December 21, 2019
MT’s Performance Advertising in 2020: Ad Channels
As the Amazon Advertising platform continues to evolve, the sophistication of Amazon’s optimization capabilities are increasing as well. In addition to the placement bid modifier update Amazon announced in January, the rollout of Amazon’s new automated bidding beta has been a major update to the platform in 2019.
Amazon defines this bidding strategy as raising bids (by a maximum of 100%) in real time when your ad may be more likely to convert to a sale, and lowering your bids when less likely to convert to a sale. Utilizing this new beta is an effective way to stay ahead of the game and get the best results out of your campaigns.
To gain a better understanding of when this bidding strategy works best, we tested Dynamic Bids: Up and Down in a variety of settings. We thought it important to test between automatic campaigns and manual campaigns, as well as across products and keywords sets in different categories with varying levels of competitiveness.
Below we highlight some of our findings from the first few months of testing. All results represent a 30-day over 30-day period comparative assessment.
Due to the higher amount of competition in this category, the campaign had a lot of opportunity to increase bids for likelihood of conversion. Revenue and net revenue both rose, but so did ACoS, likely because automatic campaigns are less targeted than manual and many of the clicks generated did not result in large enough revenue gains to warrant the additional spend. In the case of this advertiser, the ACoS rise was too much to continue.
As a result of the higher amount of competition in the category, this campaign saw strong PoP performance due to an opportunity to increase bids for likelihood of a conversion. In both campaigns we saw slight reductions to return on investment (ACoS), however, in this case the large revenue growth outweighed the less efficient spend.
Due to the lower amount of competition in this category, the campaign had less opportunity to increase bids for likelihood of conversion. This resulted in an increase in spend without an improvement to revenue.
One thing you can expect from running dynamic bidding: up and down is that your spend will increase. Because Amazon increases bids up to 100%, your spend could significantly increase so it is important to keep a close eye on your campaign after launching a dynamic bidding test and be prepared to make adjustments to your campaign budget settings.
Given the results across our testing, we have seen the best success with manually targeted campaigns within a higher competitive category. That being said, we still believe in testing other settings as these findings are not entirely conclusive. Performance may vary depending on the Amazon business you have.
As Amazon continues to improve automated bidding, we expect results to continue to improve, so we will continue to test. If you’re interested in the opportunity to test your Amazon campaigns, contact us here.