More Changes to AMS Advertising—Up and Down Bidding

 

AMS ADVERTISING BIDDING DYNAMICS

The amount of your bid may now change.

This includes ad campaigns that were running prior to April 22, 2019.

There are now three campaign bidding strategies:

  1. Dynamic bids—down only. Your bid is automatically lowered when Amazon predicts that your ad would be less likely to convert to a sale.
  2. Dynamic bids—up and down. Your bid is automatically raised as much as 100% when Amazon predicts that your ad would be more likely to convert to a sale, and lowers your bid when it would be less likely to convert to a sale.
  3. Fixed bids. Your bid is fixed, unless you check one of two boxes that allow Amazon to adjust your bid.

In addition to the bidding strategies, there are now two bid adjust options (which replace the old Bid+):

  1. You may choose to increase your bid by up to 900% to land your ad at the top of search results (first page).
  2. You may choose to increase your bid by up to 900% to land your ad on a product page.

WHAT HAPPENED TO YOUR OLD AD CAMPAIGN?

If you launched an ad campaign with AMS prior to April 22, 2019, the bidding strategy was automatically changed to Dynamic bids—down only.

If your ad previously had Bid+ set to on, it now includes a 50% bid adjust for top of search (first page).

MAKING SENSE OF THESE CHANGES

The main idea behind AMS advertising is relevance. When the most relevant ads show to customers, this benefits customers, it benefits Amazon, and it benefits the product being advertised.

AMS has always benefited authors and companies whose advertisements rate high in terms of relevance.

In fact, by rating high in terms of relevance, an ad campaign can actually generate more impressions at a more modest bid.

If an ad creates 2000 impressions and has no sales, from Amazon’s perspective the ad doesn’t seem very relevant to the customers seeing the ad.

If an results in a sale once on average for every 500 impressions, this ad is far more relevant than an ad that creates one sale for every 2000 impressions.

What I’ve said so far has been true for years.

The recent change of introducing bidding dynamics helps to reflect relevance in the amount of the bid itself.

In circumstances where an ad has a history of seeming less relevant, a dynamic bid would lower the bid for less relevant ads.

In circumstances where an ad has a history of seeming more relevant, a dynamic up-and-down bid would raise the bid for more relevant ads.

DON’T GO OVERBOARD

Amazon makes it easy for authors to bid too high.

It’s very common for authors to bid more than they can afford to bid.

If you bid too high, your ad is more likely to result in a short-term loss, and you’re more likely to think that AMS isn’t for you.

First of all, it helps to realize that AMS isn’t just for books. There are many businesses using AMS to advertise many other products.

When you’re selling a product that retails for $100 or more, and where your profit is $10 or more, you can afford to bid $1 or more and you can afford to include a large bid adjust option.

When you’re an author selling a book for $5 with a royalty of $3, you can’t afford to bid $1 or close to it (there may be exceptional circumstances, but very rarely).

If you mostly sell Kindle eBooks, and if your average royalty is close to 70% (if your books include many pictures, your effective royalty is probably much less due to the delivery fee), then you want your ACOS (average cost of sale) to be 70% or less so that you’re not losing money on your ad.

If you mostly sell paperback books, and if your average royalty is close to 30%, then you want your ACOS to be less than 30%. The list price should be higher for a paperback, which helps to offset this lower percentage.

Figure out what your average royalty is, then keep a close eye on your ACOS and strive to keep it below your royalty percentage.

For comparison, my ads (some for books under pen names) generate millions of impressions (combined) in a single month with an ACOS usually around 25%. So it is possible to generate many impressions at a modest ACOS.

My ad campaigns use dynamic bidding—down only. I don’t currently raise my bids. The main reason is that this happened automatically on April 22. But after about a month of data, I don’t yet see a convincing reason to change to up-and-down bidding. I might try it with a future ad and see how it does, but the big downside is that ads will cost more.

I didn’t use Bid+, so I don’t bid extra for placement in search results or on product pages. For a nonfiction book, I would prefer to show high in search results than on a product page. But I also prefer not to pay extra for this.

It’s tempting to bid higher and bid extra. But it costs more. If you can get successful ads at a lower cost, you can run your ads for a much longer period.

The main key to success is relevance. You can actually generate good impressions at a modest bid if your targeting results in high relevance.

Part of relevance is a compelling cover, effective description, helpful Look Inside, amazing content that leads to good reviews, etc. This helps you sell more books for each 1000 impressions, which helps to rate high in terms of relevance.

Part of relevance is effective targeting. I have a knack for researching keywords and keyphrases. I spend time on Amazon typing in keywords and seeing what it suggests (yes, I know this isn’t perfect, but as it turns out, it really helps with brainstorming). I jot down keyword ideas whenever they occur to me. Use your brainstorming techniques. Now I don’t use every keyword (or better, group of related keywords) that comes to mind, but I do have a very long and varied list to begin with.

I suggest trying to bid below a half-dollar, maybe in the 30 to 40 cents range. This may not be enough with a popular broad keyword like “mystery” or with a product page for a popular book. But if you are clever enough to find combinations of keywords that do get searched several times per day, but which aren’t insanely popular, or similar popularity for product page targeting, you can get lower bids to be effective.

But you really want the targeting to be relevant for your book. That’s the most important thing. If the wrong audience is looking at your ad, you will rate poorly in terms of relevance.

If your ad isn’t performing well and it’s been a couple of weeks, you can pause or terminate your ad and start a new one. Try different targeting.

Raising the bid isn’t likely the solution to an ad that isn’t performing well because it doesn’t rate well in terms of relevance. But new targeting may help you land more impressions at a modest bid. If you can rate better in terms of relevance, you can land many more impressions.

Write Happy, Be Happy

Chris McMullen

Author of the Improve Your Math Fluency series of math workbooks and self-publishing guides

17 comments on “More Changes to AMS Advertising—Up and Down Bidding

  1. Thanks, Chris. This makes a lot of sense. I’m glad you circled back to reiterate that if an ad isn’t selling well, we shouldn’t just throw more money at it. We should look at the keyword/key phrase’s relevance to our book and what our audience wants. Very helpful.

  2. Do you have an AMS ad for Dummies available? I literally haven’t got a clue what ‘bids’ are or do. In my world, bids take place at auctions. I can’t even start to imagine what they have to do with advertisements. 😦

    • That’s a good question. I have quite a few articles on AMS, but I’m not sure if I’ve addressed that important question yet.

      Amazon is basically auctioning advertising space, and authors and businesses literally “bid” how much they are willing to pay for that online real estate. When you run the ad, you set a bid that indicates how much you are willing to spend up to in order to have your ad shown, and the “auctioning” runs behind the scenes.

      • Oh…is that actually…legal? I mean, in a real auction you can at least see who you’re bidding against. This sounds as if it all happens behind the scenes at Amazon’s discretion.
        Anyway, thanks for explaining it.

      • It’s pretty common with internet advertising. I’ve placed ads on other sites that use a bidding system. It does seem to work behind the scenes; you get a report of impressions, clicks, and sales to help judge performance, but of course not the details for individual auctions.

      • Okay, just a few more questions. Do you bid for one single day or a range of days? Or something else entirely? Sorry, I still can’t get my head around how it actually works.

      • The bid is fixed, but you can change it at any time. (Though there can be a significant delay for changes to take effect.) Also, if you use keyword targeting, you can set different bid amounts with each different keyword.

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