What is Profit Retention?

Profit retention turns a break-even threshold into something you can bid against. Break-even says where profit ends. Retention says how much of the space below it you are willing to spend, and therefore how much margin you keep.

Target ACoS = Break-Even ACoS × Retention

Because the target is expressed relative to break-even, it stays correct when costs change. A supplier price rise moves break-even and every target beneath it moves with it, without anyone editing a number.

The presets

A custom option takes an absolute target ACoS instead, for operators who want to set the number directly.

Worked example

Suppose break-even ACoS is 50% on a £30 order carrying £15 of contribution margin. On Balanced the target is 37.5%, so advertising may take up to £11.25 and £3.75 of margin is retained. On Profit the target is 25%, ads may take £7.50, and half the margin is kept. Nothing about the product changed, only the appetite.

The setting is chosen for a product rather than for each keyword, so the operator makes one decision instead of hundreds.

What happens after the target is set

The target sets the bid, then context adjusts it. Inventory cover pulls bids down as days of stock fall, because there is no sense competing hard for top placements on stock that will not last the month, and pushes them up when cover is excessive. Organic rank changes how hard it is worth pushing for top of search, since a term you already own organically needs less paid support than one you do not.

Two guards hold the chain together. A product with no cost on file has no real break-even, so it gets no target rather than a confident one. And every move is bounded: step size is capped per run and bids sit on a floor and a ceiling, so no stack of modifiers can drive a bid to nothing in one pass.

When the target belongs above break-even

A ranking push is a deliberate, temporary, capped loss. During a launch the KPI is conversion rate rather than ACoS, because conversion signals are what earn rank, and a capped push tends to beat an uncapped one because the cap forces efficiency. Set the ceiling before starting and set an end date, so the decision is a choice rather than a drift.

Beyond that, targets ladder by the job a term does: brand defence well below break-even, core non-brand terms at or near it, and a small number of priority ranking terms above it while the push runs.