Amazon PPC ads have multiple placements, including the top of the search results page, other placements, and product detail page. Obviously, the conversion rate, click rate, and cost-per-click vary greatly for each AD placement.
Without help, it's more difficult for sellers to adjust AD spending to attract traffic to the AD placement with the highest conversion rate, while reducing spending elsewhere.
But we will show you a simple formula that allows sellers to calculate and adjust bids based on AD placements.
AD placement performance gap
The following image is the actual data, which shows the performance gap between AD placements:
Sellers need to know which placement gives you the highest conversion rate (usually the top of the search results page).
As you can see from the chart above, the AD on the search results page is significantly better, with a conversion rate of 13.51%, which is higher than the other two placement at 2.95% and 1.39%.
Looking at other data, the majority of AD spending went to placements with the worst conversion rate and the highest CPC and ACOS. The product detail page’s AD cost $ 200, but the conversion rate was only 1.39%; the search results page has a higher conversion rate, while only spending $32.
That’s what sellers have to solve: allocate AD spending to better performing placements by adjusting bids.
Bid adjustment formula
For example, let's assume the conversion rate of each AD placement, such as:
· The conversion rate for the top of the search results page is 10%;
· The conversion rate for the rest of the search results page is 5%;
· The conversion rate for the product detailed page is 7%;
(The formula for calculating the conversion rate is simple: orders/clicks)
The formula for raising bids
For example, if you want to increase the bid for the placement with a high conversion rate, please calculate the performance gap between AD placements. The calculation method is as follows:
· High conversion rate/lowest conversion rate -1
Then according to the data just assumed, the conversion rate for the top of the search results page is 10%, 10%/5%-1=1(100%). A 100% performance gap means that the advertising effect of the former is twice that of the latter. It is recommended that the AD bid for the top of the search results page can be increased by $1.
Bid adjustment range for product detailed page placements is 7% /5%-1=0.4 (40%)
Then the bid for the product detailed page will be raised to $0.4.
The formula for lowering bids
If you want to reduce your AD bids for poorly performing placements, the formula is as follows:
· 1/(1+ bid increase range for the highest conversion rate placement)
For example, we need to adjust bids for the rest of the search results page.
The highest conversion rate is 10% for the top of the search results page, and its bid increase is 1.
Therefore, the bid reduction in other AD placements is 1/(1 + 1) = 0.5.
Note:
The above calculation formula is only for the bid adjustment of the same keyword in different placements. The only way to calculate the bid adjustment range for different keywords is to divide them into separate campaigns.
That's how to shift your AD spending from underperforming to best performing.