Paid Platform Merchandising

New Bid Management Tools Come to Amazon Sponsored Ads

In January, Amazon officially rolled out a set of dynamic bidding controls for its Sponsored Product Ads. This new feature gives advertisers even more control of their bidding strategy at the campaign level.

In the past, the functionality for Sponsored Product Ads was straight forward, allowing the advertiser the ability to manually set bids at the keyword level. In addition, the advertiser could apply a “Bid+” feature which when in use, increased the advertisers max bid by 50%.

With Amazon’s new functionality, there’s now three options for advertisers:

  1. Dynamic Bidding (down only) – This bidding control is now the default and allows Amazon to adjust existing keyword bids down if their algorithm deems the likelihood of conversion to be low. Though hidden at the time, this technique was used prior to January’s update and still applies to legacy campaigns.
  2. Dynamic Bidding (up and down) – This also grants Amazon’s “smart bidding” algorithm the ability to increase or decrease a keyword’s CPC bid on the likelihood of conversion. This option is only available if the advertiser opts in.
  3. Fixed Bids – The advertiser uses a manual process to maintain control of their keyword bids. This option should be considered an advanced technique and is only available if the advertiser opts in as well.

Our suggestion? With these bid controls just being released, we’d recommend being a bit cautious and consider testing initiatives at first. Consider launching a testing mechanic that generates two distinct campaigns, each targeting the same keywords with the same CPC max bid, and each using a different Dynamic Bidding control. You’ll likely find that some keywords perform stronger depending on the bidding approach used. We’d also suggest creating a third campaign using the Fixed Bid strategies to target keyword terms of high priority, such as branded or critical category terms with a large CPC max bid to ensure coverage.

New Placement Level Bid Adjustments & Reporting

In addition to Dynamic Bidding, placement level bid adjustments have been put into place. These adjustments give the advertiser the opportunity to increase their set bids by up to 900% to win the Top of Search (first page) space (figure 1) and/or the Product Detail Page space (figure 2). and will be replacing the current Bid+ feature.

 . 

Along with these improved adjustments, Amazon has also rolled out a more detailed reporting dashboard which captures the metrics by placement group (top of search – first page, product detail pages, rest of site) in the “placements” tab as well as the downloadable placements report.

So what does this all mean?

All these updates allow advertisers to set more distinct KPIs, rather than just a target Return on Average Spend (ROAS), or as Amazon prefers, the Advertising Cost on Sales (ACoS). For example, if a brand wants to showcase a new product, they may set a KPI to target 80% of their ad spend to dominate the top of search placement. With the new placement level bidding capabilities, the advertiser can get much more granular with their placements and reporting.

Looking Ahead

Amazon has significantly upgraded its Sponsored Ads bidding functionality, empowering advertisers to have more control, and thus, more precision with their campaigns. These new settings will likely be amended, improved, and added onto over time, as Amazon works with advertisers to perfect the system. In addition, even with the new functionality, the tools available in the Sponsored Ads dashboard are grossly behind what is available with Google Ads and third-party Amazon tools.

It is very encouraging to see Amazon increasing the functionality available to advertisers within the Sponsored Ads platforms. With projected revenues nearing $19 billion annually by 2020, Amazon continues to rapidly evolve its platform’s complexity. With their media division being an increased priority for Bezos and team, the velocity at which updates are coming to both Sponsored Ads and Amazon DSP are quickly accelerating. Here at iProspect, we expect, and look forward, to further performance enhancements in 2019 and beyond as Amazon Advertising becomes a critical component to Amazon’s larger success.