Amazon Ads – What matters in the auction system – eCommerce Magazin

Amazon has rapidly developed into one of the largest online marketplaces in the world in recent years. It is a profitable opportunity for companies worldwide to sell their own products – with or without their own online shop. But while Amazon Ads offers many options, the competition is also fierce. Especially when it comes to successfully promoting products.

Amazon relies on an auction system. The online marketplace uses a bid algorithm to determine which Amazon Ads are shown to prospective buyers. This makes the decision based on keyword bids. The keywords are linked to the search terms of the customers for whom retailers want to display their products. In the end, the seller with the highest keyword bid and a high-quality ad wins not only the auction, but also the customer’s attention.

Amazon Ads: What Are Suggested Bids And Who Are They For?

So choosing the right bid for a keyword is extremely important. Newcomers are often unsure how to determine an appropriate starting bid for sponsored brands, sponsored products or sponsored display campaigns. Amazon supports them with the so-called Suggested Bids. But what are these specific bid proposals and when should companies use them at all?

The Suggested Bids can be found in the Amazon Campaign Manager as a separate column in the data table. Amazon calculates these bid proposals and their bid ranges on the basis of successful bids for advertisements that are very similar to its own Amazon Ads. The bid range is accordingly the range of successful bids for most advertisements in the respective product category. The proposed bid and the bid range are updated daily – depending on the increase or decrease in the competing bids and Amazon Ads in each auction. Companies can use these guidelines as a guide when deciding on a bid for an ad group or a keyword. Suggested Bids make it easier for beginners in particular to use Amazon advertising and give them a better insight into the bids of competitors.

The problem of suggested bids

Suggested bids are a great way to find out how many clicks a particular keyword is getting. The problem: Amazon does not know the respective advertising company and its business goals. Accordingly, the commandments are only a small piece of the puzzle. For example, if your own conversion rate is higher than that of other advertisers, there is a good chance that the company will do better than the competition. On the other hand, if it is lower, the proposed bid is not optimal, which is why the competitor will win the auction. Companies should therefore keep an eye on their own strategy. You should also target the lower end of the bid range and then optimize based on campaign performance. In the course of this, there is no getting around for advertisers to deal intensively with the topic of Amazon advertising and bidding. In order to be successful in the long term, you also need to profitably analyze the resulting data.

Suggested bids are sometimes to be treated with caution, as Amazon does not seem to necessarily base the price of the proposed bids on successful bids. For one, the proposed bids change based on the items in the respective ad group. So if you add or remove a product, the bid also fluctuates. This indicates that the proposed bid is not only based on the bids of other advertisers, but also on the product itself. It can be assumed here that Amazon indexes products in a similar way to Google keywords with the corresponding quality score.

On the other hand, tests have shown that Suggested Bids are higher if a keyword does not match the respective product – for example a keyword for dietary supplements in a campaign for a men’s care product. Since no competitor would bid for a corresponding keyword in such a context, Amazon charges a surcharge for the unsuitable keyword.

Amazon Ads – conclusion

Advertising on Amazon is highly profitable in the long term, but also time-consuming and very complex. It is important to continuously optimize campaigns and stay up to date. Especially since Amazon continuously adapts the tools and possibilities of the platforms. Suggested bids are therefore only relevant as a guide for beginners and not as a long-term solution.

It is therefore advisable to use AI-based tools that offer fully automatically optimized advertising. These continuously analyze and optimize campaigns, keywords and bids – several times a day if necessary. In this way, companies are permanently successful in the Amazon cosmos.

Also read: Omnichannel Sales – How Retailers Meet Customer Expectations.

Amazon Ads, Stefanie Richter
Image: Adspert

About the author: Stefanie Richter is CEO of Adspert, the Berlin AdTech specialist who uses self-learning algorithms to optimize advertising campaigns on the auction-based platforms Amazon, Google and Bing.