AMAZON UNIT ECONOMICS
How to get cheap Amazon Advertising clicks from Top of Search inventory?
The answer is Amazon Unit Economic.
Let's pretend that we have 2 ASINs with equal Amazon Fee.
Listing "A" has a 50% conversion rate.
10 clicks equal 5 orders x Amazon Fee $10 = $50
Amazon Listing Value: $50
Listing "B" has a 20% conversion rate.
10 clicks equal to 2 orders x Amazon Fee $10 = $20
Amazon Listing Value: $20
Listing A is ready to pay $0.1 for a click to show on the #1 ad spot. Listing "B" is ready to pay "X" amount for a click.
For listing B to win the auction, he needs to outcome the Amazon Profit Share per ASIN sale comparing to listing "A."
Amazon Profit Share per ASIN for Listing "A" is $51 (CPC for this ad position is $0.1), so $50 + 10x0,1 = $51
Amazon Profit Share per ASIN for Listing "B" is $51,1
$20 + 10x = $51,1
10x = 51,1-20
10X = 31,1
X=$3,11 he need to pay for the #1 Ad spot.
Please note that he has CPC of $3,11 because he is competing with listings "C", "D", "E"...
So we can be sure that if there are no competitors that can out beat you in terms of conversion rate, you can get a click from #1 Ad position pretty cheap.
If you are a BestSeller in your category, use the Dynamic Bids Down Only Strategy and lower your bid.
P.S. This works with the proper PPC structure and search-term isolation strategy.