Auction

An advertising auction is a mechanism that determines which ad to show to the user and at what price. Every time a user enters a request in Yandex or opens a page with advertising blocks, an auction takes place between hundreds of applicants in a split second. This is RTB - Real-Time Bidding.

Yandex Direct uses a second-price auction with an adjustment for quality: you pay not your maximum bid, but the bid of your closest competitor + 1 kopeck, multiplied by the correction factor. The winning formula is: Ad Rank = Bid ​​× CTR Forecast × Landing Quality. This is why increasing quality score works like decreasing the effective bid.

In my practice, understanding the mechanics of an auction is the basis of a bidding strategy. For example: raising bid from 30 ₽ to 50 ₽ does not mean automatically getting 67% more traffic - it all depends on the “density” of the auction. In highly competitive niches (loans, real estate, medicine), a 20% increase in rates can result in a 5% increase in traffic: the rest will be gobbled up by competitors.

The concept of “second price” means that the fair strategy is to set the real value of a click for your business, rather than trying to “outsmart” the auction. Lowering the rate out of savings most often leads to departure from the desired positions, and not to savings.