The Teikametrics Bidder measures the average order value (AOV) from orders data over a rolling 30-day window.
If your price decreases on the product, the AOV will decrease over time as more orders come in at the lower price.
If the price increases, the AOV will increase over time as more orders come in at the higher price.
In both use cases, the AOV will stabilize at the new price.
The Teikametrics Bidder sets bids in direct proportion to the AOV.
Price increases: If the AOV increases, then bids increase because the potential payoff is higher. For example, If the AOV increases by 10%, then will bids increase by 10%.
Price decreases: If AOV decreases, then price decreases because the potential payoff (ROI) is lower. For example, if the price was originally $15, an ACoS Target set at 10% indicates a willingness to spend up to $1.50 on a click (assuming one unit per order). Reducing the price to $10, then indicates a willingness to only spend $1.00 per click.