Why you should continuously adjust your keyword bids on Amazon

29/10/2017

Bid adjustment is one of the last but reoccurring steps within your Sponsored Product management. Make sure you have optimised your listing and did a wide keyword research before you start.

There are different campaign objectives you can focus on but to stay profitable in the long term your ACoS should not exceed your break-even ACoS which is profit divided by sales e.g. when your profit per sale is $10,- and the sale is worth $50,- your break-even ACoS are 20%.

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.