Amazon Sponsored PPC Auction Process

1: Understanding the Auction Dynamics:

 Amazon runs an auction when customers search for a specific product or
keyword.
 Winners of the auction get different placements, and these placements are not
solely based on bid amounts.
2: Factors Influencing the Auction:
 Bid Amounts: The bid is a crucial factor. Higher bids increase the chances of
better placements for your product.
 Relevancy: Amazon considers the relevancy of your product to the customer's
search. Unrelated products are less likely to be shown.
 Example: If a customer searches for "iPhone 12 cover," Amazon won't
show unrelated products.
 Example: Under the same search, "iPhone 12 cover," if an advertiser bids
for "iPhone charger," a higher bid may be required due to the relatedness
of the products.
 Conversion Rate and Total Sales Value: Listings with better conversion rates
and higher sales are favored by Amazon.
 Example: A product with a high conversion rate is more likely to be shown
than a product with a lower conversion rate, even if the bid is lower.
3: Examples Illustrating the Auction Process:
Consider the scenario where two sellers are competing for the keyword "seller" to
showcase their products on Amazon.
 Seller 1's Bid: Seller 1 decides to bid $1.5 for the keyword "seller," expressing a
willingness to pay this amount for each click on their product.
 Seller 2's Bid: On the other hand, Seller 2 places a bid of $1.2 for the same
keyword, indicating a slightly lower willingness to pay per click compared to
Seller 1.
Now, while bid amounts are fundamental, it's important to note that the Amazon auction
process doesn't solely prioritize the highest bid. Other factors like relevancy, conversion
rates, and total sales value come into play.
 Relevancy: If Seller 1's product is more relevant to the customer's search query,
such as offering a diverse range of sellers' products, Amazon may give it
preference over Seller 2's bid.
 Conversion Rate and Total Sales Value: Suppose Seller 1 has a higher
conversion rate or overall better sales performance compared to Seller 2. In that
case, Amazon might favor Seller 1's product, even with a higher bid from Seller
2.
Therefore, the outcome of the auction isn't solely determined by bid amounts; it's a
nuanced process that considers multiple factors to ensure a relevant and satisfying
shopping experience for Amazon customers.
3: Second Price Auction:
 The winner of the auction (first placement) pays slightly more than the second-
highest bid if their ad is clicked.
 This is known as a "second price auction," ensuring fair pricing for the winning
advertiser.
 Example: If Product A wins the first placement with a bid of 75 cents, they
might pay 76 or 77 cents, slightly more than the second-place winner.

Tip: Understanding the nuances of the Amazon Sponsored PPC Auction Process
involves considering bid amounts, relevancy, conversion rates, and the second price
auction mechanism.
By optimizing these factors, advertisers can improve their product placements and
maximize the effectiveness of their Amazon advertising campaigns.