When it comes to the different types of campaigns currently available in Amazon Ads, Sponsored Product ads are almost always where the bulk of ad-generated sales come from. Sponsored Product ads also have more ways to customize and optimize a campaign and how it spends. A Sponsored Product ad campaign can target keywords, categories, other brands, and ASINs, depending on your current business goals.
The types of bidding strategies currently available for Sponsored Products are dynamic bids – down only, dynamic bids – up and down, fixed bids, and rule-based bidding. We’ll take you through what each one means, when, and why to use them. For an explanation of bids and other pay-per-click/PPC terms, check out this handy guide from JumpFly’s Erin Taylor.
For Sponsored Product ads, you are bidding for your products to appear at the top of customer search results, the rest of search, and on product detail pages.
Dynamic Bids Versus Fixed Bids
Fixed bids are exactly what they sound like – you will set the bid amount you’re willing to pay per click, and Amazon Ads will not change your bid in any direction. Dynamic bids, on the other hand, allow Amazon’s system to change your bid amount, up or down, in order to win a bid auction where the system has determined you have a better chance of converting.
Importantly, it is possible to change your bidding strategy in each ad campaign as your business and marketing goals change, and your ads mature.
The fixed bidding strategy is great if one of your business goals is to gain impressions and not necessarily conversions or sales. Some advertisers see this as a way to control spend. After all, Amazon cannot adjust your bid to win an auction. However, this means that if your keywords or ad targets are spending inefficiently or not at all, you will need to go in and change your bids manually every time it is necessary.
In this regard, the fixed bidding strategy is certainly one way to control spend, but it is a way that must be constantly managed and is not meant for gaining conversions and sales. Fixed bids are more appropriate when your brand or product is new on Amazon and you want to gain impressions and gather search data. It is not the only bidding strategy used for new brand or product launches. We recommend using the dynamic bids – down only strategy instead. A fixed bid is more likely to overpay for a click since it cannot change in response to live auctions.
If you choose to use a fixed bidding strategy for new campaigns, we recommend revisiting the campaigns after two weeks. At this point, the campaign will have generated enough recent data to analyze and gain insights. You can then switch to a dynamic bidding strategy, which is more appropriate for a newly matured campaign.
Dynamic Bids – Down Only
The dynamic bids – down only strategy is helpful for new and mature campaigns. With this strategy enabled, Amazon will decrease your bid amount if they determine that your ad is serving on a customer search query that is less likely to convert to a page view or a sale. Amazon will not increase your bid.
This is the bidding strategy we recommend when your business and marketing goals are to control or preserve your ad spend, increase efficiency on ad spend, and focus on ad profitability. Before Amazon introduced different bidding strategies, ads, by default, used the down only method. If you have Sponsored Product campaigns in your Amazon Advertising account that were created before 2019, the bidding strategy in your campaign settings will show as “down only” unless you change it.
Dynamic bids – down only is a great way to control your spend and focus on profitability without having to monitor and micro-manage your ads constantly, as you would have to with fixed bids. Amazon will adjust your bids in real-time. The down only strategy will enable you to gather data on new campaigns with less risk of overspending on a bid.
Dynamic Bids – Up and Down
Using the dynamic bids – up and down strategy enables Amazon to increase or decrease your bids when its system determines your ad is more or less likely to convert to a sale. If you are concerned that this bidding strategy will cause you to overspend, keep in mind that Amazon will not increase your bids to more than 100% of your set maximum bid for a top-of-search placement and no more than 50% for other placements.
For example, if you set your bid to $0.50 per click, Amazon will not increase the bid by more than $1.00 for a top-of-search placement. You can always switch your bidding strategy to down only if, after at least two weeks, you’ve decided that the ad is not hitting the sales or efficiency goals you wanted.
We do not recommend using this bid strategy for new ads. The up and down strategy is best used on more mature ads that are well-optimized and on products where you’re ready to increase your total sales to kick Amazon’s flywheel into action.
The up and down dynamic bidding strategy is effective when your goal is to grow sales. The more sales you get on Amazon, the higher your product listing will appear in search organically.
It’s also important to analyze how volatile your bids have been, historically, for your category when choosing if this method is right for you.
At this time of writing, rule-based bidding is the newest strategy available in Amazon Ads. Since there are specific requirements for using rule-based bidding on a campaign, this is not a feature you can use on new ads. Rule-based bidding can only be used on campaigns that have run for at least 30 days, with a minimum of 30 conversions during that time and at least a $10 daily budget.
If you try to select rule-based bidding on a campaign that does not meet the above criteria, Amazon will gray out this option and not allow it to be selected in your campaign settings:
This strategy is useful for when you have a specific return on advertising (RoAS) goal for your brand and certain products. When your campaign is eligible, you can either follow Amazon’s recommended RoAS guardrail, which will populate in the input field, or you can set your own:
The guardrail that Amazon recommends is based on campaigns that are structured and perform similar to yours. If you set your own target or guardrail, we recommend choosing a guardrail above your average 30-day RoAS but not more than 20-25% at a time. This allows you to monitor spend and test gradual performance. You can change this guardrail at any time. Adding a RoAS goal higher than 20-25% of your 30-day average may result in erratic spending.
The good news is that if your ad does not hit the set guardrail over a 21-day period (not including special days like Black Friday/Cyber Monday or Prime Day), Amazon will disable the rule and will revert the ad to your previous bidding strategy. It is therefore important to note when you enabled rule-based bidding so you can check back in 21 days to see if it is still active and if you want to make changes to the campaign. You can always check the History tab within your campaign to confirm when the change was implemented and, in some cases, reverted.
All of these bidding strategies, fixed bidding, dynamic bidding, and rule-based bidding, are at your disposal to reach your brand and product goals. As the Amazon ecosystem expands and markets fluctuate, it is important to regularly evaluate which strategies make the most sense to implement to put and keep your Amazon business on the road to success.