What is Bid Cap? Why should I use it? How do I set it? How do I adjust it? Why is my Average CPC higher than my Bid Cap?
You turned on Bids by Badger, set your target ACOS for your campaigns, but you don't know what your bid caps should be. You may not even know what a bid cap is or the purpose of it. Well, all of this information is provided in this article!
What is a Bid Cap?
A bid cap is the maximum amount that the Bids by Badger algorithm will set your bid to with each keyword or product target.
Why Set a Bid Cap?
Ad Badger's Bid Algorithm, Bids by Badger™️, offers the following checks before assigning a new bid to a keyword or product target.
- It calculates a new bid (let's say $7.00 for a very profitable keyword).
- Before it sets the new bid, it checks your bid cap.
- If you have a bid cap of $2.00, then The Badger will not increase your bid over $2.00, and it will be "capped" at $2.00.
- Ad Badger will still calculate a new bid daily. If that new calculated bid is over your cap, it will hold at your bid cap.
How To Adjust Your Bid Cap
Setting a bid cap is quick and easy. You can set your bid cap at the campaign, ad group, and target levels.
Navigate to Bids by Badger™️: https://v2.adbadger.com/#/bids/campaigns
How to set a bid cap:
Mouse over the "Bid Cap" column and a pencil to edit the bid cap will appear. The default bid cap is $5.00, but you can update and set your bid cap here.
Once you changed your bid caps, Bids by Badger will take this number into consideration as it makes its daily calculations to make sure you reach your target ACOS while maintaining traffic and conversions.
Why is my Average CPC higher than my Bid Cap?
Let's start with some definitions:
- Average CPC: Your total amount of ad spend over the amount of clicks for a certain scope and timeframe. You can look at the average CPC at the campaign level, account level, ad group level, product level, and of course keyword level.
- Bid Cap: The highest Ad Badger will set your CPC Bid for a single keyword.
Let's say you have a keyword or campaign that generated clicks at an average CPC of $2.00 for the past 30 days.
Then you came to Ad Badger and set a bid cap of $1.50. Therefore, all of your future clicks will not be higher than $1.50.
However, if you're viewing your average CPC for the past 30 days, you will likely have an average for the month to be close to $2.00. Your average for the day-- see the difference-- will not be over your bid cap because you're just looking at the cost and clicks for a single day when the bid cap was activated.
Another scenario where your bid might be higher than your bid cap is when you look at your ad group default bids. Ad Badger does not optimize your ad group default bids because when you have an active keyword bid in Amazon, Amazon uses your keyword bid, not your ad group bid.