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Kenshoo recently released our patent-pending, proprietary ActiveCluster™ technology that powers several new paid search bid policies: Bid to CPA, Bid to ROI, Bid to Position, and Revenue for Product Target (a bespoke model for Product Listing Ads).

These new policies are model-based and more advanced than rule-based policies, using a machine-learning approach to group keywords with similar attributes and – bonus – they are ready for Google enhanced campaigns. Kenshoo’s ActiveCluster technology provides more sophisticated keyword-level bidding by creating clusters of keywords and predicting the individual behavior of each keyword.

Keywords that were previously more difficult to optimize due to low volume can now be appropriately optimized with these new policies. While rule-based policies can be limited due to access to historical data, ActiveCluster groups keywords together into meaningful clusters to better predict their behavior.

Think of our algorithm as a living, breathing decision maker. After grouping keywords by a certain attribute, the algorithm asks the question, “What do I know now that I didn’t know before about the keywords in each group?” This is a classic example of information gain – the higher the information gain from grouping by a certain attribute, the better the attribute is.

Kenshoo clients moving to bid policies powered by ActiveCluster have seen great results, and the impact from cluster-based policies can be noticeable within a few days.

If you were never able to hit a certain CPA before and you are using the same CPA target with the new Bid to CPA policy, you can expect traffic to increase in a few days. One client of mine was never able to achieve a CPA of $90 for its B2B account, but after switching to Bid to CPA, the goal was met after 7 days.

If your ROI target is higher than the actual ROI under rule-based policies, you can expect the new Bid to ROI policy to reduce your traffic quickly in order to reach its objective. After only a few days, another client was able to quickly eliminate waste and achieve the ROI target by switching to Bid to ROI.

Pro tip: since ActiveCluster can seem aggressive at the beginning (especially if upgrading from rule-based policies), be sure to keep a close eye on performance and adjust your targets if necessary.

Happy Optimizing!