Starting something can be the hardest part. When Amazon sellers begin their PPC campaigns, they may be confused on their starting bid. The best way to begin bidding on Amazon to starting with an incredibly high ACoS is using the Inch-Up Method.
Once you get started bidding on Amazon and collect enough data, check out this super helpful post on calculating the perfect bid with a free bid calculator.
How to Start Your Bidding on Amazon
What is up, Badger Nation? Today we’re going to be digging into something that I get asked all the time, which is, “How do I optimize my bids in a brand new sponsor product campaign on Amazon?“ Let’s talk about it.
Most Sellers Choose One of Two Methods for Bidding
Now really, the crux of this entire thing revolves around trying to find out the smallest bid that you need in order to get the most information as possible. What does that actually look like? We’re going to compare two different strategies, one called Fast and Sloppy, and the other one called the Inch-Up Method. Now the strategy that I prefer by far is the Inch-Up Method, which we’re going to talk about in just a couple seconds.
Once you figure our bidding, dicover the best Amazon PPC keyword research method.
The Fast and Sloppy Method = High ACoS
Let’s talk about Fast and Sloppy. Now the mindset of someone who’s launching a new keyword on Amazon is thinking, “How much do I have to bid here? Should I be bidding $1.00, $2.00, $3.00, 10 cents? Where do I bid, and how do I get information to determine if this is going to be a good keyword or a bad keyword?” We don’t really know the answer. We need to pay for data.
Fast and Sloppy, that kind of strategy involves bidding aggressively, maybe bidding over, overshooting where we actually need to be. Maybe day one, they spend $3.00 a bid, day two, $3.00 a bid. By day three, they realize, “Whoa, $3.00 a bid is quite a bit. I’m going to bring it back down to $1.50, which is half of three, but it’s still a pretty big on Amazon.
Now the clicks that they would get per day, maybe they end up with 10 clicks, eight clicks, 10 clicks, totalling $49 in spend and 28 clicks. They spent a bit. They got clicks, and they ended up with three conversions. That’s $60 total revenue, giving them an 81% ACoS.
Now this person may look at this keyword and say, “Whoa, 81% ACoS, I really need to do something about this keyword.” They may go, and they might cut the bids really drastically, or they might get rid of it altogether, saying, “Well, this doesn’t worth. This is an incredibly high ACoS.” The issue with this is when you repeat this process for hundreds and hundreds of keywords over the course of months, and months, and months, you end up with a lot of terms where you over spent, you overshot where you actually needed to be.
The Inch-Up Method = Low ACoS
Really the strategy that I always recommend is the Inch-Up Method, We thought a lot about this when we designed the Bids by Badger, the Bid Optimizer, inside Ad Badger. Basically the way that good PPC optimization works is we’re trying to find the smallest bid that gives us the most information. What does actually mean? That means on day one, a micro bid, 10 cents, I’m undershooting. I’m being conservative with a brand new keyword that I don’t know how will actually perform.
Day one, 10 cents, no clicks. Day two, 20 cents, no clicks. Day three, 30 cents, one click. Day four, 40 cents, three clicks, so on and so forth. I’m slowly but surely inching up my bid 10 cents or so every single day. What you start to see is zero clicks, zero clicks. A little bit more impressions start coming in. You start getting a little bit more clicks, one click, three click, four clicks, six, 10. Then at the end of about a week, I end up with maybe three conversions.
The same three conversions I just paid $50 for in the Fast and Sloppy method, I only paid $14, because I started much, much lower. I was slowly, gradually increasing in order to get data on three conversions. I ended up spending only $14 in clicks. I got 24 clicks, same $60 of revenue, except now I did it at a 23% ACoS.
The Inch-Up Method Will Avoid Over-Spending
This in isolation is savings. There are savings here. Just imagine when you repeat this process for hundreds of keywords that you should be looking at your search terms for, using tools to find additional terms, brainstorming, all of these strategies will add up if you’re overshooting, if you’re constantly overshooting where you actually need to be.
The Inch-Up Method, allows you to find the smallest bid that gives you the most information. Once you actually get a conversion, well, then you know exactly where to bid. You know exactly that if you landed at a 23% ACoS at an average CPC of maybe 60 cents, and you can actually go all the way up to 30% ACoS, then you know that you could bid a little bit more aggressively. If you overshot it, and maybe you landed at maybe a 35% ACoS, and you want to be at a 30%, that means you can inch it back down and land exactly where you need to be.
This process of Inch-Up Method, slowly, but surely saves a lot of money over the course of hundreds of keywords over the course of months, which could mean the difference between savings hundreds, if not thousands, over the course of a year.
You obviously don’t want to overspend, but a high ACoS isn’t necessarily a bad thing. Find out how to tell the difference between a good and bad ACoS.
Talk to Us About Amazon PPC
This is Mike from Ad Badger. Let me know if you have any questions. What is your starting strategy when you launch your campaigns? If you have tried something like the Fast and Sloppy or maybe the Inch-Up Method, for a new automatic auto campaign or a manual new keyword, love to hear what you have had as a result.
This is Mike. Talk to you soon.
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