When generating bid suggestions, Kapoq forecasts an expected conversion rate and average order value for each individual target. These forecasts (along with your Max ACOS parameter and after adjustments accounting for dynamic bidding strategies and placement-based bid modifiers) determine your suggested bid,
Suggested Bid = Forecast CR * Forecast AOV * Max ACOS * Adjustment Factor
The forecasts for AOV and CR are based on a combination of the initial values you provide in your parameters and the actual realized conversion rate and average order value for the target in question. For targets with a lot of data, the values Initial CR and Initial AOV have little impact on the final suggested bid, but for targets with little to no data, they are highly impactful.
For any given target, you can see how much weight is being put on your initial guess by hovering over the forecasted value):
For targets without any data at all, the forecast conversion rate and average order value will simply be the initial guesses, so your initial bid on any target with no data is simply:
Initial Bid = Initial CR * Initial AOV * Max ACOS * Adjustment Factor
As more performance data is gathered on the target, the forecasted CR and AOV will gradually put less and less weight on your initial guesses. This makes these initial guesses (particularly your initial conversion rate) a powerful level for governing how aggressively Kapoq’s bid automation will test targets that don’t have much performance data.
Long story short: Higher values for initial AOV and CR will raise your bids on keywords without much data and accelerate the testing process, and lower values will reduce those bids and allocate more spend to targets with a longer track record.
How should I set my Initial CR and Initial AOV parameters?
When setting up a new campaign or strategy for the first time, we recommend setting these values based on historic performance (which you can see in the grid right next to the parameters):
If you haven’t yet collected enough data for historic numbers to be meaningful, you can use the performance of similar campaigns. Also, remember that your initial bid is a function of these parameters:
Initial Bid = Initial CR * Initial AOV * Max ACOS * Adjustment Factor
If you know at what level you’d want to run your initial bid, you can use the formula above to back into a reasonable value for initial CR and AOV.
How do I ensure the initial bids set are high enough to receive impressions?
If initial bids are set too low, it’s quite possible to have targets that never or almost never get sufficient impressions to gather meaningful performance data, meaning that high-value targets might be missed.
When initially setting up a campaign or on review, compare the bids on targets with little to no data to Amazon’s suggested bid, which serves as a good guideline to where the bid has to be to win a large impression share for that target. If it’s well under the suggested range for most targets, increasing your initial value parameters might be necessary to gather data.
Another tactic for more aggressively testing is to gradually increase the initial conversion rate parameter over time. Not setting an overly aggressive initial conversion rate at first helps to avoid overspending on testing high-volume keywords in the initial stages of automation; once those keywords have data, increasing the value will only increase it in places that weren’t getting much data at the old initial bid. The main place not to use this approach is in campaigns that have large numbers of long-tail keywords or low-volume product targets.