Crawl up Method (safe) vs Calculated Method (fast)

The main two options when it comes setting your targets' initial bids are

a) crawl up: simply start with a very low bid (eg. 0.30$) and slowly crawl up if the keyword is not receiving impressions.

b) calculated method:  calculate the bid that would meet your target acos based on the expected average revenue per click.


Calculated Method: Consider Product's Target ACOS & Conversion Rate

The calculated method will typically lead to starting with a higher bid, so may be less efficient. It will, however, collect impressions and thus valuable data a lot quicker.

First you need to know your Target ACOS.

This reflects the ratio of ad spend vs ad revenue. If you bring this ratio down to a single click level, you therefore just need find out your expected average revenue per click to determine how much spend per click you can afford.

The average revenue per click (RPC) = product's conversion rate * product's price.

After that, simply multiply your target acos with that averave RPC.


Example

If the product's conversion rate is 10% and the retail price is 20$, your average revenue per click equals 2$.

If your Target ACOS is 40%, calculate 2$ * 0,4, which equals 0,8$.

0,8$ is therefore the CPC that you can afford to still meet your target.

As the actual price per click will rarely be as high as your bid, you can afford to set your bid around 10-20% higher, ie. around 0,9$.

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