CPCs suddenly increased across Amazon’s platform around December 10-12. Why the sudden increase? What was affected? What can you do to adjust?

Alarm bells have been blaring across the e-commerce community. An abnormal increase in CPCs (cost per click) started significantly affecting anyone running active ads on Amazon’s platform. CPCs and advertising in general are normally volatile around the end of Q4, however this change in bids and CPCs was even more drastic than what we normally see.

Laura Pattison (Head of Premium Services at Teikametrics, overseeing the management of large brands) noticed the drastic increase in CPCs and started digging in to understand what was going on. The video above gives an in-depth look at Laura’s breakdown of exactly what is happening and what you can do to mitigate the impact of these drastic changes. We’ll also break everything down below.

Side note: This advice and strategy is a preface of what’s to come at AdMax 2022, the marketplace advertising summit we’re hosting to prepare sellers and brands for the year ahead. We’ll be covering in-depth CPC strategies along with advanced advertising strategies for 2022. Click below to sign up or learn more (it’s FREE!). See you there!

AdMax 2022

What happened over the December 10-12 weekend?

CPCs normally tend to increase around competitive periods of time like Christmas, Black Friday or Cyber Monday, however the CPC increases Laura and her team noticed were significant. 

Specifically from Friday to Saturday, CPCs rope sharply across multiple categories. This seemed to impact all brands in the industry, not just a select few. Bids and advertising budgets were eaten up quickly across the board. Getting even more specific, discounts between bids and the CPCs decreased.

As a result, brands started paying more on their own terms and it has become more difficult to achieve a normal amount of clicks relative to the budget brands normally set. While the exact reason for this significant change in CPCs is debatable, we can speculatively point to a potential change in an Amazon algorithm as the culprit.

Time will tell whether this increase in CPCs is here to stay. For now though, what can brands do to adjust? 

This graph shows timeline of CPC & bid data of a brand from November 17 – December 16. You can see the incremental increases through December and the spike in CPC on December 12 & 13.

How to adjust for increasing CPCs

Laura gave a number of ways brands can adjust their strategies to account for this increase in CPCs and change in performance on Amazon. For an in-depth explanation for each of these methods, check out the video above. To summarize:

  1. Always be willing to pay for what you bid. 
  2. Consider reducing your bids.
  3. Reduce your max target or ACOS target to something slightly less aggressive. Changing this even by a couple percentage points can leave less headroom between the bid and CPC.
  4. Monitor your position, impressions and visibility on Amazon especially if you decide to pull back on bids (we have a great solution to help you monitor easily)
  5. If you are working with an analyst or specialist to manage your advertising, ask for a more strict max bid to be in place through the rest of the year.
  6. Check your campaign settings. Are your campaigns using Fixed Bid, Bid Up & Down, or Bid Down only? A general recommendation here is to consider using Fixed Bid or Bid Down through the rest of the holiday season, though it’s always a good idea to test. Everyone’s situation is unique.

Time will tell whether these CPC changes are here to stay. For now, keep an eye on your performance and the potential volatility through the holiday season.

For more advertising strategy like this, sign up for AdMax, our virtual advertising summit happening on January 26, 2022 from 1-4pm ET. Laura, along with core members of her analyst team, will be talking through the top advertising strategies for the year ahead.

Let us know what you think about the CPC increases. We’ll see you at AdMax!