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Bidding and Optimization

Home > English > Bidding and Optimization > Best Practices > The Exploratory Spend Phase

The Exploratory Spend Phase

Introduction

The Exploratory Spend Phase refers to the period of time when a keyword is 'borrowing' a large amount of folder data in order to calculate a statistically significant bid recommendation. More often than not, new keywords do not perform at the desired level of efficiency (e.g. Target Margin). Therefore, our bidding solution will gradually determine which keywords will perform at target, and which won’t.

How Exploratory Spend Works

The amount of folder data borrowed for an individual keyword bid calculation is determined by how much historical data that specific keyword has. For example, a keyword with only 10 clicks all-time will use more folder data than its own. Assuming the folder is performing at target, the performance data leveraged from that folder will often be better than the keyword’s own data (and the keyword is bid up – driving more clicks that will inform the next bid optimization the following day).

Things to Remember

Exploratory spend may result in an initial period of increased spend on groups with little historical data, which may negatively impact profitability. However, by optimizing bids on a daily basis and leveraging the proper amount of folder data each day, additional keyword-level click data is obtained in a highly efficient fashion. As a result, an initial period of negatively impacted profitability is typically rewarded by a higher overall level of profitability once the exploratory spend phase is over.

To reduce the initial impact of Exploratory Spend, consider mapping groups with little historical data (i.e. less than 10 clicks and 0 conversions for all-time) to their own folder, leaving this folder Off. After this, you can move ad groups from this folder into folders in Traffic mode once they have at least 10 clicks and over 0 conversions for all-time, or if your budget allows (exploratory spend may result in an initial period of increased spend on groups with little historical data, which may negatively impact profitability).
 

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