Information flow delivery | Core analysis of conversion bidding!

Conversion bidding is the core of information flow advertising and one of the factors that has the greatest impact on advertising effectiveness. For novices, there are some things that go against human nature when using conversion bidding, such as: Why is the conversion cost unstable on a hourly basis? Why can't I make a general adjustment when it's unstable? If you understand the principle of transformation, these problems will be easier to understand.

Normally your leader may not tell you in such detail, so let’s talk about it in detail today.

1. How to use click bidding

There are two common bidding methods for online advertising: click bidding and conversion bidding. Understanding click bidding will help us better understand the principles of conversion bidding. So, let’s first introduce click bidding.

The click bid is “the highest amount I am willing to pay for each click”, which is easy to control the click cost; the conversion bid is “the highest amount I am willing to pay for each conversion”, which is easy to control the conversion cost.

Click bidding is a relatively basic bidding method. In the early days, major media such as Toutiao and Tencent mainly used click bidding for advertising. Even now, some manufacturer information flows and emerging media are still using click bidding.

How to use click bidding?

For example:

I want the activation cost to be 5 bucks. Then I need to control the activation cost by controlling the click bid. This also involves the conversion rate from click to activation, so the formula between them is:

Click cost ÷ click-to-activation conversion rate = activation cost

The click cost is easy to control, but the click-to-activation rate is unpredictable! Therefore, the activation cost can easily go up.

For example, a plan costs 0.3 cents per click and the activation cost is 5 yuan. But what often happens? The click bid remains unchanged at 0.3 cents, but the activation cost suddenly becomes 10 yuan? The cost doubled! The optimizer was confused: How do I explain this to my boss? I didn't do anything!

So what’s the problem with bid-per-click? The cost is difficult to control!

Because the conversion rate from clicks to conversions fluctuates so much, the costs are very unstable.

2. How to use conversion bidding

Later, conversion bidding came to the rescue. Finally we can put the blame on the media!

Originally, the media was only responsible for ensuring that the click cost met your bid requirements, but now the conversion cost must also meet your bid!

When using click bidding, the publisher is only responsible for the "click cost";

Click cost ÷ click-to-conversion ratio = conversion cost (green represents safety, red represents danger. Both are dangerous after clicking)

When using conversion bidding, the media is responsible for the "conversion cost"!

Click cost ÷ click-to-conversion ratio = conversion cost (green means safe, red means dangerous. Both click-to-conversion are safe)

“What is conversion” is something that advertisers can customize. Activation, registration, ordering, payment... anything is fine. If you want to optimize the cost of a certain step, just tell the media the data of that step, then set the bid and let the media optimize for you! The media teachers were also very happy because they could finally control costs and not be criticized! They all grandly introduced their own conversion bidding functions.

Therefore, the usage of conversion bidding is super simple. Just set the bid according to how much cost you want!

Is the conversion bid perfect? Of course not, there will be new problems.

3. Why is the conversion cost higher than the bid?

The new problem is that the cost is not based on the bid.

At this time, the optimizer went crazy. What! What! Back! thing!

Optimizers want every conversion cost to be lower than the bid, but why is the cost so much higher than the bid?

At this time, media friends may be thinking: I can’t do it!

But they don't say that. Optimizers have been introduced to new words such as "model" and "learning".

Media operators often tell optimizers: "It is normal for the initial cost to be high! Because your plan is still learning! Be patient, once the model has learned, the cost will go down!" With the strong popular science of the media teacher, I can roughly understand "why the conversion cost is higher than the bid."

Let’s take Toutiao as an example and use a picture to simply understand what “model” and “learning” are.

Conversion bidding principle diagram

To explain:

Toutiao has many users with different characteristics, including men, women, young and old, with different interests and hobbies. We use shapes to represent people with different characteristics. Some users have triangles, some have five-pointed stars, some have hearts, and some have circles.

We divide the advertising process into two stages. In the first stage (step ① in the figure), the system first selects a group of people, shows them the advertisement, and observes their reactions. Some of them clicked, some did not, and some converted after clicking. We should focus on those who converted. Here circles and hearts are used to represent transformed people.

After we have converted people, we need to analyze them, which leads us to the second stage (step ② in the figure). The media speculated that those who converted should like this ad more. Will other circle and heart-shaped users also like this ad more? We showed this ad to more users with circles and hearts, and the system formed a "model" for finding people. This is the principle of machine learning. First find a group of converted people, then analyze their characteristics, build a model, and then find people who are similar to them based on the model.

Every plan must go through the first stage. At this stage, the media does not know what kind of people will convert, so the cost will be high. Once the people can be found, the cost will drop. Of course, it is possible that we cannot find people to convert, in which case the cost will remain high or the volume will be low. In 2016 and 2017, Toutiao set the first stage to click bidding. It would enter the second stage only after accumulating a certain number of conversions and use conversion bidding for delivery.

So, if you think that the first stage is to use click-through bidding, then wouldn’t the cost be high? Isn't it normal to be tall? Although the click bidding stage was later cancelled, the planning and learning process is still necessary, and the rule that the conversion costs of the first few new plans are high still exists.

IV. Key points in using conversion bidding

Conversion bidding is very simple for optimizers, who only need to fill in a number; but for the system, it has a lot of work to do, requiring complex calculations and constant search for users. So you need to cooperate with the system to find the target users together.

So, how to cooperate?

Think of yourself as the boss and the system as the worker who works for you. For long-term workers, it is much more difficult to find people by bidding based on conversion than by bidding based on clicks. The boss's requirement is quite difficult to fulfill, so the boss needs to be more understanding of the long-term workers.

So, where does understanding specifically manifest itself?

(1) Demand cannot change all the time - bids cannot be adjusted frequently

For example, building a house. At first the boss said he wanted a three-bedroom apartment, then it became a two-bedroom apartment, and after a while he said he wanted a two-story loft. The boss's requirements kept changing, and the farmhand was very confused and didn't know what to do. The requirements should not change too often, so that the work can be done quickly and well.

If you really want to change, what should you do? Based on the original, make slight changes, but not too much. For example, if you originally bid 20 yuan, don't change it to 10 yuan all at once on the same day. You can change it to 18 yuan on the same day and then to 16 yuan the next day. Don't do it too much or too often. The adjustment range can be based on the bid price × 10%. For example, 20 × 10% = 2. A bid of 20 yuan can be adjusted by about 2 yuan at a time. How do you understand too frequently? More than 2 times a day is considered frequent.

(2) Accept that long-term workers have a novice period - allow the plan to accept high costs during the learning period and not make adjustments for the time being

No matter what you do, you are not skilled at the beginning and your work will always be worse. The boss has to accept that permanent workers have a rookie period, which means that the boss can plan for higher costs during the learning period. The cost of each new plan for 1 to 3 days will be unstable, so whether you like it or not, you have to learn. And there are compensations, so when costs are high, you don’t have to make adjustments or price cuts. Someone will compensate you, so you don’t have to worry about “why the cost is so high”.

I wrote a jingle:

The advertising system is excellent, and the conversion bid is top-notch.

Can we build a model by accumulating data without making overall adjustments?

Don't adjust it too much, you and the system are one.

What is too big? More than 1 achievement is called great! Just call it big!

(“10%” means “10%”, if it happens more than 2 times a day, it is called total adjustment)

This is the basic usage, and novices will not have any major problems if they follow it. Once you become proficient in it, you can be free from this restriction and develop more bidding strategies.

Today's optimization experience:

• In the early days, all media used click bidding, but the problem was that the conversion rate was difficult to control and the conversion cost fluctuated greatly.
• Conversion bidding can solve the problem of fluctuating conversion costs. The media is responsible for your conversion costs and can pay whatever cost you want. For example, if you want an activation for 5 yuan, you pay 5 yuan; if you want an order for 40 yuan, you pay 40 yuan;
• A major feature of conversion bidding is that the plan needs to be learned. The cost of learning is relatively high, which must be endured. Once the plan is learned, the cost will be reduced. If the plan cannot be learned, the money must be spent. This is an objective law.
• You cannot set too high a bid for conversion, and you cannot require that every conversion cost meets the requirements. You don’t need to adjust the bid as soon as the cost goes high, as this is not worth it.
• You can remember this jingle:

The system has two options, and the conversion bid is top-notch.

Can we build a model by accumulating data without making overall adjustments?

Don't adjust it too much, you and the system are one.

What is too big? More than 1 achievement is called great! Just call it big!

(“10%” means “10%”, if it happens more than 2 times a day, it is called total adjustment)

Author: Aunt Ning

Source: Sanlitun Information Flow