How to Build Ads Dynamic Bidding
Amazon Sponsored Products (ads) has an ad bidding product called “Dynamic Bidding.” It works by bidding up to 200% of your cost-per-click bid to increase ad-attributed sales. From Amazon:
“With dynamic bids - up and down' strategy, Amazon will increase your bids in for clicks that may be more likely to convert to a sale. With this strategy, we’ll also reduce your bids for clicks that are less likely to convert to a sale… With the fixed bids [CPC] strategy, Amazon will use your exact bid for all opportunities and won’t adjust your bids. Compared to dynamic bidding strategies, you may get more impressions, but fewer conversions for your ad spend with this strategy
Dynamic bidding works by making a cost-per-click (CPC) ad auction more similar to an ideal ad auction by bidding for sales using machine learning while keeping the CPC click bid in the insertion bid formula. Here’s why dynamic bidding works and how to implement it. This guide is designed for tech leads and product managers creating dynamic bidding in their marketplace or e-commerce app.
Assume you have a calibrated click prediction model to predict the probability of a click given a specific insertion. It may be personalized and contextual. In simple CPC systems, p(click|impression) may be implemented as a global or per advertiser constant rate for all insertions.
