How to Combine “Adjust Bids by Placement” and Your Keyword Bid

March 18, 2020
By The Badger

“The road goes on forever, and the party never ends.” When thinking about the topic of ad placement strategies, this lyric from Robert Earl Keen’s song captures our feelings about it. It may seem like we’ve discussed placement bids ad nauseam on this blog, but we keep finding strategies to put more money in your pocket when it comes to optimizing your placement bids.

For an introduction to adjusting bids by placement, read this guide.

Before diving into the nitty-gritty of the subject, make your life a little easier and download this spreadsheet. It will be incredibly helpful in following along with the new strategies outlined in this blog and help you put them to use immediately. For more information about using the spreadsheet, Mike and Stephen lay out all of the instructions for using it on this podcast.

Now that we’re all set, let’s dive into how to optimize your placement bids for single keyword campaigns and multi-keyword campaigns.

Single Keyword Campaigns

A key piece of info to know about adjusting bids by placement is that the feature is a campaign level setting. That means Amazon sellers can only adjust bids for campaigns, not individual keywords in a campaign.

In addition, when looking at your data for placement settings, placement data shows performance for all keywords in Top of Search, Rest of Search, and Product Pages, but it doesn’t show how individual keywords are performing in these areas. Keyword data is also flawed as it’s just a summary of a keyword’s performance across all three placements. Sellers can’t see how a keyword is performing in a certain placement.

So how can sellers control placement bids for individual keywords?

A single keyword campaign gives us the ability to customize placement settings for an individual keyword, meaning we have almost total control over our bids for Top of Search, Rest of Search, and Product Page placements for a single keyword.

If we see a situation like the one shown below, it’s clear that Keyword A and Keyword B are performing differently, depending on their placement. As long as these keywords are in the same campaign, they will be treated the same and ad spend will likely be spent inefficiently.

Now if both Keyword A and Keyword B had their own campaigns, the seller would be able to adjust bids for each placement separately and optimize their ad spend.

If you want to learn just about everything there is to know about single keyword campaigns, check this out.

When You Shouldn’t Use Single Keyword Campaigns

It goes without saying that one strategy doesn’t work for everything. So in case someone is thinking about making a single keyword campaign for every single keyword in their account… don’t. Just don’t.

There are a couple of reasons for this:

It takes a really long time to manage all of those campaigns.
Most of your keywords won’t have enough data to justify using a single keyword campaign.

For example, if you have a low-traffic keyword with ten clicks and one sale, there simply isn’t enough data to justify creating a single keyword campaign. However, a keyword with thousands of clicks and hundreds of conversions is certainly qualified for that strategy.

The Common Problem with Adjusting Bids by Placement

So we know there are some difficulties when dialing in our placement bid settings, but how do these individual “flaws” impact sellers?

To give some context, let’s say a seller looks at their placement data, where they can’t see how individual keywords are performing based on each ad placement. They will likely decide to change their placement bid settings based on the total keyword data. Sellers often assume that all keywords are getting evenly spread between the three placements, but that’s not the case.

Looking at the keyword data, it’s easy to see how a keyword is performing on a macro-level, but it’s impossible to see how a keyword performs in a certain placement.

If a seller sees this data and decides to increase their bid for a high performing placement there’re a couple of pitfalls.

Their data for high-performing Top of Search ad placements may be tainted by branded keywords
If a bid is increased for a high performing placement, every placement’s bid is increased which may skyrocket ACOS.

Because you cannot adjust bids by placement for individual keywords in a multi-keyword campaign, the only way to fine-tune the placement bids settings for an individual keyword is to have a single keyword campaign.

Calculating Placement Bids for Single Keyword Campaigns

Make sure to download the Ad Badger Placement Bid Calculator here.

So you’ve made your single keyword campaign. Now it’s time to set and modify your placement bids.

Now if you’re thinking about complex strategies such as this one, I bet you’ve already read our guide on How to Calculate a Keyword Bid (Max CPC).

What we’re discussing now is not just trying to hit your target CPC simply at the keyword level, but the ad placement level as well. Now let’s consider a couple of scenarios where your actual keyword will be different depending on your ad placement data.

Scenario 1: Top of Search and Product Pages are the best performing placements

For our first scenario, let’s say you have a target CPC of $.84 and the Rest of Search placement is the worst-performing placement in this single keyword campaign. Top of Search and Product Pages are outperforming Rest of Search by a wide margin.

Should you set your keyword bid to $0.84, thereby giving it an $0.84 bid for every placement? Absolutely not.

When making a determination on how to adjust your placement bid settings, it’s important to keep two rules in mind.

Rest of Search doesn’t have a bid modifier. Only Top of Search and Products Pages are able to be modified.
Bid modifiers cannot be negative.

So in this scenario, the base bid would be lower than your target CPC to cover our low-performing Rest of Search placements. We then use bid modifiers to boost Top of Search and Product Pages bids.

How do you calculate your bid modifier? Simply take your desired bids for Top of Search and Product Pages and find the percentage increase needed to reach that bid. The desired bid is calculated by multiplying Revenue Per Click and Target ACOS.

Scenario 2: Product Pages are the worst-performing placement

When Product Pages are the worst-performing ad placement, the formula gets a little more complex.

Since we can’t simply modify our Rest of Search bid, we have to find the weighted average of our CPC for Product Pages and the second-best performing placement.

Let’s say our second-best placement is Rest of Sales, for this example.

The formula to find the base bid would look like this:

By using a weighted average of the two, we’re able to optimize the Product Pages placement, as much as possible, without hurting our second-best placement. The result of this calculation should be closer to the desired bid for Rest of Search, and it will serve as your base bid.

For this scenario, the best-performing placement (Top of Search, in this example) is modified by increasing your base bid by percentage to reach the desired bid.

Multi-Keyword Campaigns

While the concept of single keyword campaigns may be foreign to some sellers, multi-keyword campaigns are far and away more widely used. Out of all the campaigns the folks at Ad Badger see, 99% are multi-keyword campaigns, so the importance of optimizing your bid placement settings for these campaigns can’t be understated.

What Makes Multi-Keyword Campaigns Tricky?

There are three main obstacles sellers must overcome to optimize their placement bid setting for multi-keyword campaigns. Let’s review them:

Placement bid adjustments can only be set at the campaign level and not the keyword level
Sellers cannot set negative adjustments (they can only increase bids)
Sellers can’t set adjustments for Rest of Search

Placement Bids Are Only Set at the Campaign Level

When setting a placement bid for a campaign, it’s important to realize that every keyword in that campaign will have the same modifiers applied across the board. That’s why we suggest single keyword campaigns for special or “hero” keywords.

It’s also important to note that the Top of Search placement will virtually always perform better than the Rest of Search and Product Page placements (better Click Through Rate and Conversion Rate). However, these numbers may be misleading. If you have a lot of keywords in your campaign, it’s possible that the only Top of Search placements you are getting are from branded keywords. This inflates the Top of Search metrics, leading some sellers to increase their Top of Search bid modifier and causing the performance of other keywords to suffer.

To remedy this problem, you can segment your branded keywords into a separate campaign.

Sellers Cannot Set Negative Adjustments

You can only increase bids for certain placements. Let’s look at a scenario where Rest of Search is performing poorly. In order to achieve Target ACOS let’s say CPC is $0.50 and CPC for Top of Search should be $1.00. The only solution would be to bid $0.50 and increase 100% for Top of Search. Ideally, if the target CPC for the keyword is $0.75 then this strategy should be effective, but at the end of the day it all depends on how much of the Top of Search data is contributing to CPC.

Sellers Can’t Set Adjustments for Rest of Search

Rest of Search inherits the normal keyword bid. To deal with this, we want to set a low keyword bid (which will serve as the default Rest of Search bid), and then apply bid modifiers to reach the desired Top of Search and Product Page bids. However, with multi-keyword campaigns, it isn’t quite as cut and dry.

Becoming a Master of Multi-Keyword Campaigns

From the get go, take a look at this placement bid calculator. It makes it much easier to follow along as we dive into the ins and outs of placement bid settings for your multi-keyword campaigns.

How to Think About this Process

When looking at how you ought to adjust your placement bid settings, it can be confusing. So from the outset, let’s think about your campaign like a car.

You’re driving a car with a full tank of gas until the gas tank is empty. On highways you get 20mpg. On city streets you get 10mpg. If you average 19mpg when the tank is empty, it’s logical to think most of the miles traveled were on the highway. We should view setting keyword bids in a similar way.

For example, if you have a 100% increase for Top of Search, and later find that 99.9% of your keyword data is coming from Top of Search, you should decrease your actual keyword bid by 50%.

Let’s break this down in more detail.

How to Achieve (Near) Perfect Placement Bids for Multi-Keyword Campaigns

When calculating bids, it’s important to recognize what Amazon provides sellers and that this process isn’t an exact science. There is no perfect way to do this except having single keyword campaigns for every keyword, which ,as we stated earlier, is impractical. Sellers are only given the total number of clicks for each keyword and each placement. But for our strategy, that’s all you need.

Let’s look at an example of how to use these metrics to your benefit. Say a keyword has 200 clicks and the entire campaign has 350 total clicks. You can look at these numbers and say, more likely than not, what percentage came from Top of Search. In a campaign that has 350 clicks, you can look at your Top of Search placement reporting and see that Top of Search received 175 clicks or 50% of total clicks. This is the Top of Search click-share.

You then have to extrapolate this data to determine how each keyword contributes to the Top of Search click-share. You can use each keyword’s click-share to predict where the next click will come from and bid based on that prediction.

In short, this strategy boils down to one key principle:

Your Target CPC isn’t the same as your bid.

In most cases, you’ll want to bid slightly less than your Target CPC because you will set a bid modifier increasing Top of Search or Product Pages. This lower bid, coupled with the modifier, will get you to your Target CPC.

Case Study

Upon first glance, it’s clear that the CPC for Rest of Search is too high. We fix this by decreasing the bids on these keywords and using a bid modifier to increase Top of Search.

Some of the principles we’ve already discussed still apply to this case and will always apply when using this strategy. To find your bid modifier, or % increase from the base bid, for Top of Search, use the Base Bid Formula.

Next, find the Top of Search clickshare to see how impactful clicks on Top of Search are for the keyword’s metrics. Look at total clicks and see what percentage of the total came from Top of Search. It’s as easy as that, and now you have the click-share for Top of Search.

In this case, Top of Search is worth $1.33 (RPC $3.31 X Target ACOS 40%). Revenue per Click for Product Pages is worth $1.57 and Rest of Search is worth $1.27. When multiplying these numbers by our Target ACOS, you might think we should spend $0.51 for Rest of Search and increase the bid for Top of Search by 160%. This would work for a single keyword campaign but NOT for a multi-keyword campaign.

When dealing with multi-keyword campaigns, we have to take the keywords into account.

Keyword 2

ACOS: 39%
Target CPC: $1.55

If we just set our bid at $1.55, it’s very likely that we’ll overspend on Rest of Search because Rest of Search isn’t performing very well in this case. To go back to the car analogy, our Target CPC is somewhere between our worst performing and best performing CPCs.

Remember, our Target CPC isn’t our bid. It’s what we want to spend.

What we end up doing is bidding $0.86 and increasing our Top of Search to $2.23 and Product Pages to $1.06. At the end of the day, our CPC comes out to $1.55

At this point you might say, “Why is Top of Search $2.23 all of the sudden?” It’s important to remember that these bids are for Keyword 2. This keyword has a higher than average Revenue per Click. The Revenue per Click for Keyword 1 is much lower and when these two are viewed together, at the campaign level, they meet in the middle at $1.33.

If you haven’t taken a look at the calculator yet, you may be wondering how these bids at the keyword-level are calculated. Here’s the formula:

Update: Sponsored Product Placement Bid Modifiers

Some of the content in this blog about Rest of Search may be outdated. Please check out this post for all of the latest updates and strategies!

Key Takeaways

It’s been a long journey figuring out the best way to set placement adjustments and keyword bids on Amazon, but we finally found ways to optimize both single keyword and multi-keyword campaigns.

Single keyword campaigns give sellers the ability to control their bids by placement for an individual keyword; however, there must be enough data to support separating a keyword from a multi-keyword campaign.

Multi-keyword campaigns are much more frequently used, and we now know the best way to calculate your placement adjustments for these campaigns.

The calculations and formulas shown above are the only sure-fire way to make sure your targets metrics are being obtained when it comes to adjusting bids by placement, and it’s even easier when you use our calculator.