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Normalize bids based on placement modifier and dynamic up/down strategy

Learn how to normalize bids based on placement modifier and dynamic up/down strategy.

Updated over 4 months ago

  • You can normalize the final bid using the campaign's Top of Search (TOS) / Product Page (PP) / Rest of Search (ROS) and Dynamic Up/Down bidding strategies.

  • The final bid is applied only after the min/max caps have been applied. The min/max limit calculation assumes no placement modifiers, and the campaign's bidding strategy is not dynamic up/down.

1. Normalization based on dynamic up/down factor

  • Based on the above example, the bidding rule's computed bid after applying the min/max cap is $1.19.

  • If the campaign uses a dynamic up/down bidding strategy, with a factor of "0.65". The new bid will be calculated as follows: $1.19 * 0.65 = $0.78

2. Normalization based on TOS/PP/ROS placement modifier

This normalization setting can be stacked with the dynamic up/down factor.

The normalization formula (assuming TOS) is:

Normalized bid = Pre-normalized bid * (100 / (100 + TOS %))

  • For example:

    • A campaign has 200% TOS, and a keyword has a $0.78 bid.

    • The new bid will be $0.78 * (100 / (100+200)) = $0.78 * 0.33 = $0.26

    • If the campaign TOS is 100%, the new bid will be $0.78 * (100 / (100+100)) = $0.78 * 0.50 = $0.39.

    • If the campaign TOS is 300%, the new bid will be $0.78 * (100 / (100+300)) = $0.78 * 0.25 = $0.20.

  • The bidding normalization process prevents bids from dropping to the minimum value when a huge TOS modifier is applied while TOS/PP/ROS % or dynamic up/down settings are active.

  • The sequence is as follows:

    1. Calculate the optimal bid.

    2. Cap it.

    3. Normalize the capped optimal bid.

    4. Shift the keyword bid towards the normalized capped optimal bid.

  • Normalizing bids based on the optimal bid calculation ensures consistent target bids.

  • If you want to see the breakdown of bid calculations, you can click on the "Preview" button.

  • The Excel file shows how different parameters and TOS % modifier will affect the final bid.

Notes:

  • These settings are exclusively for Sponsored Products and can only be accessed by selecting "Target ACOS" as the computation type.

  • The computation of the normalized final bid will appear in the tooltip when previewing the bidding rules.

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