Amazon Ads Bidding Optimization Strategies

Now that you’ve mastered the basics of Amazon bidding, you’re ready to take your Amazon bidding strategies to the next level. Bidding isn’t just about the highest price— it’s about strategically managing your budget to optimize visibility while controlling costs and maximizing sales.

With the right bidding strategy, your ad can get the best placement, and you can achieve your target ACoS. In this article, we’ll explain Amazon bidding strategies and how to adjust your bids effectively while automating the process to save you time and money.

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Dynamic vs. Fixed Bids

There are three main Amazon bidding strategies:

1. Up and Down Bidding: Automatically adjusts bids based on the conversion likelihood
2. Down Only Bidding: Lowers bids when conversions are less likely
3. Fixed Bids: Keeps your bid the same across all placements, regardless of conversion probability

What is Up and Down Bidding?

Amazon’s up-and-down bidding raises bids when conversion probability is high and lowers bids when it’s low. This strategy helps maximize sales efficiency by adjusting bids in real time.

How up and down bidding works

As an example, let’s say you as an Amazon seller, set a bid for a keyword, but it’s too low for your product to appear at the top of the search results.

Your product would theoretically appear mid-page with the bid you have set.

At this point, Amazon analyzes historical data and calculates whether the product would sell more if it were at the top of the search results instead of the middle of the page.

If Amazon expects a higher conversion rate, it will increase the bid to the minimum amount necessary to win the top-of-search auction. It can increase the bid by up to 100%.

Many sellers do not use this feature because they believe that Amazon has a conflict of interest and increases the bid only to make them spend more. In reality, this increase only occurs if a higher conversion rate is expected.

In cases where Amazon predicts a lower likelihood of sale, it will reduce the bid per click.

With Advigator, the up-and-down bidding is always active and automatically disabled if the campaign’s actual ACoS exceeds your target ACoS by 5 percentage points.

When to Use Up and Down Bidding?

This strategy is best for profit-focused campaigns with a lot of flexibility. Keep a close watch on ad spend, as Amazon can double your bids for high-conversion opportunities and you may accidentally spend more than you intended.

*This is the strategy recommended by Advigator but you can change the values

What is Down-Only Bidding?

Down-only bidding automatically reduces bids when the conversion likelihood is low. It helps optimize costs by preventing overspending on less profitable clicks.

When to Use Down-Only Bidding?

This strategy is best for maximizing profits when you’re new to managing campaigns or when you want to reduce costs without increasing the bid amounts.

What are Fixed Bids?

With Fixed Bids, Amazon applies your set bid across all placements without any adjustment. While this approach can generate more impressions, it may lead to fewer conversions and higher costs.

When to Use Fixed Bids?

This strategy is best for product launches, brand visibility boosts, or when impressions are the main goal.

What’s the Best Amazon Bidding Strategy?

Choosing the right bidding strategy depends on your goals. For maximum flexibility and cost control, dynamic bidding strategies often provide the best results.

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Optimizing Amazon Ads with Hourly Bidding

Bids can also be adjusted based on time-of-day performance. With hourly bidding, you can lower your bids during low-conversion times (such as nighttime) to preserve your budget for higher-converting hours.

Why is hourly bidding important for efficiency?

1 . The Budget Reset Effect

• Explanation: Every seller’s daily ad budget resets at midnight, which leads to heightened competition right at the start of the day (after midnight). The sudden rush to secure top positions increases the cost per click (CPC) significantly.
• Key Insight: This is a highly competitive time, meaning bidding aggressively at midnight may lead to higher expenses for fewer results.

2. Top of Search Placement is Expensive During the Night

• Explanation: The cost of securing top-of-search placement skyrockets during the night due to increased competition and lower conversion rates. If sellers use an “up & down” bidding strategy, Amazon will automatically increase bids, which may double the cost.
• Key Insight: While bidding higher might secure top placement, it doesn’t translate into better results overnight because customer activity is usually less active this time.

3. Low Conversion Rates at Night

• Explanation: The provided graph shows that conversion rates (the percentage of users who complete a purchase after clicking) are considerably lower at night. This means fewer sales, even though ad costs are higher.
• Key Insight: Although CPC is high at night, the low conversion rates mean spending at this time is less efficient.

4. Nighttime Spending Still Takes Up 14% of the Daily Budget

• Explanation: Despite low traffic at night, a significant 14% of the total daily budget is consumed during these hours.
• Key Insight: The combination of low traffic and high CPC leads to inefficient budget use—essentially wasting money on clicks that rarely convert into sales.

5. Reducing Bids at Night Improves Efficiency

• Strategy Recommendation: The best approach to reduce inefficiency is to lower bids at night when conversion rates are lower. This adjustment ensures that you’re not overpaying for clicks that don’t result in sales.
• Practical Solution: Tools like Advigator can automatically manage this process by analyzing your products’ hourly conversion rates and adjusting your bids accordingly.

Why This Matters:

• High costs + Low conversion rates = Inefficiency at night By lowering bids during these inefficient hours, you preserve your budget for times when conversion rates are higher, improving overall ad performance.

This analysis emphasizes that understanding when you’re spending your budget is just as important as how much you’re spending to maintain efficiency.

How Often Should You Adjust Bids for Amazon Ad Campaigns?

Bids should be adjusted whenever key metrics like average order value or conversion rate significantly change. Since these shifts happen frequently, using AI-powered automation is crucial to efficiently manage bid adjustments and ensure campaign success without manual effort.