Understand the principles of Douyin advertising in one article

This article will use a case to fully interpret the oCPM advertising delivery system behind advertising products such as FEED and DOU+, to help everyone better understand the delivery principles and thus carry out more effective delivery.

This article is more suitable for friends who are not familiar with the oCPM advertising billing method. It contains a lot of basic principles. It is recommended to save it and read it in a quiet environment.

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Case Background:

Xiaomei has just opened a women's clothing store. After the store opened, her first priority was to attract customers.

So, Xiaomei found the local flyer industry tycoon, Boss Li.

At the beginning, Xiaomei asked Boss Li to distribute flyers on her behalf at a price of 20 yuan per 1,000 flyers, and Boss Li quickly finished distributing all the flyers.

But Xiaomei was very dissatisfied because many of the flyers were distributed to elderly people and did not bring any actual customers or revenue to the store.

Knowledge point: oCPM advertising billing model

The charging models of traditional Internet advertising mainly include CPT/CPM/CPC/CPA/CPS, etc. Different billing models have different interest games for advertising platforms and advertisers.

For example, in the above case, 1,000 photos/20 yuan is CPM billing. In this model, fees are charged as soon as the ad is displayed, and the media does not need to worry about the click-through rate and conversion effect of the ad. For the media, the risk is relatively small.

Charging based on actual sales results is a typical CPS billing model. This model has the lowest risk for advertisers, but is not conducive to media profitability.

It can be seen that the further to the left the billing method is, the higher the risk for advertisers, and vice versa.

So, oCPM was born, a billing model for display advertising aimed at conversion effects. In oCPM, advertisers do not bid for CPM (cost per thousand impressions), but bid for conversion goals; similarly, media charges are not based on the conversion price set by the advertiser, but on the number of ad impressions to achieve that goal.

oCPM is also called smart bidding, which means that the system will automatically adjust the CPM bid to bid for ad exposure based on the conversion target set by the advertiser.

To put it simply, advertisers do not need to worry about the CPM price or how the media is delivered, as long as the conversion cost does not exceed the bid they set.

Boss Li discussed a new way of cooperation with Xiaomei. At the same time, Xiaoli and Xiaoke, who ran two other stores on the same street, thought it was reliable and joined in.

Boss Li received orders from three people.

Business is here, but Boss Li is in a dilemma.

Boss Li conducted a careful analysis:

Xiaomei's poster design is pretty good. I estimate that 25% of the orders will be placed in the store after seeing them. Her clothes are also very fashionable. I think 25% of the orders will be placed in the store~

Xiaoke’s posters are too unpopular, and the store visit rate is estimated to be 15%. The clothes are average, and the purchase rate after arriving at the store is estimated to be 20%. However, Xiaoke’s acceptable traffic cost is 15 yuan, which is higher than Xiaoai. As long as 66 people buy 1,000 yuan, it will be enough, so you can also try it.

As for Xiaoli's, the store visit rate and purchase rate are probably average, and the prices are not high. Let's see the situation and I'll post it when I have time.

In order to better digest the orders from the three stores, Boss Li designed two estimation indicators based on his daily observations of the three clothing stores and his preferences for the three posters.

The first one is the probability that the beauty will come to the store after getting the flyer.

The second is the probability of a beauty making a purchase after arriving at the store.

After setting the target, Boss Li took out a calculator and calculated the number of flyers he had distributed.

The next day, Boss Li distributed flyers strictly according to the plan. He distributed all 1,600 flyers to Xiaomei and 2,222 flyers to Xiaoke. However, because it was dark, none of Xiaoli's 2,500 flyers were distributed.

On the third day, Boss Li found Xiaomei and Xiaoke to settle the bill.

oHow CPM advertising works

In oCPM, the higher the target conversion bid is not necessarily the case, the higher the exposure you can get.

The advertising system will estimate the click-through rate and conversion rate of each exposure, and calculate the conversion value score brought by each exposure based on the conversion bid set by the advertiser, and then bid for the exposure based on the score.

The advertising system ensures that the advertiser's optimization goals are maximized while also maximizing the conversion value of exposure.

Taking Douyin live streaming as an example, from seeing the advertisement to placing an order in the live broadcast room, users have to go through the process of clicking on the video recommendation page to enter the live broadcast room and clicking on the shopping cart in the live broadcast room.

Therefore, if the conversion goal is "clicking the shopping cart in the live broadcast room", the system calculates the value of a single ad exposure = conversion target bid * ad creative click-through rate * shopping cart click-through conversion rate * intelligent adjustment factor (the intelligent adjustment factor is determined by factors such as the daily budget consumption of the ad and the achievement of the conversion cost, which will not be discussed here for now)

The Douyin advertising (including Douyin's FEED and DOU+) system will strictly bid according to the eCPM maximization principle.

The biggest difference is that FEED must bid for the optimization target, while DOU+ cannot bid for the optimization target and can only fill in the budget.

Therefore, DOU+ will pay more attention to click-through rate and conversion rate (video DOU+ conversion rate is interaction rate and attention rate), that is, the quality of content materials.

In the future, DOU+ may also add the function of bidding according to optimization goals, so that the delivery of DOU+ will be more strategic.

The owners of the three clothing stores all recognized Mr. Li's model, so they all placed orders with Mr. Li.

Boss Li learned from his mistakes and after getting three new orders, he no longer made probabilities based on his own guesswork. Instead, he sent his capable subordinates to each store to test the actual store visit rate and purchase rate.

Therefore, in the second wave of orders, Boss Li accurately grasped the visit rate and purchase rate of the three clothing stores.

Based on the two pieces of data, the number of flyers to be distributed to the three milk tea shops was re-determined.

After learning from his subordinates, Boss Li indeed improved the efficiency of distributing flyers. In the same day, we distributed 3,800 flyers, which was a lot more money than the first time.

Xiaomei and Xiaoli were quite satisfied with the result. After Xiaoke inquired about the situations of the other two companies and saw that his own conversion rate was so good, he decided to lower the conversion bid next time.

oCPM advertising learning period

In oCPM, in order to maximize revenue, the advertising system will try to improve the efficiency of traffic utilization and obtain the maximum conversion with the least traffic.

Therefore, there will be a learning period in the advertising plan.

During the learning period, the advertising system should not only test the conversion rate of alternative ads, but also find users with higher click-through rates and conversion rates for each ad (finding target users is not involved in the above case), so as to improve the accuracy of estimated click-through rate and estimated conversion rate, and then arrange advertising resources.

In order not to affect the learning period, in practice:

• Ensure that the planned budget is sufficient to avoid the situation where the budget is exhausted during the study period;
• Try to make as few changes to bids and targeting as possible for the same plan. Every change to a variable will make the system learning period more complicated.

Similarly, advertisers should also continuously optimize ads and content to increase ad click-through rates and conversion rates, thereby increasing eCPM values.

The higher the eCPM value, the higher the real-time bidding bid calculated by the advertising system will be, which means the greater the bidding advantage of the advertisement. On the premise of obtaining the same amount of traffic, the bid can be lower, saving more costs.

Taking the FEED direct broadcast room as an example, the sophistication of the room’s decoration and the host’s appearance are factors that affect the click-through rate of advertisements, while the discount of the products and the host’s guiding words are important factors that affect the conversion rate.

Compared with old accounts and old plans, the delivery costs of new accounts and new plans will be higher.

If a new account or new plan wants to increase sales quickly and get through the learning period, it should increase the bid and relax the budget, because the system is more cautious about things it is not sure about. Bidding more makes the system feel that there is a high probability of making money, and the system will be willing to run the volume.

The new arrival, Xiao Ai, always feels that her store is not popular enough. Apart from the customers brought by Boss Li's flyers, there are very few new customers. So we found Boss Li and took out a part of the budget for orders that had already been purchased for conversion and asked Boss Li to increase the popularity of the store. The conversion condition was changed to just coming to the store.

oCPM advertising conversion goal setting

Both DOU+ and FEED have multiple conversion goals. The conversion goal determines the conversion rate. Different levels of difficulty will result in different prices.

Taking live streaming as an example, although conversion based on watching the broadcast is a bit far from the final transaction, if watching the broadcast is the goal, the price will be lower. In addition, the real-time number of viewers will play a positive role in the rating of the live broadcast room in the traffic pool, and can bring more natural traffic to the live broadcast room.

Therefore, you might want to try running advertising plans with different conversion goals at the same time.

For example, while setting sales conversion goals such as “shopping cart clicks”, you can allocate a portion of the budget to the number of viewers. Similarly, in live broadcast rooms for products such as jade and jewelry that have higher average order value, it would be more effective to allocate budget to set direct orders as conversion goals in addition to clicking on the shopping cart.

After Boss Li had cooperated with the three clothing stores for many times, Xiaomei, Xiaoke and Xiaoli respectively put forward higher requirements for the targets of distributing flyers.

Xiaomei and Xiaoke are both based on requests from real customers, while Xiaoli completely made up user characteristics based on her own ideas.

The final result is self-evident. Xiaomei's store's conversion rate has been significantly improved, but Xiaoke's store only sent out a few flyers because the requirements were too detailed. Because Xiaoli decided on user characteristics based on random guesswork, her final conversion rate actually dropped.

oCPM advertising targeting settings

Targeting means sending specific ads to specific people.

oCPM is different from other advertisements: the conversion goal it sets is itself a kind of targeting. For example, if the conversion goal is to complete an order, the system will conduct a wider range of matching based on the characteristics of people who have placed orders for similar products. In addition, the system will automatically optimize the advertising plan and seek out groups of people who are more likely to achieve conversion goals.

Therefore, when setting oCPM targeting, try to relax the targeting conditions as much as possible. The more complex the targeting is, the fewer target users will meet the requirements, the more intense the competition will be , and the less likely the system will be to produce results. Moreover, when setting the targeting, it is important to refer to the characteristics of the converted population under the historical delivery data. It is better not to set the wrong targeting.

In DOU+, there is no need to set targeting in most cases. The account label is the targeting condition, and the label is formed based on the interaction data of historical content. Among them, popular content will play a decisive role in the formation of labels due to its large amount of interaction.

For those accounts with confusing labels or new accounts, DOU+ targeting can be used to accelerate the formation of labels . However, if the content of DOU+ fails to become a hit, the value of a single delivery in forming a label will not be too high.

Summarize

In fact, for advertisers, Douyin advertising is not complicated. The reason why many friends don’t know where to start is mostly because they don’t understand the principles of the oCPM bidding mechanism.

The purpose of this article is to explain the principles as simply as possible. The cases are purely fictitious and do not involve intelligent adjustment factors, bidding ranking strategies, etc. If there is anything wrong, please point it out.

Author: Hanekawa

Source: Kas Data