Mastering Keyword Bidding for AMS Ads

You’ve made it to the gladiator arena of Amazon Advertising—the adrenaline-fueled world of keyword bidding. Here, the competition is fierce, but the potential rewards are monumental. What is Keyword Bidding?

In simplest terms, keyword bidding is an auction. You compete with other advertisers to place your book in front of Amazon’s vast audience. When you “bid” on a keyword, you’re telling Amazon how much you’re willing to pay for a click on your ad when someone searches for that keyword. Keep in mind this is the maximum amount you’re willing to pay. You’ll often win clicks well below your maximum bid.

Imagine you’re at a charity auction. There’s this beautiful, handmade quilt you’re dying to get your hands on. How much are you willing to bid for it? $50? $100? $500? Your bid will depend on how much you value the quilt and how badly you want it. Similarly, in keyword bidding, your bid reflects how valuable you believe a specific keyword (and the resulting click) is to your advertising goals.

The Role of Keyword Bidding in Your Amazon Advertising Strategy

Keyword bidding is an essential component of your Amazon Advertising strategy. It’s like the heartbeat of your campaign. Too low a heartbeat (or bid), and your campaign might not have the energy it needs to thrive. Too high a heartbeat, and you might exhaust your resources too quickly.

Determining your keyword bids requires a balance. You must understand the competitive landscape, your book’s market value, your advertising budget, and how all these elements interact with each other. It’s a bit of a juggling act.

After you set your bids, you’ll want to adjust them up or down based on how well they’re performing and if they’re turning a profit. The process dynamic and requires your attention and adjustment. But, hey, you’re an author. You’re used to revisions, right?

Understanding Your Advertising Cost of Sale (ACoS)

ACoS is a magic mirror that reflects the efficiency of your advertising campaign. It’s calculated as a percentage of your total sales that went towards advertising. So, if you sold $100 worth of your advertised book and spent $20 on your campaign, your ACoS would be 20%. Simple math, right?

One word of caution. Amazon calculates ACoS based on the sale price of your book, NOT on the commission you receive. A $4.99 Kindle book earns about $3.44 from a 70% commission, so keep this in mind.

And as we learned in the previous chapter, ACoS doesn’t consider read-through if you are advertising a series. In other words, it’s a highly imperfect statistic.

So why should you care about ACoS? Well, this magic mirror not only shows the efficiency of your ad campaigns but also hints at how much room you have for bidding. The lower your ACoS, the more efficient your campaign. If the number is too high, it’s a sign that you’re spending too much on advertising compared to your returns.

How high is too high?

When I advertise the first book in a series, I know my book is worth a lot more than ACoS says it’s worth. Because read-through and Kindle Unlimited page reads earn me about $40 per order of book 1, I can often profit on an ACoS of 600%!

Value your the sale of book 1 in a series before you start your advertising campaign. Then estimate the ACoS you can shoot for while still turning a profit. Calculate these numbers ahead of time.

When determining how much to bid, consider these factors:

Your Book’s Worth

Just as a fancy lobster dinner is pricier than a hot dog, the worth of your book plays a significant role in determining how much you should bid on keywords.

If your standalone book costs $2.99, spending $0.50 on a click may not be the best strategy. Why? Well, even the best advertisers usually need 20 or more clicks before they receive an order. You don’t want to spend $10 to sell a $2.99 book.

But if you’re selling book 1 of a series that is worth $30, bidding $0.50 per click and spending $10 for ever sale will make you a ton of money in a hurry. With this much wiggle room, you’re better off bidding $1 per click. Your profit margin won’t be as massive, but you’ll receive far more impressions, clicks, and sales.

The Popularity of the Keyword

Keywords are like concert tickets. The more popular the band, the more expensive the ticket. Similarly, the more popular a keyword, the higher you’ll need to bid to stand out. Words like “bestseller,” “thriller,” or “romance” have more competition, driving up the price. Long-tail keywords such “small-town romance stories” are better targeted and much cheaper.

Your Advertising Goals

Consider your goals. Are you launching a new book and want to make a splash? A higher bid might be the right move. Are you more interested in maintaining a steady stream of sales for an older title? A lower bid might suit your needs. Remember the chapter on slow growth versus fast growth?

The beauty of Amazon Advertising is it’s flexible. You can tweak your strategy as your goals change. Experiment, monitor your metrics, and adapt.

How to Experiment with Bids

When setting up your ad campaign, Amazon will provide you with a suggested bid for your selected keywords. This is Amazon’s educated guess based on the performance of similar ads. It’s kind of like Amazon saying, “Hey, based on our gigantic pool of data, this is probably a good starting point for you.”
Ignore them.

Yes, I said it.

Amazon’s suggested bids are inaccurate and often ridiculously high. Even Janet Margot, who worked for Amazon Advertising in the book division and wrote an amazing book called “Amazon Ads for Indie Authors”, advised readers to toss out Amazon’s suggested bids.

Use logic. A very competitive keyword will need a bid of $0.70 or higher to gain traction, while a long-trail keyword with low competition might carry a cost of $0.25 or lower.

Many people will tell you to bid high and adjust downward if the keyword fails to turn a profit. There’s nothing wrong with that strategy, except it might not be right for you.

If you are risk intolerant or new to marketing, start with low bids and raise them as you gain success.

Monitor and Adjust

Once your ad is up and running, monitor its performance closely. Is it generating impressions and clicks? If yes, that’s awesome. You’re on the right track. If not, it’s time to raise your bid.

Tweak your bid up or down and see how it affects your ad performance. Just remember to only change one variable at a time so you can see the direct impact of your changes.

In general, raising your bids increases clicks and impressions. Lowering your bids has the opposite effect.

Rinse and Repeat

Keep tweaking and testing until you find the bid amount that delivers the best results for your book. And when I speak of results, I’m referring to profits.

If $0.50 bids turn a profit and give you slow and steady growth, but $0.65 bids give you a lot more exposure but put your profits in the red, learn to be happy with $0.50 bids, or find a happy medium somewhere in between.