Overview

Amazon’s marketplace now supports nearly two million active sellers, all competing for the same search‑result real estate. Because advertising spend influences both paid (Sponsored) placements and organic ranking, fine‑tuning bid amounts has become a must‑have skill for sellers who want to protect margins and stay ahead of rivals.

Key Points

• Bid‑CPC impact — Raising a cost‑per‑click can increase a Sponsored ad’s share of impressions, but only when the higher spend still yields an ACoS (Advertising Cost of Sale) below the product’s profit margin.
• Organic spillover — Consistently strong ad performance sends relevance signals to Amazon’s algorithm, often nudging the same SKU higher in organic search results over time.
• Relevance tiering — Sorting keywords into high, medium, and low relevance groups lets sellers concentrate budget on searches with the greatest conversion probability, cutting waste on low‑intent queries.
• Search‑term mining — Pulling the “Search Term” report uncovers buyer‑spoken language; adding those terms as exact‑match keywords improves ad relevance and can lift organic discoverability.
• Bid‑adjustment timing — Applying short‑term bid increases during peak shopping windows captures extra traffic without permanently inflating daily spend.
• Budget pacing — Aligning daily ad budgets with a product’s sales velocity prevents early‑day budget exhaustion, which can harm both paid exposure and the organic momentum that follows sales.

How Bid Optimization Works

1. Segment keywords by intent — A seller of stainless‑steel water bottles creates three keyword groups: “stainless steel water bottle” (high intent), “eco friendly bottle” (medium intent), and “gym accessories” (low intent), assigning each group a bid that mirrors its expected conversion rate.
2. Set baseline bids and track metrics — The same seller starts with a $0.85 CPC for the high‑intent group, $0.55 for medium, and $0.30 for low; after seven days the high‑intent group posts a 12 % ACoS while the low‑intent group sits at 45 % ACoS, prompting a bid cut on the latter to preserve profit.