It may seem counterintuitive: a keyword has a low ACoS, so why would AdLabs lower the bid?
Remember our RPC formula…
Combined with your Target ACoS and Placement Mod, RPC determines the maximum Cost-Per-Click you can afford while staying profitable. Whether your bid is currently $0.50 or $5.00, AdLabs calculates the correct bid from scratch using performance data.
The current bid is not a factor.
So, if the current bid is $1.00 and the correct bid for the KW (i.e. what you can afford) is $0.50 then yes, we are technically lowering that bid even if the KW has a low ACoS.
A keyword with a low ACoS is performing well relative to your target. However, there are several reasons the calculated bid may come in lower than the current bid:
If a keyword's conversion rate decreases, its RPC drops. A lower RPC means a lower maximum affordable CPC, which results in a lower calculated bid.
For example, a keyword that went from a 15% conversion rate to 10% will get a lower bid even if ACoS is still below target.
The Bid Ceiling represents the maximum affordable CPC for the keyword, determined by your Target ACoS, the keyword's RPC, and placement performance data. It prevents AdLabs from overbidding on a keyword just because it currently has a low ACoS.
The Dynamic Bid Ceiling has three aggressiveness levels:
Conservative (1x Target CPC) — Bids stay at or below the calculated ideal CPC.
Balanced (2x Target CPC) — Bids can extend moderately above the ideal CPC.
Aggressive (3x Target CPC) — Bids can extend further to capture more volume.
Even at the Aggressive setting, the bid could still be capped by the keyword's calculated ceiling based on its own performance metrics.
Full help doc on bid ceilings below.
What are "Dynamic Bid Ceilings"?
How AdLabs protects you against wasted spend and overspend
This is worth repeating: the current bid is not a historical data point.
For example, a keyword has a 20% ACoS over the last 30 days with a $0.80 CPC.
If you manually change the bid to $2.00 today, the ACoS for the last 30 days is still 20% and the average CPC is still roughly $0.80.
The new $2.00 bid hasn't generated any data yet. AdLabs calculates bids based on what actually happened (clicks, sales, revenue, cost), not what the bid is currently set to.
AdLabs uses the same RPC-based calculation for campaign placement adjustments.
Low ACoS placements can receive decreased adjustments if RPC data shows the current adjustment is higher than needed.
High ACoS placements can receive increased adjustments if a low adjustment is causing poor positioning and lower conversion rates.
AdLabs always calculates the correct value based on performance.
Why does AdLabs increase bids on High ACOS Keywords?
Scenarios when increasing bids on High ACOS is mathematically correct
