Basics: How does the metoda Ad Optimizer optimize bids?

Basics: How does the metoda Ad Optimizer optimize bids?

How does the metoda Ad Optimizer optimize bids?

General hints: 

• Bid optimization is taking into account the most recent performance data. 
• Bid optimization compares the actual ACoS to the Target ACoS of the campaign. 
  • If ACoS > TACoS, bids are reduced. 
  • If ACoS < TACoS, bids might be increased (if budget allows). 
• Optimization of bids is implemented every morning so that new bids are really reflected in the campaigns performance of that day.
• Only active campaigns (SPs, SBs and SDs) with TACoS defined in Ad Optimizer can be managed via bid optimization. 

Mechanism of optimization for different kinds of campaigns:

1. Campaigns with no costs recently
   • Assumption: campaigns bid is too low to be competitive
   • Bids are increased steadily in order to generate clicks and test the potential of this campaign
     
     
2. Campaigns with costs recently 
   • but no revenue
     • Goal: reach campaign's TACoS
     • In order to reach the TACoS, conversions are necessary, but these are not always reached immediately. 
     • Allow the campaigns to generate enough clicks, so that a conversion is likely
     • If the conversions are not reached, bids are reduced again
       
       
   • and also generated revenue
     • Campaign has an ACoS, which can be higher or lower than its TACoS
     • Bids are increased or decreased depending on whether TACoS has been reached or not

Adding the available budget into the equation:

• If the budget is sufficient (indicated by a budget factor of 1), the campaigns are optimized based on their TACoS
• If the budget is not sufficient (indicated by a budget factor below 1), the campaigns are optimized based on their (TACoS * Budget factor) --> Ad Optimizer tries to be even more efficient than defined as a goal due to budget scarcity