Amazon PPC - Budgets and Bidding Strategies

hi guys thank you for watching my channel I'm Jelena from Amazonia PPC and today I'm going to talk to you about campaign budgets on Amazon and also some of the most common misconceptions around how it's being calculated and also about the campaign bidding strategies that are currently available in Amazon so stay tuned I hope you can get some value from this video first of all you know that when you go to campaign creation every campaign has a couple of mandatory elements that it needs to have in order to get started so first of all it has to have a name start date targeting type bidding strategy and daily budgets but one of the most common misconceptions around how this daily budget is being calculated is basically an average average user of this interface will think okay if I set up a daily budget for example $30 that's going to be the maximum amount that I was looking spent per day on my advertising showing my ads but in reality they are calculating something that's called weighted the daily budget meaning they use your baseline daily budget as an average of what they will actually spend throughout the whole month the same kind of approach is being used on the rule since like three years ago maybe so basically it's not something new but it's a very common misconception around how how we should use it basically so in an example this would look like for example if you have let's say $30 daily budget that you want to spend that's the let's say maximum amount you're willing to spend on advertising hours and we'll take this $30 as an average of what you want to spend not like a maximum so what they will do is first of all careful calculate what's an average amount of days during a month so 365 days a year through / 12 months on average that makes thirty point four days a month so 30 point four times thirty dollars daily budget makes nine hundred and twelve dollars a monthly budget so this is your actual threshold this is how much your maximum going to spend on a monthly level if your daily budget is said to be thirty so it seems likely very again I mean again 30 times 30 is always going to be around 900 but it can vary up to ten percent of what your daily budget is depending on the traffic and what is the main reason why they're setting it up this way instead of just you know setting a very hardcore limit to your daily budgets the reason is because traffic's vary from day to day not every day is the same and Amazon doesn't want you to lose any kind of additional sales potential sales that you could lose if you run out of budget for that day so they're giving you like a like an additional threshold of 10% higher than what your daily budget is they're allowing themselves to spend that - in case that your previous day or any other day during that month wasn't super busy in terms of traffic so if you have some leftover budget from yesterday for example they're just gonna roll it out to today but not spend more than 10% it's something you need to understand how it works in order to set up you know maybe bigger thresholds if you see that your daily budgets is constantly being kind of like adding more spend than what you initially designated as your daily budget then this could be a sign that potentially you need more budget for their campaign also they're always gonna be other signs like impressions the amount of impressions the amount of clicks that you're receiving for the campaign if it's consistently higher than what you expected and it's definitely a sign of a growing demand so daily budgets work like that and also we expect this 10% higher than the threshold you said I'm going to become a higher percentage in the future let's say Frank if we follow Google's example they are allowing themselves to spend up to double from what you set is your daily budget as long as it doesn't overspend again the monthly average so we expect this trend to repeat on Amazon as well it's only a matter of time as well as the more they grow as a platform more freedom they're gonna give themselves over ad spend distribution so that's something we've seen on some Google as well and of course the bidding strategies this is um there are also a lot of common misconceptions around which one is best you know I've been hearing a lot of questions which one is best which one should I use for my specific account and in general just how they work you know they are a little confusing and we have seen some discrepancies that haven't been very logical and in theory shouldn't really even happen so we're waiting for responses from Amazon regarding that but first I'm going to dive into each campaign bidding strategy and give you our insights from our experience for multiple accounts how each one works and what's the best possible approach for each one of these dynamic bits download is the campaign bidding strategy the first appears even when you know 2018 then when you always even when you only have like automated campaigns not no other targeting options as well at all so dynamic bits down only means that you set up your max CPC bid as a baseline bid but you will allow Amazon to down to just like bid it down if they estimate that it's not going to convert to a sale so basically this bidding strategy is giving Amazon a little bit of freedom over your ad spend distribution but not so much you're giving them the baseline basically and they can only bring it down they can't bid them up in case that they see that there's going to be a sale so down on the strategy it's mostly working really well for campaigns that already have a lot of orders they have good sales velocity they have good number of orders throughout the month and they have been running for a while to have enough data to learn from so both the both dynamic bits campaign bidding strategies work well if you have an already established account that's been running for a while that has sales that have it's good both of these strategies are very good for best seller products then you know are gonna have a lot of velocity a lot of data to learn from so basically if you have some budget set aside for testing purposes dynamic bids up and down for example in dynamic bits down low they are gonna give you a good understanding of where Amazon is positioning you in the marketplace so if you see that for example if you're using dynamic bids up and down bidding strategy and Amazon's consistently giving you placement like you can see in the placement reports you will see that your main placement where your most of your impressions coming from is you know rest of the search maybe or product leaders even then that is a sign that Amazon isn't really seeing your product as a competitive product for some reason if you set up dynamic bits up and down and then you see it start seeing your photo show up in the first page in the top of the search placement then that's a good sign it means that your listing is optimized it's a series of good signs actually so good thing to test out if you have some kind of additional budget on the side dynamic bids also kind of as a strategy something if you if you are running for example an automated campaign and you want to make sure that it's inter its profitability whether you're using some kind of tool that you're using you're doing it manually it's still a good thing to give Amazon freedom over this because they have tons of data that they don't share with us so they can with huge accuracy predict when a sales going to happen and when it's not going to happen but at the same time you have to have a lot of flexibility around you know being flexible around how much you're gonna pay per click because there are a lot of bidders at the same time and there is room for manipulation in these kind of bidding strategies you have to be aware of that you have to be cool with it in order to use them so if you have very set profitability targets then I wouldn't even recommend using downloading dynamic bits not not even I mean I would use it but still if you are very tight on your eCos targets for example then you need to have an absolute control over where each click is coming from and how much it's costing you in order to you know hit your target simply because you know exactly how much clicks you can actually afford before getting to that actual sale that's that's the reason why I want strictly recommend using dynamic bidding strategies when it comes to fixed space in strategy this is the strategy that doesn't give you a lot of flexibility at all so you set up for example one dollar bid on your keywords our products and then you set up 10% plus percent placement bid adjustment for top of the search and that's it your bid shouldn't be higher than 1.1 dollars in best case scenario if you're fighting for the best premium placements on the search results page so fixed bid is a very good strategy when you calculate your max CPC according to your profit margin according to your specification so I think how like a very granular campaign structure where you target only one product one keyword you know single keyword that groups single key campaigns but you want to see specifically for each campaign how it's working out how something is working out so it's not a bad thing to use when you are very tight on targets for a cost on the other hand it could be quite limiting for your campaign reach so it's not fixed bids campaign strategies not the best option for accounts looking for growth not the best option for accounts that are that need aggressive reach they need to take over some of the you know market share in the search results page however if you're using it required product targeting and you're pretty sure pretty confident that the you know you're bidding much much higher than what the suggested bid was and you really want to target one specific competitor aggressively it might work for your advantage you just have to understand really really well how it works so in theory fixed bids should not change at all from what you are from what you are bidding on them they could be lower because you want the auction the ad auction and then you're paying lower than that because you have a quality listing or your product is selling its relevance to the searches that your customers are typing in they're clicking on if you have a good click to rate all these things are setting good signals to Amazon that you that your campaign quality score is good so that's why that's the reason why could you possibly pay less from what was bedded through the fixed bids campaign strategy campaign bidding strategy but in any case you should not be paying more for your average cpc's more than your maximum cpc's in any case if you're using the fixed rates spinning strategy for campaigns and the reason for this is because you have set your maximum CPC and it shouldn't go higher than that at all unless you are using any kind of placement bid adjustments but then in that case again you could very easily calculate exactly how much in the worst case scenario that's gonna be but in many cases in our accounts and we haven't yet received like a very concrete response from Amazon regarding this like an explanation please in many cases we've seen that average CPC that was actually paid was higher than the max CPC that we bid on with no bid adjustments in place with a fixed bid is camping bidding strategy in place so if I receive any kind of valuable and for me regarding this from Amazon I'm gonna definitely post this on the channel and let you know so that's that's the thing if you have a fixed page it shouldn't really go higher than what you bid it on but in some cases it does happen and also of course there are bid adjustments by placements for top of the search and product pages depending on your campaigns strategy whether you are trying to get your product ranked whether you're looking for profitability whether you're looking for growth winning one market share through product pages you know competing against some of the brands that there are in your same match etc so various things could be you can increase bids at this point but you can't set up a negative bid adjustment so far so we can adjust a little bit and you can be even more aggressive when it comes to certain placements so in order to do this right you have to understand really well how placements work and where the place is very possible ads could possibly show up so that will be the topic of our possible next video I can explain to you the placements let me know if you need this I hope I hope that this video is useful for you and let me know if you have any other questions I'll be happy to answer them thank you for watching