Yandex.Direct, Yandex’s pay-per-click advertising platform, is changing its auction system and introducing new ranking rules for paid search results. Starting tomorrow, instead of a generalized second-price auction (GSP), Yandex.Direct will be using a Vickery-Clarke-Groves (VGC) auction to serve ads in the premium positions on its search engine results page (SERP) and the SERPs of websites in the Yandex Advertising Network. Ads competing for the ad block on the SERPs will be selected based on their quality, in addition to advertisers’ bids. These changes are aimed at providing Yandex’s advertising clients with maximum traffic at an optimal price, while serving the ads that are most relevant to our users.
“Changes in Yandex.Direct respond to changes in the advertising market. Cost of traffic and return on investment have become more important than having ads in premium positions. The second-price auction doesn’t allow advertisers to fully benefit from running their ads in top positions. They tend to prefer paying less for lower positions at the expense of additional clicks. Now, we’re changing the rules so that attracting more traffic will become more efficient for our advertisers,” says Eugene Lomize, head of monetization at Yandex.
The second-price auction pushes advertisers to pay for their clicks a price that is defined by their closest competitors. In the VCG auction, the cost-per-click price is based on the difference between the amount of traffic in different ad positions. If an ad in the top position yielded 15% more clicks than it would have done in the second position, the advertiser would pay only for these additional clicks if their ad moved up from the second position to the top. In contrast to the second-price auction, the cost of baseline clicks in the VCG auction remains the same regardless of the ad’s position. The average cost per click grows in proportion to the increasing amount of traffic, making advertisers compete for additional traffic.
In addition to changing the auction model, Yandex.Direct will now also apply a new ranking formula to ads competing for the ad block on the SERPs. To encourage and stimulate quality advertisements, ads will be selected not only based on the advertisers’ bids, but also considering their quality and click-through rates. The ads’ quality is assessed based on a number of factors including the quality of copy, relevance to the search query, and quality of the landing page. The new ad ranking rules will help Yandex.Direct serve the ads that are most relevant to users’ search queries.
