Follow these steps to understand how to set your Max CPC for your AdWords
campaigns if you are using the "direct-linking" approach as described in Appendix G above – i.e. linking directly to the merchant via AdWords campaigns:
1) First, make sure the ONLY keywords you purchase are brand name & model number keywords e.g. Canon TX1, Canon TX-1
2) Initially, set your Max CPC based on 1% conversion rate i.e. assume you’ll
make 1 sale for every 100 clicks
For example, if your profit per sale is $50, then you can set your Max CPC
at $0.50 @ 1% conversion rate.
If you want to bid a more aggressive Max CPC then set it based on a 2% conversion rate
i.e. 1 sale for every 50 clicks
For example, if your profit per sale is $50, then you can set your Max CPC
at $1.00 @ 2% conversion rate.
3) Monitor your campaigns and Amazon report to determine the actual
conversion rate of the product and adjust your Max CPC accordingly.
For example, if your profit per sale is $50 and if the product converts after
120 clicks, then you should lower your Max CPC to $0.41 (working: $50/120
clicks) to avoid turning the AdWords campaign into a loss.