A bid is the maximum you are willing to pay for a single click on a keyword or product target in a Sponsored Products, Sponsored Brands or Sponsored Display campaign. Amazon runs a second-price style auction, so the actual cost per click is usually below the bid, set by the next competing advertiser. Three settings then adjust the bid before the auction: dynamic bidding, where Amazon can lower the bid (down only) or raise and lower it (up and down, by up to 100% for top of search) based on the likelihood of conversion; placement modifiers, which add a percentage for chosen placements; and, in some campaign types, rule-based bidding toward a target.
Why it matters
The bid is the one number that decides whether you appear, where, and at what cost. Too low and the ad never enters the auction on a competitive term; too high and the cost per click outruns what the click is worth. Because Amazon's adjustments can multiply a bid several times over, a $1.00 bid with up-and-down bidding and a 100% top-of-search modifier can cost up to $4.00 for a top-of-search click, which surprises sellers who read only the base figure.
The right bid depends on the job. A keyword being pushed for organic rank justifies a bid above break-even for a defined period. A keyword in a profit campaign should be bid at or below the value of a click, which is the conversion rate multiplied by the profit per order.
What moves it
- Conversion rate and price, which set the value of a click.
- Target ACoS, which converts that value into a maximum bid.
- Competition on the keyword, which sets the floor for winning impressions.
- Placement performance, which decides where the modifier should go.
- Data volume. Bids moved on ten clicks of data move on noise.
How we use it
Bids are set from the job each keyword does, ranking, profit, discovery or defense, with a starting bid derived from price, conversion rate and target. They are reviewed weekly against the Search Term and Placement reports, moved in steps rather than jumps, and only when there is enough data to trust the change. Every bid change is logged in the report with the reason.