Thoughts on Amazon Advertising: Understanding Ad Placement and Organic Ranking

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Background:
A summer product with a three-year listing can secure both ad and organic positions on the first page when overall traffic increases. When sales are good, ad orders account for over 80%, and the organic position remains stable on the first page.

When overall traffic drops, the ad position for this listing cannot secure previous positions with the same bid. It is understandable that during low-traffic periods, competitors might increase their bids to secure positions. However, why does the organic position drop so quickly? A three-year listing compared to market listings of 5-6 years can quickly regain its organic position after being out of stock and then restocked, almost to the pre-out-of-stock position. However, this listing, without being out of stock, sees a rapid decline in both ad and organic positions. What is the core logic behind organic ranking? During traffic fluctuations, everyone's sales drop.

1.Why does my ad position drop so quickly? Is it because competitors are increasing their bids and I am not keeping up? However, continuously increasing bids will definitely affect conversion rates and raise the ad spend ratio.

2.Why does the organic position drop so quickly when sales decrease? Does the previous accumulation during good sales periods have no impact? How should I adjust to recover some organic position? Currently, I have tried slightly increasing ad bids, but sales continue to decline, and the organic position keeps dropping.

Thank you for your guidance.

2 Answers

When there are 10 units of traffic distributed between two sellers, each of you bids $5, and you can each secure 5 units of traffic. However, if there are only 5 units of traffic left and Amazon aims to earn $10 from the sellers, then they need to increase the cost per traffic unit to $2 to achieve their earnings goal.

As the market size becomes smaller, shouldn't CPC also decrease? Isn't the principle of CPC based on seller competition? Since competition is less, isn't CPC also lower?