Any Amazon advertiser worth their weight knows that setting bids is not just a set-it-and-forget-it task—you need to adjust for seasonality, implement dayparting, and adjust to changes or unexpected updates quickly. Here at Kapoq, one of the things that we most often see done incorrectly is enacting bid modifiers by placement.
Setting bid modifiers by placement allows you to put money behind whichever placement performs best for your campaign, while also avoiding wasted spend for placements that don’t convert as well.
Calculating your ideal bid modifier for each ad placement on Amazon isn’t complicated in and of itself (especially if you utilize Kapoq, which calculates it for you!), but there’s a lot of strategy and data to consider in the process. Because all of Kapoq’s automated bidding algorithms rely on a metric called Revenue Per Click (RPC), we’re going to walk you through how to use RPC to set your placement bid modifiers and get the best results from your advertising.
What are Bid Modifiers?
For a Sponsored Products campaign, there are three possible places (placements) your ad could appear on Amazon:
- Top of Search
- Rest of Search
- Product Pages
You can set a bid modifier for each of these placements, which will increase your base bid for that placement by the amount you specified, between 0% and 900%.
Bid Modifiers allow you to put more money behind the most effective ad placements, while avoiding spending more on placements that are ineffective. A core principle of RPC-based bidding is that you should try to capture as much volume as possible across all placements, while never spending more for a click than the value you expect that click to drive.
In order to do this, you need a way to calculate the expected value from each click. We’ll dive into that more further on.
Which Amazon Ad Placement is Best?
Each placement will perform differently for a number of reasons. But generally speaking, Top of Search is the highest converting placement for many advertisers.
There’s no single reason for why Top of Search is generally the top performing placement. But it makes sense—typically, you want to bid highest on the keywords that perform well for your brand, and by bidding high, you’re more likely to win Top of Search.
This loop can make it seem that the placement is what’s driving success—when in reality, it could be that you’re intrinsically bidding highest on the terms that perform well for your brand, and winning the Top of Search placements as a result of those already high bids.
Of course, showing up at the top of the search results page is also a powerful placement due to the number of eyes on your ad when it’s running. More traffic theoretically means more clicks, so don’t rule it out! It’s just a matter of being aware of your biases when looking at the data in your account.
Bottom line: don’t just assume that Top of Search is the best just because it’s Top of Search! Understanding the inherent biases in the data allow you to understand why certain ad placements perform better than others.
Bid Placements and Campaign Structure
Kapoq believes the correct way to set any bid on Amazon, including the correct way to adjust these Bid Modifiers, is to use Revenue Per Click (RPC) as your guiding metric.
Bid adjustments and placement modifiers are set at the campaign level. Because you can have multiple ad groups and targets in a campaign, when you implement a Bid Modifier to a campaign, it affects all ad groups, targets, and products within it. Therefore, the best way to effectively implement Bid Modifiers is to isolate the structure of your campaigns.
In a perfect world, you would want to isolate your top keywords into single-ASIN, single-target ad groups and campaigns in order to have maximum control over the placement bids for each of those keywords.
So, once you’ve structured your campaigns properly, how do you determine what bid modifier to use for each placement?
How to Calculate RPC to Find Your Ideal Bid for Each Placement Type
The first step to determining how to set your bid modifiers by placement is to calculate your RPC by placement.
Your Revenue Per Click is how much revenue you should expect to get from every click on your ad, on average. Finding your RPC is the right way to maximize clicks without overpaying—it’s meant to show you the maximum value you should pay for a click based on your ACoS goals.
RPC is calculated by multiplying your Average Order Value by your Conversion Rate. Your AOV, Conversion Rate, and RPC are all calculated in Kapoq for you, but here’s how you’d calculate it yourself:
So, let’s say you sell a product with a $20 AOV, and your conversion rate is 20%—your RPC would be $4.
| AOV x Conversion Rate = RPC | $20 x 20% = $4 |
Then, to find your ideal bid (the max amount you should pay), multiply the RPC by your target ACoS. So in this case, your RPC is $4 and your ACoS target is 50%, which would be $2.
| RPC x Target ACoS = Ideal Bid | $4 x 50% = $2 |
Once you have calculated your RPC for each placement type, you can now set the bid modifiers for each ad placement using the ratio of each placement’s RPC relative to your baseline. You want to structure your bid modifiers from best placement to worst placement.
To calculate your bid modifier percentages, you divide the RPC for each ad placement type by the worst RPC. For example:
| Top of Search | Rest of Search | Product Pages | |
| RPC | $4 | $2 | $1 |
So, here’s how we’d calculate your bid modifier for each type:
| RPC / Worst RPC = Bid Modifier | $4 x $1 = Bid Modifier |
And here’s how that would look all together:
| Top of Search | Rest of Search | Product Pages | |
| RPC | $4 | $2 | $1 |
| Bid Modifier | 400% | 200% | 0% |
Bid Placement Strategy
In practice, the above logic usually implies too high of a bid modifier for Top of Search placements as a result of the fact that high-conversion rate targets tend to have more competitive bids and win Top of Search auctions with higher frequency, even before accounting for bid modifiers.
As a result, some of the outperformance at the campaign level you see for the Top of Search placement often results from the set of keywords that are winning that placement rather than the placement itself enhancing conversion rates. The extent of the overstatement heavily depends on the mix of keywords in the campaign and the actual bids you are running.
As a result, we suggest using the formulas above a guide, but shading the Top of Search modifier down to account for this potential bias, especially if the implied Top of Search modifier is unusually high compared to the Rest of Search modifier.
It’s also important to make sure your bid is aligned with the bid modifiers you’ve specified, especially if you set large bid modifiers (which is common when one of the placements, often product page, substantially underperforms the other placements). If a campaign previously wasn’t running bid modifiers, adding them can cause the campaign to effectively bid much more aggressively. We suggest lowering your overall bid to the point that your average modified bid (weighted by click volume) aligns with your intended bid level.
Setting Bid Modifiers in Kapoq
Because Kapoq automatically calculates your RPC for you, it’s easy to set optimized bid modifiers within the platform.
- Structure your campaigns correctly
- Use Kapoq’s automatically calculated RPC
- Calculate & set bid modifiers for each ad type
- Repeat for each campaign
Want to see how easy it is to enact a bid placement strategy within Kapoq? Sign up for a free demo today by filling out the form below!
