Placement Bid Adjustments and Why to Use Them
Where your ads appear on Amazon is controlled by the campaign type that you choose when creating new ads. With the addition of placement adjustments, advertisers have more control on how much they want to pay for those specific ad placements.
Placement adjustments enable you to increase your bid at the campaign level by a percentage from 0 to 900%, effectively raising the bid by that percentage for every keyword or targeting group in your campaign at once. They are available in automatic and manual sponsored product campaigns for both vendors and sellers in three placement types:
- Top of search (first page) ads show in the two to three sponsored product placements that are available on the top of the first page of results, as shown below.
- Product pages ads show in the “4 stars and above” and “sponsored products related to this item” sections on product detail pages, as shown below.
- Rest of search covers all other search result page ads that are not located in the top spots for sponsored product ads, as shown below.
Each of these placement options can be adjusted to fit your campaign goals. They are manipulated by entering a percentage that you’d like to increase your bid by for the particular ad placement you’re targeting, and impact every keyword or targeting group in the campaign. When your ad is eligible to compete for that placement, the bid adjustment for the placement is applied to your base bid.
For example, let’s say you have a campaign that advertises a coffee maker. The ads in your campaign target “coffee maker,” “coffee pot” and “coffee machine” with a fixed bid strategy on the keywords of $0.50, $1.00, and $2.00, respectively.
You want to have the ads in your campaign appear in the top of search placement, so you add a bid adjustment of 50% to that placement for that campaign. When a shopper searches “coffee maker,” your ad will now have a bid of a $0.75 per click rather than the $0.50 the keyword is set at – the $0.50 bid plus the $0.25 placement adjustment of 50% results in a bid of $0.75 at auction.
The same would happen if a shopper searched for “coffee pot.” Your keyword bid is $1.00. Adding the placement adjustment of 50% would bring your bid at action to $1.50. And for the “coffee machine” search, your keyword bid of $2.00 would be increased to $3.00 with the 50% placement adjustment applied.
The bidding strategy you set for the campaign determines what Amazon does with your bid when your ad goes to auction. There are three bidding strategies:
- Fixed bids: Amazon will use the exact bid you enter for a keyword for every ad opportunity. It will not adjust your bid based on the probability of conversion.
- Dynamic bids, down only: Amazon will adjust your bid down for any ad opportunity that is less likely to result in a conversion.
- Dynamic bids, up and down: Amazon will increase or decrease your bid for ad opportunities depending on the likelihood of converting. It will increase your bid by no more than 100% for placements at the top of the first page of search results, and no more than 50% for all other placements.
If you are using either of the dynamic bidding strategies, the placement adjustment is applied before Amazon determines if it will be raising or lowering your bid according to the strategy. So, the math would look just like the fixed bid example above – bid plus placement adjustment percentage – but after that comes a final step to add or subtract Amazon’s dynamic percentage.
Let’s go back to the “coffee pot” keyword with a $1.00 bid and a 50% placement adjustment, and add a dynamic down bidding strategy. Say that Amazon reports a $1.25 final cost per click (CPC), a $0.25 decrease from the $1.50 the fixed bid would have been.
What percentage did Amazon decrease the bid by?
The answer is found in the dreaded “X” from your algebra days. Amazon doesn’t tell you what percentage it changed your bid by for each auction, so you have to do the math based on your cost per click for each keyword.
The algebra looks like this:
- Formula:
- (keyword bid + placement adjustment %) + X/100 = CPC
- Example:
- ($1.00 +(50/100)) + X/100 = $1.25
- X = 25%
For this bidding strategy and placement adjustment scenario, Amazon adjusted your keyword bid down by about 25% each time it was eligible for auction, based on its algorithmic calculations on the likelihood of conversion.
At this time, it is not possible to place an adjustment on the rest of search placement type. It is also not possible to decrease your placement bid using a bid adjustment. If you’d like to lower your bid, you’ll have to do it at the keyword or ad group level and that affects all placements.
The most common application for placement adjustments is to boost bids in placements that have good conversion rates. In the “Placement” tab of your campaign, you can see a breakdown of how a campaign is performing by placement type.
For example, the screenshot above shows that this campaign converts well at the top of search placement. We want to capitalize on that so we encourage more ads to be shown in this placement by adding a 10% bid adjustment. This means we can compete more aggressively when our ad qualifies to be shown without having to do large-scale bid increases at the keyword level for manual campaigns or the targeting level for automatic campaigns.
Placement bid adjustments can be applied to fine tune ad performance, expediting precise bidding updates rather than changing keyword or targeting segments en masse.
