New auction in Yandex Direct: 3 changes and how to use them

    At the end of August Yandex Direct switches to a new type of auction VCG. The current “second price” scheme will remain in the past. For some, this is an apocalypse, but for some, a bright future. What is the essence of the changes, what will the new rules bring and how to use them with maximum benefit - read in this article.

    As it was before: second-price auction

    Here, advertisers pay for each click the bid of a lower competitor plus the bidding step (1 cent or 30 kopecks). Thus, in the special placement block, for the positions in which advertisers fight, whoever pays more is higher. Hence the effect of “overheating” of the auction and failure for those who evaluate the effectiveness of an advertising campaign on the payback of traffic.

    Here's how it looks with an example:

    Let's say you have two competitors with the same product. The margin and conversion indicators are the same for everyone:

    Purchase value of one unit of goods - 10,000 rubles;
    Retail price - 13,000 rubles;
    Margin - 3,000 rubles;
    Landing page conversion - 3%;
    Conversion of the sales department (calls and applications for sales) - 50%.

    The maximum bid that you are willing to pay is calculated as the product of margin, site conversion and sales department conversion. As a result, we get:

    Maximum rate = 3,000 rubles. x 3% x 50% = 45 rubles.

    If the rate is higher than 45 rubles, advertising does not pay off.

    Suppose you set the maximum allowable rate of 45 rubles. with a CTR of 10%. The second competitor puts 30 rubles. with a CTR of 15% and a third - 20 rubles. with a CTR of 20%. At the same time, the minimum threshold for entering special accommodation is 25 rubles, so the last competitor is “in flight”.

    Positions are distributed as follows:

    Cool: we take first place due to the highest bid. But what does it give in terms of efficiency?

    According to Yandex statistics, the first place in special placement collects 100% of clicks, the second - 85% and the third - 75%.

    Revenue is defined as the product of the number of clicks, conversion and margin. And profit as the difference between revenue and advertising costs. And here is the picture we get:

    As you can see, the second position has a higher return on investment (ROI) due to the lower cost of traffic. That’s why many advertisers used the “Show in block at the lowest price” strategy.

    New VCG system

    Here it is assumed that the cost of a click depends on traffic: the more traffic you collect, the more you pay. Specifically, the payment will go for additional clicks that our competitors have not received (those same 15% and 25% in the second and third places in the special placement).

    Advertising budget = Costs of competitors if we are not in the auction - Costs of competitors when we participate in the auction

    If we were not there, the first competitor would receive 100% clicks for 30 rubles, and the second competitor 85% clicks for 20 rubles . Accordingly, their costs would be 30,000 and 17,000 rubles. Total - 47,000 rubles.

    Our budget = 47 000 - 17 850 = 29 150 rubles.
    The cost of a click on 1 place in special accommodation = 29,150 / 1,000 = 29.15 rubles.

    The click price is reduced under new conditions (in the first case, it was 32 rubles.) Of course, while competitors maintain their bids.

    VCG does not protect against raising rates and, most likely, in the near future we will again encounter an “overheating of the auction”. This is already established psychology. However, ideally, the VCG system encourages you to set a true bet if all participants behave rationally. Some experts call this type of auction “sincere”, because it is most optimal for Yandex and for advertisers.

    By the way, VCG (according to the names of American economists Vickrey, Clark, Groves) have been using Google and Facebook for a long time, so Yandex in this regard is pulling up to the best practice of auctions in online advertising.

    Yes, in the Yandex.Direct interface, there are still bets to enter a specific position and the ability to set your own bids. In this case, you will see the current price for each position: the system will become more transparent.

    This is not all: in addition to the new auction, Yandex abolishes discounts and amends the ranking of ads in blocks. What does this mean?

    Cancel discounts

    This is a blow to large advertisers who bought large volumes of traffic and received a discount from Direct. Such a system negatively affected the ranking and cost of the click: for example, with a 10% discount, the advertiser could use it to raise bids by the same 10%. The new auction establishes uniform rules of the game, without a price handicap to anyone. Traffic in the first positions should become cheaper, due to which Yandex intends to compensate for the damage to the "monsters" of the market.

    New ranking rules

    Now sorting in blocks will depend on three factors: CTR, bid and quality factor. Recall that so far only the bid affects it. As a result, the ad with the highest CTR was in last place in the special placement.

    Interesting data leads in the book "Optimization of contextual advertising" Andrei Belousov. This is the probability that the position has the best ad in the block:

    The worse the CTR, the greater the chances of first place. Here is such a strange logic)

    Yandex says that ads that are more attractive to users will receive more benefits. Okay, with CTR and rates everything is clear, but what does the quality factor mean? As always, mere mortals do not know its formula, but from the available information we can assume the following.

    Yandex brings the Direct scheme closer to search engines. And in the first place is the rule of relevance: how much match the request, ad and landing page. This is where the fun begins. If directors are skilled at copying the request into the headline and ad text, then landing pages are a disaster.

    Typically, the traffic goes to one page. In an extreme case, several landings for different types of services. For example, Tinkoff Bank has a credit card, a special credit program and a debit card. Only three pages for 1,350 unique ads!
    It’s a bit easier for online stores where there are many product pages, but even they cannot fully ensure that the content of the page matches all user requests.

    A common example where an ad promises one thing:

    And the user lands in a completely unfamiliar place:

    Where are the Samsung tablets here at a super favorable price? Even if the store has a separate page for a specific brand, users have dozens of various query options: in terms of memory, screen size, color, functionality, not to mention the conditions of purchase and service. And they all come to the same page: those who are looking for “Tablet with Windows”, and those who are looking for “Tablet with delivery”.

    Leading context experts say behavioral factors will influence rankings. The same quality factor directly correlates with the bounce rate and viewing time. And if users "run away" headlong from the landing page, the advertiser will not see top positions, even at high rates and good CTR. Thus, Yandex introduces an efficiency rule based on the logical chain “Request - Announcement - Landing”.

    What to do

    1. Adjust traffic to relevant landing pages

    This primarily relates to online stores. With an exact request (for example, “Samsung Galaxy Tab 4 tablet”) send users not to a category, but to a page of a specific product or selection. Yes, this is a more time-consuming process, but it's worth it: otherwise, the bounce rate will go off scale (remember the previous example of a mismatch between an ad and a product page).

    The fact is that contextual advertising competes with organics, where just in the vast majority of cases the principle of relevance is respected. And Yandex simply unprofitable to twist commercial ads "past the checkout". To maintain long-term profits, he will be forced to reduce the number of ads in special placements (to two, for example).

    For example, the official website of Samsung, the request "tablet Samsung Galaxy Tab 4."

    Advertising (1 CP) leads to this page:

    A link from organics to here:

    Question about backfill: Which of the two options will the user choose?

    2. Disable inappropriate traffic.

    Everything is simple here: you need to “shovel” the semantics and exclude homony phrases that sound the same with your product, but mean something completely different. For example, in the advertising campaign of Tinkoff Bank, we found the query “health resort card”. And there are a lot of such examples.
    Working with additional relevant phrases and auto-expansion is a delicate process. If you want to capture the so-called one-cent traffic, you must carefully work out the offer for each such keyword. As a rule, directors do not bother with this and pour 10-20% of the budget to nowhere.

    3. Improve the uniqueness of ads.

    Matching the text with the request remains a key condition, while you can further uniquely ad: expand the mode of operation, create additional benefits, as well as use quick trigger links.

    4. Increase the relevance of landing pages.

    Common truth: the user must immediately find the necessary information, see compliance with his request. At the same time, we showed how things are in practice.

    Dynamic content allows creating exact correspondence of a site to the demands of users from contextual advertising. Using the Yagla Serviceyou indicate which elements you want to substitute for requests. We recommend the most conversion ones, on which the fulfillment of the target action directly depends: heading, subheading, CTA button, signatures for lead forms.

    The simplest option is the exact match "Request = Heading", as in Direct. For example, one of our customers - a pawnshop - has two types of services: buying and exchanging cars. At the request “Car exchange”, the user sees in the heading the sentence “Exchange your car with mileage”. And upon request, "Buying cars" - "We will redeem your used car." This already gives an increase in conversion to the application by at least 15-18% in different niches.

    But for a tangible increase in conversion, it is necessary to create not just a match, but an attractive offer (trading offer). For example, “We will redeem your car with mileage of up to 90% of market value / Valuation within 60 minutes. The whole amount on the same day. " The “Heading + Subheading” scheme is more cumbersome, while at the same time it contains several benefit triggers. In this case, through successive tests, you can achieve a conversion increase of several times. Record - 960%.

    For details on how dynamic content works, how to implement it and what it gives on specific examples in different niches, see this article .

    PS Everything is moving closer to contextual advertising principles of organic traffic ranking. Some experts even predict a mix of advertisements with search results in 1-2 years. And at the forefront is the user experience, the quality of which depends on the compliance of needs (requests) with the offer on the site (landing page). In other words, give the user what he is looking for and give it immediately.

    With respect to you and your business, the founder of the service Alexander Alimov

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