What is a bid?

January 9, 2024

1 What is a bid?

A bid for your Amazon Ads may seem simple at first glance: it's the maximum amount you're willing to pay for a click on your ad. But this is just the surface of a more complex system. Every time a customer searches for a product on Amazon, an unseen auction springs into action.

Your bid is your entry ticket. But winning this auction is not as straightforward as having the highest bid. Settings like placement adjustments will modify your bid depending on where your ad is being shown. And with Amazon's dynamic bidding algorithms, your bid might not even be the one Amazon brings to the auction.

amazon advertising placement adjustments
amazon advertising campaign bidding strategies

Amazon prioritizes two things: the customer shopping experience and maximizing product sales. They don’t just care about how much you're willing to pay; they want to show ads most likely to result in a purchase. Ads that resonate with shoppers by showcasing relevant products they want to buy.

This brings about a sort of hidden quality score for your ads influencing whether or not they’ll be shown.

But a bid is more than just a dollar figure. It’s your biggest strategic lever when it comes to Amazon Ads, affecting the success of your campaigns and determining whether you meet advertising goals, or blow through your budgets without results.

The perfect bid is an equilibrium between your conversion rates, profit margins, and business goals. It symbolizes how important a specific keyword, product target, or placement is to your overall objective. And it’s a reflection of the competitive landscape you’re part of.

So, while a bid may seem like just a number, it's a number that carries substantial strategic weight. A catalyst affecting how, when, and where your ads get shown.

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