Models of buying advertising in traffic arbitration
This is the eighth lesson of the basic course on mobile arbitration , in which you will receive a general set of knowledge about mobile arbitration, basic concepts and a set of tools that are necessary for any arbitrator, internet marketer or traffic manager.
Previous lessons:
In this lesson we will discuss the patterns of buying advertising in traffic sources.
Let's talk about CPT, CPM, CPC, CPI. Consider in detail the concept of advertising auction and its algorithms.
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Presentation | Text transcript
In order to make the right decisions in attracting traffic, it is important to understand how the processes for purchasing advertising in traffic sources are arranged. Let us examine the basic models of advertising procurement.
For traffic sources, selling advertising is a way to make money. The main task for advertising sites is to maximize the effective CPM (eCPM) , the revenue per thousand ad impressions.
The number of ad impressions is limited, and the advertising platform seeks to earn the maximum amount of money from the advertising inventory. Advertising site can not sell all the advertising shows. To understand how many impressions the site actually sells, use the concept of Fill Rate (the ratio of the actually sold number of impressions to the maximum possible).
Each site seeks to sell all possible advertisements and get the Fill Rate 100%. If it does not sell all possible impressions, the site offers cheaper traffic - to at least earn something. The ad network wants, on the one hand, to maximize CPM - revenue from every thousand impressions, but on the other hand - to sell all the thousands of impressions that it has in its inventory.
Own advertising platforms also monitor the quality of the content that we place, so as not to cause a negative to the user. To assess the quality of the content quality score is introduced. Sites sell advertising to those who have a higher Quality Score.
MyTarget, Google AdWords and Facebook do just that: in addition to the price you pay per thousand impressions, they also take into account the quality of the content. When choosing between two advertisers, the sites look not only at how much they earn from you, but also at the number of users who will be satisfied with the advertising content, and in the aggregate take into account both factors.
Do not forget about the advertising policy sites: advertising of certain categories of goods is not allowed regardless of how much you are willing to pay for the shows.
If advertising platforms are not own, but foreign ones, for example, Direct Traffic, or Mobile Display, not users, but users of publishers who work with this advertising network can be dissatisfied. Accordingly, the publisher is not happy with how the advertising network works with it.
We now return to the sale of advertising models. There are 4 models:
Let's talk about each model in more detail.
With this payment model, we redeem an entirely fixed time for displaying our banner on the advertising platform. We provide the site with a 100% fill rate: it sells us all the shows that it has for a certain period of time. The site sells us shows cheaper, since we buy them in bulk. In this case, the purchase of CPT is cheaper than the CPM model. Advertiser is more profitable to sell all shows at once.
Working on CPT we get the risks that CPM or CPC will be expensive. We do not know what kind of platform this is, how often the banner will be shown to users, whether they get bored or not. It is hard to test: you need to subscribe for certain volumes, and only after that we will get CPM and we will understand whether it is profitable or not profitable to place advertising on the site. The second minus: it is not always possible to make changes quickly, and sometimes it is completely impossible. If we place a banner for a week, during the week we cannot make edits and test various hypotheses, whichever banner works better or worse.
Another ad purchase format is the CPM model when we pay for impressions. The advantage of this advertising format is that our goals completely coincide with the goals of advertising sites: traffic sources sell what they want to sell. The sites do not care what the results are of impressions, whether they turn into clicks or are converted into orders. Traffic sources are guaranteed to get the value we offer. Due to this, the twist of the advertisement is more stable and predictable. If this format pays off, it’s easier to work with it than with CPC or CPI. You can always calculate the cost per click, which you get. Regardless of whether we buy CPM or CPC, we can always take impressions, see how many clicks we have, divide one by the other, and calculate how much the click cost us.
There is a formula for eCPC (effective CPC): eCPC = CPM / CTR / 10
Looking at the formula, we draw conclusions: the higher our CTR, the cheaper our CPC will be.
For example:
If we pay 1000 rubles per 1000 impressions, and the CTR of the banner is 1%, then clicks cost us 100 rubles each.
If we pay the same 1000 rubles per 1000 impressions, and our CTR is 2%, then the shows cost us 50 rubles each.
Accordingly, at the same price for the number of impressions, we receive clicks 2 times cheaper. Hence the conclusion: the higher the CTR of the banner, the cheaper we get clicks. It is more profitable for us to make those banners whose CTR will be higher.
On cheap traffic, CPM works better: when paying by CPC, there is a minimum rate that the site wants to receive per click. When traffic is cheap, with a high CTR, we can get clicks lower than this bar. By CPC, we will not pass, as there is a minimum limit. Also, when working on CPC, it is worth remembering such a thing as the Frequency cap - the frequency of displaying a banner to the same user. If we show the same banner to the user several times, the CTR drops, the CPC grows. And there are sites that allow us to choose the Frequency cap and, for example, show each banner only once to the user per day or per week. There are sites that are not allowed to do this, and this depends on the cost of CPM.
The next model of advertising purchase is CPC. Using this format, we pay for clicks, cost per click. When working with this advertising format, it is worth remembering that we are paying for the clicks that the advertising network considers to us. There will always be a discrepancy between the clicks that we actually receive and the clicks that the ad network counts. Some clicks fall off until the moment when our page is loaded, some clicks come from users who are not considered an advertising network, because they were not unique. When calculating cost per click and eCPM, you should use those clicks that you actually received, and not those shown by the ad network. The discrepancies can be large.
The CPC format is good because you pay for real actions and real users. By purchasing the CPM format, you may never get a click, and you won’t understand if your advertising approach worked at all. You cannot test the offer itself. When we buy CPC - guaranteed to get a click, in this regard, the format is convenient, because we can calculate and guaranteed to receive impressions.
Accordingly, if the test requires 1000 clicks - we can buy 1000 clicks, we know how much we pay per click, we can predict the budget for tests. With CPM it's hard to do. Therefore, tests are easier to start with the CPC format, and then, when we already see the CTR, we can calculate how much CPM actually costs, and see if it is profitable for us to work on CPM or on CPC. When we pay for clicks, we can count in the opposite direction and understand how much each thousand impressions cost us. In this case, it should be understood that the site is profitable to sell shows. We pay for clicks, and the site charges us for every thousand impressions, and the more we get effective CPM, the more profitable the site is to show our advertising than the ads of another competitor. We recalculate eCPM using the following formula: eCPM = CPC * CTR * 10
We conclude: the higher our CTR, the higher the CPM.
With equal cost per click advertising site is more profitable to show a banner with a large CTR. If there are two advertisers who pay 1 ruble per click, but one CTR has 1%, and the other has 2%, then on the banner with CTR 2%, the advertising platform will earn 2 times more.
The reverse is also true: if there is a banner with a CTR of 2%, but we pay 50 kopecks per click, then it will be shown exactly the same as a banner for which they pay 1 ruble per click, but it has a CTR of 1%.
Increasing the CTR, we reduce the cost of a click for ourselves and get the same number of impressions, or we get more impressions from the traffic source.
We can influence the CTR: draw a creative that will have a higher CTR, because users want to click on it. We can choose the right targeting, and show creative, aimed at a specific audience. For example, on mothers from 25 to 35 years old or on men with the name Denis, and show a banner where it says “Denis”. As a result, the CTR will be higher, we will get clicks cheaper, although we will pay as much for CPM. CPM format on cheap traffic is often more expensive. Usually there is some kind of threshold, and you just can not buy clicks cheaper than one cent. Although buying at CPM, with a high CTR of 10-15%, you get cheaper clicks.
When working on the CPM format, the sites themselves try to maximize the CTR. They will show the banner to those users who are more likely to click on it. For the same reason: it is more profitable for sites to show advertising banners to those users who click, as sites in this case will earn more. On large traffic sources, Facebook, AdWords, MyTarget, special algorithms are activated, which select the audience and show your banner to those users who are more likely to want to click on it.
This is an advantage of CPC format over CPM: when we work on CPM, the site doesn’t care, we have already paid for ad impressions. Accordingly, smart advertising space algorithms will not work, although they are effective. For example, Facebook knows what we like and comment on. If we comment and like posts about cars, the advertiser, having shown an ad about cars to us, will receive a click, and Facebook will work. We lose this algorithm if we buy ads using the CPM format. If we compare the same ad for CPM and CPC, the CTR drops because the platform does not help to make the CTR high.
The latest advertising purchase model is the CPI format. Sometimes there is a CPA when we pay for an action. The site in this case optimizes impressions and clicks in the installation, it has data about users, and it can predict: show ads to users who are more likely to download the application.
Usually this format looks attractive, but it doesn’t work as well in practice. The site is not ready to take risks: it is likely that it will not be able to optimize, shows and clicks into installations with good conversion.
If you use the methods of mobile arbitration: the right creatives and targeting, it is cheaper to make the installation, buying advertising on the format of CPC or CPM.
But the CPI format still works if the site has certain tools. For example, Facebook has a look a like to the audience. If we provide data about our users: 5,000 people who made purchases last month in our application, Facebook will build an audience that is similar to those 5,000 people, which will lead to a cheap CPI. In this case, the CPI format works better than the CPC and CPM format.
Let's talk about effective CPM / effective CPC. When you buy ads, you consider how much a click costs and how much a show costs. It always needs to be done. If you buy CPM, then consider how much a thousand impressions cost. If you buy CPC, then consider how much it costs per click. And compare these formats with each other. This allows you to make the right decisions, and understand why you are getting more traffic or less now, why your banner is not shown at a high rate.
Regardless of what you buy - clicks or impressions, always count clicks into impressions, and impressions into clicks. We know how much money we spent, how many impressions and clicks we received, we can always divide one by the other and understand how much the click cost, and how much the show cost. Even if we only paid for impressions or only for clicks. This knowledge helps to make the right decisions. As we have already dealt with it: when the CTR grows, we get a click cheaper, and it is more profitable for the site to show our banner if we do not change the rate.
When you make a bid, regardless of what advertising model, remember that you do not have to pay exactly the amount of money you put. There is an advertising auction. Many advertisers participate in it, and everyone makes a bid for an advertising display.
There is competition between you, and the final rate for showing, clicking or installing will depend on many indicators: the model of the advertising auction, the minimum allowable rates and the rates of competitors.
Consider several different types of advertising auctions.
The classic, basic, on which most of the advertising networks and sites are built is a closed auction of the second price . Imagine that all advertisers are bidding for impressions. Each advertiser says how much he is willing to pay for a particular user, for display, or for a click. All these rates are collected and sorted: who is willing to pay more, who is less. That advertiser who is ready to pay the big rate wins. He gets the right to advertise, or click, but at the same time he pays not his bid, but pays the bid, which was shown by the advertiser following him, the second.
If we have several places in the advertising auction, on the site, where to show advertising, then the first place is given to the first advertiser, he pays the price of the second advertiser, the second place is given to the second advertiser, and he pays the price of the third, etc. Closed auction of the second price is used on most advertising platforms.
Main advantages:
There are negative points:
Often it turns out that you do not need to win the auction, but you need to win second or third place.
Take the auction Yandex.Direct. The optimal strategy is to be in spec. accommodation. When users enter a search query, advertising results are displayed - three places on top. The biggest bet - for the first place in the spec. placement, but being in second or third place, you get about the same amount of impressions, but cheaper.
There are alternatives to this advertising auction, the second popular auction is the VCG auction.
In this auction, another feature - the more clicks you get, the more you pay. This type of auction takes into account that different banners have different CTR and give a different number of clicks. The advertising platform gets more money from those advertisers who received more clicks, no matter which slot they won.
The scheme of this auction is not clear to advertisers. If in the previous auction the advertiser paid the rate that was placed next to him in the queue, then there is not. You pay for those clicks that competitors in an advertising auction receive less if you were not there. It is difficult to understand and explain, and this is the main drawback of the auction.
This type of auction provokes advertisers to set true bids. If a click costs 3 rubles, it is advantageous to put 3 rubles, you will get the optimal number of clicks on this rate, and the result will be the maximum at a rate of 3 rubles. At a lower rate, say, 2 rubles, you will either receive less clicks, or receive clicks worse in quality.
Facebook works on this model, Yandex started working on this model. This model is gaining increasing popularity. It is difficult to work with it, but you need to understand that such an advertising auction exists.
We considered the methods of buying advertising, discussed advertising auctions.
The next lesson will be final, in which we will talk about the tools that you need for arbitration: software, books, blogs. We will discuss the expectations and the reality that the arbiter faces in real life.
You can ask any questions about arbitration in the comments or in our VKontakte group .
Previous lessons:
- What is arbitration
- Market participants
- Basic metrics and concepts
- Offers and verticals
- Partner Networks
- Traffic sources
- Conversion and payment types
In this lesson we will discuss the patterns of buying advertising in traffic sources.
Let's talk about CPT, CPM, CPC, CPI. Consider in detail the concept of advertising auction and its algorithms.
')
Presentation | Text transcript
In order to make the right decisions in attracting traffic, it is important to understand how the processes for purchasing advertising in traffic sources are arranged. Let us examine the basic models of advertising procurement.
For traffic sources, selling advertising is a way to make money. The main task for advertising sites is to maximize the effective CPM (eCPM) , the revenue per thousand ad impressions.
The number of ad impressions is limited, and the advertising platform seeks to earn the maximum amount of money from the advertising inventory. Advertising site can not sell all the advertising shows. To understand how many impressions the site actually sells, use the concept of Fill Rate (the ratio of the actually sold number of impressions to the maximum possible).
Each site seeks to sell all possible advertisements and get the Fill Rate 100%. If it does not sell all possible impressions, the site offers cheaper traffic - to at least earn something. The ad network wants, on the one hand, to maximize CPM - revenue from every thousand impressions, but on the other hand - to sell all the thousands of impressions that it has in its inventory.
Own advertising platforms also monitor the quality of the content that we place, so as not to cause a negative to the user. To assess the quality of the content quality score is introduced. Sites sell advertising to those who have a higher Quality Score.
MyTarget, Google AdWords and Facebook do just that: in addition to the price you pay per thousand impressions, they also take into account the quality of the content. When choosing between two advertisers, the sites look not only at how much they earn from you, but also at the number of users who will be satisfied with the advertising content, and in the aggregate take into account both factors.
Do not forget about the advertising policy sites: advertising of certain categories of goods is not allowed regardless of how much you are willing to pay for the shows.
If advertising platforms are not own, but foreign ones, for example, Direct Traffic, or Mobile Display, not users, but users of publishers who work with this advertising network can be dissatisfied. Accordingly, the publisher is not happy with how the advertising network works with it.
Advertising procurement models
We now return to the sale of advertising models. There are 4 models:
- CPT - buy a fixed period of time in which our banner will be displayed on the site;
- CPM - buy ad impressions;
- CPC - we pay for clicks on an advertisement;
- CPI / CPA - pay for actions.
Let's talk about each model in more detail.
CPT
With this payment model, we redeem an entirely fixed time for displaying our banner on the advertising platform. We provide the site with a 100% fill rate: it sells us all the shows that it has for a certain period of time. The site sells us shows cheaper, since we buy them in bulk. In this case, the purchase of CPT is cheaper than the CPM model. Advertiser is more profitable to sell all shows at once.
Working on CPT we get the risks that CPM or CPC will be expensive. We do not know what kind of platform this is, how often the banner will be shown to users, whether they get bored or not. It is hard to test: you need to subscribe for certain volumes, and only after that we will get CPM and we will understand whether it is profitable or not profitable to place advertising on the site. The second minus: it is not always possible to make changes quickly, and sometimes it is completely impossible. If we place a banner for a week, during the week we cannot make edits and test various hypotheses, whichever banner works better or worse.
CPM
Another ad purchase format is the CPM model when we pay for impressions. The advantage of this advertising format is that our goals completely coincide with the goals of advertising sites: traffic sources sell what they want to sell. The sites do not care what the results are of impressions, whether they turn into clicks or are converted into orders. Traffic sources are guaranteed to get the value we offer. Due to this, the twist of the advertisement is more stable and predictable. If this format pays off, it’s easier to work with it than with CPC or CPI. You can always calculate the cost per click, which you get. Regardless of whether we buy CPM or CPC, we can always take impressions, see how many clicks we have, divide one by the other, and calculate how much the click cost us.
There is a formula for eCPC (effective CPC): eCPC = CPM / CTR / 10
Looking at the formula, we draw conclusions: the higher our CTR, the cheaper our CPC will be.
For example:
If we pay 1000 rubles per 1000 impressions, and the CTR of the banner is 1%, then clicks cost us 100 rubles each.
If we pay the same 1000 rubles per 1000 impressions, and our CTR is 2%, then the shows cost us 50 rubles each.
Accordingly, at the same price for the number of impressions, we receive clicks 2 times cheaper. Hence the conclusion: the higher the CTR of the banner, the cheaper we get clicks. It is more profitable for us to make those banners whose CTR will be higher.
On cheap traffic, CPM works better: when paying by CPC, there is a minimum rate that the site wants to receive per click. When traffic is cheap, with a high CTR, we can get clicks lower than this bar. By CPC, we will not pass, as there is a minimum limit. Also, when working on CPC, it is worth remembering such a thing as the Frequency cap - the frequency of displaying a banner to the same user. If we show the same banner to the user several times, the CTR drops, the CPC grows. And there are sites that allow us to choose the Frequency cap and, for example, show each banner only once to the user per day or per week. There are sites that are not allowed to do this, and this depends on the cost of CPM.
CPC
The next model of advertising purchase is CPC. Using this format, we pay for clicks, cost per click. When working with this advertising format, it is worth remembering that we are paying for the clicks that the advertising network considers to us. There will always be a discrepancy between the clicks that we actually receive and the clicks that the ad network counts. Some clicks fall off until the moment when our page is loaded, some clicks come from users who are not considered an advertising network, because they were not unique. When calculating cost per click and eCPM, you should use those clicks that you actually received, and not those shown by the ad network. The discrepancies can be large.
The CPC format is good because you pay for real actions and real users. By purchasing the CPM format, you may never get a click, and you won’t understand if your advertising approach worked at all. You cannot test the offer itself. When we buy CPC - guaranteed to get a click, in this regard, the format is convenient, because we can calculate and guaranteed to receive impressions.
Accordingly, if the test requires 1000 clicks - we can buy 1000 clicks, we know how much we pay per click, we can predict the budget for tests. With CPM it's hard to do. Therefore, tests are easier to start with the CPC format, and then, when we already see the CTR, we can calculate how much CPM actually costs, and see if it is profitable for us to work on CPM or on CPC. When we pay for clicks, we can count in the opposite direction and understand how much each thousand impressions cost us. In this case, it should be understood that the site is profitable to sell shows. We pay for clicks, and the site charges us for every thousand impressions, and the more we get effective CPM, the more profitable the site is to show our advertising than the ads of another competitor. We recalculate eCPM using the following formula: eCPM = CPC * CTR * 10
We conclude: the higher our CTR, the higher the CPM.
With equal cost per click advertising site is more profitable to show a banner with a large CTR. If there are two advertisers who pay 1 ruble per click, but one CTR has 1%, and the other has 2%, then on the banner with CTR 2%, the advertising platform will earn 2 times more.
The reverse is also true: if there is a banner with a CTR of 2%, but we pay 50 kopecks per click, then it will be shown exactly the same as a banner for which they pay 1 ruble per click, but it has a CTR of 1%.
Increasing the CTR, we reduce the cost of a click for ourselves and get the same number of impressions, or we get more impressions from the traffic source.
We can influence the CTR: draw a creative that will have a higher CTR, because users want to click on it. We can choose the right targeting, and show creative, aimed at a specific audience. For example, on mothers from 25 to 35 years old or on men with the name Denis, and show a banner where it says “Denis”. As a result, the CTR will be higher, we will get clicks cheaper, although we will pay as much for CPM. CPM format on cheap traffic is often more expensive. Usually there is some kind of threshold, and you just can not buy clicks cheaper than one cent. Although buying at CPM, with a high CTR of 10-15%, you get cheaper clicks.
When working on the CPM format, the sites themselves try to maximize the CTR. They will show the banner to those users who are more likely to click on it. For the same reason: it is more profitable for sites to show advertising banners to those users who click, as sites in this case will earn more. On large traffic sources, Facebook, AdWords, MyTarget, special algorithms are activated, which select the audience and show your banner to those users who are more likely to want to click on it.
This is an advantage of CPC format over CPM: when we work on CPM, the site doesn’t care, we have already paid for ad impressions. Accordingly, smart advertising space algorithms will not work, although they are effective. For example, Facebook knows what we like and comment on. If we comment and like posts about cars, the advertiser, having shown an ad about cars to us, will receive a click, and Facebook will work. We lose this algorithm if we buy ads using the CPM format. If we compare the same ad for CPM and CPC, the CTR drops because the platform does not help to make the CTR high.
CPI
The latest advertising purchase model is the CPI format. Sometimes there is a CPA when we pay for an action. The site in this case optimizes impressions and clicks in the installation, it has data about users, and it can predict: show ads to users who are more likely to download the application.
Usually this format looks attractive, but it doesn’t work as well in practice. The site is not ready to take risks: it is likely that it will not be able to optimize, shows and clicks into installations with good conversion.
If you use the methods of mobile arbitration: the right creatives and targeting, it is cheaper to make the installation, buying advertising on the format of CPC or CPM.
But the CPI format still works if the site has certain tools. For example, Facebook has a look a like to the audience. If we provide data about our users: 5,000 people who made purchases last month in our application, Facebook will build an audience that is similar to those 5,000 people, which will lead to a cheap CPI. In this case, the CPI format works better than the CPC and CPM format.
Effective CPM / Effective CPC
Let's talk about effective CPM / effective CPC. When you buy ads, you consider how much a click costs and how much a show costs. It always needs to be done. If you buy CPM, then consider how much a thousand impressions cost. If you buy CPC, then consider how much it costs per click. And compare these formats with each other. This allows you to make the right decisions, and understand why you are getting more traffic or less now, why your banner is not shown at a high rate.
Regardless of what you buy - clicks or impressions, always count clicks into impressions, and impressions into clicks. We know how much money we spent, how many impressions and clicks we received, we can always divide one by the other and understand how much the click cost, and how much the show cost. Even if we only paid for impressions or only for clicks. This knowledge helps to make the right decisions. As we have already dealt with it: when the CTR grows, we get a click cheaper, and it is more profitable for the site to show our banner if we do not change the rate.
Advertising auction
When you make a bid, regardless of what advertising model, remember that you do not have to pay exactly the amount of money you put. There is an advertising auction. Many advertisers participate in it, and everyone makes a bid for an advertising display.
There is competition between you, and the final rate for showing, clicking or installing will depend on many indicators: the model of the advertising auction, the minimum allowable rates and the rates of competitors.
Consider several different types of advertising auctions.
The classic, basic, on which most of the advertising networks and sites are built is a closed auction of the second price . Imagine that all advertisers are bidding for impressions. Each advertiser says how much he is willing to pay for a particular user, for display, or for a click. All these rates are collected and sorted: who is willing to pay more, who is less. That advertiser who is ready to pay the big rate wins. He gets the right to advertise, or click, but at the same time he pays not his bid, but pays the bid, which was shown by the advertiser following him, the second.
If we have several places in the advertising auction, on the site, where to show advertising, then the first place is given to the first advertiser, he pays the price of the second advertiser, the second place is given to the second advertiser, and he pays the price of the third, etc. Closed auction of the second price is used on most advertising platforms.
Main advantages:
- Understandable for advertisers: why and for what you pay so much.
- It is easy to enter a quality score and sort advertisers not only by rates, but, for example, by rates multiplied by a quality factor. It is easy to take into account that the show will be given not only to those who are willing to pay more, but also to those who have better advertising quality.
- Easily calculate your position in the auction. Going over the bids, you understand what bids are involved in the auction, what rate the second advertiser puts, what rate the third advertiser puts.
There are negative points:
- There are support and overheating of the auction, when players start picking up bids in order to raise your bid and knock you out of the auction.
Advertisers do not put "true prices." For each advertiser there is a true cost per click: how much he is willing to pay per click. Closed auction of the second price does not force advertisers to place such bids, it forces them to bid lower. This is a plus for advertisers, a minus for an advertising platform, as it earns less money from advertisers than it could earn. - It does not take into account that there are different advertising spaces. The site sells several banners in various positions. These banners will have a different CTR, and advertisers will receive a different number of clicks from different banners. This auction does not take into account. As a result, the winner receives the first banner and pays the highest price for it, and the second participant receives the second banner and pays the price less for it, but at the same time, the second banner gives the same number of impressions as the first one. This is a lack of auction.
Often it turns out that you do not need to win the auction, but you need to win second or third place.
Take the auction Yandex.Direct. The optimal strategy is to be in spec. accommodation. When users enter a search query, advertising results are displayed - three places on top. The biggest bet - for the first place in the spec. placement, but being in second or third place, you get about the same amount of impressions, but cheaper.
There are alternatives to this advertising auction, the second popular auction is the VCG auction.
VCG auction
In this auction, another feature - the more clicks you get, the more you pay. This type of auction takes into account that different banners have different CTR and give a different number of clicks. The advertising platform gets more money from those advertisers who received more clicks, no matter which slot they won.
The scheme of this auction is not clear to advertisers. If in the previous auction the advertiser paid the rate that was placed next to him in the queue, then there is not. You pay for those clicks that competitors in an advertising auction receive less if you were not there. It is difficult to understand and explain, and this is the main drawback of the auction.
This type of auction provokes advertisers to set true bids. If a click costs 3 rubles, it is advantageous to put 3 rubles, you will get the optimal number of clicks on this rate, and the result will be the maximum at a rate of 3 rubles. At a lower rate, say, 2 rubles, you will either receive less clicks, or receive clicks worse in quality.
Facebook works on this model, Yandex started working on this model. This model is gaining increasing popularity. It is difficult to work with it, but you need to understand that such an advertising auction exists.
Conclusion
We considered the methods of buying advertising, discussed advertising auctions.
The next lesson will be final, in which we will talk about the tools that you need for arbitration: software, books, blogs. We will discuss the expectations and the reality that the arbiter faces in real life.
You can ask any questions about arbitration in the comments or in our VKontakte group .
Source: https://habr.com/ru/post/322820/
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