As an eCommerce leader or Amazon advertiser, understanding the intricacies of Amazon bidding strategies is crucial to maximizing your advertising ROI. Whether your goal is brand awareness, conversions, or efficiency, choosing the right bidding approach can make or break your campaign's performance.
In todayโs hyper-competitive Amazon marketplace, simply setting up an ad campaign isnโt enough. Your ability to intelligently bid on keywords and placementsโwhile managing costs and outcomesโcan determine the success or failure of your Amazon advertising efforts.
In this guide, weโll break down how Amazon bidding works, explore various strategies, and offer actionable tips for selecting and optimizing the best approach for your business objectives.
What Are Amazon Bidding Strategies?
Amazon advertising operates on an auction-based system. When a shopper searches for a product, Amazon runs a real-time auction to determine which ads appear and in what order. Advertisers bid on keywords or product targets, and the highest bidder with relevant content typically wins the placement.
However, winning isnโt just about bidding the highest dollar. Amazon also considers relevance metrics such as click-through rate (CTR), conversion rate, and the historical performance of your ad. Your final cost per click (CPC) is determined by your competitorsโ bids, not just your own. If you bid $2 and the second-highest bid is $1.50, you might only pay $1.51 for the click.
Thatโs why itโs essential to understand how to balance your bids with performance metrics and campaign goals. Enter: Amazon bidding strategies.
Understanding these strategies can lead to more intelligent budget allocation and higher returns. Instead of wasting money on unqualified clicks, you can hone in on high-intent shoppers who are more likely to convert. The nuances of Amazonโs bidding algorithm reward precision, which is why adopting the correct strategy at the right stage is so critical.
Types of Amazon Bidding Strategies
Amazon offers three core bidding strategies under Sponsored Ads: Dynamic Bids โ Down Only, Dynamic Bids โ Up and Down, and Fixed Bids. Each has its strengths and limitations, and understanding how they apply in real-world scenarios is essential.
1. Dynamic Bids โ Down Only
With this strategy, Amazon automatically lowers your bids in real-time when a conversion is deemed less likely. For example, if your ads donโt perform well on weekends, Amazon will bid less during that time to avoid wasting ad spend.
ยทPros:
Reduces inefficiency and avoids overspending
Ideal for conservative budgets or when testing new campaigns
ยทCons:
May lose competitive placements
Limited growth potential in high-performing situations
ยทWhen to Use:
When starting new campaigns
For niche products or categories with unpredictable behavior
If the goal is to maintain a lower ACoS or test market response
This strategy acts as a safeguard for your advertising spend and helps maintain control, especially when youโre uncertain about market responsiveness.
2. Dynamic Bids โ Up and Down
Amazon increases or decreases your bid based on real-time conversion likelihood. It can raise your bid to 100% if the likelihood of a sale is high, or lower it to conserve budget during times of low probability.
ยทPros:
Highly adaptive and performance-oriented
Maximizes sales opportunities during peak traffic
ยทCons:
Less predictable spend
Higher risk of exceeding budget if not monitored closely
ยทWhen to Use:
High-performing or mature campaigns
For best-selling SKUs
When driving sales volume and maximizing ROAS is a priority
This is an excellent fit for advertisers who want to scale their efforts and are comfortable allowing Amazon to use conversion data for aggressive optimization.
3. Fixed Bids
With fixed bids, you tell Amazon always to bid exactly what you set, regardless of the auction dynamics.
ยทPros:
Full control and predictability
No unexpected budget spikes
ยทCons:
Misses out on real-time performance signals
Can lead to underbidding or wasted spend if not adjusted often
ยทWhen to Use:
Retargeting campaigns
Branded keyword campaigns
When testing specific ad groups with known outcomes
While Fixed Bids may seem outdated in todayโs data-driven world, they still have a placeโespecially when you want reliable forecasting and complete budget control.
Campaign-Level vs. Placement-Level Bidding
Amazon gives advertisers two key levels to optimize their bid strategy: campaign-level bidding and placement-level modifiers.
Campaign-Level Bidding
Here, you select your bidding strategy and set your default bids for each keyword or product target. Itโs your foundational bid setup.
Example: You choose Dynamic Bids โ Up and Down with a $1 base bid for the keyword โorganic dog food.โ
Campaign-level bidding is ideal for broad control, especially when working across multiple ad groups. It helps set the tone and aggressiveness for your campaign.
Placement-Level Bidding
Amazon allows bid multipliers for:
ยท Top of Search (First Page)
ยท Product Pages
ยท Rest of Search
You can apply a percentage multiplier (e.g., +50%) to increase your chances of winning premium real estate such as Top of Search.
ยทWhy It Matters:
Placements like Top of Search typically drive the most conversions
Strategic use of multipliers can dramatically boost performance without changing your entire bidding setup
Pro Tip: Use Amazonโs reporting features to analyze placement performance, and then apply higher multipliers to your top-performing placements. Many sellers find that investing more into Top of Search gives exponential returns compared to other placements.
Bonus read: Amazon SEO Best Practices: 2025 Guide for SaaS-Powered Sellers
Choosing the Right Strategy Based on Business Goals
Thereโs no universal bidding strategy for all situations. Your approach should depend on your current business goals, lifecycle stage, and product positioning.
For Example:
A health supplement brand targeting repeat purchases may find Dynamic Up & Down bidding ideal for high-intent searches, while using Fixed Bids for retargeting loyal customers. For another example, a fashion brand launching seasonal items may benefit from quick Dynamic Up & Down adjustments based on click volume and seasonality.
How to Optimize Your Bidding Strategy
Bidding is not a one-and-done setup. Continuous optimization is key to campaign success. Hereโs how:
Manual Optimization Techniques
1. Bid Testing Cycles
Run A/B tests to find the optimal bid for each keyword.
Adjust in 5-10% increments to avoid drastic fluctuations.
Identify low-performing or irrelevant keywords.
Use negative targeting to prevent wasted clicks.
3. Budget Reallocation
Shift budget toward profitable campaigns or SKUs.
Pause or downscale underperforming ad groups.
4. Search Term Reports
Regularly review actual search terms triggering your ads.
Add new high-performing terms as keywords or ASIN targets.
5. Monitor Impression Share
Track your impression share to see how often your ads appear.
Low impression share may signal underbidding or high competition.
6. Refine Match Types
Use broad match for discovery, phrase for mid-level control, and exact match for high precision.
Each match type should have its optimization routine.
Bonus read: Amazon Search Term Optimization Guide for 2025
Automated Optimization with Tools
Amazon provides basic bid suggestions, but experienced advertisers often use external automation tools that optimize in real-time based on performance indicators.
Using Amazonโs Native Tools
ยท Suggested Bids: Offers a bid range based on competition
ยท Placement Reports: Highlights performance by ad position
ยท Performance Recommendations: Recommends bid increases or decreases
Advanced External Tools
Platforms like Pacvue, Perpetua, or Sellics provide: - Rule-based bidding automation - Real-time ACoS/ROAS optimization - Custom dashboards and alerts.
Benefits of Automation: - Scalable for extensive catalogs - Less manual effort - Faster reaction to data changes - Consistent performance improvement over time
Advanced Strategies: Rule-Based Bidding
Rule-based bidding allows advertisers to set conditions under which bid adjustments happen automatically. Ideal for large accounts or complex product portfolios.
Examples:
ยท โIf ACoS > 30% for 3 days, reduce bid by 10%โ
ยท โIf CTR > 1.2% and ROAS > 3x, increase bid by 15%โ
Benefits:
ยท Responsive to performance trends
ยท Reduces manual intervention
ยท Improves long-term campaign stability
ยท Enhances control at scale
Pro Tip: Combine rules with real-time performance dashboards for maximum control. Also, ensure rules are reviewed periodically to reflect seasonal and behavioral changes in customer patterns.
Common Mistakes to Avoid
Even experienced advertisers fall into traps. Avoid these:
1. Set-and-Forget Mentality: Amazon is dynamic. Daily or weekly adjustments are necessary.
2. Ignoring Placement Modifiers: Top of Search often drives better ROI.
3. Overusing Fixed Bids: Especially in fast-moving categories.
4. Not Using Negative Targeting: Wasted clicks = wasted budget.
5. Unoptimized Bid Testing: Make data-backed bid adjustments.
6. No Segmentation: Apply different strategies to branded vs. non-branded campaigns.
7. Focusing Only on ACoS: A healthy ROAS and customer lifetime value should also guide your strategy.
8. Inconsistent Reporting: Without weekly analysis, minor issues snowball into significant inefficiencies.
Final Thoughts
Success in Amazon advertising isnโt about following a one-size-fits-all approachโitโs about choosing the right bidding strategy that aligns with your specific goals, budget, and customer journey.
From launching new products to scaling mature ones, your bidding approach should evolve with your brand. Manual bidding offers foundational control, but automation, data intelligence, and advanced strategies are key to unlocking long-term efficiency and performance.
And you donโt have to do it alone.
At SalesDuo, we help brands design and execute data-driven Amazon ad strategies that drive measurable results. With our advanced automation tools, in-depth market intelligence, and continuous campaign refinement, we make sure your advertising budget works harder and smarter.
If youโre ready to simplify ad management and accelerate your growth:
Book your 1:1 growth call with SalesDuo to see how we can elevate your Amazon advertising strategy.
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About the Author
Pavish Kumar, a seasoned digital advertising expert, specializes in Amazon Ads, Walmart Ads, and Google Ads, crafting data-driven strategies that maximize ROI and brand growth. Beyond work, he is a keen industry trendspotter, an analytics enthusiast, and a lifelong learner passionate about optimizing ad performance.
