#119 - Should You Use Amazon's Suggested Bids in Amazon PPC?

#119 - Should You Use Amazon's Suggested Bids in Amazon PPC? Speaker 1: In Amazon PPC campaigns, Amazon will show you a suggested bid for all of your keywords and product targets. Speaker 2: Amazon's suggested bid will give you a range. There is a low end, a high end, as well as a midpoint within that range. Speaker 1: But should you use it? Does it even matter? And is Amazon purposefully inflating suggested bids to steal your money? We're breaking it all down today on That Amazon Ads Podcast. Speaker 2: Alexa, play That Amazon Ads Podcast. Unknown Speaker: Which one would you like to hear? Speaker 2: The best one. Unknown Speaker: Okay, now playing that Amazon ads podcast. These gentlemen are completely changing the game. Speaker 1: After listening to that Amazon ads podcast, my ads are finally profitable. Unknown Speaker: I also heard they're pretty cute. Speaker 2: Alright guys, this episode came from a YouTube comment on one of our videos. And so as a reminder, we are answering your questions, sometimes even becoming full podcast episodes if you leave a comment asking a good question on our videos. So make sure you like, subscribe, comment, all those good things. But before we actually dive into this episode, you may have also seen A few masterclass videos have gone live on our channel. So if anyone doesn't know, Andrew and I last year spent way too much time creating That Amazon Ads Masterclass, everything you need to know about Amazon PPC to take you from zero to hero within just one week through this masterclass course. And we are now starting to release the first one third of it. So the course comes in three different modules, three main sections. Beginner, intermediate and advanced stage. So we are releasing all of the beginner videos for free on our YouTube channel. So definitely make sure you see those and subscribe. So you're capturing those videos as well. Andrew, any questions or any additional comments to add to that? Speaker 1: I was just going to say, I'd be surprised if you can get through the entire masterclass in one week. So take your time going through it. There's a lot of info in there, but excited to have that out for everybody. Speaker 2: It's about 30 hours of content. So I was thinking if you can get through that first module. Speaker 1: You get through that first module and maybe a week, but. Speaker 2: All right. So here is our YouTube comment. The user says, first of all, thanks for the content. Well, thank you. FYF for a 6-2. Feels unreal to have it for free. I agree. But this video raises a couple questions for me. Number one, I have one keyword which is giving me bad ACOS and you suggest lowering the bid. But it can't be lower since I have a 75 cent bid and the suggested bid is $2.55 with a range, low end being $1.91, high end being $3.62. What should I do here? Is it relevant? Phenomenal question. I'm just going to like rephrase it and then let Andrew go on to the second part. But he's basically saying the bid is already far below the suggested bid range, even the low end of that suggested bid range, and the keyword isn't performing, the ACOS is bad, so should he lower it even more? Is he just going to lose all visibility? What do we do in that context? Andrew, what's the second part of his question? Speaker 1: Yep, he goes on to say, in my exact manual campaign, I have one keyword that activates three different search terms due to the plurals and prepositions, and one of them gives me really bad results. He's trying to basically negate one without affecting all the others. He's tried negating it once and it ended up affecting all of the other search terms that were coming through that exact match keyword. So we'll dig into figuring out, you know, how to handle that and just uncovering that Amazon's exact match is no longer exact match. Speaker 2: All right, so great questions and there's really to that first question. about the bids and the CPCs. There's really two different components going on in here. And so the first conversation that we need to have is actually around, well, we need to define Amazon's suggested bid and dive into that a little bit. And then we also need to discuss the difference between Amazon's suggested bid and what your actual CPC are, because your bid and your actual CPC are two different things. Your bid could be 70 cents, but we don't know if he has modifiers on top of that. Is he doubling his bids for top of search? Is he doubling his bids for a specific audience, for B2B placements? All of those are gonna stack. He could be ending up Getting up to like a $3, maybe even a $4 actual CPC, which could be why that could potentially be why his ACOS is so high is because his CPC is so high and he's actually bidding above the high end. So you do need to kind of understand there's a difference between the bids and the actual CPCs, or even what we call the max potential CPC, which is just if you are fully charged, All of your modifiers to the absolute max. What would your max potential CPC be? But for that, let's just I'm going to pull up a screenshot here. And here we have the suggested bid and bid range definition from Amazon. So let's just first define our terms. The suggested bid and bid range are calculated from a group of recent winning bids for ads that are similar to yours. This is very important to keep in mind. It's similar to yours, meaning similar to your specific products, not similar to you, not similar to all of the products in your catalog, but this one specific ad, this one specific SKU that you are advertising. The bid range is a range of winning bids for most ads in your Product category. That kind of just said the same sentence again. Suggested bids provide an estimate of bids that have been used by other advertisers for products similar to yours. The purpose of the bid range is to help you get started with advertising. So they're kind of saying, you know, just for your starting bids, this is a good kind of proxy to let you know other. So let's just say you're selling it like whey protein, right? You're selling a whey protein chocolate powder. You've got some, a lot of other competitors that are selling whey chocolate protein powder, and they're all bidding on the keyword chocolate protein powder. And this is just, you know, if you have no data, it's like, well, how much does this cost? What's the average CPC? You know, because you could start at 25 cents and inch your way up from there. But if the average bid that competitors are paying is five dollars, it's going to take you months before you're like inching your way up to the five dollar range. So Amazon's giving you some information saying, hey, you should probably start at five bucks. However, if you have a specific objective in mind, we recommend entering a bid that enables you to meet your strategic goals, meaning if ACOS needs to be below a certain level, maybe don't use the suggested bids. So adjust your bid based on campaigns performance and then yeah, go ahead. Speaker 1: Yeah, so they really should just call these suggested CPCs because they're not the actual bid that we're actually shooting for. We're trying to figure out and the suggested bid that they're actually giving us is a range of the max effective CPCs of other competitors, other products that are advertising on that actual Keywords. So you got to take all that into consideration, factor in the modifiers like Stephen was saying to net out to like what your actual max effective bid or your max CPC would be and consider all those other variables within it to arrive at that. So Amazon just giving you Looking at the competitors in the space on that keyword, other products similar to yours and basically saying, here's what they're bidding. Here's the range of what they're bidding and the market price for CPCs for ad placements on certain keywords, on certain queries, and then giving you a little bit of information so you can gauge, you know, about what it's going to cost for you to get placement on these keywords. Speaker 2: Here's trivia quiz opportunity time for the for the listeners and then try to answer this yourself. But I'm just going to throw this question to Andrew. Andrew, is your actual CPC typically higher or lower? Let's talk a little bit about Amazon PPC. How much higher is your bid than your bid? Speaker 1: The actual CPC in most cases is going to be higher than the bid if you are leveraging a strategy that manipulates placement modifiers to allocate spend accordingly. So if you're not utilizing placement modifiers, your bid and your CPC are going to be a lot closer to one another because there's no modification to boost bids. If you have dynamic up and down on, that's another consideration where your CPC might actually be a lot higher because you're allowing Amazon to bid more. If you're not leveraging modifiers, if you're using fixed bids or dynamic down only, you will generally see that your bids need to be lower to hit the target ACOS on the worst performing placement and then increase the CPCs on other placements. Speaker 2: And is your CPC, your actual CPC, typically higher or lower than your max potential CPC? Speaker 1: Always lower. Speaker 2: I'm actually just going to switch tabs over here. We're going to switch over to AdLabs. I'm going to show you guys something cool. Oops, wrong tab. So this is a very new feature, and this is going to blow your guys's minds with understanding these aspects, because Amazon might use bid, like bid and CPC interchangeably, but they are not the same. And so we need to be very clear with these definitions because your bid is different from also your historical bid. That's the first thing you got to distinguish. Your current bid might not be like, it's like, why was my ACOS so high? The bid's already at $0.07, but the ACOS was like 200% for the last two weeks. Your bid could have been at $20 for the last two weeks, and you just changed it now. So whenever you're analyzing just the current bid, It's already a little bit of a fallacy because it's the historical bid that matters. And then you also have to look at what the actual CPC was during that time frame, and also what the max potential CPC was during that time frame as well. So let me show you what we're talking about with AdLabs recently brought in the suggested bids into the targeting tab and search terms and all these things. But there's also a view bid history, which if we click this, Look at what we're going to get. I'm actually going to clear this out. Look at this beautiful history showing three core lines here. This purple line at the bottom is your actual bid, which is the bid on this keyword. The keyword, as you can see here, is tools. So it's just a super generic, super offer funnel keyword so that we're not giving away too much information about what this product or category is. Something related to tools. This is our top of funnel keyword campaign strategy. So you can see this bid has been around 43 cents, but the max potential bid has been around a dollar because we have some day partying, top of search, product page, like these are all the possible increases that we have on here. If I hover over this, you can see where those increases are coming from. Product pages has 100% increase, day partying has a 15% increase at its peak, at its highest moment during, you know, whenever that increases. So all together, this could cap out at a 99 cent CPC, but the actual CPC, this blue line, is going to be somewhere between your bid and your max potential CPC. Sometimes it could even dip below, right? Sometimes the actual CPC could go below your bid because Amazon is a second price auction, which means you're only ever going to pay one penny more than the second highest bidder. So who knows what happened on this day? But Andrew, any insights on this before we start talking about like suggested bids and actually looking at how this spend and impressions moved around? Speaker 1: No, this is awesome. I love this view. And it's kind of crazy. It's such a small thing that you think a lot of softwares would have done this. I haven't seen this anywhere where you're actually able to track how Amazon is suggesting bids throughout over time. And then also being able to see like how your performance is changing in tandem with that. It's really insightful. It's interesting to see how your overall CPC trend is kind of just trending downward in this period that we're looking at without any bid changes or anything like that. And you can see with the suggested bid cloud that we have now, you can see that the suggestion, the competitors are likely just kind of down bidding slowly. Maybe it's a period of seasonality or something like that, where you can actually see what's happening in the broader market, what other competitors are doing based on that. Speaker 2: Yeah. Phenomenal observation there, Andrew. So just to reiterate, Andrew was saying, I'm going to remove this bid. So I'll throw it actually live in there. So the actual CPCs have been trending down. I mean, we were paying as high as you see that blue line, 77 cents. Peaking around 67 cents and now we're only peaking around 56 cents. So like these CPCs have fallen by like 25 to 50 percent without any bid changes. The bids have stayed the same, top of search, everything stayed the same on this campaign. It's just a top of funnel kind of just supposed to be always on driving a little bit of traffic at whatever. So but why have these CPCs naturally come down? Well, as Andrew pointed out, Amazon suggested bids seems to have come down. Now, lots of things to observe about the suggested bid range. Like Andrew said, you cannot get the suggested bid history in Amazon. It's only going to show you the suggested bid for that day, which you can see from day to day. These suggested bids can vary wildly because especially around deals, events, prime day, whatever, all those suggested bids are going to be cranked up. All these types of things and even in the API, there's no history on the suggested bids. So for the last couple of months, AdLabs has actually been collecting and storing the suggested bid history. So we pull the suggested bid every single day and we store it to our database. So you can look back on the last like two months, three months or whatever and see all of this history to really understand what's happening. Seeing that the suggested bids have decreased, another observation is that my max CPC has always been below the actual suggested bid range. Sometimes it's a little bit in the low end, but it's pretty much always below. And if we look at what's actually happening to spend here, let's look at what happened to the spend. So the spend started going ham in the last few weeks. And there's a couple of reasons for that. Part of it could just be seasonality. I happen to know that this product was kind of like low on inventory and it started coming back in inventory. And so that's going to be part of it. Now that the inventory levels are better, we're probably getting better visibility. But also it could be that competitors were pulling back on their bids, which is why we were getting a lot more visibility or a combination of both those things. Speaker 1: One thing on that which is really important to note is that the suggested bid for each individual product or maybe even your competitor's product is going to vary based on a variety of factors. So like if your product is low on inventory, Amazon has that as a data point in the system. Perhaps they're actually suggesting your product has bid a little bit more aggressively because it's going to cost you more to earn that sale because you're low on inventory and the lead times are high. And now that you're in stock, you have much better conversion rates and you're maybe looked at more favorably by that The auction or whatever. And so that could potentially factor into it as well. So the suggested bids are going to vary on keyword to keyword and specific product to keyword relationships. So you could have, even within the same parent ASIN, different child ASINs and the suggested bids for each of those keywords for each individual product is going to be different. So, and not always, but a lot of times it is, that's specific to that relationship. So that's something else to consider as well. Sometimes, you know, depending on your product positioning, Amazon could give different suggestions based on a lot of different factors. Speaker 2: Yeah, and in this case, you can see that our conversion rates have really started going crazy as well. We're getting up to like 30% conversion rates. We are running some deals for, you know, the Turkey 10, Black Friday, blah, blah, blah, our products back in inventory. So in this case, why this spend started happening, why we're getting a lot more impressions, visibility, clicks, all this kind of stuff is not super connected. Like there were no bid changes. It's more of other aspects going on. And this actually raises a phenomenal point, which is what actually is Amazon using for these suggested bids? This is what Andrew was kind of starting to say. It's not purely the market price for that keyword. And I'll show you what I mean. If I look at, I'm looking at all, these are all the same tools, keywords, right? And these are all phrase match minus this one. Can I deselect this one? I can deselect that row. Look at how these suggested bids change. Tools phrase match, $1.19, over here it's $1.38, over here it's 86 cents. Like, wait, what? Like, how is this an 86 cent? So, like, why is this range, like, 33% cheaper than this one or this one? And then, like, over here it's $2, now it's a broad match, but if we come down to this exact match, why is this exact match 39 cents and why is this one a dollar? Why is this exact match More than 50% cheaper than this keyword. It's almost like 75% cheaper. Why? The answer, these are two different ad groups, right? You can't have, obviously, it has to be two different ad groups because you can't have the same keyword as an exact match in the same ad group. So it's clearly two different ad groups. These are two different products. So the suggested bid is not purely based on that keywords data alone. Amazon is also looking at your product and your product keyword quality score, sometimes called your ad quality score, which is how good is your product for this keyword. And to that suggested bid, which is further reflected in your actual CPC, by the way, there's going to be a slight premium or discount On your actual keyword CPC or where your bid needs to be before you can get visibility based on that product's strength for that keyword in particular. What determines that product strength is going to be number of reviews, your sales velocity, your BSR, all these types of things, but also what's your conversion rate on that product. And probably the most important metric to Amazon is do you have low return rates because you're making Amazon's job easier. So if you have a great product with a ton of really good reviews, really low return rates, then you're going to find that you're naturally getting lower CPCs for that keyword than perhaps a brand new product launch that has zero reviews, getting lots of returns, things like that. Speaker 1: Very well said and I just want to reiterate that this is a range too, like it's not necessarily the, you know, Truth, like some of these CPCs you look at compared to the suggested bids, you can see some of the CPCs are quite a bit lower than the even the lower range of your top one right there. The low end of the range is 89 cents. Your actual CPC is 53 cents. So just just to say that the range isn't like you're not going to get any impressions unless you're in this range with your max CPC. You can be below the range. It's going to vary day to day and, you know, depending on the product. But, you know, Just all that to just say that your CPCs can be below that range and still get visibility. You don't have to be within that range or anything like that, all things considered. But it is a good reference point for starting settings, your starting bids. If you're getting into a new category, new ads, things like that, and you have no insight into the category gives a good reference point. And then from there, I like to use kind of the overarching account benchmark averages for placement settings, those initial placement settings. And then I kind of factor that into those initial starting bids. So then that max effective CPC kind of lands within that suggested bid range at the end of the day, whenever you factor in all the adjustments and things like that. Speaker 2: Yeah. And one other thing just to note here on this example, I mean, So this is saying the suggested bid is around $0.39 for this specific keyword in this specific ad group, which is a single product ad group. So it's saying what's really the difference between these two is the suggested bid for two different products. So it's saying I should be paying $0.39. I am bidding $0.39. You see that with my modifiers on here, I'm actually potentially spending up to $1.11. My actual CPC is averaging around $0.41 and I'm getting 28 clicks with a significantly lower bid on this one and a significantly lower max potential CPC. With a $0.41 actual CPC, I got 28 clicks, was able to spend $12 on this. But compared to a weaker product and also potentially a more expensive product, that's another big thing. You're going to see, if you have two variations within the same parent with the same number of views, everything, but one is just a higher ASP, average sales price, than the other, Amazon's naturally going to charge you a higher cost per click because they're understanding it's a higher priced product. You probably have better margins on it. We are going to charge you more for this more expensive product. That's a very natural thing. So that's why it's usually a good idea to sell your cheaper products, to really promote your cheaper products because you can get by with lower CPCs. And then you're actually hoping people will upgrade to the more expensive products. You're actually capturing a higher AOV sale, but you're driving that traffic at a lower CPC because you're promoting the cheaper SKU. So that's a very helpful piece of wisdom for you. But this other one has a 42 cent bid. Max potential CPC of $1.60. I'm paying twice the CPC, getting up to 80 cents here. And yet I'm not getting nearly as much click traffic or visibility. So the difference between these two is the products. One of these products Amazon likes more than the other. Probably because it has more reviews. Fun fact for all of our AdLibs users, if you click go to and you go to the advertise product tab, it will take you specifically to the ads for those products that are within those same ad groups. But I can't show you what these products are, so I just reviewed these products. The one with the cheaper CPC is actually the more expensive product. It has an average order value of around $35, whereas this other one has an average order value of $19.99. But the cheaper product is being charged more money just because it's a newer product. It's a stronger, it's a weaker product. It does not have as many sales. This one has around 700 reviews. It's averaging over four and a half stars. So it's great. It's a great product. But Amazon doesn't like it for this keyword necessarily, versus the other product has 1500 reviews, also over four and a half stars, but just a lot more volume behind it. So the other one just has better sales in general, better reviews, probably lower return rates. So, Amazon likes this one more, so Amazon is giving us a discount and that's why I can actually get more traffic at a lower CPC. So, going all the way back to our friend's lovely comment and question here, if you're already bidding 75 cents, when Amazon suggested bid is like double or triple or quadruple that, The biggest question that you just need to answer is basically, are you able to get visibility at this keyword level? Because if you can, then it's totally fine. But you just want to monitor like, you got to keep in mind your actual CPC, your max potential CPC, and you're just trying to, the suggested bid is just a helpful range. But you see plenty of examples here where my actual CPCs, like this one here, I'm bidding 36 cents, max possible of 50 cents, I'm actualizing somewhere, You're always going to actualize somewhere in the middle between your bid and your max. So I'm actualizing around 33 cents, but I'm still driving some traffic on like a pretty upper funnel keyword, 46 clicks here. So I'm well below the suggested bid range. So you don't need to treat these things as gospel. Actually, this one was an even better example because this one's really spending a lot. So Yeah, this one is really spending a lot, especially recently. Could also be that our competitors went out of stock or something, or people who were previously bidding aggressively on this went out of stock, so that came down. Who knows? Millions of factors to consider, so I just wouldn't put too much weight into the suggested bid or your actual bid and just consider big picture. Speaker 1: Yeah, and one final note on this, you know, we didn't have all the context in the question. But one thing to also consider is that maybe you've downbid if it's a broad or a phrase match keyword, perhaps the suggested bid is a lot higher. And through bad performance, you've, you know, downbid things. But it could be that if you're if it's a broad and phrase keyword, it could be that there's just problem search terms coming through that have resulted in, you know, the poor performance of that keyword that you might need to go in and potentially Clean up. So that'd be one other thing to also look at to consider if you if you're looking at the suggested bids on more expanded match types rather than just exact match. But that leads us into the next phase where we're going to talk a little bit about that and analyzing the search term specifically on exact match and some of the developments happening there within Amazon. So let's dive into it. Speaker 2: So Andrew, to repeat this second part of his question, he was saying, I've got a keyword. I presume it's an exact match. Yeah, it's an exact match keyword. And let's just say it's, let's just say it's tool. Okay, just tool exact match. But he's getting three different versions, including plurals and prepositions. So that could mean tool, tools, or like, maybe if it was longer words, like if I was saying, tools carpenter, then there could also be tools for carpenter. In addition to Tool for Carpenter, Tool Carpenter. Speaker 1: Yeah, I've seen Amazon even adding words like you said four and two and all that type of stuff, but even other words too. Like I had branded terms showing up in my single keyword exact match non-brand keyword targeting campaigns. Coming through exact match, throwing in the brand term there. Speaker 2: That must have been sponsored brands, right? Speaker 1: No, sponsored products. Sponsored products. Yes. So Amazon has taken exact and basically allowed a lot more, you know, deviation with what the search terms could potentially be there. And it's creating some problems. So in this particular problem, it's one of the search terms in there is causing an issue and you're trying to negate it, but it's It's negating the exposure on all of the other search terms as well. So Amazon's kind of treating all of them as like a group, essentially. And so, unfortunately, there's not a whole lot that you can do about this at this point in time, that I know of. I've tried it and it doesn't really work. I would just suggest that you leverage negative keywords anytime you're setting up exact match campaigns, primarily going through negating branded search terms, things like that, just to make sure from the onset that those things aren't showing up. So if you, you know, Instead of later down the line having to come through and you've got all this performance kind of built up around this campaign, then you go in and negate kind of where all that sales history and performance was coming from. So I don't really have an answer or solution for you here. It is just kind of the state of things currently. But Stephen, do you have any recommendations for him there with how he might be able to essentially solve that? Speaker 2: Yeah, I've got a great meme somewhere. Unknown Speaker: Love it. Speaker 2: All right, here is the image for the listening audience. It says it's the panic. I think his name is Meme Man, but it says Spanish terms are appearing on English keywords because people were seeing this. Like even with these exact match keywords, Amazon changed it where it's not exact is not exact anymore. They call it exact intent, which like intent itself is very vague. So great, we've lost all of our precision on exact match. So Spanish search terms were appearing on English keywords. So then a user in our Discord went to go negate the Spanish search terms. But then now none of the English search terms appear anymore because the negative exact is also negative intending exact. So yes, if you try to negate a specific plural or singular variation or preposition or a different language, you're going to just kill that keyword. So short answer here, nothing you can do about it. We just got a deal with the cards we're dealt. Speaker 1: Yep, it just is what it is sometimes with Amazon. But thanks so much for tuning in. Hopefully you learned a lot about suggested bids, max CPCs, all of that type of stuff. We've got content coming out, as Stephen mentioned, the masterclass coming out, new content every week. So make sure you like and subscribe. Come back next week for another one. We'll see you there. Peace out. Unknown Speaker: I've got a meme here.