New Amazon Rule-Based Bidding Strategy 2023

Introduction to Rule-Based Bidding on Amazon

Rule-based bidding on Amazon is a sophisticated feature designed to streamline advertising campaigns for sellers on the platform. It allows sellers to set specific rules within their Campaign Manager, dictating how bids should be automatically adjusted based on their predefined criteria. This feature is crucial in managing Amazon’s dynamic and competitive marketplace, where efficient ad spend is critical to driving sales and visibility.

The primary benefit of rule-based bidding lies in its ability to maintain or improve the return on ad spend (ROAS) while minimizing the time and effort spent on manual adjustments. By leveraging this automated system, sellers can focus more on strategy and less on the granular details of bid management, enhancing their Amazon advertising campaigns’ overall effectiveness and efficiency.

How Rule-Based Bidding Works

Here’s how it works:

1. Automatic Bid Adjustments: The system automatically alters your bids in real time once you set specific rules. These adjustments are based on the performance of your ads relative to the goals you’ve set. For example, if your ads do not meet the desired ROAS, the system may lower the bids to reduce spending or increase them to capture more high-value clicks.
2. Setting Guardrails for Campaign Management: Guardrails are the predefined conditions or limits you set within the rule-based system. They act as the parameters within which the automated system operates. This includes setting minimum and maximum bid limits, target ROAS, or specific conditions under which bids should be increased or decreased. These guardrails ensure the automated system makes bid adjustments that align with your overall campaign strategy and budgetary constraints.
3. Impact on Sales and ROAS: The primary goal of rule-based bidding is optimising your ad spend return. This system helps you maximize sales and achieve better ad placement by constantly adjusting bids to the most efficient levels. This drives a higher volume of sales and ensures that these sales are cost-effective, aligning with your profitability goals. As a result, you can maintain a competitive edge in the Amazon marketplace while ensuring your advertising budget is utilized effectively.
4. Campaign Duration Before Setting a Rule: Your campaign must be running for at least 10 days before setting a rule.
5. Minimum Conversions Requirement: The campaign should have a minimum of 10 conversions in the last 30 days.
6. ROAS Adjustment Criteria: Amazon will disable the rule and revert to the previous bidding strategy if the campaign’s ROAS for the last 20 days drops to less than 30% of the ROAS over a 20-to-40-day period.

Setting Up ROAS Guardrails

Establishing Return on Ad Spend (ROAS) guardrails is critical in effectively utilizing Amazon’s rule-based bidding. These guardrails act as benchmarks to guide your ad spend towards profitable outcomes. Here’s how you can set them up:

1. Understanding ROAS Guardrails: ROAS guardrails are thresholds that determine how your ad spend relates to the revenue generated from it. Essentially, they are the target returns you expect from every dollar spent on ads. Setting these guardrails helps balance spending and earning, ensuring your campaigns are effective and profitable.
2. Determining Your ROAS Target: Analyze your past campaign performance for a realistic ROAS target. Consider your product margins, average conversion rates, and market competitiveness. A higher ROAS target means you’re aiming for more revenue per ad dollar spent, which could lead to fewer sales if set too high. Conversely, a lower ROAS might increase sales volume but with lesser profit per sale.
3. Using Amazon’s Recommendations: Amazon provides recommended ROAS values based on your historical campaign data. These recommendations can serve as a starting point, especially if you’re new to rule-based bidding or uncertain about setting your targets. They are derived from aggregated data of your past ad performance, offering a data-driven approach to setting your initial ROAS guardrails.
4. Adjusting Over Time: Your initial ROAS guardrail may not be perfect. Reviewing and adjusting it periodically based on ongoing campaign performance is essential. Market conditions, seasonal trends, and changes in your product line or pricing can all influence the ideal ROAS target. Regular adjustments ensure that your campaigns continue optimally and align with your evolving business goals.

Minimum Budget Required for Rule-Based Bidding

For Amazon’s rule-based bidding to be effective, specific budget requirements must be met. These minimum budget thresholds are essential for ensuring sufficient campaign traffic, enabling accurate metrics evaluation and enhancing the quality of recommendations. The required minimum daily budget varies depending on the marketplace. Here is the minimum budget requirement for each supported marketplace in their local currencies:

• AE: 10
• AU: 10
• CA: 10
• DE: 10
• ES: 10
• FR: 10
• IN: 300
• IT: 10
• JP: 600
• MX: 50
• UK: 10
• US: 10
• BR: 20
• EG: 50
• SA: 20
• SE: 50
• PL: 30
• TR: 50
• NL: 10
• BE: 10
• SG: 10

These budget requirements ensure that your campaigns have enough activity to benefit from the rule-based bidding system effectively.