There are 2 main phases of bid automation, the 'Discovery Stage' where we use click data to calculate bids and the 'Value Bid' stage which uses performance changes to determine the optimal bid.
What is the starter bid?
The first bid calculated is known as the ‘starter bid’. The starter bid will also be used for keywords with low data. In both instances, the bidder will slowly raise the bid until it has enough clicks to determine the true value of a bid. In some cases, this may cause your bids to fall, at first, for some keywords.
What is the Discovery Stage?
When you are first starting out with Flywheel bid automation or have launched a new campaign, you are in the discovery stage. The first 30 days of bid automation is the most important time for data collection. For auto campaigns bids are calculated at the ad group level. For manual campaigns bids are calculated at the keyword level.
Once we have collected enough “click data” on a keyword or ad group, it is transitioned into the ‘value based bid’ flow. In this stage, the value of a bid is calculated based on the performance of the keyword or ad group.
How long is the Discovery Stage?
On average, keywords or ad groups will be in discovery for as long as 30 days. This will depend on the quality of the keyword. Data backed keywords will generate clicks more quickly. Poor or non-performing keywords may never leave discovery. A higher MACS will speed up the discovery process.
What is Value Based Bidder?
Our price-aware bidding algorithm crunches your data to find the perfect bid amount based on your conversions, Max Ad Cost per Sale (MACS), amount of change in performance, sales price and more.
How are bids calculated?
The equation used to calculate bid adjustments is:
(payoff/price) x (conversion rate) x (MACS) = Value Based Bid
Any changes affecting the conversion rate, net ad revenue (payoff) or the ‘willingness to spend’ (MACS), will trigger changes to bid value.
NEXT: What are the Reasons for Bid Changes?