I just got this question in our Facebook group. Could you explain the best approach for utilizing a higher bid or bid up and down strategy versus top of search placement? If I have a new design that say is for a niche such as Father's Day that's happening soon so I want to get seen quick, am I better off with a higher bid or investing in top of search or both? Thanks for your feedback. This is a great question. One that comes up a lot when it comes to launching new products, especially for big occasions like Father's Day. Should you go big on your bid, focus on top of search, or do a mix of both? Well as is often the case, the answer is it depends. Both strategies can work on their own or even together, but how well they work can change based on the competition, how your product has been doing, and what you want to get out of your ads.
Setting Your Goals
First things first, what's your goal here? Are you just trying to get your product seen and sell as much as possible? No matter the cost or do you want your ads to be profitable or at least break even? We always want to keep our campaign goals in mind with any strategy we implement. In your situation, the lack of sales history with the new products is the biggest hurdle. Without historical data, Amazon is in the dark with how your ads will perform. Remember, Amazon's goal is to turn shoppers into buyers, so it uses your product's historical performance to predict how well your ads will do.
Understanding Amazon's Ad System
Let's talk about how Amazon's ad system works. This is really important to understand when deciding on any advertising strategy. Amazon advertising is an auction. The bid you enter the auction with determines where your ad gets placed. The higher the bid, the more favorable locations you'll appear like top of search. But here's the kicker, the bid you set might not be the bid Amazon uses in the auction. Amazon uses dynamic bidding to adjust your bid in real time. Based on how likely they think your ad will lead to a purchase. If Amazon isn't feeling confident about your ad or if they just don't know because you don't have a sales history, they'll drop the bid you're entering the auction with. So you might think you're making a strong move with a $3 bid, but Amazon could turn around and make it a less impressive $0.20 bid. That means your bid isn't competitive for the search terms you're targeting, your ad doesn't get premium placement, and fewer people see it.
Competition and Top of Search Placement
Launching a new product in a fiercely competitive niche like Father's Day means you're going toe to toe with products that have tons of sales history. Amazon knows how these products perform and how often they convert at different placements. Top of search placements often bring in more conversions and can warrant higher bids, but high competition, especially during event seasons like Father's Day, can drive up the bids needed for these highly coveted top of search placements. If you're selling products with a smaller profit margin, this can be even more challenging. You're likely competing with other product ties for many of the search terms you're targeting. They have much higher profit margins and therefore more budget to dedicate to ads.
Choosing the Best Approach
So what's the best approach? Well, there's no definitive answer. I recommend starting with a maximum bid you're comfortable with, then consider applying placement adjustments for top of search or using a mix of both up and down bidding strategies and placement adjustments. Keep in mind, using up and down bidding or 100% top of search adjustment has the same effect on your max bids for top of search. The only difference is that up and down bidding also bumps up your max bid by 50% for all other placements. Up and down bidding and placement adjustments are multiplicative. So be aware your effective maximum bid and how it might apply to potential search terms. A 100% top of search adjustment in combination with up and down bids means your maximum potential bid is four times the bid you set for top of search. A key tip, if you want to focus mainly on only top of search, you could set a lower bid but crank up your top of search adjustments.
Considerations and Fixed Bidding
Even with a high bid and dynamic bidding, there's no guarantee your ads will win any auctions. Since Amazon can reduce your bid, they're likely to do that for a product without a proven track record. If you are struggling to get your ad scene, you might want to try fixed bids. This forces Amazon to use the bid you set in the auction instead of adjusting it. But be cautious with this method. You might miss out on Amazon's algorithm lowering your bid when it makes sense. While fixed bidding can boost visibility, it often comes at the expense of a cost performance. It's a strategy best used for new campaigns or product launches where getting seen is your main goal.
We have an upcoming video that goes into even more detail about Amazon's ad auction and bidding strategy. Don't miss it, so be sure to subscribe. Got more questions like this? Join our Facebook group, Amazon Ads University. You can learn from thousands of other Amazon advertisers and the link is in the description. Good luck with your new product launch and your Father's Day campaigns and as always, keep testing, keep optimizing, keep scaling.