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Bidding and Optimization

Home > English > Bidding and Optimization > Bidding Basics > Automated Headroom Adjustment Feature

Automated Headroom Adjustment Feature

Introduction

When optimizing bids for search, social, and display ads, it’s important to account for headroom.

The headroom is the difference between what you bid (Max. CPC) and what you pay (the delivered Avg. CPC). You can view your current headroom at the folder level by adding the Headroom column from the View Builder.

The Automated Headroom Adjustment feature adjusts calculated keyword bids by a CPC to Bid Adjustment to inherently account for headroom. When using this feature, advertisers no longer need to leverage the folder Boost setting to account for Headroom. Folder boost should be set to zero when using the Automate Headroom Adjustment feature unless boost is being used for a reason other than accounting for headroom, such as handling a sale or seasonality.

Understanding the CPC to Bid Adjustment calculation

Headroom is defined using the following formula:

[(Avg. Bid – Avg. CPC) / (Avg. Bid)] 

The CPC to Bid Adjustment is calculated as the click-weighted average of this formula over all biddables in the folder including keywords, placements, product targets, and creatives.

Note: Keywords on bid and position override are excluded from the calculation.

Notes

  • In folders using Portfolio Optimization, the CPC to Bid Adjustment is the click-weighted average of all tail terms over the past 2 weeks. Tail terms are low volume keywords that do not have enough data to have click volume models. Head terms are high volume keywords that have a keyword-level headroom model. Override is excluded from the calculation for portfolio optimization folders. 
  • Static and Rolling Excluded Dates are observed. If dates in the past 2 weeks are excluded, the look-back will be extended beyond 2 weeks so that it includes 14 days of data.
  • The default value for the CPC to Bid Adjustment is 0%.
  • Headroom % below 0 will be excluded from CPC to bid adjustment calculations.

When the CPC to Bid Adjustment is updated

The CPC to Bid Adjustment is re-calculated every seven days by default, as well as when any of the following events occur:

  • When groups or campaigns are added to or removed from a Folder.
  • When a Folder is turned from ‘Off’ to either ‘Preview’ or ‘Traffic’.
  • When a Folder is copied.

The frequency of calculation can be modified to a different interval than the seven day default. Please reach out to your account manager to have this setting modified.

Where to find the calculated CPC to Bid Adjustment in the Platform

You can see the current calculated adjustment for a given folder in the CPC to Bid Adjustment % column in the Folders grid (i.e. the Bidding tab).

This adjustment is also now shown within the Boost section of the Bid Details page for all objects within a folder.

Overriding the feature

You can override the CPC to Bid Adjustment for a given folder or set of folders. Please reach out to your Platform representative or file a Support ticket to request this.


 

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