For sellers running Amazon ads, managing your keyword bids is one of the most important yet time-consuming activities when it comes to Amazon PPC optimization. Once your PPC campaigns are up and running, you still need to regularly monitor your keywords on a regular basis to track what is working and what needs to be changed.
Bid optimization has a direct effect on the success of your PPC campaigns. If you don’t monitor your keywords on a regular basis, your ACoS will creep up, and you risk losing sales to competitors outbidding you for the top advertising space on Amazon.
If you can automate your keyword bids, it will help you to achieve a higher return on ad spend (ROAS), and save you many hours of manual PPC management work each week.
How do I automate my PPC campaign?
Your goal is to create and execute keyword bid rules that will cover the majority of your automation needs for all your ad groups. There are 3 essential bid rules that will cover the majority of your automation needs:
- Automatically increase keyword bid (when ACoS is low)
- Automatically lower keyword bid (when ACoS is high)
- Automatically pause keyword (when keyword is unprofitable)
To help sellers visualize our bid automation rules, we’ve created an example below that demonstrates how to automate your PPC campaign:
Example: A product sells on Amazon with a conversion rate of 5%. The break-even ACoS for this product is 35%, and the target ACoS is 20%, which means the seller wants to achieve a 15% profit margin per unit.
Rule 1: Automatically increase keyword bid (when ACoS is low)
Automation rule: If ACoS< target ACoS (20%) after 20 clicks, increase bid by 30%.
In this scenario, your ACoS is below your target ACoS, which means you want to increase your CPC bid to increase your ad visibility and sales potential.
Why wait for at least 20 clicks before increasing my bid?
We frequently get asked “how long should I wait before changing my CPC bid?.” Our general rule of thumb is to wait for at least the average number of clicks (“X” clicks) needed to generate 1 sale.
Number of clicks = 100 ÷ organic conversion rate (CR %) of your product
Note: In order to calculate “X clicks” you must use an expected conversion rate. For this you can either use the organic CR of your product/ product group, or even better the average PPC CR of your product/ product group.
This should allow for sufficient data collection to help you determine:
- Is my keyword/search term converting well for my product?
- What is the ACoS of my keyword/search term?
Using the current example, if your product has a conversion rate of 5%, you can expect to generate 1 sale for every 20 clicks on average. I.e. you need to wait at least 20 clicks before making any changes to your keyword bids.
Tip: This process is automated for you in Sellics; we automatically calculate the average click period for all your ad groups. Depending on your risk threshold, you can select “1x” “1.5x” or “2x” your average click waiting period.
Why increase my CPC bid by 30%?
We recommend sellers to test incremental bid increases, in order to collect sufficient data on whether your bid increases have had a positive effect on your sales volume. If you only increase your bid by 10%, the marginal increase in your CPC bid may not have any significant impact on your ad visibility. From our experience, we believe CPC bid adjustments around 30% will be sufficient when testing bid changes.
Rule 2: Automatically lower keyword bid (when ACoS is high)
Automation rule: If ACoS> target ACoS (20%) after 20 clicks, lower bid by 30%.
In this scenario, your ACoS is above your target ACoS, which means your PPC costs are too high. You will want to lower your bid to prevent your ad spend from eating into your target profit margin.
Rule 3: Automatically pause keyword (when keyword is unprofitable)
Automation rule: If keyword has generated 0 sales after 20 clicks, pause keyword.
In this scenario, your keyword has generated 0 sales after reaching your average click threshold, which means you will want to pause the keyword to prevent bleeding more advertising dollars on an unprofitable keyword.
We hope this article will be useful for sellers looking to automate their PPC campaigns. Of course, you can create as many bid automation rules as you wish, and this is not limited in our PPC Manager. However for sellers new to Amazon PPC automation, we believe applying the bid automation rules we’ve outlined above will already be immensely useful to help you lower your PPC costs, and optimize your CPC bids to maximize your sales potential.