Amazon Dynamic Bidding: 3 Amazon Seller Strategies

Amazon is one of the most well-known online marketplaces. However, with success comes competition. It is difficult to get your products noticed among millions of other Amazon sellers, which is why Amazon has introduced two new advertising tools: Amazon Dynamic Bids and Adjust Bids by Placement.

What is Amazon Dynamic Bids?

Amazon Dynamic Bids were made available as part of Amazon's $15 billion investment in third-party seller tools in 2019. Amazon Dynamic Bids enable Amazon to adjust your Sponsored Product bid in real-time based on the likelihood of conversion.

Previously, you entered a fixed maximum bid when setting your CPC (cost per click) bid on a Sponsored Product campaign. You now have three bid options:

Down only

If Amazon believes that a click is unlikely to result in a sale, it will reduce your bid by up to 100%. This is the default setting, and it has been applied to all existing campaigns.

Up and Down

If a click is likely to result in a sale, Amazon will increase your bid by up to 100% (for first-page search result placement) or 50% (for second-page search result placement) (for all other placements). Amazon will reduce your bid by up to 100% if a click is less likely to convert.

Fixed

Regardless of the likelihood of conversion, your default bid remains the same. Amazon will still recommend a bid based on the category, competition, and proprietary data.

How do Amazon Dynamic Bids works?

Amazon has access to a massive amount of data, which allows them to calculate the likelihood of a website visitor clicking your ad and converting.

Machine learning is used to analyze data on buyer behavior, previous ad performance, product niche, time of day, and a variety of other factors to determine whether your ad will result in a purchase in real-time.

Amazon Dynamic Bids: Can They Increase Sales?

Amazon certainly believes so. The idea behind dynamic bidding is that it increases conversion rates while decreasing ad spending, but it may also result in fewer clicks and higher bids.

To increase your chances of success…

Optimize your keywords

Keywords determine which search results in your advertising campaign will target, influencing the amount you must bid and the likelihood of conversion.

To find the most relevant and profitable short and longtail keywords for your campaign, use an Amazon keyword tool and reverse ASIN search.

Enhance your listing

Conversion will only occur if your listing looks and sounds appealing to potential customers. Using high-resolution photographs, writing informative descriptions, and improving your Amazon feedback rating are all examples of how to do so.

Subscribe to Amazon Prime

Customers love Amazon's fast shipping program, which guarantees two-day deliveries at no extra cost.

By qualifying for Amazon Prime through FBA, or Seller Fulfilled Prime, you can earn the blue Prime badge and appear in fast shipping-filtered search results.

Follow a marketing strategy

Choosing which bidding method to use for your Sponsored Product campaign is determined by the desired outcome. Determine and commit to a strategy that will allow you to select the best bid for your goal.

Strategies for Amazon Dynamic Bids

The three main dynamic bid strategies are as follows. They are as follows:

1. Cost-cutting measures

A cost-cutting strategy is ideal for new or recently created advertising campaigns. It entails lowering your advertising costs while learning Amazon's advertising system, testing out keywords, gathering data, and fine-tuning your listings.

The 'Down only' bid is the best option for a cost-cutting advertising strategy, as it prevents you from overspending on advertising. It also gives Amazon's computers time to gather vital information about your ad's performance, allowing them to accurately predict conversion likelihood when you later upgrade to 'Up and Down' bids.

2. Sales

A sales strategy is ideal for existing campaigns that are well optimized and ready to scale to achieve a flywheel effect. It entails maximizing your advertising costs by utilizing keywords that have been tested and proven to produce results.

The 'Up and Down' bid is the best option for a sales strategy, as it gives you the most opportunities to increase conversions and boost your brand's visibility across the platform.

It also means that Amazon has had time to collect data on the previous performance of your ad, increasing its accuracy in predicting likely conversions.

3. Impressions

An impression strategy is ideal for product launches and increasing brand awareness. It entails increasing the number of times potential customers see your ad, regardless of whether or not they click.

The 'fixed' bid is ideal for an impressions strategy, as it exposes your advertisement to all relevant searches.

Once your product has been launched or you've established significant brand awareness, you can shift to a sales strategy based on an 'Up and Down' bid.

Important note: Do not run any of these campaigns for the same product at the same time because they will compete for bids.