3000 words in-depth explanation of bidding promotion sorting rules!

People in the industry all know something about the ranking of search promotion ad spaces, but their understanding may vary from person to person at different stages.

The same goes for me. I dare not say that I have fully understood the ranking of ad slots. I can only say that I hope to communicate and share with you my current thoughts on the ranking of ad slots without reservation.

one

The most basic understanding of ad ranking is to understand it literally.

Search promotion is also called search bidding promotion . The one with the best ranking gets it, and whoever is willing to pay the most for the ad space gets it. This logic is simple and crude, and it seems very fair to everyone, and advertisers also accept this rule.

Simple things will have some loopholes. When ranking is calculated only based on bids, an advertiser can bid slightly or much higher than the next person, and the final ranking will still be the same.

For example, there are three advertisers, let's call them A, B, and C. They bid 10 yuan, 5 yuan, and 2 yuan respectively for the same keyword. Then among the three ad positions, the first one is A, the second one is B, and the third one is C. There is nothing wrong with this ranking. If B offers 2.01 yuan, he can still be ranked second. If fees are deducted only based on bids, people will most likely not actively bid high prices, which will ultimately affect the platform's revenue.

This problem is easy to solve. Almost all platforms now use a two-price auction billing method. The final fee is calculated based on the bid of the next advertiser plus a very small amount, usually 0.01 yuan.

With such a setting, everyone calls Baidu the conscience. Previously, it cost 10 yuan to click A, but now it only costs 5.01 yuan, which is nearly half the cost. In fact, as long as A is not a fool, even if the rules are not changed, he will continue to test and find out that 5.01 yuan can rank first, and in the end he will still spend that much money when clicking.

two

The bid ranking combined with the generalized second-price auction method seems perfect, but loopholes will be discovered over time.

There is a type of company that has a lot of money but no professional optimization team. After opening an account, they just bid very high. Anyway, the final billing will be based on the next person. He can just write any advertising idea or something. For him, his writing skills are limited. He just strives for the best ranking, so as to ensure the best promotion effect within his ability.

For Baidu, it is different. If A bids 10 yuan and the ad has a 3% click-through rate, B bids 5 yuan and has an 8% click-through rate, and C bids 2 yuan and has a 6% click-through rate. So for the same 100 impressions, A earns 15.03 yuan and B earns 16.08 yuan. By comparison, B is the big money sponsor, so why is he ranked second?

Therefore, it is the most cost-effective to sort by advertising quality. This is how the advertising ranking calculation rules currently announced by Baidu are stated. Ad ranking is based on the value of the ad, and ad ranking competitiveness = ad quality * bid.

Still using the above example, assume that the qualities of A, B, and C are 3, 8, and 6 respectively. After the rules were changed, the advertising ranking competitiveness were 30, 40, and 12 respectively. Then the ranking of the top three can be changed to B, A, C.

B is ahead of A. A's bid is 10 yuan, so the charge to B will not become 10.01 yuan. Therefore, the billing rules also change accordingly, and need to be multiplied by a quality ratio. B's deduction becomes: 10*3/8+0.01=3.76 yuan.

This will not exceed B's bid of 5 yuan, and it can tell advertisers that improving quality can reduce the cost per click, and everyone is very satisfied.

In fact, B may be the second largest company in the industry and just wants to compete for the second-place advertising position. He optimized the quality index with the intention of lowering the cost per click while still ranking second.

If B is in the second place, the deduction fee is only 2*6/8+0.01=1.51 yuan. Even if the rules are not changed and the quality is not included in the calculation, it will only be 2.01 yuan. Now it has been inexplicably promoted to the first place, and more money needs to be spent.

From this perspective, the platform is the biggest beneficiary of such sorting rules.

three

Capital is greedy. From the perspective of the platform wanting to make more money, is there anything that can be improved based on the current sorting rules?

Some time ago, I got a patent from Baidu on ad placement ranking, and found a lot of interesting things in it.

The background introduction of the patent states that the current technology cannot allocate advertising space globally when allocating and pricing advertising space, resulting in low overall advertising returns. In other words, ranking and pricing techniques can still be optimized to make more money.

What exactly is the problem now? It can also be seen from the core changes in the patent.

The basis for ranking in the patent is expressed as overall exposure value, which is actually the same as the advertising ranking competitiveness mentioned above. The key lies in how this is defined.

The inventor of this Baidu patent believes that different ad positions naturally have different click-through rate attributes. At the beginning, the click-through rate of ads in high-quality ad positions will naturally not be bad. However, excellent advertising creativity may not have a significant increase in click-through rate because it is in a relatively backward ad position.

If we can reasonably evaluate the value of excellent advertisements, we may be able to achieve better click-through rates and create higher value.

The method proposed by the inventor is to obtain the bid of each advertiser and the click rate of each ad space on the premise that all ad spaces are present. The bid is multiplied by each click-through rate and then added up to calculate the overall exposure value. After sorting, the first one gets the first ad spot.

The next allocation is not in order, but the first ad slot is left out. Among the remaining ads, the bids are multiplied by the click-through rates of the remaining ad slots and added together. The first one after sorting gets the second ad slot, and so on.

Such changes, on the positive side, will mean that excellent ideas will have more opportunities to be discovered. On the negative side, the competition will become more intense, Baidu will make more money, and we will have to spend more money.

Four

In fact, it is not so easy for us to spend more money. After all, no matter how it changes, the fees will not exceed the bid. Just control the bid well. It would be great to have a better ranking.

The extra money Baidu earns is just from those who set a random price. They thought that the deduction was the next person plus 0.01, and it didn't matter how much they bid. In fact, Baidu was trying every means to get closer to their bid.

Price is always part of the game between advertisers and platforms. To achieve the same effect, advertisers want to spend less money, while platforms want to make more money. It is indeed not easy to find a balance point that everyone can accept.

Putting aside the price part, let’s take a look at the search ad rankings.

According to Baidu's official statement, ranking is also affected by quality, namely click-through rate, creative relevance, and landing page experience. According to the inventor within Baidu mentioned above, it is affected by the click-through rate of each ad spot.

It can be seen that click-through rate is the indicator that the platform pays the most attention to besides bidding. I personally think that the two additional parts of the quality index, creative relevance and landing page experience, are actually linked to the click-through rate. If the creativity is irrelevant, there will naturally be no good click-through rate. If the experience after clicking on the ad is not good, users will develop an aversion to ads and thus stop clicking on the platform’s ads, lowering the overall click-through rate.

To be honest, if you want to increase your click-through rate, it’s actually very simple. Just think of some attractive copy. But after doing this and getting a good ranking, is the advertising really successful?

From the perspective of the platform, it was a success. For us advertisers or optimizers, there is still a lot to consider.

For the platform, click-through rate is conversion rate, and every click generates revenue. After we get clicks, the conversion rate depends largely on the quality of the people who click in.

What we need to do more is actually screening, especially among some relatively broad words. There is no need to attract a bunch of people who are not relevant to the product just to increase the click-through rate. If you can successfully screen out people who are willing to buy your products, then you are successful. Of course, this requires a certain level of skill.

In my work, I have come to a profound realization that a high ranking does not necessarily mean a high conversion, nor does a high click-through rate necessarily mean a high conversion. If high ranking means high conversion, then you can actually get the best ranking by bidding against others. After all, what matters in the end is ROI. Under the premise of ensuring high conversion, the cost per click is really nothing compared to the order amount.

It’s not that we don’t care about rankings. The official statement clearly states that different ad positions have different click-through rates. No matter how good your own creative ideas are, they still need the support of natural traffic.

When two swords are combined, they will be more powerful.

Author: Houchang College

Source: Houchang College (semlianmeng)