How to set Bids for your Joom Ads Campaign?
Every product you select for a campaign should come with a bid. The bid you set is a maximum share of the product price that you're willing to pay for each advertised sale (CPA bid) or the number of impressions (CPM bid).
How Much Should You Bid?
⚠️ PLEASE NOTE:
- You are never charged more than your actual bid;
- CPA bid is calculated according to the product’s original price disregarding the shipping price (regardless the shipping method).
CPA Bid and CPM Bid
When you create your Joom Ads Campaign, you have two options: CPA bid method and CPM bid method.
The Bid you set within CPA Bid Mode can be called as ACOS Bid (Advertising Cost Of Sale Bid) and is measured in percent (%). CPA Bid represents the amount of money you are willing to pay when the product is sold.
The bid you set within the CPM Bid Mode is called CPM Bid (Cost per Mille) and is measured in in dollars ($) per every 1 000 impressions your products get. CPM Bid represents the amount of money you are willing to pay for each 1 000 impressions your products get.
Advice on Setting CPA Bid
The best strategy is to bid within the product's gross margin. However, the bid can be higher than the product's gross margin in case you want new products to get maximum traffic as quickly as possible.
Gross Margin (%)
Optimal CPA Bid Range
If you chose CPA bid method, you can also turn on Smart Discount mode. If you leave the Smart Discount toggle turned on, the Joom Ads mechanism will use some part of the potential campaign-payment as the discount given to the buyer. Your advertising costs will not change, since the sum of Smart Discount Amount and Joom Ads Amount will never exceed the CPA Bid you set. A discount is given only when it would most likely result in conversion: the smart algorithm will offer the most appropriate discount for every given customer.
To find out how much money you provided in total as a Smart Discount, please refer to the Discount Sum column in the Joom Ads reports.
⚠️ PLEASE NOTE: Smart Discount is available only within CPA bid method.
What are Reference Bid & eBid?
⚠️ PLEASE NOTE: These metrics are available only within CPA Bid Mode.
Reference Bid - the bid calculated by Joom, based on the analytics of your competitors’ bids. The bid is provided only for your information. If there’re not enough bids for reference in your leaf category, Joom Ads counts bids from the category 1 level-up. Reference bid is updated daily.
If it’s greater than 100% it means that either the product is too cheap or the other merchants’ bids are higher (for the more expensive goods).
ADVICE: If you want your product to get more impressions, set the ACOS Bid higher than the Reference Bid.
eBid (Effective Bid) - the amount you actually bid when you set CPA Bid value.
Advice on Setting CPM Bid
While setting the CPM bid aim for the following formula:
CPM = (Spent ÷ Impressions) x 1000
Therefore, the bid value and your budget define the number of impressions your products get. You should carefully set the CPM Bid.
You will be charged according to the actual number of impressions your products get. You can check it in the CPM column in the Joom Ads reports.
If you choose the CPM bid method, you can also turn on Auto-bidding mode. When setting a bid manually, there is no way to choose which impressions are more valuable and which ones you want to bid for more. That's why it's more efficient to use the Auto Bidding feature and let the system calculate the appropriate bid for your case. This way you will be able to set bids and promote products more effectively.
There are several bidding strategies that aim for different goals:
1. "Maximize POGS" - This Joom Ads strategy aims to maximize Price Of Goods Sold (POGS). Joom Ads uses the machine learning to predict whether the user is likely to purchase a product or not. Bids are selected in proportion to the product of multiplying the expected probability of a product purchase by the cost of the product. With an increase in the budget, the advertising cost of sale (ACOS) may increase as well. The campaign daily budget will be almost always fully spent.
2. "Target ACOS" - This Joom Ads strategy aims to achieve maximum Price Of Goods Sold (POGS), while trying to spend no more than target ACOS * POGS. In this strategy you must specify the target advertising costs (target ACOS) as a percentage of POGS, Joom Ads system will do its best not to exceed this limit. With an increase in the budget, financial performance may decrease. The campaign daily budget may not be fully spent.
3. "Maximize Sales" - This Joom Ads strategy aims to maximize the number of sales of campaign products. Joom Ads will spend budget primarily on impressions that will most likely lead to a purchase. At the same time, the price of the product is not taken into account, this strategy considers the sale of a cheap product to be of the same value as the sale of an expensive one. The larger the budget, the more sales you'll get. However, the average cost of sale may increase. The campaign daily budget will be almost always fully spent.
4. "Maximize Impressions" - This Joom Ads strategy aims to try and get you as many relevant impressions as possible. Bids will be selected in a way that will spend the budget on the "cheapest" impressions. But it doesn’t guarantee you the sales for the products, the campaign expenses may well exceed the income received. The larger the budget, the more impressions campaign will receive. However, the average cost of sale may increase. The campaign daily budget will be almost always fully spent.
If you go to the Joom Ads page in your Joom account and scroll down to the Campaign List, you will see the CPM Metric as one of the way to evaluate the performance of your campaigns. The metric is calculated for both CPA and CPM campaigns. Pay attention to this metric's value as it reflects the impressions' cost within different bid method campaigns.
Please refer to the article Performance Evaluation for more details.
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