What is Amazon keyword bidding?

When creating an advertising campaign on Amazon, sellers must be aware of both the type of sponsored ads they intend to run and how much they intend to spend on the campaign. Amazon keyword bidding is the process in which the seller does the latter. Understanding both Amazon advertising’s structure and how keyword bidding works is integral to optimising your Amazon advertising strategy.
How does keyword bidding on Amazon work?

As a pay-per-click (PPC) platform that deals with thousands of searches a day, Amazon advertising implements a bidding structure to determine which seller wins the ad space on product listings. Sellers in fact bid on specific keywords related to their ASINs which, depending on the keyword type (eg. broad, exact or phrase match) will determine which search results their sponsored ads will be present in. However, if a seller does not understand how Amazon’s keyword bidding process works then their ad campaigns will never create the results that they want.

How do you win at Amazon keyword bidding?

Amazon advertising uses a second price auction format. This means that the winning seller who bids the highest on a keyword and thus gets their ad displayed, only pays 1p more than what the seller who came in second place bid. For example, if you bid £2.50 for the keyword “men’s trainers” and someone else bids £1.50 and you won, you would pay £1.51 for every time someone clicked your ad as the 2nd highest bid was £1.50. The 2nd highest bidder would then win the second sponsored ad space on the page and so on until all spaces were filled. It is therefore integral to make sure you win one of Amazon’s ad spots if you want your ad to be seen.

Types of Amazon keyword bidding strategy

When creating Sponsored Product ads, you will get an option to choose the type of bidding strategy that you want to apply to your campaign. They are broken down into dynamic and fixed bids and are a way for Amazon to help you manage your campaign using their algorithm in real time.

  • Dynamic bids: down only 

Amazon will lower your bids when your ad is less likely to convert. This bid is probably the safest of all 3 as Amazon will only decrease your default bid. It is therefore a great option for brands on a tighter budget or those concerned with a high Advertising Cost of Sale (ACOS)

  • Dynamic bids: up & down

Amazon will raise bids up to double your default bid when your ASIN is more likely to convert and lower it when it is less likely. This type of keyword bidding will maximise chances of your brand converting but at the cost of your Total Advertising Cost of Sale (TACOS)

  • Fixed Bids

Amazon will not alter your bids despite the opportunity of increased conversion. This type of bid is the simplest to understand and allows sellers to hold full control over their sponsored product ad campaigns and know exactly how much they are bidding.

Creating Sponsored Product ads is a much more complex activity than making Sponsored Brand ads as, for the latter, sellers can only choose to turn off or on an automated bidding option so a bidding strategy is much less detailed.

Is your keyword bidding strategy failing to provide the results you want?

Creating a PPC strategy isn’t as easy as choosing keywords and letting your campaigns run without guidance. Designing a fully optimised advertising campaign takes time, skill and patience which our Amazon Advertising team have all 3 in abundance. It also requires ASINs that are fully optimised too, ranging from an enticing store page, plenty of inventory and informative A+ content and description. As a full-service Amazon agency, Molzi has experts in every aspect of ensuring your ASINs are retail ready from trading & growth to optimising content. What’s more? We are still working during this time! Contact us today and see how our team can help you grow even through this time.