The Journey of the Bidder:
Starter Bid > Discovery Stage > Value Bid
What is the starter bid? (Initial Bid)
The first bid calculated is known as the ‘starter bid’. Flywheel calculates the initial bid based on 1) product price, 2) conversion rate (industry est. average) and, 3) your set MACS. This will also be used for keywords that revert back to 'low data' state. In both instances, the starter bid kicks off the discovery stage. Amazon's max bid/default bid and category CPC is not factored into this calculation.
Since product price is an input in this equation, you may see very high starter bids for expensive items (over $250) or very low bids (under category CPC) for lower priced items (under $20). As we gather data, these bids will correct themselves.
Pro tip: Use a bid floor if you're bids are much lower than the category CPC to speed up discovery.
What is the Discovery Stage?
When starting out with bid automation or when launching new campaigns, you are in the discovery stage. The bidder will slowly raise the bid until it has enough clicks to determine the true value of a bid. In auto campaigns, bids are calculated at the ad group level and in manual campaigns at the keyword level.
On average, the discovery stage can take 30 days. Timeline depends on the relevancy of the keywords, the amount of sales data, and the set MACS. A higher MACS will speed up the initial discovery process. Once we have determined the true value of the bid, we transition to the ‘value based bid’ flow.
What is Value Based Bidder?
When bids have entered the value bid flow, we begin calculating bids based on changes in performance. The equation used is:
(payoff/price) x (conversion rate) x (MACS) = Value Based Bid
Any changes affecting 1) conversion rate, 2) net ad revenue (payoff) and/or, 3) the ‘willingness to spend’ (changes in MACS), will trigger changes to bid value. Read about this in more detail in 'Value Based Bids: 101'.
What does the 'bidder journey' look like in Flywheel?
Review bid changes within the 'Change History' section to see how your bids are being adjusted.
Bid Change Reasons
Next: Learn more about how your bids are calculated in Value Based Bids: 101