Check out our in-depth discussion on Episode 39 of That Amazon Ads Podcast!
Summary:
When optimizing High ACOS keywords, we calculate bids based on the keyword's data. Our bid optimizations are not aiming to raise or lower the bid from whatever it was previously set to, but rather we calculate what the bid should be from performance of the selected date range.
NOTE: the "current bid" isn't a historical data point, and therefore it's incorrect to calculate bids for past performance based on the most recent bid.Example: If a keyword has 100% ACOS for the last 30 days with a $1.00 CPC, if you change the bid to $0.05 today, the ACOS for the last 30 days will still be 100%. Therefore, simply "reducing" the bid on the next optimization because the ACOS was high for the last 30 days would be incorrect.
Instead, we always CALCULATE the bids based on the keyword's Revenue-Per-Click.
From one week to the next, a keyword's performance can change. If a keyword's conversion rate improves between optimizations, this would allow for a higher bid compared to the previous optimization.
Campaign Placement adjustments are happening simultaneously with bid adjustments in AdLabs. It may be that Placement performance has changed which is allowing the keyword bid to increase.
It's worth noting for Sponsored Products & Sponsored Display: Even if the bid for a High ACOS keyword is increased, the new bid will ALWAYS be lower than the keyword's CPC for that date range.
For Sponsored Brands, the keyword's new bid could be higher than its historical CPC as we increase the "base bid" to maintain Top of Search sales while reducing placement bid adjustments for placements not-Top of Search.
See more information about How We Calculate Campaign Placement Adjustments. (There should be a hyperlink here, but that article isn't done yet, so if you're reading this send Stephen a message)