Hourly Bidder: Under the Hood

June 6, 2019 | Posted By Robbie Hill
Hourly Bidder: Under the Hood

Aatish Salvi is the CTO of Teikametrics.

I received a question from a Seller yesterday about hourly bidding and wanted to take the opportunity to dive into some of the details of our system. The Seller had essentially asked:

“If advertising information isn’t available for about 48 hours, how can you adjust bids hourly? I can’t find an hourly timestamp anywhere in the API. I can only find daily reports!”

The skepticism here is well founded and the observation about Amazon’s API is astute. Despite this, hourly bidding is actually quite valuable. Let me attempt to explain why.

To begin, the Seller is absolutely correct that there is no hourly timestamp anywhere in Amazon’s API. Having said that, on reading the API fine print (https://advertising.amazon.com/API/docs/v2/guides/developer_notes), we can see that there is actually some data that resolves faster than 24 hours. For example, clicks and impression data is available within 180 minutes (though it takes 72 hours to resolve fully).

We’ve also found that the significant majority of all sales are reported within the first day of their click, though there is some variation here with different keyword-product pairs. Thus asking for data hourly means that you do get new, valuable information with each request, even if it isn’t ‘up-to-the-hour.’

With hourly bid evaluation, the Teikametrics algorithm can respond to changes in the quality and volume of traffic with the assumption that conversion is reasonably stable. Our findings are that there is a shelf-life to conversion rates, but they’re less volatile than you might imagine.

As an example, imagine a new keyword that gets a lot more volume (i.e. impressions and clicks) at its initial bid than expected. We don’t yet know whether those clicks are going to produce sales, but all-of-a-sudden spend is rocketing. The algorithm can detect this in a matter of hours and slow down the bidding until it has more confidence in the conversion rate / ACoS.

The other really important part of hourly bid evaluation that matters is responsiveness to the Seller’s goals and pricing. If the Seller changes price, we no longer wait an entire day to adjust a bid. If the Seller changes their target, we no longer wait an entire day to adjust a bid. Our approach to hourly bidding makes the whole system more responsive.

As a summary  – the stark truth of life is that hourly bid evaluation does not matter, say, 70% of the time. This is because for most keywords and products, not a whole lot happens every hour. Many keywords might not see a single click for weeks, let alone hours.

During the 30% of the time hourly bidding does matter, it matters a lot. Take Prime Day for example: If you shift your targets during that time, you definitely do not want to wait for your algorithm to take 24 hours to figure itself out. The same is true if the behavior of a high-volume keyword changes, and that keyword is responsible for the bulk of your sales.

Get In Touch

If you have any questions or would like to continue the conversation, we’re happy to chat with you! Please feel free to contact Aatish directly on LinkedIn.