What is a good ACoS? What is the best bidding strategy to use? How does it all tie together to reach goals and objectives? In this episode, we will give you some things to consider to help set realistic ACoS targets. We’ll also break down different bidding strategies and talk through how you can implement these strategies to achieve your goals.
What one considers to be a “good ACoS” on Amazon is going to be very different from one seller to the next. It’s largely dependent on your margin, repeat purchases, the category you're in, and the objectives for your product. While ACoS is an important metric, it could be pretty misleading if other factors aren't considered when analyzing your ad performance.
There are three types of bidding strategies: dynamic down, dynamic up and down, and fixed bidding.
Dynamic Down: In the early days this was the default bid type. This type of bid will bid down to the value specified. Scenario: If you set a $1 for your bid, it will bid up to $1. However, Amazon can decrease the bid that goes to the auction if they don’t think your product will convert well into a sale. When to use it: Use dynamic down bidding for more established products. It allows you to be aggressive while minimizing wasted spend dynamically.
Dynamic Up and Down: This type of bidding allows Amazon to either increase or decrease your bid for clicks that can convert. Scenario: If you set a $1 bid, Amazon can increase your bid above the threshold if they determine the product will convert. Simultaneously, the bid can also decrease if Amazon determines that the product is not likely to convert. When to use it: This bidding type gives Amazon a lot more control and can help maximize sales opportunities for high converting keywords, product targets or ad groups.
Fixed Bidding: With this type of bidding, Amazon will not alter your bids. Instead, bids will be set. Scenario: If you set a $1 bid, then no matter the likelihood of a sale the bid that goes to auction will be $1. When to use it: Use this strategy for new product launches. This strategy gives sellers the most control to max bids without Amazon decreasing bids due to little or no sales history.