How do Amazon sellers adjust bids based on ad placement?

How do Amazon sellers adjust bids based on ad placement?



Amazon PPC ads have multiple placements, including the top of the search results page, other locations, and product detail page locations. Of course, the conversion rate, click-through rate, and cost per click of each ad placement are also very different.

Without help, it’s difficult for sellers to adjust ad spend across different placements to drive traffic to the highest converting ad placements while reducing spend in other placements.


However, today's article will introduce you to a simple formula that allows sellers to calculate and adjust bids according to display positions.


Ad placement performance gap


The following figure is the actual data
This really shows the performance gap between ad placements:
       
Sellers first need to understand which position gives you the highest conversion rate ( usually the top of the search results page).
As you can see from the picture above, the advertising effect on the search results page is significantly better, with a conversion rate of 13.51%, which is much higher than the 2.95% and 1.39% of the other two positions.


Looking at other data, most of the advertising expenditures went to the placements with the worst conversion rates and the highest CPC and ACOS. The product page ad placements spent $200, but the conversion rate was only 1.39%. The search results page had a higher conversion rate, but the advertising expenditure was only $32.


This is the problem that sellers need to solve by adjusting the bids for the placements and allocating spend to the positions with better performance .


Adjust the bidding formula


For example, let’s assume the conversion rate for each ad position is:

  • Ad placements at the top of search results pages have a conversion rate of 10%

  • The conversion rate for other locations on the results page is 5%

  • The display position of the product page is 7% ( the formula for calculating the conversion rate is very simple: order volume ÷ click volume )


Formula for increasing your bid


For example, if you want to increase the bid for a position with a high conversion rate, first calculate the performance gap between ad placements. The calculation method is as follows:
High conversion rate ÷ lowest conversion rate - 1


Then according to the data just assumed, the conversion rate of the top of the search results page is 10%, 10% ÷ 5% - 1 = 1 (100%). The 100% effect difference means that the former ad effect is twice that of the latter. So it is recommended to increase the bid for the top position of the search results page by $1.


Product page placement bid adjustment = 7% ÷ 5% - 1 = 0.4 (40%)
Then the bid for product page display position increases to $0.4.


Formula for lowering your bid


Now we need to lower the bids for the poorly performing positions. The formula for lowering the bids is as follows:
1÷(1+the bid increase for the highest conversion rate position)


For example, you may want to adjust the bids for other locations on the search results page.
The highest conversion rate is at the top of the results page, which is 10%, and its bid increase is 1.
Therefore, the price reduction for other positions is 1÷(1+1)=0.5, and the bid is reduced by 0.5 US dollars.

Notice:

The above calculation formula is only for the bid adjustment of the same keyword in different positions. The only way to calculate the bid adjustment range of different keywords is to separate different keywords into separate campaigns.


The above is how to shift advertising spending from underperforming locations to the best performing locations. If sellers have any better ideas, please share them in the comments section.


Text ✎ Mary/

Statement: When reprinting this article, the title and original text must not be modified, and the source and original link must be retained.


Previous Review

●What products are most likely to generate huge sales during the peak season?
●Amazon Black Technology: Teach you how to calculate your competitors’ conversion rates
●15 tools for finding influencers that sellers are using, all free!
●Amazon sellers’ confusion: Why does ACOS increase when the bid is lowered?






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