There are two ways one can possibly reduce their ACoS.

  • Work with your existing targets to reduce ACoS and maximize sales

  • Find new targets to help achieve the lower ACoS

The way you reduce your ACoS changes based on the nature of the goal.

Method 1: Consider being more aggressive

Before anything, consider if a higher Target ACoS may result in a lower realized ACoS.

Why? Increasing your Target ACoS increases how aggressive you are on your existing targets. In some cases, being more aggressive - and therefore getting more competitive placements on the same terms - may result in better performance.

Consider increasing your Target ACoS by 5-10% for a week and see how that performs.

Method 2: Reduce Target ACoS

This method works when you have lots of converting targets and have consistent conversions. It therefore corresponds to the first scenario mentioned above.

It’s very important to decrease Target ACoS as per the recommendations below:

  • Decrease Target ACoS by a maximum of a relative 10% at a time (if Target ACoS is 40%, reduce by a maximum of 4%)

  • Wait 5-6 days to evaluate the impact of a Target ACoS change before deciding to reduce further or to revert the initial change

The reason this is important is because there is a point after which decreasing your Target ACoS further will cause spend and sales to drop drastically, and possibly even cause ACoS to increase in the short term. This is because your bids have been reduced to the point where most of them are no longer competitive.

If you’ve reached the point where you can no longer bring down your Target ACoS without causing spend/sales to drop drastically or ACoS to increase, you’ll need to either work on finding new targets that help you achieve your ideal ACoS (method 2).

Method 3: Increase your Target ACoS or do Upward Bid Adjustments

This method is applicable if you do not have a ton of converting targets and have infrequent sales; or if the vast majority of your converting targets consistently perform higher than your ideal ACoS.

Simply lowering your Target ACoS in this situation will not lower your ACoS, it will just lower spend and sales. An alternative approach needs to be taken.

How does this approach work?

The idea here is to actually increase your bids for a longer period of time so that the ad engine can spend more to explore and find new targets that perform at a lower ACoS. Furthermore, increased bids will give data on how existing targets perform when you're getting more competitive placements (see Method 1), which in itself could result in a lower ACoS.

How to execute this method?

You can do this by increasing your Target ACoS (which in turn increases your bids) until you have significant sales volume and a more robust list of targets which convert at your a desirable ACoS. Once you've achieved this, you can slowly lower your Target ACoS to start optimizing.

Alternatively, you can run bid adjustments on PHRASE and BROAD match keywords, as well as the AUTO campaign. Any long tail search term that sees conversions will automatically be harvested by the ad engine to be optimized. Ideally, your Target ACoS should be higher than normal to allow for this exploration.

  • CAUTION: Bid adjustments can hinder optimization if done improperly. We recommend doing a maximum of 3-5 bid adjustments at once within a Goal to limit this risk. If the Goal has infrequent conversions, this isn't as much of a concern.

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