Amazon has provided sellers with more options to control their bidding strategies within Seller/Vendor Central. While it is great to have options, this can become confusing, especially when paired with Flywheel's Bid Automation.
Recommended settings with Flywheel Bid Automation:
Campaign Bidding Strategy: Dynamic Bids - Down Only
Adjust Bid by Placement: 0%
What are the 'Campaign Bidding Strategies' in Seller/Vendor Central?
Amazon has released 3 different types of bidding strategies, available for use on both auto and manual campaigns:
Dynamic bids-down only *RECOMMENDED*: Bids are lowered based on likelihood of conversion. If it’s detected that, based on the buyer’s shopping trends the ad is unlikely to convert, the bids will be adjusted down. This creates a positive experience for both the buyer and seller because we don’t want to place ads that are unlikely to convert. This is Amazon's original algorithm and recommended to be used with Flywheel automation for best results.
Dynamic bids-up and down: Bids change (up or down) based on likelihood of conversion. Bids will be raised (maximum 100%) when your ad may be more likely to convert and lower yours bids when less likely to convert.
Fixed bids: Bids stay static. Amazon will use your exact bid and never make any adjustments based on placement likelihood. Bid automation will not run with this option enabled.
What does this look like in Seller Central?
You can assign the campaign bidding strategy to a particular campaign within the 'campaign settings' in Campaign Manager. The default setting is 'dynamic bids - down only'.
What are the impacts of using Dynamic Bidding?
The risks and rewards of Dynamic Bidding vary based on the strategy you implement.
Dynamic bids-down only
This is the default behavior for any campaigns created prior to January 2019. Using this strategy means your bids will function as they always have. This strategy works best with Flywheel's bidding algorithm.
Dynamic bids-up and down
This strategy allows Amazon to increase your bids by almost 100%, this can quickly result in overspending and an increase in ACoS. This strategy can be effective when launching a product, if you're goal is to increase exposure.
Sellers implementing this strategy must be tolerant of spend and make sure they are closely monitoring ACoS to make sure they are getting corresponding growth for their spend. This strategy is not recommended for use with automated Flywheel bidding.
We recommend regular bid changes for the most efficiently run campaigns. Implementing an automated bidding algorithm that makes performance-based changes is recommended over leaving bids static.
What is 'Adjust Bids by Placement'? (Replaces Bid+)
Placement-level bidding allows you to increase your bids by 0-900% to get placed Top of Search or on Product pages. This can quickly result in overspending and an increase in ACoS. For example, if you set a "booster" of 300%, when Amazon deems your ad to be eligible for these placements, your bid will be increased by 300%, making a $1 bid, now $4.
It is very important to consider your margins and objectives when deciding whether or not to use this option. If you do choose to use this feature with Flywheel bid automation, you should expect to see an increase in ACoS.