You set a €1.20 bid telling yourself you'll probably pay 80 cents? Bad idea. According to the lawsuit filed on August 31 by the FTC and 22 US states, Sponsored Products advertisers allegedly paid their own maximum bid about 8 times out of 10 in 2024. Amazon disputes the charge, but confirms the principle: with its reserve prices, you can pay up to your bid. A month out from Black Friday, here's how to set your bids as if every click cost you your maximum.
The case in 30 seconds
The allegation: since 2019, Amazon allegedly added an undisclosed reserve price, internally called a "soft reserve price", to auctions presented as second-price auctions.
The key number: the share of clicks paid at the full bid price allegedly went from 30 to 40% in 2021 to about 80% in 2024 on Sponsored Products.
The spikes: the FTC claims the surcharges rose sharply during Prime Day and Black Friday.
Amazon's defense: reserve prices are standard, average CPC has stayed stable once inflation is taken out, and nobody pays more than their bid.
Nothing has been ruled yet. But when you run an account, that doesn't matter: what counts is the price you actually pay.
Step 1: measure your CPC-to-bid ratio
Open your targeting report for the last 30 days. For each keyword that spends, divide the average CPC by your bid. If the ratio is above 0.85 on your big keywords, your bid is your price. Write those keywords down: they're the ones that will cost the most in November.
Step 2: recalculate your profitable ceiling
The formula to keep handy: max CPC = selling price × conversion rate × target ACOS. A €40 product that converts at 12%, with a 20% target ACOS, gives you a ceiling of €0.96. Any bid above that is a bet on a discount you may never get.
Step 3: watch your placement boosts
The "top of search" boost is applied to your bid. A €0.90 bid with +50% can therefore cost you up to €1.35 per click. Set your base bid so that bid plus boost stays under your profitable ceiling.
Step 4: lock in Black Friday ahead of time
On November 27, competition drives prices up, and the lawsuit claims the surcharges go up too. Set up your bid and budget rules now, with a clear ceiling per campaign. On the day, you raise budgets if sales follow, not bids blindly.
Step 5: review your numbers after the event
Compare your average CPC for Black Friday week with October's. If the gap is well beyond the increase in your conversion rate, you paid more for the event than it earned you. That will be your benchmark for Christmas.
Checklist before November
Calculate the CPC-to-bid ratio of your 20 highest-spending keywords.
Recalculate each ceiling with price × conversion × target ACOS.
Check that bid plus placement boost stays under that ceiling.
Write your Black Friday rules: bid ceilings and max budgets per campaign.
Schedule a CPC review the week after the event.
The court will decide. You can set your bids at the real price today.
Want us to recalculate your ceilings before Black Friday? Talk to the Kroogads team.