How to Optimize PPC Bids for Profit

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Here’s a simple method, how to adjust your bids to match your profit targets.

Suppose, your target ACoS is 20% (which means you can spend 20% of your sales on advertisement for a specific campaign). Normally this value should match your profit margin (so if your margin is 20% without ad expenses, you can afford to spend this money on ads and you’d still break even).

Now, take a look at your actual ACoS. Suppose it’s 40%. Here’s a formula, which calculates ideal values for your new bids:

New Bid = (Target ACoS / Current ACoS) * Current Bid

This basically means: to achieve a 20% ACoS, you’d have to reduce bids by half (target ACoS is half of actual ACoS, so if you’d pay half of the price for the ads, you’d achieve your target ACoS).

In reality, it might happen that you won’t get any clicks if you reduce the bids so radically, so you might want to reduce them in a couple of steps (and reassess the status after every step).

sellerboard can now automate this whole process. sellerboard’s PPC dashboard (beta) will calculate the target ACoS based on your target margin for ads, calculate bid recommendations for every keyword and automatically apply them every day. Would you like to beta test this functionality for free? Sign up for a free trial and request your invite in the chat window in the bottom right corner in your sellerboard account.

sellerboard is an accurate profit analytics service for amazon sellers with additional tools: follow-up mail campaigns, inventory management, reimbursements for lost & damaged stock and other FBA errors, PPC optimizer, listing change alerts. All this starting at $15 a month with a free trial.

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