How do you determine your bidding strategy for Sponsored Products on bol?
Lars HurkmansCo-founder16 November 2023Reading time 9 minutes
Your bidding strategy for Sponsored Products on bol depends on your experience, budget and how much control you want. Automatic bidding lets bol's algorithm steer towards your set ACoS and saves time. Manual bidding gives you full control per product and keyword. Keep your ACoS below your profit margin in the long run.
With Sponsored Products on bol you have a choice of different bidding strategies. They determine how you bid on keywords and products, and which strategy fits best depends on your goals, your budget and the degree of control you want to keep over your campaigns. This article is part of an extensive explanation of Sponsored Products; below we go deeper into the bidding strategies and the role of ACoS within them.
What role does ACoS play in your bidding strategy?
ACoS, or Advertising Cost of Sale, is a core concept within Sponsored Products on bol. It measures how much you spend on ads relative to the sales they generate. You calculate the ACoS by dividing your total advertising costs by the total sales the ads generated, and multiplying that result by 100 to get a percentage.
How do you calculate your ACoS?
You divide your advertising costs by the revenue you get from those ads and multiply the outcome by 100. Say you've spent 100 euros on Sponsored Products and this led to 500 euros in sales. The ACoS is then calculated as:
ACoS = (100 euros / 500 euros) × 100 = 20 percent
An ACoS of 20 percent means you spend 0.20 euros for every euro of sales you generate.
What is a healthy ACoS?
A healthy ACoS is closely tied to the profit margins you achieve on a product and to your willingness to accept a temporary loss to reach your goals.
Your product's profit margin is an important starting point for determining which ACoS is acceptable. Generally speaking, your ACoS needs to be lower than your profit margin to keep advertising profitably. If you sell a product with a profit margin of 40 percent, for example, an ACoS of 20 percent means you still make 20 percent profit on the product, even after deducting the advertising costs. If your ACoS is higher than 40 percent, you're running a loss on the product.
Besides profit margins, your goals for Sponsored Products also play a role. If you're launching a new product or aiming for more visibility, you can choose to temporarily accept a higher ACoS. This can be useful to establish your position in a competitive market or to draw attention to a new product. Treat this as a temporary strategy, though. In the long run you aim for an ACoS that stays below your profit margins, so your advertising spend remains sustainable.
How does automatic bidding work on bol?
Automatic bidding is the simplest bidding option within Sponsored Products. You let bol's advanced algorithms manage and optimise your bids, so you don't have to bid manually yourself. This is how it works:
- Focus on ACoS: bol's automatic bidding system focuses on reaching the set ACoS. It adjusts bids based on your campaign's performance relative to that ACoS target.
- The algorithm's learning phase: when a new campaign starts, the system goes through a learning phase in which bidding behaviour is adjusted based on collected data on clicks and conversions.
When is automatic bidding handy?
Automatic bidding is ideal for sellers looking for an efficient, time-saving way to manage their advertising campaigns. The biggest advantage is the time saved and the lower complexity, especially suitable for general campaigns without specific requirements. Automating the bidding process removes the need to constantly adjust bids, which is handy for sellers who don't have the time or expertise to continuously analyse the market and bids.
On top of that, the system continuously optimises your bids, adapting to performance data. That provides a dynamic approach focused on the effectiveness of your campaigns. Because the system continuously adapts to market conditions, your campaigns stay aligned with the current market.
Automatic bidding suits both new and experienced sellers. New sellers benefit from the ease and automation, while experienced sellers extract valuable insights from the data the system collects, which they can use to refine their strategies.
What do you need to watch out for with automatic bidding?
Even with automatic bidding you remain responsible yourself: you keep an eye on your ACoS, your keywords and your campaigns. There are a few important considerations to keep in mind.
When you start with automatic bidding, your ACoS can come out higher than your target. That's due to the algorithm's learning phase, in which it tries to determine the most effective bidding strategy for your specific products. This can initially lead to higher costs, but it's an essential step to optimise the system.
Even with automatic bidding it's important to monitor your campaigns regularly. You keep watching market conditions, the performance of your ads and your campaigns, and adjust them to your goals and budget.
The automatic bidding system takes keyword relevance into account to a certain extent, but it doesn't automatically switch keywords on or off. So you remain critical yourself about which keywords are worth bidding on and which aren't.
It's important to have a clear picture of your ACoS and how it fits within your overall sales strategy. The system takes a lot of work off your hands, but you keep control over your campaigns yourself.
Collecting enough data is crucial for making well-informed decisions. If there's little traffic on your keywords or you use few keywords, you may need to spend a lot before you have reliable data. That's a challenge with automatic bidding. So also collect data yourself, such as the average winning bid, and use it to back up your bidding strategy.
How does manual bidding work on bol?
Manual bidding gives you full control over your bidding strategy. Unlike automatic bidding, where bol's algorithm manages the bids, with manual bidding you actively set your own bids, both at product and at keyword level.
With manual bidding you determine yourself the maximum amount you want to pay for a click on an ad. That can be done in two ways:
- Bidding per product: you set a bid for each specific product in your range. This lets you place higher bids for your best-selling products or for products with higher margins.
- Bidding per keyword: you set specific bids for each keyword. This is especially handy if you have good insight into which keywords are most valuable for your products.
When is manual bidding handy?
Manual bidding is particularly suited to experienced sellers with extensive market knowledge and insight into their products' performance. This method gives you full control over the bids for both products and specific keywords, letting you fine-tune your advertising strategy precisely.
With manual bidding you can bid exactly on the keywords most relevant to your products, which benefits the effectiveness of your campaigns because you advertise more precisely. The approach also gives you the flexibility to respond quickly to changes in the market, which is essential in a dynamic online environment.
Another advantage is that you can manage your advertising budget more effectively. You can place higher bids for products with higher margins or better performance, which can lead to more efficient spending of your advertising budget. That degree of control helps you focus your advertising efforts on areas likely to deliver the most return.
An important tool with manual bidding is the average winning bid as a reference point. By looking at that average, you get an indication of the current market price for a click on a particular keyword. That helps you decide whether it's worth bidding on a keyword and how much you're willing to pay. What that average says about the auction behind it is covered in how bol's advertising system works. By incorporating this information into your strategy, you make more effective and cost-conscious decisions about your bids.
What do you need to watch out for with manual bidding?
Manual bidding requires active involvement and a time investment: you continuously monitor your bids and adjust them. You regularly evaluate your campaigns and make changes based on current market conditions and your products' performance.
Thorough knowledge of the market and your competitors is very important for determining effective bids. Think of insight into demand for your products, the prices your competitors charge and the general trends within the category you're active in. Without that knowledge you risk placing bids that aren't competitive or that don't lead to the desired visibility.
An interesting option with manual bidding is using bol's API, which lets you automate many manual tasks while still keeping more control than with the standard automatic bidding strategy. You can, for example, activate your campaigns on an hourly basis, though that does require some technical knowledge of the API. As an alternative to a direct API implementation, you can also use external tools offering this functionality. Such tools support you in managing your campaigns more efficiently and effectively, but also require insight into how you integrate and use them within your overall sales strategy.
What are the key differences between automatic and manual bidding?
Automatic bidding saves time and is suitable for new or general campaigns; manual bidding gives you more precision and control and suits experienced sellers with market knowledge. The key differences at a glance:
Automatic bidding
- Target audience: ideal for new sellers or those who want to save time and effort.
- Characteristics: uses bol's algorithms to optimise bids based on the set ACoS.
- Advantages: time-saving and less complex; suitable for general campaigns without specific requirements.
- Considerations: can lead to a higher ACoS during the algorithm's learning phase; still requires regular monitoring.
Manual bidding
- Target audience: suitable for experienced sellers with extensive market knowledge and insight into their product performance.
- Characteristics: full control over bids per product or keyword, letting you bid precisely on specific target areas.
- Advantages: greater precision and flexibility; essential for targeted campaigns and optimising advertising spend.
- Considerations: requires regular monitoring and adjustment of bids, and thorough knowledge of the market.
- API integration: offers advanced capabilities to automate bids with custom rules, ideal for sellers with technical resources or access to software tools such as Pacvue or MarktMentor.
The choice between manual and automatic bidding depends on your experience, available resources and specific goals. Manual bidding, possibly supported by API integration, is ideal for anyone who wants detailed control over the campaigns and is willing to invest the time needed for monitoring and adjustments. Automatic bidding is a good choice for sellers looking for efficiency and ease in managing their advertising campaigns using bol's advanced technology. If you want to experience the advantages of manual bidding without managing the bids yourself, you can also consider hiring an advertising agency.
Which bidding strategy do you ultimately choose?
Choosing the right strategy depends on your goals, your budget and how much control you want to keep; every bidding strategy within Sponsored Products has its own advantages. A crucial concept here is ACoS (Advertising Cost of Sale), which measures how much you spend on ads relative to the sales they generate. Maintain a healthy ACoS that fits your profit margins and your goals.
Want to know more about Sponsored Products and how to use them effectively? Read our article on what Sponsored Products are and when it's useful to use them. Want to learn how the algorithm behind Sponsored Products works, we have a separate article on that. And if you need help determining the right keywords for your campaigns, there's an article on finding keywords available.