How to bid reasonably for Amazon CPC ads?

How to bid reasonably for Amazon CPC ads?



Source: Hugo.com

Author: Xiao K talks about cross-border


1. The purpose of advertising optimization


2. How to determine the target ACoS

Notice:

(1) The ACoS target is not a fixed value and varies according to product positioning and life cycle;
(2) ACoS has a certain positive correlation with sales volume. The ACoS target cannot be set too low, which will result in product sales without advertising.

3. Target Bidding Calculation Formula

Bidding = target ACoS × unit price × natural conversion rate

See the figure below for details:


To better understand, let's take an example:

First, assume that the target ACoS is 25%, the product price is $40, and the natural conversion rate is 5%. According to the target bidding calculation formula, for each sale, the expected advertising investment is $10, each product sale requires 20 clicks, and each click generates sales of $0.5. When the bid is equal to the sales generated by each click, the target ACoS, that is, the business goal, is achieved.
Notice:
(1) ACoS is directly proportional to the bid price. Considering the upward space of ACoS, it is recommended to increase the default bid price by 40% to 50% to gain a bidding advantage.
(2) Default bid: 0.5 x (1+50%) = 0.75 USD.

4. How to adjust bids for different ad positions

After having the data, we can adjust the bid through the following steps: First, download the placement data report from the background.
Here is how to calculate after having data:

If data is available, the sales volume can be the sales volume generated by the advertising effect or the sales volume after the advertisement clicks of other products in the store. In the case of break-even, the total sales volume can be used to calculate the average revenue of an average single advertisement order for bidding calculation. After conversion, the concept of "advertising word click revenue (SPC)" is obtained, which is the revenue brought by each click.
After downloading the ad position data report, proceed to the second step to calculate the revenue per click (SPC) of ads based on the ad revenue and clicks in different positions. Different ad positions have different conversions, and the purpose of downloading the data report is to make different bid adjustments based on different ad positions.

For the case where Rest of Search SPC is the minimum value:
• Bid = Target ACoS x Rest of Search SPC
• Top of Search adjustment ratio = target ACoS x Top of Search SPC / bid - 1
• Product Pages adjustment ratio = target ACoS x Product Pages SPC / bid - 1
For the case where Product Pages SPC is the minimum value:
• Bid = Target ACoS x (RoS Sales + PP Sales) / (RoS Clicks + PP Clicks)
• Top of Search Adjustment Ratio = ToS SPC / (RoS Sales + PP Sales) / (RoS Clicks + PP Clicks)
The above is our sharing on Amazon’s CPC advertising bidding formula!

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