traffic
The best keyword-set it worthless, if you do not receive any ad impressions by Amazon. The following prerequisites apply for ad impressions:
The advertised product is in the Buybox
The advertised keyword was indexed for Amazon advertisement.
The indexation can be achieved through the placement of the keyword in the product title, the bullet points, the product information, the backend search terms, and the product description (only under specific conditions). For the play of the PPC-ad, usually each part of a possible keyword phrase, as for example "toaster long slit 4 slices", has to be placed and indexed. It is basically irrelevant for the indexation how often the respective word was placed in the product data. Max out the potential of variants family - through that an extreme amount of keywords can be placed in just one product. Always take the category Style Guide into account, since a non-compliance can lead to a loss of visibleness. The product's assigned category can strongly influence the indexation - experiments are often counterproductive - unless you neatly track all changes and perform the change of the category carefully. Check regularly if your desired keywords were actually completely indexed.
In the following situation, ads can be played for keywords that are not deposited in the product data:
Amazon still considers your product relevant (e.g. for similar brands).
Relevance was signalled through PPC-advertisement (rarely).
Keywords were deposited in the past.
In addition to the basic requirements, there are additional factors that are often crucial:
Relevance score of the ASIN by Amazon for a specific keyword
Do you receive, despite Buybox, exorbitant high bid, adequate campaign budget, correct category, appealing product picture and product title, no impressions for an indexed keyword, the ASIN for this keyword is currently not relevant enough. This valuable feedback should not be overrated, but reflected, for example by optimizing the keyword focus also in the onpage product data to possibly advertise new keywords or to put more emphasize on other keywords.
Amazon PPC and Amazon SEO are very much interlocked, because the basic relevance can only be managed through the onpage product data. Due to Amazon's byte limitation, not all researched keywords can be placed at once. Regularly expand, rate, and optimize your onpage keyword-set, based on gathered knowledge, let it be through altered search suggestions or PPC-Data, to shape your PPC-campaigns on Amazon more efficient and profitable.
About Moritz Meyer and MOVESELL
Moritz Meyer is managing director of the Amazon marketing agency MOVESELL®. Practicing Google & Amazon SEO for already 8 years, Moritz Meyer is really experienced in developing content strategies for a wide range of businesses. With MOVESELL® he built a strong team and helpful software to provide brands the best service and revenue possible on Amazon.
Find the right balance
The goal is to find a structure that is easy to set up but also easy to manage in future. You have to find the balance between quality through precision data and evaluation speed. We recommend this setup if your PPC sales for a product are at least 30 per month. What works best for us is the set up of three campaigns per product: one AUTO campaign and two MANUAL campaigns. One of the MANUAL includes an ad group with broad or phrase match type keywords and the other includes keywords with exact match type. The decision between broad and phrase match type is based on the level of your keyword research. If you did this well you can start with phrase, if not start with broad. We recommend to start with broad match.
Why you should not use only one MANUAL campaign
The advantage of two manual campaigns exists within the control of your campaign’s budget. Since you cannot handle this on ad group level you should separate the high bidding exact campaign from the medium bidding broad campaign. Otherwise it might happen that amazon sucks your daily budget within a few hours for your high bidding keywords and your broad campaign is not delivered anymore.
How to set the default bid?
The amount of your start bids depend on your budget and the time you have. If you have the budget and you want fast results start with high bids. If you have time and a smaller budget you should start with low default bids e.g. in AUTO with USD 0.23, in broad USD 0.66 and in exact USD 0.87. Do not use USD 1.00 or USD 0.50 since those are the most common bids. Don’t use Bid+ since this influences your avg. CPC.
The importance of negative keywords
Negative keywords exist as exact and phrase match type. Those generally make sure, that you do not appear for search terms that do not fit to your product or audience. Generally you should make sure to set the exact keywords in the other manual campaign as negative exact keywords. This allows you to precisely control your bid for a keyword but DON’T set the manual keywords as negative in the AUTO campaign from the beginning on.
Why you should not set all manual keywords as negative within an AUTO campaign!
One of the main goals of an AUTO campaign is to show up on competitors product detail pages. You can identify your appearance by checking your search term reports. There you find all the ASINs starting with “B0..” where your ad was shown. BUT: The visitors came to the specific ASIN through a search term. Please try that for yourself. Go to amazon after you read this article and enter a search term. Then check the ASINs showing up on the product detail pages for products from the 1st, 3rd, 5th or 10th page. You will realize that they are almost exactly the same. As soon as you set this search term as negative your ad will not be shown anymore on those listings for that search term.
Should I use negative keywords in my AUTO campaign?
Yes, you should! If a search term does not perform well and you have got statistical certainty (check how many clicks you should wait over here) then you may add the keyword as negative. Since you cannot set an ASIN as negative you can check special attitudes of the bad performing ASIN and put identifiers like the brand name as negative. In addition we always recommend to add the keyword you set as negative as a positive keyword as well with a bid that is much lower than the current one.
Why should I add bad performing search terms to a manual campaign?
Even though your search term did not perform as you wanted it to perform your bid might be just too high. If your current CPC is USD 0,50 and you did not generate a sale after 20 clicks and your ACoS would be above your Break-Even ACoS you should change something. If you set the search term as negative you will not get any sale via this search term but imagine if you add it as an exact keyword with a bid that leads to a CPC of just USD 0,25. Now you can receive double the clicks where it is much more likely generating a sale by having the same cost as before.
How BidX can support you!
With BidX you can save valuable time by setting up Corresponding Ad Groups automatically for each SKU and Country. Based on a target value BidX manages bids, keywords and negative keywords for you. Once this is set up you should activate our SYNC feature which makes sure that all existing and new manual added keywords are set as negative in the corresponding manual ad groups. Soon we will enabling the aggregation of performance data between product groups. This brings the low cost of putting all variation for an ASIN in one ad group by still getting all insights which SKU performs the best. BidX makes sure to only adjust keywords based on validated data. Through Amazon’s Advertising API we automatically pull new performance data and it is possible to check the performance for each single keyword and search term in a specific date range to make sure you don’t waste any money. We check all your requirements daily and adjusts the bids for you until you hit your target CPC and ACoS. BidX is the world’s first tool which allows you to automatically adjust the bids and manage corresponding keywords for Sponsored Product Ads.
Try BidX today for free here.
1st - the UI
If you are selling in the US and in Europe you have two accounts. So first you have to choose an account. Then, after you are logged in you cannot get an overview of all your countries where you are selling in with this account. In addition, you cannot get an overview of all your ad groups, keywords or especially for auto campaigns no search terms are shown. Those you’ll find in the report section. Generally no comparison with previous periods and no visualisation is given. So Amazon offers you some data within the UI but makes it extremely difficult to access them and especially for analysing those, the UI cannot be the first choice.
2nd - the reports
Like we stated above, you need to download the reports to get more information out of your performance data. One look into the reports offers you already a lot more information than just shown in the Campaign Manager. But still comparison with no previous periods and visualisation is difficult. When it comes to reports there are additionally some restrictions where you have to watch out! Let’s first finish the third point and then we’ll discuss this more detailed.
3rd - Access the API
I won’t recommend to do this by yourself, because it’s really time consuming and you need to know what you are doing. If you are an expert in this field or you have enough IT resources go ahead! Otherwise there are some tools who did the whole bunch of work for you, like we did. The API allows you to access all performance data on search term or SKU level. The only missing information for now are the order information themselves including which SKUs were bought.
You need validated Data - do not exceed one SKU per ad group
If more than one SKU is in one ad group it is currently not possible to identify which keyword brought the sale or which SKU was sold. So a simple but powerful way to guarantee validated data is to split your SKUs into separated ad groups. In addition to that you should consider the different match types and make use of negative keywords.
No keywords with 0 impressions
When downloading the bulk file from the Campaign Manager keywords which did not get a single impression yet won’t be displayed. Such a pity because particularly those tell you where you could miss out the sales opportunity or where you should consider to improve your listing.
Only attributed sales after 7 days are shown
When it comes to attributed sales a seller gets only one third of the data available. Additionally to the data shown in Seller Central and within the reports the API allows you to access the attributed sales after one day, after seven days and after 30 days. Principally during Christmas season this has a big influence because many customers click on an ad in November but buy the article only in December and as a seller you won’t get the real sales and ACoS of your keywords. A click is valid for the time of 30 days after you clicked on an ad. Our experience shows that you generally receive approx. 90% of your attributed sales data within five days.
No historic data
When it comes to historic data, Amazon’s possibilities are quite limited. The support of a 3rd party application is needed to store for instance the max. bid as a historic bid over the time. This is very important to evaluate your changes and sort out keywords which did not perform well.
Amazon sometimes behaves like Pippi Longstocking
Most of all when it comes to the calculation of Average Cost of Sale (ACoS) Amazonians have a different view from their mansion and they will tell you their version of the story. Amazon does not consider tax when calculating the ACoS, perhaps because they are not used to it. If Amazon tells you, that your ACoS is X% it is times your tax rate higher. For instance in Germany where we are located, the local tax rate is 19%. So if you generated 100 EUR in Sales and spend 20 EUR therefor, Amazon shows that your ACoS is 20%. But considering the tax your spend 23,80 EUR and your ACoS is 23,8%. Please consider this when you optimise your campaigns on your break even CPC.
Sellers and vendors, get access to all your data!
We at BidX focus solely on optimising online advertisements with a great user experience. If you want to access all of your sales data and dive deeply into comparisons and visualization, contact us. We generate your individual reports and in addition to that you can save valuable time by creating customised rules. BidX makes sure to only adjust your bids based on validated data. Based on Amazon’s Advertising API we automatically pull new performance data and it is possible to check the performance for each single keyword in a specific date range to make sure you don’t waste any money. We check all your rule requirements daily and adjusts the bids for you until you hit your target CPC and ACoS. BidX is the world’s first tool which allows you to automatically adjust the bids for paid search advertisement on Amazon on an individual rule based algorithm or with our Automation.
Try it for free here.
What is Economic Clicks?
Economic Clicks describe the amount of clicks you need, to get at least one conversion with a probability of more than 80%. This amount varies and is depending on your Paid Conversion Rate (PCR) within your Sponsored Product Ads. The PCR now describes the probability that a person who clicks on your ad buys an item. To give you an example let’s assume a PCR of 10%, meaning that every tenth person buys one of your items in average. The question now is how likely it is to generate a conversion after 10 clicks for instance. Well, to calculate this we can use the theory of a random experiment with two possible outcomes. So we take the probability somebody is not buying your product which is 90% in our case and subtract that from 1. In our case no sale is 0,9 * 0,9 * … * 0,9 = X and 1 - X is the probability that somebody generates a sale.
Let’s compare this with rolling a dice!
The probability to roll a 6 is 1/6 while the probability to roll no 6 is 5/6. So if you roll the dice six times the probability to get a 6 is the probability to six times not rolling a 6 a subtracting this form 1. The probability of not rolling a 6 for six times is 5/6 * 5/6 * … * 5/6 which is 5/6 to the power of 6 which equals 33%. Meaning that the probability for rolling a 6 is 1 - 33% = 67%. Not too much, hhm? strong>
How many clicks should you wait now?
Well, this depends on how sure you want to be to not miss THE sale. From our experience a probability ≥80% gives you enough evidence to make a decision. In the example stated above with a PCR of 10% this equals 16 clicks. We can visualise this with a tree diagram as shown in the following.
|CR in %:|
|Certainty to generate a sale in %:|
Is there anything else you should consider?
Yes! Consider that paid traffic can be very expensive but also very cheap. So it makes sense to define minimum and maximum CPC whether you are increasing your bid or decreasing it. Those threshold values should be considered as CPC requirements in combination with the amount of Economic Clicks.
How BidX can support you!
With BidX you can save valuable time by creating customised rules. You can easily set up rules with Economic Clicks as a requirement. BidX makes sure to only adjust your bids based on validated data (older than 168h). Based on Amazon’s Advertising API we automatically pull new performance data and it is possible to check the performance for each single keyword in a specific date range to make sure you don’t waste any money. We check all your rule requirements daily and adjusts the bids for you until you hit your target CPC and ACoS. BidX was the worlds first tool which allows you to automatically adjust the bids for paid search advertisement on Amazon on a individual rule based algorithm.
Try it for free here.
Second is the learning curve: The more products you sell the less you pay for the Cost of Goods (“COGS”) and the more experience you gain. Rule of thumb assumes that each time you double your cumulated volume you decrease your COGS by 20% through less time needed, improved quality and technical progress.
Start competitive: BoostThe objective of the Boost strategy focuses on newly launched products to find best converting and most searched keywords and yet hidden products. In advance make sure you finished the SEO of your listings and created a keyword pool. An automated campaign generated already relevant long tail keywords from validated data. Generally auto campaigns help you to learn about how customers are searching for your items and make sure you target a wide range. Bidding should be above the market and your break-even CPC. For KPIs you can refer to your organic search (bestseller) ranking increase and how much additional traffic you generated besides your organic one. Go to Seller Central and check "Reports" > "Business Reports" > "Detail Page Sales and Traffic" for a specific date range and compare those KPIs directly to the performance data of your campaigns. This gives you transparency on how much traffic you can generate additionally. Don’t adjust your bids too early and wait until you generated sufficient validated data (older than 168h).
Adjust to break-even: BalanceThe Balance strategy is intent on generating economical sales by keeping profits and costs in balance meaning to run the campaign at the break-even point. Beforehand your campaigns should run for a couple of weeks to make sure you are not missing out any opportunities and you are able to browse and compare your advertising data. Bidding should be as high as long it is economical meaning you aim for the break-even CPC. The bid you set in Amazon might be up to 70% higher to reach your target CPC. For KPIs you may refer to additional units sold with SPA. Go again to Seller Central and check "Reports" > "Business Reports" > "Detail Page Sales and Traffic" for a specific date range and compare those KPIs directly to the performance data of your campaigns. This gives you transparency on how much sales you can generate additionally without "paying" for the advertisements. Don’t adjust your bids too early and wait until you generated sufficient validated data (older than 168h).
Maximise your profit: BenefitThe Benefit strategy focuses on maximising SPA’s profit. Start with this strategy as soon as you know your market and you gained a respective ranking. Now it is time for fine-tuning your campaigns and getting the most out of it. Generally your profit equals your revenue deducted by your costs. Use your profit as KPI to compare your sales data and check how your sales and costs varies through bid adjustments. And again, do not adjust your bids too early and wait until you generated sufficient validated data (older than 168h).
Additional strategies you can focus on
Of course there are other strategies to focus on especially if you are using Amazon Marketing Services or registered a word brand within the Seller Central you get the possibility to access Product Display Ads (“PDAs”) respectively Headline Searches (“HS”):
- Research: Here you should definitely run auto campaigns with bids below the market. Thus will force Amazon’s automatism to widen it’s keyword pool to reach your budget. As soon as a keyword converts you may add it to your manual campaigns and put it on the negative list.
- Schedule: Christmas and special sales events like Black Friday are coming. For those events the traffic and competition will increase strongly. Bids and budgets should be increased for a limited time. A special ad group might contain adapted and seasonal keywords.
- Awareness: This focuses mainly on publicity and awareness of your products. AMS allows additional goals like cross-selling via PDAs or increase in marketshare while bidding on competitor’s products and keywords via HS.
- Break: If your are in a highly competitive branch with low cost products, ACoS exceed your target by far and you don’t have the budget to just raise awareness, bidding below the market and auto campaigns with low default bids might be an option as well.
Boost, Balance or Benefit?Our recommendation is to start with the Boost strategy when launching new products. Later on you should find the right spot between Balance and Benefit. For all strategies you should define your target ACoS. From our experience it is useful to adjust the bid twice as much as your are distanced from your target e.g. if your target ACoS is 25% and your current ACoS is 35% the distance is 10% and you should set up a rule which decreases the bid by 20% in this case - same counts for increasing. Make sure that your target ACoS is set realistically. Too high adjustments in a single step may lead to revenue drops because one of your more competitive ads is not delivered on #1 page anymore but #2 or #3.
How BidX can support youWith BidX you can save valuable time by creating those customised rules. You can easily set up rules for all three discussed strategies and apply the rules to any of the campaigns by adding the campaign name to the “applying to” section. BidX makes sure to only adjust your bids based on validated data (older than 168h). Based on Amazon’s Advertising API we automatically pull new performance data and it is possible to check the performance for each single keyword in a specific date range to make sure you don’t waste any money. We check all your rule requirements daily and adjusts the bids for you until you hit your target CPC and ACoS. BidX is the worlds first tool which allows you to automatically adjust the bids for paid search advertisement on Amazon on a individual rule based algorithm.
Try it for free here.
Consider that the ACoS when generated by Amazon incl. VAT while their shown cost don’t.
What is the impact of a bid?
Amazon judges your position within the sponsored ranking based on your quality score and the amount you are willing to pay per click. Let’s assume that the quality score incl. the CR e.g. 5% for a specific product and keyword is given. The only way to regulate your advertisement is by adjusting the amount you are willing to pay. If the max. bid and your which is the value you set in Amazon is too high, you generate unnecessary expenses. If the max. bid is too low you lose sale potentials. To give you an idea and to come back to the example above: If your current break-even ACoS is 20% your break-even CPC is $0.5 because with a CR of 5% every 20th person who clicks on your ad will generate a sale and 20 times $0.5 equals your profit of $10,-.
Did you find the optimal bid?
After your first set up wait until you generated enough validated data (older than 168h). Check your search term reports and add new keywords. Did you hit your target CPC? That’s great; if you didn’t adjust the max. bid. Also think one step beyond: Amazon is a highly dynamic market which changes daily basis. New products are coming up, new sellers join the marketplace and additional advertisements appear. That’s why it is necessary to control the bids for all your keywords and adjust them based on the changes within the market. The target CPC today might differ from the one tomorrow.
Check your CPC on a regular basis
In general the max. bid should be up to 40% higher than your target CPC. Is your current CPC lower than your target then increase your bid - is it higher lower it. This should be done dynamically meaning that if your CPC is much higher than your target CPC lower your bid accordingly.
How BidX can support you
With BidX you can save valuable time by creating customised rules. We check all your rule requirements daily and adjusts the bids for you until you hit your target CPC and ACoS. Based on Amazon’s Advertising API we automatically pull new performance data and push the adjusted bids back to Amazon. BidX is the worlds first tool which allows you to automatically adjust the bids for paid search advertisement on Amazon on a individual rule based algorithm.
Try it for free here.