Are Amazon’s Suggested Bids Costing You Money? Here’s What to Do

Your Amazon PPC campaigns feel like a constant guessing game. You’re tweaking bids, monitoring performance, and hoping for the best. Amazon’s suggested bids pop up, promising an easy solution. But are they actually helping, or are they just draining your budget?

It’s a question every Amazon seller grapples with. Most sellers trust Amazon’s recommendations, hoping they’ll lead to more sales. But the reality is, blindly following these suggestions can lead to wasted ad spend and a higher ACOS.

In this article, we’ll break down whether you should use Amazon’s suggested bids, when they might be helpful, and how to make smarter bidding decisions that boost your profits.

Understanding Amazon’s Suggested Bids

Amazon’s suggested bids are estimates of what you should bid to win ad placements. These bids are based on several factors, including your product’s relevance, competition, and historical performance. They appear in the campaign manager, often highlighted in green, tempting you to simply click and accept them.

The problem is, these suggestions aren’t always accurate or aligned with your specific goals. Let’s explore why.

Why Amazon’s Suggested Bids Can Be Misleading

Amazon’s primary goal is to maximize its own ad revenue, not necessarily your profits. This means their suggestions might be inflated to encourage higher spending. Here’s what’s happening behind the scenes:

• They’re based on averages: Amazon’s suggestions are based on the average bid across all similar products. This doesn’t account for your product’s unique value proposition, conversion rate, or profit margin.
• They’re not always real-time: The data Amazon uses to generate these suggestions might be outdated. Market conditions change rapidly, and a bid that was appropriate yesterday might be too high today.
• They ignore your ACOS targets: Amazon doesn’t know your target ACOS. A suggested bid might drive sales, but it could also push your ACOS above your profitability threshold.

Here’s why that matters: you could be overpaying for clicks that don’t convert or generate enough profit to justify the ad spend.

Example of How Suggested Bids Can Hurt You

Let’s say you’re selling a kitchen gadget. Amazon suggests a bid of $1.50 for a specific keyword. You accept it, and your ad starts getting impressions. However, your conversion rate for that keyword is only 2%, and your average order value is $25.

Here’s the breakdown:

• Cost per click: $1.50
• Clicks per sale: 50 (100/2% conversion rate)
• Cost per sale: $75 (50 clicks x $1.50)
• ACOS: 300% ($75 / $25)

In this scenario, following Amazon’s suggestion resulted in a disastrously high ACOS and a significant loss on every sale.

When (and How) to Use Suggested Bids Wisely

The reality is, Amazon’s suggested bids aren’t always bad. They can be a useful starting point, especially when launching new campaigns or testing new keywords. The key is to use them strategically and with caution.

Using Suggested Bids as a Baseline

Think of Amazon’s suggestions as a rough estimate, not a hard-and-fast rule. Here’s how to use them effectively:

1. Start with the suggested bid: When launching a new campaign or targeting a new keyword, start with Amazon’s suggested bid.
2. Monitor performance closely: Track your impressions, clicks, conversion rate, and ACOS.
3. Adjust based on your data: If your ACOS is too high, lower your bid. If you’re not getting enough impressions, increase it gradually.

Remember, the goal is to find the optimal bid, not necessarily the highest one.

Example of How to Optimize from a Suggested Bid

You launch a new campaign with Amazon’s suggested bid of $1.00 for a set of keywords. After a week, you see the following results:

• Impressions: Good
• Clicks: Decent
• Conversion Rate: 5%
• ACOS: 40%

Your target ACOS is 30%. To improve your ACOS, you lower your bid by 10% to $0.90. After another week, you see:

• Impressions: Still good
• Clicks: Slightly down
• Conversion Rate: 5%
• ACOS: 32%

You’re getting closer! Continue to adjust your bids incrementally until you reach your target ACOS without sacrificing too many impressions.

Smarter Bidding Strategies for Long-Term Success

Relying solely on Amazon’s suggested bids is a recipe for disaster. Here are some proven bidding strategies that give you more control and drive better results:

Rule-Based Bidding

Rule-based bidding involves setting up automated rules that adjust your bids based on specific performance metrics.

• Example: “If ACOS is above 30%, decrease bid by 5%.”
• Benefit: Automatically optimizes bids based on your goals, saving you time and improving efficiency.
• Tool Recommendation: This is where AdLabs really shines. Our software lets you set up sophisticated rules based on ACOS, conversion rate, and other key metrics, so you can automate your bidding strategy and maximize your profits.

Dayparting

Dayparting involves adjusting your bids based on the time of day or day of the week.

• Example: “Increase bids by 10% during peak shopping hours (6 PM – 9 PM).”
• Benefit: Captures more sales during periods when your target audience is most active.

Placement Targeting

Placement targeting involves adjusting your bids based on where your ads are shown (e.g., top of search, product pages).

• Example: “Increase bids by 20% for ‘top of search’ placements.”
• Benefit: Increases visibility in high-converting placements.

Utilizing Machine Learning

Machine Learning is a great way to automate and optimize your Amazon PPC campaigns, as long as you do it right. One AdLabs user said:

“Having tested the likes of Pacvue, Perpetua, Skai, Helium10, you name it, none can compete with the level of sophistication behind the bidding algorithm at AdLabs. I’ve saved COUNTLESS hours managing my bids, but hitting ACOS targets and growing my Amazon sales has been much, much easier.”

Conclusion

Amazon’s suggested bids can be tempting, but they’re not a substitute for a smart, data-driven bidding strategy. By understanding the limitations of these suggestions and implementing your own optimization techniques, you can take control of your ad spend, improve your ACOS, and drive sustainable growth. Don’t leave your success up to chance – take charge of your bidding strategy today!

Key Discussion Points from the Episode

Here are some of the most valuable insights Andrew and Stephen shared during the full episode discussion:

In Amazon PPC campaigns, Amazon will show you a suggested bid for all of your keywords and product targets. 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.

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. Alexa, play that Amazon ads podcast. Which one would you like to hear?

The best one. Okay, now playing that Amazon ads podcast. These gentlemen are completely changing their game.

After listening to that Amazon ads podcast, my ads are finally profitable. I also heard they’re pretty cute.

Love it. 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 keywords were appearing on Spanish search terms were appearing on English keywords. So then a user went to go negate 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 intenting exact. So yes, if you tried to negate a specific plural or a 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 to deal with the cards we’re dealt. Yep.

It just is what it is sometimes with Amazon. But thanks so much for tuning in. Hopefully you learned a lot about suggested vids, max CPCs, all of that type of stuff.

We’ve got content coming out. As Steven mentioned, the master class 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.

This article is based on Episode 119 of That Amazon Ads Podcast. Subscribe for weekly Amazon PPC strategies.