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Bidding and Optimization

Home > English > Bidding and Optimization > Bidding Basics > Gross Profit

Gross Profit

Introduction

The gross-profit column (and related columns) is a calculated column used for automated bidding which records the value used in the bidding algorithm for a particular day based on the bidding folder settings on that day. Gross profit is calculated for Campaigns, Groups, Keywords, and Creatives on a daily basis.

Gross Profit Details

This "value" or Gross Profit is specified depending on the folder Revenue Model. Historical Gross Profit reflects past bidding settings (and NOT current settings). If you change the folder settings so the gross-profit valuation changes going forward the historic gross profit will not be updated. This acts as an audit for the historic folder settings used in bidding. These are useful when evaluating historic bid decisions. If changes are made to the bid settings, it only affects Gross Profit for future dates.

The actual gross-profit used in the bidding algorithm is calculated anew every day based on the current bidding folder settings and therefore the historic gross-profit column may differ from the actual value used in bidding.

For historical profit and gross profit, we suggest NOT to change historic profit and gross profit just by changing Folder bid settings. We recommend using Custom Columns to see how current settings affect their past performance. The reasoning behind this is that we do not want to change your true reported profit and gross profit just by changing settings. Find out more about custom columns.

 

Gross Profit is defined as follows:

  • CPL Revenue Model - Gross Profit is equal to the Total Conversions multiplied by the specified Value Per Conversion
     
  • Performance Marketer - Gross Profit is equal to the Total Revenue
     
  • eCommerce - Gross Profit is equal to the Total Revenue multiplied by the specified COGS percentage ("Cost Of Goods Sold")
     
  • Specify By Conversion Type - Gross Profit is summed across each valued conversion type, as either Conversions multiplied by specified Value Per Conversion or percentage of Revenue depending on the settings specified.

 

If no Revenue Model has been specified or if the folder has not been defined, Gross Profit defaults to Total Revenue; if there is no Total Revenue the Gross Profit will be blank.

Frequently Asked Questions

Why does my profit calculation look incorrect?

The profit calculation by default is Gross Profit - Publisher Cost. If you would like to see a Profit calculation of Revenue - Publisher Cost, please visit our Help article on Custom Column Setup & Management.

How does Gross Profit change when Total Conversions are Updated?

When you update the definition of Total Conversions by adding or removing conversion types or by changing which conversion types are added to totals, Gross Profit is only updated going forward.  This means that for any one day, the interface will show a Gross Profit amount based on a) the conversions added to totals and b) the revenue model selected for that day.  Bidding calculations will always calculate historical Gross Profit based on the conversions added to totals, and the revenue model selected at the time that bidding runs.

When such a change is made, the Conversion Rate used in our bidding calculations will still be based on the historical conversion settings and will not adjust to include the conversion types that have been added or removed from totals.  If changes to total conversions are made, we recommend setting folders on algorithmic or portfolio to Off while you collect 28 days of updated total conversion data.  After 28 days, exclude all days prior to the change and set the folders back to traffic with new targets where applicable.

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