From bidding with a revenue target to bidding with a profit target – increasing gross revenue by 71%
June 18, 2021 (6 mins read)
Kitchentime, who uses Bluebird Media as their digital marketing partner, had – like many other e-commerce businesses – difficulty with attaining profitable results from Google Ads. Kitchentime focused on total revenue, but when they switched their bidding strategies to maximise total profit, they were able to increase their gross profit by 71% compared to the same period the previous year, after deducting marketing costs.
“ – The mistake that many e-commerce businesses make is that they optimise their bids to maximise revenue or transactions, but in order to achieve sustainable growth they should be optimising for profitability. Thanks to Kuvio you can send profit as a signal to bidding algorithms to maximise profitability in absolute terms rather than revenue. ” - Patrik Segersven, Head of Paid Search & Analytics, Bluebird Media.
Kuvio only acted as a facilitator for Google’s smart bidding algorithms to make better decisions. Kitchentime previously used ROAS (Return On Ad Spend) bidding, which means that Google adjusts bids to maximise revenue given a certain ROAS target. This likely means that Google favours selling products that are as expensive as possible and that have the highest possible sales volumes. As many e-commerce businesses know, however, is that it is not necessarily the most expensive and certainly not the products that have the highest sales volumes that are the most profitable for the business. By feeding Google’s smart bidding algorithm profit rather than revenue, we force Google to find the most profitable sales rather than those that have the highest revenue.