A bid cap is a bidding strategy that fixes the highest amount you will pay for a single result in the ad auction. It hands you cost control but can leave the budget unspent; if the cap sits below the market price, the ads cannot win enough impressions. That is the fundamental difference from automatic bidding.
A cap makes sense in businesses with thin margins and a clear acquisition cost threshold: buying above the threshold is a loss by definition. Its risk is the ads stopping altogether in periods of heavy competition; the November discount week and the year-end are the typical examples. In practice a cap is only set once real cost data has accumulated, because on a newly opened account the market price is unknown and a cap kills learning. A cost-target strategy that works on averages is more flexible and more useful on most e-commerce accounts.
A cap makes sense in businesses with thin margins and a clear acquisition cost threshold: buying above the threshold is a loss by definition. Its risk is the ads stopping altogether in periods of heavy competition; the November discount week and the year-end are the typical examples. In practice a cap is only set once real cost data has accumulated, because on a newly opened account the market price is unknown and a cap kills learning. A cost-target strategy that works on averages is more flexible and more useful on most e-commerce accounts.
A cap makes sense in businesses with thin margins and a clear acquisition cost threshold: buying above the threshold is a loss by definition. Its risk is the ads stopping altogether in periods of heavy competition; the November discount week and the year-end are the typical examples. In practice a cap is only set once …
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