What is the Ad Engine Doing?
The ad engine is trying to ensure that the aggregate ACoS of all the targets (keywords, ASINs, category targets, etc.) stays within the Target ACoS that you set for the segment. This means that the ad engine is increasing the bids on terms that are driving sales and performing below the Target ACoS in an attempt to maximize sales; it is also being more exploratory when bidding because it is beating the target that was set and has room to test new keywords. Keep in mind reaching that set Target ACoS is not the engine’s sole goal, the engine is optimizing toward sales.
Method 1️⃣ - 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. Could it be that your low Target ACoS is keeping CPCs too low for your to remain competitive in your ad strategy? In some cases, being more aggressive means attaining higher ad placements, and may result in better efficiency.
Consider increasing your Target ACoS by 5-10% for a week and analyze the performance in the subsequent weeks.
Method 2️⃣ - Reduce Target ACoS
This method works when you have lots of converting targets and have consistent conversions.
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.
We recommend these best practices because there is a point after which decreasing your Target ACoS further will cause spend and sales to drop more drastically, and even cause ACoS to increase in the short term. This is because your bids have been reduced to the point where they 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 3️⃣ - 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 Target 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.
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.
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 that convert at your desired 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.🚨
Method 4️⃣ - Use Negative Match
Negative keyword, negative product, and negative brand targeting allow you to exclude shoppers’ query results (e.g., brands, keywords, or products) from displaying ads in the shopping results or product pages. Negative targeting is applied at the ad group and campaign levels.
For example, if you are selling high-end bags, with an average unit price of over $500, it’s ideal to target the category term "women's bag," and use a broad match. The goal is to fully expose and continuously collect top-performing terms as new keywords targets. After some time, brands may discover that the browsing term "affordable women's bag" is matched. Many clicks are generated under this browse term, but it does not bring conversions. In this case, a best practice is to consider using the negative targeting function in a reasonable way to avoid unnecessary expenses.
Method 5️⃣ - Pause Targets with High Spend but Low ACoS
Check your Targets & Search Tab, paying special attention to the SP Target Refinement Tab. Utilize the filters to assess the comprehensive list of targets with substantial ad spend but no sales in the past 60 days. Due to Perpetua’s 30-day attribution window, you do not want to narrow down the date range even slimmer. If the bids are relatively high (around $2), consider adjusting the bids downward or pausing them.
Confirm that these targets aren't crucial category terms or likely to trend positively in the near future. You should avoid lowering bids or pausing targets that might drive conversions soon.
Ad School: Why is my ACoS increasing?
Article last updated December 2023. If you find this information to be out of date, please contact firstname.lastname@example.org.